Community Amenity Charges: The Province Introduces Guidelines for Local Governments
Local governments across British Columbia have competing demands of providing amenities and infrastructure while keeping down taxes. Local governments are entitled to collect development cost charges to pay for certain infrastructure such as roads, parks and utility infrastructure that are required as a result of the demand from development. However, local governments are not permitted to collect development cost charges to pay for items such as recreation amenities, city halls or fire halls that may be required because of demand from development, or that are simply on a wish list of the local government.
Local governments have increasingly been seeking what are generally referred to as Community Amenity Charges (CACs) from developers to cover the cost of amenities and infrastructure.
The Province of B.C. has issued a guide intended to assist local governments to establish how, or if, the local government should be seeking CACs from developers.
When a parcel of land is rezoned, the rezoning commonly creates an increase in the value of the property (commonly referred to as the “lift”). Local governments have sought to have a portion of the lift paid to them for amenities. Local governments have based the amount of CACs sought in a rezoning application in various ways including seeking a percentage of the lift, charging a set amount per square foot of anticipated development, or imposing an amount on an ad hoc basis for each rezoning application.
The guide clearly sets out that local governments do not have authority at law to require CACs be paid as a condition of rezoning. Rezoning is to be for the implementation of the community plan, and should not be seen as a revenue source by “selling zoning”. The guide indicates that CACs should be negotiated with the developer, and not imposed by the local government, as one consideration to be put before council when it considers the rezoning application.
The guide sets out that if CACs are to be charged, there should be a connection or link between the amenity sought by the local government and the increased demand created by the development. The CACs should also be charged proportionally across all developments creating the increased demand. The guide indicates that setting CACs based on the lift created by rezoning is not appropriate, and is not consistent with the principals suggested in the guide.
Local governments commonly charge CACs on the basis that they are required to assist in providing affordable housing. The guide sets out that the collection of CACs may be a cause of the lack of affordable housing, and a local government should consider the effect of CACs on housing costs in the market before establishing a CAC policy.
The guide from the Province is a good step in establishing a balanced approach to the charging of CACs by local governments. We now wait to see what effect it will have on their CAC policies.
See the Guide online here:
Contact Brad Cronquist at firstname.lastname@example.org or (250)869-1150