City spins fee hike as a bargain

By Ron Seymour Tuesday, November 6, 2007 Kelowna Courier

Even with a 20 per cent hike in development cost charges coming next spring, the increased fees will still represent a smaller percentage of a new home‘s cost than they did 10 years ago. City council on Monday approved an updating of the 20-year servicing plan that will bump the DCCs – which are fees paid by developers to help cover the cost of new roads, parks and other infrastructure improvements – on a typical single-family home from $16,329 to $20,275. Councillors unanimously endorsed the new fees, with some regretting the increase but saying it simply reflects rising construction costs and the soaring price of land the city wants to buy for parks. “I‘m comfortable with the increase, especially given what I‘ve heard is happening in the Lower Mainland,” said Coun. Carol Gran, who said Surrey was looking at a 40 per cent increase in its DCCs and Abbotsford was likely to go even higher than that. Finance director Paul Macklem tried to put the increase in perspective, showing a chart that showed the relationship between DCC charges and the price of new homes in Kelowna going back more than a decade.

In 1998, the city charged DCCs of $10,147 for a new single-family home, which typically sold for $164,500. That meant the DCC charges amounted to six per cent of the home‘s purchase price. This year, with DCCs at $16,329, the median price of a new home in Kelowna was $440,000, he said. So the charges were less than four per cent of the home‘s value, Macklem said. Even with the increase to $20,275, effective March 1, the DCCs will still represent a lower percentage of the median house price than was the case a decade ago, Macklem said. The total cost of buying new properties for parks and doing all the roadwork and improvements to water and sewer lines that city officials say are necessary in the next 20 years has been revised upward from $753 million to $905 million. Almost three-quarters of the total comes from DCCs. “If it wasn‘t for DCCs, we‘d have to pass on the cost of growth to taxpayers,” Coun. Norm Letnick said. “The increase reflects what‘s happening to construction costs and land values.” Two open houses on the higher DCCs are planned, on Nov. 20 from 4 to 7 p.m. at the Ramada Lodge and Nov. 22 from 4 to 7 p.m. at City Hall.