New policy to apply DCCs to farmers could be crippling

Jennifer Smith - Kelowna Capital News Published: March 12, 2010

Members of Kelowna’s agricultural advisory committee told the city Thursday they believe plans to charge farmers development cost charges need tweaking. Across the province, farmers and municipalities are struggling to devise a system for adding the levies to new buildings that are built on farmland. Until last year, development cost charges, or DCCs, were only applied to development with four or more units; but the province has now made it possible for communities to charge the levies on individual buildings, meaning DCCs can now be charged on commercial ventures on farms.

“Even within the development community (we find) confusion as to what a DCC is, when it is applied and how they are determined and what they pay for,” said John Vos, City of Kelowna community services general manager. Figuring out how to apply the new rules is open to interpretation and the process has not come easily in Kelowna where local government staff have to try and explain the complicated DCC system, then explain what has changed.

Still, the city’s agricultural advisory committee came armed with concerns the new charge could cripple legitimate farmers. “If you had an operation where you were peeling garlic (in a new building), then you’re never going to recoup the DCC on that,” said longtime farmer Domenic Rampone, noting there are major differences between the types of commercial agriculture operating within the valley.

At times the discussion was specific. For example, the city only plans to charge DCCs on fruit stands where the building is worth more than $150,000. The AAC members said it’s still entirely possible a farmer could pay that out to build a stand, particularly with the storage and refrigeration needed, and still not pull down a profit large enough to ensure the DCC does not kill the business. Vos countered the argument, saying the same rational could just as easily be applied to a residential homeowner who has several children and needs a large home to house them, but doesn’t have much money to spare for the tax. It was a moot point for committee member Brian Heichert who argued the city needs to understand agriculture is a societal issue. “It’s not apples to apples,” he said.

The plan is essentially to apply commercial DCCs to farms building new commercial buildings, but Heirchert pointed out the problem. “…You can’t take a system that’s built for industry and apply it to agriculture,” he said. Where industry can react to market change and a manufacturer can switch products, or adjust their product to meet market demand, to a certain extend food production and feeding the masses isn’t always something you can tinker with, he said. And a city needs food.

The municipality will consult the Economic Development Commission and the B.C. Tree Fruit Association as city staff try to hone in on a formula that works. When all three parties have been consulted, the matter will return to council. City council sent the matter out to the advisory bodies for extra feedback after they failed to agree on how the legislative changes should be applied, expressing concern they did not have enough information.