Developers and home buyers could face “sticker shock” as the city prepares to update development cost charges to bring them in line with current costs to build and maintain infrastructure to meet Nanaimo’s growing population and geographical footprint.
At a governance and priorities committee meeting Monday, June 23, city staff presented the results of a review on DCCs and asked for direction to prepare new DCC bylaws and seek public engagement and stakeholder consultation.
Development cost charges are a provincially regulated financial tool to help municipalities recover costs of supplying infrastructure needed to support growth.
Nanaimo’s current DCC bylaw hasn’t been updated since it was adopted in 2017, but inflation – the City of Nanaimo has faced infrastructure cost increases of 50-100 per cent over the past 10 years – and increased apartment and condo development has changed significantly.
“There’s been some considerable cost inflation since the last DCC bylaw update seven years ago and the province has also introduced some new categories, including RCMP, fire protection services … in addition to what was previously allowed,” said Poul Rosen, city director of engineering. “Those two factors are the primary drivers for the increases that you will see.”
According to the city’s 20-year investment plan and asset management plan update, presented to the finance committee in 2023, projected funding shortfalls included a $74.9-million shortfall in DCC contributions for new and upgraded infrastructure. In short, Nanaimo is not collecting sufficient development cost charges to keep pace with rising costs related to growth and development.
The province has also made multiple changes to DCC legislation since 2017. In 2023, government introduced amenities cost charges, or ACCs, to help municipalities recover costs for facilities that provide social, cultural, heritage, recreational, or environmental benefits to a community, such as youth centres, seniors centres, rec centres, libraries, daycare facilities or public squares. An ACC program for a south-end community recreation facility and improvements and expansions in Beban Park and the Stadium District has been in development since December.
This week's report included proposed new rates, arrived at with help from Victoria-based consulting firm Urban Systems, which came up with three scenarios for DCC rate increases, plus added ACCs, using forecasts for population growth and corresponding infrastructure upgrades.
DCC rates vary according to the type of housing to be constructed with the most expensive for single-family dwellings. Nanaimo’s current DCC rate for a single-family dwelling per lot is $14,900, plus a $4,600 Regional District of Nanaimo sanitary DCC rate, for a total of $19,500. But under the three newly proposed DCC rate scenarios, Scenario 1, the highest-tier scenario, building a single-family home on a single lot would entail $58,000 per unit. DCC Scenario 2 comes in at $48,200 and, the least expensive Scenario 3 tops out at $38,300.
“That’s a lot to swallow…" said Coun. Janice Perrino. "I realize we’re probably behind in our charges, but, wow, that’s quite an increase.”
Shaun Heffernan, Urban Systems senior local government advisor, noted there have been “exceptionally large changes” in infrastructure costs, driven in part by supply chain issues, and land acquisition costs – for parkland, for example – are higher.
“You haven’t updated your rates in a fair bit, which is going to create increases no matter what,” he said.
Staff recommended the committee choose a rate tier scenario and have staff proceed with public engagement and consultation with stakeholders, conduct an economic impact assessment of proposed DCC and ACC rates, prepare a DCC bylaw and fire protection and police development reserve fund bylaws; prepare a local area transportation DCC bylaw for south Nanaimo, prepare bylaws for ACCs and an ACC reserve fund, and prepare DCC and ACC waivers to provide incentives to develop not-for-profit rental and supportive housing.
Staff also asked for $125,000 from the city’s special initiatives reserve fund to pay for consultant work for an economic impact assessment.
The committee voted unanimously for Scenario 2 and for the staff recommendations.
Nanaimo Mayor Leonard Krog noted there is only so much the city can do to keep costs of housing down while ensuring it can accommodate future growth.
"Either let existing taxpayers continue to shoulder the burden, or to shift more of it onto those who are moving here and driving that growth. So, a very challenging proposition," he said. “I think the option that’s been proposed is reasonable … I remind everybody, over and over again, we are a big municipality in terms of geography … Too much geography and too few people."
Krog also stressed the recommendation has to come back before council and is not a final decision, but said the city has waited a very long time to increase development cost charges and has received a lot of criticism for tax increases because of the rising costs of construction.
“My concern is we’re trying to encourage development, not discourage it…" Perrino said. "We need to be doing this on a more regular basis, so it’s not such a huge sticker shock for developers who are trying their best to accommodate our needs for housing. That’s what we’re looking for, is housing. So, this is going to be a tough one."
Rosen said public engagement will begin in the fall and the new bylaws expected to be brought before council in the first quarter of 2026.
