The impost fee and development cost charge in British Columbia
Creators: name: Kuroyama, Kazumi Alan
Publisher: name: University of British Columbia
Year: 2010

description: The main purpose for undertaking this study is to provide factual information on impost fees and development cost charges in British Columbia. The general aim of the study is to impart a better understanding of the two concepts, particularly with reference to their purpose and the circumstances causing their evolution. This study has four objectives: 1. to determine and discuss some of the major factors and events which prompted the municipalities in British Columbia to consider and adopt the levying of impost fees; 2. to clarify the philosophy and implementation strategies of the impost fee concept and determine the extent of its use in British Columbia prior to the advent of the development cost charge legislation; 3. to determine and discuss some of the major factors and events which prompted the provincial government to abolish impost fees and introduce development cost charges; and, 4. to examine and synthesize the development cost charge legislation to ascertain its philosophy, purpose and the requirements provided therein, as well as to determine the extent of its current use in the province. The information required to satisfy these objectives was collected in three distinct ways: (1) interviews with officials and representatives from various municipalities and the Ministry of Municipal Affairs, (2) a questionnaire which was forwarded to 36 localities in the province, and (3) review of the limited amount of literature relating to the subject matter. This study has derived four observations: 1. The impost fee concept evolved from the municipalities' search for an alternate source of revenue to offset the financial liabilities created by their restrictive modes of revenue generation and the increasing demands for additional expenditures. More specifically, this fee was found to be a direct result of municipal strategies to alleviate the cost burdens created by urban population growth. 2. The commonly accepted definition of an impost fee is: a levy which is assessed against a developer by a municipality to defray the municipal costs of constructing or expanding services necessitated by new developments. It was perceived that the basic intent of the impost fee was to meet the demand and costs for new and improved services by imposing a financial requirement on those lands that created the demand. A questionnaire survey, conducted in January and February of 1977 revealed that a number of municipalities had adopted the impost fee concept. Of the 36 survey localities, it was found that 21 or slightly more than 58 per cent levied some form of impost. 3. The demise of the impost fee concept was found to be attributable to the municipalities1 abuse of the land use contract provision of the Municipal Act. Evidence showed the provincial government felt the land use contract contributed to inconsistencies in the development and subdivision approval process, was being used by some municipalities to require excessively high service standards from developers, and was unduly increasing the cost of housing. Further research showed that while the provincial government was sympathetic towards the municipalities' financial problems in terms of financing services for new development areas, it was reluctant to grant municipalities unlimited taxing power to acquire revenues for this purpose. Therefore, the provincial government granted the municipalities the legislative power to impose development cost charges subject to a number of restrictions and requirements, stipulated in the legislation. 4. The purpose of the development cost charge was found to be basically the same as the commonly accepted purpose of the impost fee; that being to: "provide the municipality with a source of revenue so that the municipality may call upon its banked capital cost charges to pay for a major capital expenditure that becomes necessary in relation to its highways, sewer, water, drainage, or park systems". Investigations indicated that the provincial government's philosophy behind the development cost charge provision was to make the legislation regulatory, uniform and taxing. Ancillary to this, "certainty" was to be reinstated in the development process. A survey conducted in July of 1979 revealed that 19 localities have already taken advantage of this legislation and had enacted development cost charge by-laws. A review of the development and subdivision approval process in the Municipality of Richmond showed "that the development cost charge provision of the Municipal Act does not represent the only means available to the municipalities to acquire specific revenues from developers. It was found that by exercising their administrative power, municipalities can enter agreements with developers - much like the land use contract - and contract with them to provide revenues to be used in much the same manner as development cost charges.