DC revenue loss
There will be an overall reduction in development charges collected related to the phase-in of new rates. For example, in year one of a new rate, the City can only collect 80 per cent of development charges. This means there is a 20 per cent shortfall that must be funded from taxes and rates which was not required in the past.
Bill 23 also introduced new exemptions such as a 100 per cent exemption for non-profit housing projects and discounts for rental housing units, as well as exemptions for affordable and attainable housing. Regulations have not been released yet to enable the implementation of exemptions for affordable and attainable housing, however the capital costs of servicing these developments have not decreased, so the City will be required to make up the revenue shortfall through taxes and rates.
Ineligible growth costs
Bill 23 introduced certain costs that can no longer be included in the development charges calculation. Certain land costs and growth studies that would have been included in the background study are no longer eligible and will need to be fully funded by property taxes or rates. Regulations providing more information about which services land would be an ineligible cost for have not been released to date.
Applying a 15-year service standard instead of a 10-year standard may increase or decrease the portion of a project that is eligible for development charges funding. A 15-year standard provides more rate stability.