Development Charges Policy
The City uses partnerships and funding tools, such as the Development Charges Policy (Policy), to help pay for new infrastructure and services required to support growth, like water treatment plants, water and sewer mains, roads, parks and recreational facilities. The Policy supports growth and renewal by managing and investing development charges and other funds into infrastructure for current and future residents.
Growth Costs
The Policy helps fund Growth Costs without passing these costs onto existing residents. Growth Costs can include:
- New, expanded or upgraded infrastructure and services
- Paying down debt for past growth works
- Related administrative expenses needed to support growth, such as technical studies or plans
The Policy provides a framework for funding Growth Costs in both Greenfield and Established Areas of the city and provides funding sources for:
- Direct Growth Costs solely benefiting and internal to a new neighbourhood or development
- Offsite Growth Costs benefitting growth throughout the Greenfield Area
- Offsite Growth Costs, or Tax Lift Funding, benefiting growth and intensification throughout the Established Area
The Policy assigns responsibility to developers to pay for Growth Costs that their subdivision or development will directly benefit from, such as local roads or water & sewer mains connecting homes and businesses to each system.
These costs may be thought of as Direct Growth Costs and are provided under servicing and development agreements between developers and the City.
Development charges are a fee charged by the City when new subdivision and development occurs in undeveloped Greenfield Areas. They are intended to recover growth-related costs that extend beyond the boundaries, or are offsite, of a single new neighbourhood or development site and provide a benefit to multiple Greenfield Areas of the city. These costs may also be referred to as Offsite Greenfield Growth Costs.
Per The Planning and Development Act, 2007 and the Development Charges Policy, the City uses development charges to fund eligible expenses for the following types of infrastructure and services, in addition to related administration costs (Offsite Greenfield Growth Costs):
- Water (example: new water treatment plant)
- Wastewater (example: new sanitary trunk main required for overall city growth)
- Parks & Recreation (example: new zone level park)
- Transportation (example: interchange required after growth occurs)
Development charges cannot be used to pay for operating costs or the renewal of existing infrastructure - this is paid for through taxes and utility rates.
Paying Development Charges in Greenfield Areas
The City applies two types of development charges:
- Servicing Agreement Fees (SAFs) - applied when undeveloped land in Greenfield Areas is subdivided
- Development levies - applied when land in Greenfield Areas is developed and requires more servicing capacity for the land than previously provided, but does not involve subdivision of land
Development charge rates are reviewed periodically and approved by City Council. The table below outlines the current per hectare greenfield development charge rates, as well rates set to take effect June 1, 2023.
|
|
Current Per Hectare Rates |
Rates effective June 1, 2023 |
||
|
|
Residential & Commercial |
Industrial-zoned |
Residential & Commercial |
Industrial-zoned |
|
Transportation |
$125,000 |
$41,670 |
$134,000 |
$44,500 |
|
Water |
$92,000 |
$30,760 |
$99,000 |
$33,000 |
|
Wastewater |
$42,000 |
$14,000 |
$45,000 |
$15,000 |
|
Drainage |
- |
- |
- |
- |
|
Parks/Rec |
$13,000 |
$4,330 |
$14,000 |
$4,500 |
|
Admin |
$25,000 |
$8,330 |
$27,000 |
$9,000 |
|
Total |
$297,000 |
$99,000 |
$319,000 |
$106,000 |
Development Charges Annual Report
Each year, the City releases a Development Charges Annual Report in alignment with the Development Charges Policy that includes information on infrastructure and projects funded through greenfield development charges. The 2022 Development Charges Annual Report can be found in the Related Documents section on this page.
Supporting growth and intensification in Established Areas comes with added costs. Intensification creates added pressure on infrastructure systems. New or upgraded infrastructure and services often may need to be in place to facilitate intensification and related development, or may be needed after intensification occurs to maintain service levels. These added costs, when benefiting growth and intensification beyond a single site or development, may be thought of as ‘Offsite Established Area Growth Costs’.
Rather than using development charges to fund ‘Offsite Established Area Growth Costs’, tax lift from intensification in Established Areas is allocated to a special reserve.
- The term ‘tax lift’ may be referred to as the difference in municipal taxes on a property before a new development occurs and the municipal taxes after a new development is completed. Example: A strip mall adds a second storey consisting of new residential units on the existing structure. Before the second storey was added to the mall, the municipal taxes on the site were $47,000. After construction of the second storey, municipal taxes on the site rose to $66,000. This equates to an annual ‘tax lift’ of $19,000. Going forward, the $19,000 ‘tax lift’ for the site will be used to pay for ‘Offsite Established Area Growth Costs’.
Learn more about Intensification and Infill on our Planning page.
Development Charges Policy & Model Review
Offsite Costs funded by development charges (in Greenfield Areas) and tax lift (in Established Areas) are managed through the Development Charges Financial Cash Flow Model (Model). The Model calculates per hectare development charge rates and the amount of tax lift required from intensification in Established Areas, both of which are based on total amount of Offsite Costs needed to support growth in Greenfield and Established Areas.
A Development Charges Policy & Model Review (Review) has been initiated to address concerns with the current Model, as well as to:
- Improve the Model’s self-sufficiency to fund Offsite Costs required to support growth
- Adjust assumptions and variable leveraged by the Model
- Adjust the timing and need of Offsite Costs and related projects funded by the Model based on the current pace of city growth and development
- Explore different options for applying development charges across the city.
As the City moves through this process, we are committed to updating and consulting with industry stakeholders.
Timeline
August to November 2022: Audit of past development charges models and rate-setting processes
December 2022: Report to City Council to set 2023 Development Charge Rates
January to March 2023: Adjust Model assumptions and variables
March to June 2023: Adjust the timing and need of growth-related infrastructure projects included in the Model based on the current pace of growth and OCP Phasing Plan.
July to December 2023: Develop city-wide and area-specific models for stakeholder consultation based on updated timing and need of growth-related infrastructure projects
December 2023: Report to City Council on results of consultation and recommended changes to the Model and Development Charges Policy
Development Charges Review Kick-Off Information Session
On April 17, 2023, the City hosted a Development Charges Stakeholder Kick-Off session.
Contact
If you have questions related to the Development Charges Model Review, please contact developmentcharges@regina.ca
