Letter to the Editor: on DCCs and taxes

The recently circulating petition to limit municipal spending in light of the 10% annual property tax increase to finance Rossland’s five-year capital plan invites a lot of discussion on how the municipality collects revenues to finance its infrastructure deficit. Several financing options for infrastructure deficits are available to municipalities:

For those concerned on why there is no DCC bylaw (for 13 years since the 2012 misinformed repeal) along with the proposed 10% annual tax hikes on Rossland’s mostly residential properties for the next five years, perhaps this section of the 2022 Rossland OCP will help to inform both eventual and ongoing discussions:

Section 15 – Infrastructure and Servicing, under Policies, sub-section 15.1.8:

In legislation, although the word “will” qualifies this OCP policy as a mandate, (while courts allow a time lapse), so Rossland Councils can shift the dates endlessly into the future. However, with a five-year capital plan that imposes a 10% property tax increase annually, the time is now. DCCs, meanwhile, act as a “financial assist” to BC municipalities experiencing development pressures on ageing infrastructure. Rossland, with its ageing infrastructure, two expanding resort areas at the golf course and ski hill, and a near total reliance on residential category property tax, makes an excellent candidate for DCCs.

Some history: Rossland had a DCC bylaw until 2012 when that council knee-jerked and repealed it. Defenders of that decision forget to note that an alternative collection system for infrastructure was then promised but never delivered. Since the 2012 DCC bylaw repeal, three consecutive councils have seen fit to not draft a new DCC bylaw to replace the previous one, despite the decades-long identified infrastructure deficit. The argument for the repeal, from those who then supported it, has been circulating in a half-baked state recently, with some councillors even placing thumbs-up emoji’s in conversations on “FB Rossland Talks” next to comments of defenders of that repeal. Some also defend the 2012 repeal decision with an additional argument that the then $3329 DCC at the hill and the golf course (for a single-family home) was too expensive for 6-and-7-figure property sales, similarly for the then $1791 DCC in town; pure bunk. So it’s safe to say that hocus-pocus economic analysis won the day then and continues to do so. The time since the 2012 repeal has seen the hottest property development market in North American history. Rossland has unfortunately blown it badly, forfeiting an estimated $10-m in DCCs over the course of 13 years.  A lot of money has been left on the table.

Remarkably, no other British Columbia municipality or RD repealed their DCC bylaw that year. Some even adopted new ones: the RDKB passed a DCC bylaw in September of 2012 for Fruitvale and Area A’s joint community water system; a DCC of $4500 for water infrastructure that was then being greatly improved through significant grant funding. Fruitvale, like Rossland, is over 90% reliant on residential property for its tax revenues. So Rossland really stands out for its defiance and rejection of DCC-based infrastructure financing, for its stubborn reliance to nearly wholly place the infrastructure deficit burden on its residential property owners.

Rossland has known for the last 40 years that its infrastructure is very broken, notably in water mains, many of which are at risk of failure due to age, or are both aged and undersized, with multiple examples in the old town of dead-ends, i.e. no looping to sustain sufficient pressures; engineering reports dating back to the 1980’s testify. Sanitary sewer mains, roads and stormwater catch-basins and mains have also seen decades of neglect. Prior to the 2012 DCC repeal, Council had received in January 2011 an “Infrastructure and Facilities Improvement Plan” that listed out in some 110 pages the conditions and estimated infrastructure deficit (roads, water, sanitary sewer, stormwater, buildings), of roughly at $35 million. Rossland Council again in 2017 contracted Urban Systems Ltd to draft an Asset Management Plan which placed the deficit at $53 million. Despite the mountains of evidence that Rossland needed a DCC bylaw to help offset the tax burden on local residents, Rossland in 2017 stated that it would not draft a DCC bylaw. And here we are 8 years later, still without an alternative collection mechanism for infrastructure replacement. Three successive Rossland councils have decided to not draft a new DCC bylaw, with the latest announcement in the Five-year Capital Plan of a 10% annual increase. In the absence of a DCC bylaw, this is not a casual financial issue.

Rossland’s 90% reliance on residential class properties for its property tax revenues stands in strong contrast to another nearby resort municipality, Revelstoke, which is only 40% reliant on residential class properties, with 60% coming from commercial and industrial class properties. Nonetheless, Revelstoke, unlike Rossland, has a DCC bylaw that charges roughly $20,000 for a single-family development to assist financing its ageing infrastructure. That should be about the level for what Rossland’s hypothetical DCC bylaw would also charge, with a portion going to each infrastructure sector’s deficit in an account specific for infrastructure only. Readers should also understand that a DCC  bylaw must be provincially approved, that the process requires one-to-two years, and that the older Asset Management Plan from 2017 may need to be updated yet again ($$$$$) to properly inform a new DCC draft bylaw. The longer council waits, the worse it gets.

None of us who have invested here in our homes and community over the last few decades or in recent years deserve to be so heavily financially burdened by the infrastructure deficit when British Columbia’s provincial legislation offers all local governments a tool help offset, to assist, in financing the municipal infrastructure deficit. Taxes will definitely increase, but they could be raised less dramatically with an additional revenue source. The last drafted DCC bylaw was in 2009 due to the earlier Council in 2006 sensibly directing staff to draft a new one; nearly twenty years have since passed. Council has an obligation, through the OCP, to pursue a long overdue financial correction (to stop the revenue forfeiture) and have a new DCC bylaw drafted. Continued inaction on DCCs, continued forfeiture of infrastructure funds derived from development for the last 13 years and counting, ensures that Rossland’s residential property owners will disproportionately, unfairly, fund the infrastructure deficit.

Regards,

Mike Maturo