Innisfil turns down development charge deferral attempt

Barrie builders have ‘competitive advantage’, claims Previn Court representative
By Chris Simon Innisfil Scope November 17 2010
What may be a competitive advantage for a developer would likely have serious implications for the town and its existing residents.
Innisfil council turned down a request from Previn Court Homes, which would have granted the builder a deferral of development charge payments, during a recent meeting. Under the current bylaw, developers must pay DCs upon the date the first building permit is issued on a home.
Previn asked for a deferral of payment until the issuance of occupancy, which would provide competitive advantage over builders in other municipalities like Barrie.
“This practice will enable us to make the investment in constructing unsold inventory homes and assist us in completing the current phases under construction,” said Previn representative Nisio Rizzardo, in a letter addressed to council. “This will also better the positions for both the builder and municipality in sale of homes with competing areas. Barrie has a substantial DC advantage … if the town makes allowance, we can offer a quick closing option to potential purchasers, and may sway their decision.”
However, approving the request would have had major implications for the municipality, said finance director Lockie Davis.
“The delay is problematic in terms of cash flow planning for undertaking the works that the development charges are intended,” he said, noting DCs as used to fund growth-related infrastructure projects. “If the payment is not made at the issuance of the permit, then it becomes difficult to determine when funds would be available, and potentially delay works from proceeding. The loss of interest income begins to shift an additional burden on existing rate payers, and removes the theoretical argument that growth should pay for growth.”
Staff surveyed 11 other municipalities regarding the matter. Only two have approved similar requests — one for Habitat for Humanity, and another for a commercial development that was an important part of a long-term economic plan. The advantage would also be negated by other charges or fees associated with deferral, said Davis.
“To ensure the town and prospective buyers are properly protected, any deferral of fees would need to be secured through a letter of credit or other financial instrument,” he said.
“By requiring this, it would negate any benefit, as they would either incur the fees associated with the letter, or they may need to provide the cash as a security to the bank,” said Davis. “I don’t know specifically what they’re referring to in terms of competitive advantage; it really depends on where that development were to occur.”
Councillors agree. “I concur with the rationale,” said councillor Lynn Dollin. “However, if it was not residential, and might be an industrial development, I hope that would come back for reconsideration. We’re making the right decision not to allow it for residential development, but on a site by site case, perhaps it will come back and we wouldn’t just say ‘no’.” Most municipalities also showed concern for the request, suggesting they could be asked for similar commitments, said Davis.
“If the town agreed to a deferral, similar requests would be made of them as well,” he said. “Any competitive advantage would be lost. Staff is concerned that allowing this change would not be beneficial to the town or prospective purchasers.”