Stephen Vance, Staff
Meaford’s council has approved a policy that will allow developers to defer payment of municipal development charges for up to two years. Currently developers are required to pay development charges in full upon the issuance of a building permit.
The idea was put forward by Councillor Steven Bartley in December, who at the time said that one of council’s top priorities is “growing our economy, specifically to become business ready”.
The draft policy, which will receive a final vote from council at the next meeting, applies to the municipal portion of development charges only. Grey County development charges will still need to be paid at time of the issuance of a building permit.
“Policies were reviewed from various Ontario municipalities to determine the best possible template to utilize. The draft deferral policy was developed utilizing the best components of six different policies. This has ensured that flexibility is provided for both residential and non-residential developments,” said Chapman in his report to council.
Chapman said that the intent of the new policy is to provide short-term relief from development charge payment until construction has been completed, and the unit has been marketed for sale.
“This will ensure that a developer/builder has an extended period of time to complete the construction and sell the unit using the proceeds from the sale to pay for the deferred development charges normally collected at the time of building permit,” said Chapman in his report. “The overall process has a small cash incentive to the Municipality in the form of application fees ($250) and a fee equivalent to 1% of the value of the deferral amount. As well, the Municipality will charge interest annually at the prime lending rate of the Municipality’s bank plus 1%.”
The draft policy put before council at their March 21 meeting would have only applied to developments of four or more units, however councillors requested the policy apply to all sizes of developments, including individual building, though it might not be financially prudent for individual projects to seek deferral.
“Based on the draft policy, a new single residential unit would be required to pay a $250 application fee which is more than five percent of the cost for a rural DC charge and approximately 2.5 percent of a serviced DC charge. This becomes a fairly steep price to pay for a short deferral period of not more than two years,” noted Chapman.
The new policy directs authority to both the Treasurer and Director of Development & Environmental Services for the majority of applications, up to specified thresholds at which time staff would be required to provide a report to Council for approval. The draft establishes an upper limit of $250,000 which would be equivalent to roughly 20 residential units.
In 2015, a banner year for building permits in the municipality, Meaford generated $259,000 in development charge revenues. In the five years prior to 2015, Meaford averaged less than $120,000 per year in development charge revenue.
Mayor Barb Clumpus welcomed the new policy, and said that the developers she has spoken to are in favour of it.
“I like the idea that this is a standard policy that applies to everyone equally, and the fact that you’ve done extensive collaboration with current developers. I’ve spoken to a couple of them now with regard to this deferral policy and they seem to be fairly comfortable with it,” offered Clumpus.
