In total the existing 41.8 acres of former industrial land will be fully remediated and redeveloped over a period of 10 to 12 years

Over recent months, Administration has been engaged in discussions with FHC with regards to the details as to the timing and application of the approved financial incentives. The proposed overall development is expected to cost millions and cash flow considerations are an important aspect of the development process. The financial incentives available under the Brownfield CIP are structured in a manner that is a cost recovery basis. That is, the developer is expected to fully fund the cost of rehabilitation, site servicing and development in advance of and as a condition to receiving financial grants from the City.

In addition, program changes as it relates to the charging and collection of DCs, in particular the new requirement for a mandatory deferral of DCs, will apply to the multiple dwelling residential rental housing component of the development. This mandatory deferral will prolong the timeframe in which the City would otherwise receive payment of the DCs. An exception to the mandatory deferral is provided pursuant to s27 of the DCA which allows for an agreement that would establish an alternative payment arrangement. FHC has requested that an alternative payment arrangement be approved as it relates to this development.

Discussion:

As indicated above, as part of the financial incentives provided through the Brownfield CIP, FHC will be eligible to receive a rebate of up to 60% of the DCs. In other words FHC will be responsible, at time of building permit issuance, for 40% of the DCs owing. Payment of the DCs will be associated with the type of development. In other words, payment of the DCs on the detached residential lots will be required at time of building permit issue. Payment of the DCs on the residential rental housing (multiple dwelling buildings), pursuant to the amended legislation in effect as of January 1, 2020, will be required to be deferred from building permit issuance until first occupancy and collected in six equal annual installment payments over the course of five years. While this deferral was intended to assist smaller developers with cash flow requirements, municipalities are able to set an interest charge during the period of deferral. The rate of interest is dependant upon whether the deferral is secured, usually through Letter of Credit which is provided at a cost to the developer. Therefore over the span of deferral, developers will incur more costs associated with the DC. That additional cost must be weighed against the benefit of the delayed cash flow impacts. From a municipal cash flow perspective, the mandatory deferral will delay the timeframe in which the City is in receipt of funds which will be used support future growth related projects and initiatives.

An alternative to the mandatory deferral is provided pursuant to s27 of the DCA which allows a municipality to enter into an agreement that would provide for payment of any part or all of the DC prior to or after the required date. Terms may be flexible and reflect the unique structure of each development. Interest, similar to what was allowed and approved in accordance with the provisions of the deferral or other appropriate rate,