may also be applied during the period for which the agreement in place until such time as payment in full is made.

Administration is in support of FHC’s request for an alternative DC payment arrangement and is recommending that the City enter into an agreement(s) with FHC subject to the following specific terms and conditions:

• The agreement(s) will relate to the proposed seven (7) multiple dwelling residential buildings only;

• Amount of DC payable for each building will be calculated as of the date of issuance of a building permit for each building;

• Payment of the DCs will be due in full on the date which is the earlier of:

  • When each building occupancy has reached 85% or

  • Delivery of the MPAC Notice of Assessment to the owner which includes new assessment for each residential rental building;

• Should there be a sale of the units or the property or advanced offering of rental of the units prior to the DCs becoming due and payable, the DC will immediately become due and payable;

• Agreement(s) cannot be assigned by the owner;

• Payment deferral will be secured by an irrevocable Letter of Credit issued to the City in an amount sufficient to cover both the DC and estimated applicable interest ;

• The Letter of Credit will also include an annual auto renewal clause

• The City will charge interest annually on the outstanding DC which is calculated based upon the greater of:

  • Statistics Canada Building Construction Price Index Non-Residential (annual change as at 2nd Quarter ) + 1% premium or

  • Bank of Canada Rate as at June 30th of each year plus one percent (1%);

• In the event that a Letter of Credit is not provided, the interest rate on the outstanding DC will be the greater of:

  • Statistics Canada Building Construction Price Index Non-Residential (annual change as at 2nd Quarter ) + 5% premium or

  • Bank of Canada Rate as at June 30th of each year plus five percent (5%);

• In the event of default in payment of the DC, the outstanding amount can be added to the property taxes and collected in the same manner as property taxes;

Further discussion with regards to the specific terms is included in Financial Matters.

Risk Analysis:

As with any development, cash flow considerations are a high risk factor. An agreement which allows for the payment of DC’s based upon alternative agreed upon dates assists both FHC and the City. Security for payment, by way of a Letter of Credit, mitigates the risk to the City of non-payment. Additionally, the DCA allows outstanding DCs to be added to property taxes and collected in the same manner as property tax. Interest, at the stated rates, will provide compensation to the City for during the period of time that the revenue would have otherwise been received and available to fund other projects and initiatives.