strategy for climate change adaptation. It also results in lower utility bills and other related benefits.

Financial Matters:

By authorizing agreements under s.27 of the DCA, the payment of these DCs can be accelerated. In other words, rather than the DCs being paid over a period of 5 or 20 years beginning after the date of occupancy for each multiple dwelling building or institutional building (the current mandatory requirement), the DCs would be paid, in full, on the date the building permits are issued.

S.27 of the DCA provides that interest may be charged on any part of the DC that is paid after it is required to be paid as set out in the agreement. As part of the report presented to City Council with regards to the changes in DC administration (C11/2020) it was recommended that, with the provision of Letter of Credit, the interest rate be equal to the greater of the Statistics Canada Building Construction Price Index Non-Residential (annual change as at 2 nd Quarter) + 1% premium or the Bank of Canada Rate as at June 30 th of each year plus one percent (1%) to cover the additional administrative oversight required to manage the programs. In circumstances where a Letter of Credit is not provided, the interest rate would be equal to the greater of the Statistics Canada Building Construction Price Index Non-Residential (annual change as at 2 nd Quarter) + 5% premium or the Bank of Canada Rate as at June 30 th of each year plus five percent (5%).

The Statistics Canada Non-residential Construction Price index was recommended because it is the same methodology used to apply the annual increase to the calculated DC charges to keep up with the cost of inflation and will maintain consistency and enhance the understanding of the process. The Bank of Canada Prime Rate as at June 30 th of each year is also included to offset any significant fluctuation in the Statistics Canada Building Construction Price Index Non-Residential change. By basing deferred DC carrying costs on this methodology, the City is mitigating the risk that the cost of growth exceeds the revenue ultimately received over time thus minimizing the financial impact to existing ratepayers.

For illustrative purposes, using information available for 2020 and assuming that a Letter of Credit will be provided, the rate of interest that would be applicable would be 3.6%. If a Letter of Credit is not provided, the annual rate would be 7.6%. The applicable rate would be applied to any portion of the DC that was due at time of building permit issuance until such time as payment is made.

Consultations:

Wira Vendrasco, Deputy City Solicitor

Joe Baker, Deputy CBO/Manager of Permit

Conclusion:

Council approval is required to be able to enter into a.27 agreement pursuant to DCA in regards to early payment of DCs related to the residential rental development,