Drewlo Holdings Inc. agrees…

Drewlo Holdings Inc. agrees with the Province's assessment; development charges are a major demand on the cashflow of new development - particularly for cost-sensitive forms of housing such as purpose-built rental.

The introduction of deferred payment and a development charge 'freeze' were concepts that we sincerely supported upon release of Bill 108. However, upon review of the proposed regulatory changes, it appears that these changes only introduce a new obstacle.

Amendment to the Development Charges Act in Schedule 3 of the More Homes, More Choice Act provide an avenue for municipalities to charge interest on development charges payable during deferral as well as to charge interest during the development charge 'freeze'. Further, the Minister is NOT proposing to prescribe a maximum interest rate through regulations. We recognize that the ability to charge interest creates an additional funding stream for Municipalities and creates incentives for development to proceed, however:

- Interest will add additional cost to development and it may in fact be cheaper for the developer to market-finance
- Allowing municipalities to charge interest on deferred development charges does not help cashflow as intended. A side effect of long-term deferral is reduced borrowing capacity. Delayed payment reduced the annual income of the project and significantly reduces overall financing available.

Unless interest rates are prescribed at a value that is submarket, the deferral/freeze provides no benefit to the rental provider and will result in prepayment of development charges.

Through amendments to Section 26 of the Act, development charges are 'frozen' at the time of Site plan application; a change that provides greater certainty to development and is highly supported by rental housing providers. As proposed, regulatory change would establish the period for which the 'freeze' would apply. It is proposed that development charges would be 'frozen' until two years from the date the site plan is approved.

We believe the intent is to 'freeze' the development charge rate upon site plan application until the time that a building permit is issued. The proposed two year period will ensure development maintains momentum. We are supportive of this change, as it will create greater certainty in development particularly for cost-sensitive forms of housing such as purpose-built rental. Based on review of the amendments and perceived intent, we believe the regulation should be worded to ensure the intent, as stated above, is clearer.