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Beeton developer seeks DC deferral to lessen borrowing burden

Posted August 30, 2011

The principal of Alliance Homes asked New Tecumseth council last night for an exemption that would allow him to defer paying about $7 million in water and wastewater development charges at building permit issuance rather than upfront as part of the hard service installation.

Alex Troop, who has draft plan approval to build a 164-unit subdivison in the area between Main Street and Lilly Street that will link with Daniele Avenue, is currently working through the engineering and design components of the approvals process. He explained to councillors that the $7 million hit comes on top of the $3.8 million he'll be required to pay at registration.

"That makes it a very onerous obligation on any development," said Mr. Troop. "What we're looking for is to defer that. It allows us to proceed with the development, borrow less money, we don't have to have as many presales that sit there before they get done, and we actually have a better shot of paying development charges more quickly by getting the shovel in the ground and getting houses up."

Dubbed West Country, the development would be Beeton's first crop of new homes since Alliance Homes' previous subdivision development completed around 2001.

"We're moving forward, we're working very closely with the Town staff," said Mr. Troop. "We think the advancement of the development will be positive for the community. The last development in Beeton was mine, and we finished in 2001, so I think there's a real need for some housing not only for the residents, but the economic well being of the community."

It was confirmed by Brendan Holly, New Tecumseth's Director of Technical Services that the development community's request to push DCs payable to the building permit stage was well-received by the Town. But in the final draft, Mr. Holly said the developers' lawyer neglected to include it in the settlement agreement approved earlier this year.

In the meantime, as Ward 3 councillor Paul Whiteside noted, New Tecumseth issued a 17-year debenture earlier this year  to pay for a $32 million debt on the regional wastewater treatment expansion. Including interest, it will cost $2.77 million annually to service it. Proceeds from development charges are intended to cover the debt, but currently DC accounts have not kept pace.

"We are not a financial institution," said Mr. Whiteside speaking against Mr. Troop's request. "The hard services are required to go in prior to the development taking place. And our current financial records show, the 2011 budget if all the capital works are done in wastewater for example, we'll be overdrawn. Yes, it may reduce the borrowing requirement of the developer, but I think we must be fiscally responsible and look after the Town."

Mayor Mike MacEachern countered, noting, "we're also looking at the timing of the payment to let the development occur so fiscal responsiblity also looks at cash flow coming in to the municipality at a point in time."

Deputy mayor Rick Milne suggested that council take the initative and alter the DC bylaw payment schedule so fees would be payable later in the approval process.

"We are going to get the money," said Mr. Milne.

"I'm a little bit concerned because this year we did debenture the wastewater treatment plant, and that's a $32 million debt that we pay for every spring and fall," added Ward 4 councillor Fran Sainsbury. "The Town has to lean on DCs to cover that cost, not taxation. So we have to make sure that we always have that covered with our annual budget."

Ward 5 councillor Richard Norcross argued the request was reasonable, particularly since it was all but agreed to during the DC appeal process.

"I think we should take a look at doing this," he said. "If we can get a report back to council I think it would be very prudent on our part."

And though it was referred to Staff for a report on the implications, Mr. Whiteside remained unmoved.

"We have expended that money, we have borrowed that money for growth, and we have to make those principle and interest payments. I therefore think we need the cash upfront. And we must remember if we make these decisions, it's very precedent setting."

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