Council Approves Deferral of Development Charges that Might Cost Taxpayers up to $500,000

Junction Group plans to build 238 rental units for seniors in a highrise and sell additional 50 units. Their plan to sell a few units disqualifies them from the deferral in development charges (DCs). 

According to a recent Ontario legislation, if the whole building is rental units then the developer can differ the development charges for up to five years. These development charges pay for the services such as roads, transit, water, fire, police services etc. 

The government is hoping that the development charges deferral will incentivize more developers to build rental units. And more supply will lead to a drop in rental prices. 

But the deferral incentive is not applicable, If the building has even one ownership unit. However, a clause under the same legislation allows a city to enter into a deferral agreement with the developer. Ward 5 Councillor Robert Thomson put forward a motion to do the same with Junction Group. 

Many council members including Mayor Jeff Lehman raised concerns about setting a precedent. 

Gary Harvey, the only councillor to oppose the motion, said “we've got so many rental units in the pipeline that could come knocking at the door, and cost us a significant amount of millions of dollars in delayed DCs coming in, so I will not support this.”

Some council members said the precedent is good because it will encourage more development. 

Sergio Morales, Ward 9 councillor, said he is not concerned about the precedence but rising home and rental prices in Barrie.  

“What I am concerned with is that rents continue to be in the top of the entire country, even though we are not a world class city. We're getting there, Councillor McCann, but we're not a world class city. And we're not an economic engine of this country,” he said, in support of his argument. 

Lehman said the precedent would be bad because developers would make a lump sum money by selling a chunk of coondos and ask for the deferral on rental units.

“Our treasurer has just told us the cost to the taxpayer is $500,000,” he said. “If the city has to borrow another $10 million, because we didn't receive development charges.”

However he expressed support for this particular motion because the drop in rental and housing prices coupled with rising interest rates and raw material cost is discouraging more development. He also said if the developer had decided not to sell condos, it would have got five years of deferral instead of one year proposed by councilor Thomson. The agreement will also compel the developer to apply for the building permits within 120 days hence ensuring the economic value is added to the city immediately in a difficult economy. 

He urged the “next counsel, whoever's on it, don't let the practice of ‘I'm coming in with a couple of floors of condo but I still want my taxpayer funded loan’ to become your standard practice.”