City of Barrie deferring development charges for purpose-built rental units

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Ontario Construction News staff writer

Barrie councillors voted to defer development charges on a large part of a major downtown residential development, despite staff concerns for setting a precedent that could ultimately impact the capital plan.

“Staff do not recommend this deferral agreement request because of the precedent it may set for other developments to come forward outside of the city’s current framework and by-laws,” the staff report warned.

Councillors voted instead to defer an estimated $7 million on the two-tower development, at a cost to taxpayers of as much as $500,000 — for a planned project that includes 223 rental apartment units and 50 condos.

The motion is expected to receive final approval at a council meeting Sept. 19, directing staff to sign an agreement with Junction Group on behalf of Traditions Seniors Housing, to defer the portion of development charges related to the purpose rental units . . . with payment in full at occupancy. The agreement – interest free for one year – is contingent on the developer applying for the building permits within 120 days of signing.

“I think this is a great opportunity to kind of accelerate and hold the developer to…and I guess incentivise to a point, to start building,” said Councillor Robert Thomson. “I’m conscious that there’s a little bit of a financial implication, but at the end of the day if they build nothing, I think that’s more of a burden on the finance.”

Thompson amended the original motion to exclude the 50 planned condo units from the deferral. He called it a “middle of the road” approach that lessens the financial impact and “hopefully sees 238 senior units built in a timely manner.”

Only one councillor opposed the motion, because he was concerned it would “set a precedent that has never been set before.”

“Part of my concern is that if we set a new precedent, we’ve got – especially the biggest one that comes to mind is the Smart Centres development which is all rentals and is going to be several hundred units over this,” Councillor Gary Harvey said at the general committee meeting.

“If we were to pass this, would it have implications for other developers like Smart Centres that come knocking at the door looking for the same thing?”

The province recently changed rules to encourage rental unit construction by giving longer term payment plans for buildings that are all rental units.

Chief Financial Officer Craig Miller agreed that approving the deferral comes with risks for the city.

“Basically, you hit the nail on the head. That was staff’s concern,” Miller said. “There is that risk if you set a precedent here then you may have others that will come forward asking for the same arrangement.

“The City of Barrie is relying heavily on development charges to pay the bills, so if you approve too many of these sort of approaches, then that could be a challenge resulting in the potential for altering our capital plan.”

Deputy Mayor Barry Ward agreed the decision could be precedent setting, but he argued it would be a good precedent.

“We should be encouraging this kind of thing,” he said. “It’s an empty lot now, sewers, everything’s already there, the roads are already there. We’ll get a lot more tax dollars and the development charges from this.”

Recognizing a “serious shortage of rentals”, Ward said he hopes the incentive will encourage developers to build affordable housing.

Councillor Mike McCann agreed.

“I like the direction of people getting shovels in the ground faster.”