Fergus business Crane Automotive will see its local portion of development charges deferred for two years.
In her report to Centre Wellington’s committee of the whole on Sept. 19, economic development officer Patricia Rutter recommended the township authorize the deferral until September 2018.
Rutter explained Crane Automotive is in the process of constructing a new facility at 943 Glengarry Cres. to house its growing business. The 2,875 square foot building will consist of a small office and four bays.
“As this is a small family owned business, the owners, Andy and Debbie Crane, need some additional time to seek longer-term financing for the project and requests a deferral of the development charges,” Rutter told council
She said Section 27 of the Development Charges Act allows a municipalities to enter into agreements with property owners for payment of the charges earlier or later than normal, when a building permit is issued.
“In this case, the business was only established to two years ago and due to rapid growth must construct their own facility,” said Rutter.
“They feel that additional time will allow them to generate some cash flow to pay for the development charges.”
Rutter noted a couple of similar requests have come to council recently.
“We’ve been trying to work with the community to spur some economic development and remove some barriers to getting some small local community businesses up and running,” she said.
Councillor Don Fisher said “we cannot defer the charges for every person that asks … at some point there is going to be an impact.”
He said he hoped future reports would include a tally of the charges being deferred to put things into context for council.
Mayor Kelly Linton clarified that deferred charges “are not going into limbo, there is a date when payment is required.”
Councillor Kirk McElwain asked if this was merely an alternative to providing interest-free loans – without the same requirements.
He asked if there are any requirements for the charges to be deferred.
Rutter was uncertain there are any stated rules or policies … other than what exists in the township’s DC bylaw, which allows council to defer charges.
While McElwain was sympathetic to the current request, he pointed out the township did initiate a strict set of rules regarding interest-free loans.
“This is just another form of that,” he said.
Councillor Steven VanLeeuwen considered this different because the township has a strong economic development mandate.
“This is part of the focus of job development and job creation,” he said.
Councillor Fred Morris said he supported small business and helping them expand. However, he stated council’s role is not only to look out for the interests of small business owners – but also the interests of taxpayers.
Considering this deferral was the third request in 2016 and that the township does not have a policy governing deferrals, Morris recommended setting a policy on the issue that might consider a cap on the amount to be deferred – or a nominal interest rate.
Morris explained previous deferrals were for one year and now the one before council was for two years.
Planning director Brett Salmon said the Development Charges Act specifies payment at the time of a building permit, unless there is an agreement with council to pay at a different time.
“We are not loaning any money or giving a grant, we’re simply changing the date at which the fee is payable,” said Salmon.
He added the township could potentially asked developers to pay the charge at the time a subdivision agreement is signed.
Decisions are on an ad-hoc basis and someone has to come to come to council and ask for a Section 27 agreement, he said, noting those making requests are asked for justification.
“There is no financial penalty to the township other than deferral of collecting payments,” said Salmon.
He added that he also believes that should development charges increase during the time of deferral, the payment would be for the higher amount.
He considered the recent requests a good thing.
“We don’t collect any development charges if these people don’t build,” Salmon said.
“It’s a good sign that people are building and we are helping small businesses by allowing them to defer payment.”
