Development Charges

1.1   The purpose of this policy is to establish rules and practices for charging interest, as permitted under the Development Charges Act, 1997 (the “Act”).

1.2   The fundamental principle of funding growth-related capital costs is that ‘Growth should pay for Growth’. This policy serves to ensure that there is compensating interest income to fund the lost Development Charges (DCs) that will result from any DC rate freeze and all deferred payments.

1.3   This DC Interest Policy aims to ensure that the Town of Bradford West Gwillimbury (the Town) can fund the new cost of capital required to maintain the delivery of our services to new employment and population in the community. DCs are the main source of funding for infrastructure required to accommodate growth and without mitigation of the funding shortfall expected, the tax and rate payers may otherwise have to make up this difference. The Town’s goal is for growth to pay for growth as much as the Act allows. The interest earned from this policy will fund the lost DC revenue resulting from the payment of DC’s through instalment payments, or the deferral of development charge collections as permitted through the Act or as approved by Council where permitted by the Act.

3.1   The Town will calculate, charge and collect interest from all types of development within the Town as permitted by the Act.

Determination of Applicable Rate of Interest

4.1   Where the Act and/or its Regulations prescribe a maximum rate of interest, the Town will utilize and apply that rate of interest for the purposes of calculating interest during DC rate freeze periods, deferred payment periods, the payment of DC’s through instalment payments and all other situations where the application of interest is permitted by the Act.

4.2   If the Act does not prescribe a maximum rate of interest, the Town shall utilize an annual interest rate that is one percentage point higher than the annual prime rate of interest announced by the Town’s banking services provider on Canadian dollar commercial loans by that bank.

Application of Interest

4.3   The applicable rate of interest shall be used to calculate interest revenue during the time period of any DC rate freeze period and any time period related to the deferred collection or payment through instalments of DC’s as permitted through the Act or as approved by Council where permitted by the Act.

4.4   When the rate of interest increases or decreases during a freeze period, deferral period or instalment payment period, the rate of interest used in the calculation of interest revenue shall be adjusted accordingly to ensure that the maximum rate of interest is not exceeded at any point in time.

4.5   Simple interest will be applied and shall accrue from the date(s) specified within the Act until the total DC amount is paid in full.  A 365-day calendar shall be used for the purposes of prorating annual interest revenue calculations.

Interest Revenues

4.6   All interest revenues calculated by the Town under this section shall be recorded as DC revenue and credited to the appropriate DC accounts in the same proportion as the original DC calculations themselves.

5.1   Financial Services

• Assisting landowners, developers, builders and other stakeholders in determining the total amount of development charges that would be determined under the Town’s DC By-laws and the applicable interest rate that would apply.
• Ensuring that the total accrued amount is being calculated and charged.
• Collection of development charges, inclusive of interest, when due and payable

5.2   Director of Finance/Treasurer

• Ensuring that this policy is being administered correctly.
• Confirming the correct amount of development charges, including interest are collected when due.

6.  RELATED DOCUMENTS AND LEGISLATION

• Building Code Act, 1992
• Development Charges Act, 1997
• Municipal Act, 2001
• Planning Act, 1990