Development deposit gets cool reception

NNSL (Jan 10/97) - In the face of protests from one businessman, a proposal to have developers back their promises with cash has been sent back to the drawing board.

The proposal, drafted by the planning and lands department, would require developers to include letters of credit to ensure they comply with development agreements.

Developer Les Rocher spoke against the change at a development committee meeting Monday.

"What you're asking for is cash, cash up front," said Rocher, predicting the change would tie up developers' working capital.

The policy would have required developers to put up a letter of credit worth 1.3 per cent of the total value of their development.

Rocher, however, objected to the proposal's scope, saying it gives the city too much power over entire developments, instead of limiting it to specific elements, such as paving.

"It leaves you wide open to use it for anything you want to use it for," said Rocher. "It's too much bite for council to have on private people."

It was a report detailing developments in which parking lot paving was overdue that prompted council to instruct staff to look into the matter.

Planning and lands director Bob McKinnon noted the city has been using letters of credit to ensure sewer, sidewalk and gutter projects are completed.

He described the existing method of spurring reluctant developers to complete their work as "very difficult, costly and time-consuming."

Without the leverage afforded by a letter of credit, the city must rely on the courts to force reluctant developers to complete their work.

Alderman Vi Beck recommended a compromise: "I hear Mr. Rocher's concerns, and I wonder if we can't make the wording of the bylaw a little more specific."

The committee has directed staff to reconsider limiting the scope of the bylaw to certain aspects of developments.

Though rare in the territories, letters of credit are part of most development agreements in the south.

"In Alberta it's quite common for municipalities to require some sort of security for a development," said Carol Hammermeister, subdivision and development co-ordinator for the city of Leduc.

Hammermister said development agreements for subdivisions in Leduc require letters of credit covering 25 per cent (to a maximum of $150,000) of the cost of improvements such as sidewalks, paving, landscaping and sewer and water lines.

In the case of individual commercial and multi-family residential developments, Leduc investors are required to put up 125 per cent of the estimated value of landscaping.