Developers Cry Foul Over Oceanfront DCC Agreement

By Gagandeep Ghuman
Published: Feb 16, 2015

Some local developers are concerned the district is transferring the risk to the community with an agreement it’s proposing with the Oceanfront developer on Development Cost Charges (DCCs).

The Oceanfront developer, however, says he’s taking a substantial risk with his company putting up $38 million upfront with no guarantee of reimbursement.

Development Cost Charges (DCC) are funds that municipalities collect from developers to offset costs associated with new development. There isn’t enough money in the existing district reserves to service a project as big as the Oceanfront.

The district is proposing a front-ender agreement which will have the Oceanfront developer, Matthew Southwest, put $38 million up front to fund infrastructure the district says will benefit the entire community.   

The district will then reimburse that $38 million to the developer over a period of 20 years using part of the Development Cost Charges (DCC) from other projects in the municipalities.

 The arrangement being proposed isn’t in the best interest of the community, some developers say. The community loses out because the arrangement could mean less money for other services like parks or a gym, said Grant Gilles of Team Target.

“It will be punitive to put this SODC cost to the rest of the community,” said Gillies.

Oceanfront developer Michael Hutchison said Matthews Southwest is taking a considerable risk in putting up money upfront which will be used to upgrade off site infrastructure and help spur development downtown and on the Oceanfront.

“We are taking all the risks here and the assumption is that the rising tide will float the boat,” he said.

What increase the risk, Hutchison said, is that there is no legal provision through which the company can force the district in case of non-payment of the upfront money.

Dave Ransier of Team Target said if there isn’t money in the long run to pay to the developer, the district may have to pay the money from its profits. The arrangement doesn’t bode well for other developments.

“If we don’t collect enough DCCs, it will come out of our pockets,” he said.

Developer Doug Day said he was opposed to the front-end agreement the district is proposing.

“Most of this money will be going into the bottomless pit of this development,” he said.

Prashant Pundit, a district consultant, said the district doesn’t have the borrowing capacity to fund the off-site projects needed to develop the Oceanfront.

The developer will only be reimbursed for funds spent on constructing or upgrading offsite infrastructure. Those off-site improvements will benefit the entire district, Coun. Doug Race told the Reporter last year.

The developer will pay the usual DCCs on the Oceanfront, for which he won’t be reimbursed, he said.

Hutchison, meanwhile, said the community, the council, and the developers have made downtown and Oceanfront its priority but major infrastructure upgrades are required for this project.

“We are putting $38 million up front because no one really wants to wait another eight year to move this project forward,” Hutchsion said.

 

 

 

 

Comments

  1. Douglas Day says:

    In this case, the rising tide levels will not “float the boat” as Michael Hutchison says above.
    Instead, it will most surely sink the Ship of Fools who put this ill conceived, convoluted deal together.
    There are various self interested parties steering the District of Squamish onto an iceberg here worthy of Titanic.
    They are all feeding from the seemingly bottomless pit of money
    that is being endlessly sucked out of our pockets.
    It has got to STOP
    Douglas R. Day
    Squamish & Vancouver, B.C.

  2. Rick says:

    If a project can’t stand on it’s own, then why should the rest of us pay for it. Whats the benefit of a fully developed water front to the tax payer, other than the ones that will live there? I still firmly believe that the majority of tax payers in Squamish would like the water front saved from the kind of development proposed. It’s not all about cramming as many people as you can in as little space as possible. It about livability.

  3. Dave Colwell says:

    I agree with Rick. This whole thing has been limping along for years….Plan after plan…Pretty pictures after pretty pictures…. and cost after cost.
    There is a table and there is lots of of space underneath. And we, apparently, all cannot see what really goes on under it. I would prefer not to see, as it would, no doubt, make me sick to my stomach.
    I do not think that this water-front will ever be developed as conceived but there are many who have benefited financially from it already…I suspect….but I would would love to have evidence to prove me wrong.
    This has been a sad, continuing, saga for which many in this town should be ashamed of.

  4. Larry McLennan says:

    Let’s see- The District claims the service/infrastructure costs will benefit the whole community but doesn’t give any examples of exactly how those benefits will occur- please provide a list of the benefits . Next, the District states it will pay back the $38 million over 20 years (about $ 2 million / year) with monies it collects from other DCC charges for other projects without explaining how those other DCC charges will be paid for . Doesn’t this sound somewhat like a Municipal version of a Ponzi scheme wherein the plan is for incoming cash is used to pay current obligations but the obligation to pay the incoming liabilities is dependant on more incoming cash- at some point the cash flow stops and the last liabilities in the daisy chain don’t get paid out . It would be interesting for the Municipality to provide a cash flow modelling showing how all parties get paid out in the end.

  5. Larry McLennan says:

    On retrospect, perhaps the possible $2 million/ year taxes from the WLNG proposal will cover the annual committment. Otherwise, the usual taxpayer well of infinite benevolence will be tapped again.

  6. Larry McLennan says:

    Continuing on-How exactly is this arrangement being structured ? Who is running the pertainent DDC expenditures ? Is it being run by Hutchinson or by the District? If its Hutchinson, is he paying himself some project management fees ? If so, how much? Who is monitoring the costs attributed to DDC ? Are there interest costs attached to this agreement- again, if so how much ? Are subcontractors being vetted by the District or, if Hutchinson is running the show , is it strictly up to him who gets hired? What is the percentage of other projected DDC revenues that is going to be used to pay back Hutchinson? Are Municipal bylaws being changed to allow for this apparently amorphous and seemingly ambiguous arrangement to go forward? What internal/external controls are in place to guard against possible abuse of taxpayer monies? An odoriferous cloud seems to be eminating from this proposal and its not coming from the rose garden.

  7. Larry McLennan says:

    Furthur- are any current members of Council in a position to benefit directly or indirectly from the provisions of this proposed arrangement ? If so , I believe they (council members) should declare a conflict of interest and excuse themselves from voting on any issues dealing with the proposal

  8. ted says:

    Some good questions Larry get them in writing to the district and yes there is a management fee and office costs that comes with the deal

  9. Larry McLennan says:

    Teddy- I have been contacted by some individuals who MAY have info pertaining to some of my queries. If I can get reliable information you can bet your lower cheeks I will be providing them to the District ( and papers) if appropriate.