.Corp Comm Connects

Payback in jeopardy: Carruthers Creek area --specific DCs

July 4, 2018
Rachael Williams

unnymede Development Corporation is being denied an extension to an agreement with Durham Region regarding front-ending costs for the Carruthers Creek sanitary sewer infrastructure.

In a letter from law firm DLA Piper directed to regional clerk Ralph Walton, lawyer Chris Barnett detailed past front-ending agreements between his client, Runnymede, and Durham Region for the Carruthers Creek Sanitary Sewerage Area. The area is bounded by Lake Ontario to the south, Audley Road to the east, Taunton Road to the north and Pickering Beach Road, Harwood Avenue and Salem Road to the west.

Signed 20 years ago, the agreements enabled a number of development companies, including Runnymede, to pay $16-million in net capital costs to construct sanitary sewer infrastructure to advance the development of their lands. This infrastructure included the installation of trunk and diversion sewers, pumping stations and forcemains.

Subsequent to the agreements, the region implemented an area-specific development charge by-law that required regional staff to collect payments from landowners who benefited from the servicing already installed in the Carruthers Creek Sanitary Sewerage Area. These funds were then distributed back to the landowners who initially financed the services.

The front-ending agreements and area-specific development charge by-law are set to expire on August 31, 2019. But according to Barnett’s correspondence to the region, Runnymede, who was the primary funder of the services, is still owed $2-million.

“RDCL (Runnymede Development Corporation Limited) is extremely concerned that, in the absence of an area-specific development charge by-law and an extension of the front-ending agreements, it will have expended a significant amount of money as part of an agreement with the region with the risk that it may not be able to be reimbursed in full for the funds it expended,” Barnett wrote in the letter.

Durham’s acting finance commissioner Mary Simpson noted the length of time the service agreements have been in effect and told NRU it is the decision of council not to offer any extensions.

“These agreements were executed by all parties with the understanding of the sunset clause...and that there was a risk that depending on the pace of development, they may not recover their entire costs,” she stressed.

Amending the agreements would also require that all original signatories negotiate a new agreement. Since none of the other development firms took issue with the expiration date of both the front-ending agreements and area-specific by-law, staff did not recommend extending the agreements beyond the current expiry date.

Hemson Consulting partner Craig Binning, who heads the company’s municipal finance division, told NRU that it is not uncommon for these types of agreements to have a sunset clause of 20 years, but that it is up to the negotiating parties to determine how they should settle remaining balances.

“What we would do is, if a particular developer continued to be owed monies on works [it] had emplaced, we would carry that forward as a line item in a next DC [development charge] update study and show it as an amount owing,” he said.

According to the Carruthers Creek Sanitary Sewerage Service Background Study, 69 per cent of the service area has been developed, including two business parks--Salem Business Park and Ajax Business Park.

Former Durham Region planning director and current Whitby planning and development commissioner Roger Saunders said it is possible Runnymede overestimated the number of units that would be built in that area.

“But any area within Durham, within the existing designated urban areas that are buildable, will be built on, rest assured. The demand is so high and the market is there. This region will be bursting at the seams.”

Runnymede will continue to be paid any incoming development charge credits until August 31, 2019.