When travelling between municipalities, as a result of their autonomy, the statement, “not all Development Charges are equal”, seems like an obvious fact. However, within the confines of a single municipality this statement seems to be often overlooked. It is extremely important for Landlords and Tenants to be aware of different development charges within their municipalities since often different business uses are subject to quite different charges.
An example of when this can become an issue is when a municipality has zoning’s which allow both commercial and industrial uses to co-exist. In terms of development charges, commercial and industrial uses are seldom, if ever, have the same rate. The outcome for a commercial use entering a new industrial facility despite that they may be a permitted use, is that there will be an up-charge to make up for the fact that only industrial development charges have been paid by the Landlord at time of construction. Some may think that this extra charge is not much to worry about, but those individuals would be sadly mistaken. Take for example the City of Barrie where non-retail industrial development charges at the time of writing this post are $14.37/sq.ft. and retail is $26.48/sq.ft.. With more than a $10/sq.ft. difference, this sum can add up quite quickly, especially in larger spaces.
The difference in development charge rates will leave either the Tenant or the Landlord with a bill that can range from the thousands of dollars and up. It is for this reason it is important to be aware of these charges and ensure your contract outlines which party will be responsible for any form of up-charge. Consulting your knowledgeable commercial real estate professional is always recommended as they can help guide you through this process when searching for space to lease.
City Wide Development Charge – Summary of by-law 2014-108
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