CALGARY, ALTA. — The City of Calgary will now accept surety bonds as an alternative to letters of credit as part of the Master Development Agreement (MDA) for residential, commercial and industrial development in the city.
The changes were effective as of March 14 and Calgary is the first large municipality in Canada to provide developer surety bonds. A release from the city said this will “allow greater flexibility for developers in terms of being able to reinvest their working capital that would have been tied up in a letter of credit.”
“By removing financial barriers for business owners, our aim is to strengthen Calgary’s reputation as a great place to invest in land development and redevelopment,” managing director of Calgary Approvals Darren Lockhart said in a statement.
The decision came after the city consulted with industry stakeholders, the release said, adding letters of credit could restrict working capital or capacity in lending agreements while bonds allow companies to reinvest funds in other local projects. Surety bond rates may also be lower than those of letters of credit.
“The city is working to make improvements for businesses in Calgary that make it easier to invest. Our hope is that this business-friendly change will allow our developer partners to invest those funds into projects that make Calgary one of the most livable cities in the world,” Lockhart said.
Bonds can also be transferred in a similar manner to letters of credit in the event of a transfer in ownership. The city’s security reduction process will be the same as with letters of credit and once a final acceptance certificate has been issued bonds expire after one year with no further action required by the developer.
For more information, the City of Calgary’s Planning Service Centre can be contacted at Calgary.ca/contactpd
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