The town will now be accepting surety bonds as a form of security for new subdivision and development permit applications.
Almost identical to letters of credit that are commonly used by developers, Ryan Stewart, the town's civil land development manager, says surety bonds help free up capital for developers while providing the town the same assurance.
"It reduces the cost of doing business for the developers," said Stewart. "Essentially, letters of credit have a higher fee than surety bonds, and it just simply provides another option of security for the development community," explained Stewart.
Stewart says the town is provided practically the same financial assurance as letters of credit and is ensured of the successful completion of the obligations under either a development agreement or servicing agreement.
Surety bonds are irrevocable, payment is required upon demand, partial reductions are permitted, and written notice of cancellation is required.
Several developers have approached the town asking if they could replace existing letters of credit with surety bonds. Because of the costs associated with changing up the security, it was determined they will only be accepted for new applications.
"We do have a lot of confidence in this moving forward and just feel it's another tool in the toolbox for development in our community, which we feel will not only benefit the development community but Cochrane as well," said Drew Hyndman, the town's general manager of development and community services.
Currently, five other Alberta municipalities accept the bonds. Calgary was the first in 2019. As of last year, they were also being accepted in Edmonton, Airdrie, St. Albert, and Strathcona County.
The town also accepts funds in trust provided directly to the municipality.