The Canadian city of Airdrie is set to soften the terms of letters of credit (L/Cs) it currently insists on from developers to ensure they undertake development obligations in respect to landscaping and site improvements to meet city standards.

This follows a council meeting during which a report was presented recommending a review of how L/Cs should be structured and used in response to concerns raised by some developers about the nature and extent of their terms.

Securities

Site development securities in the form of L/Cs can range from 100 to 150 per cent of estimated costs, according to the report.

But the report suggested these securities sometimes place a significant financial burden on some developers, especially small and medium-sized enterprises.

The council agreed with the report and accepted the need to review the securities Airdrie demands from developers.

Options

The report suggests a sliding scale for the amount of security required could be employed while security requirements could even be waived where the risk of default is thought to be minimal.

However, the council may want to reserve the right to apply a higher percentage to applicants with a history of not meeting obligations to the city, the report said.

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