Subdivision Development Financing Program
The Subdivision Development Financing Program (SDFP) is a financing support pilot program that will help qualified developers offset infrastructure costs for long-term residential housing developments.
Offered by Finance PEI
Amount
2% financing on up to 90% of eligible project costs, for a term of 5-years and amortized over a 25-year period
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Who can apply
Eligible applicants for the Subdivision Development Financing Program will be expected to demonstrate the following:
- The proposed project has been approved through Municipal Infrastructure Fund.
- The applicant has successfully completed a similar project on time and within budget. Alternatively, proponents will enter a fixed-price contract with a general contractor who has experience with projects of similar size, cost, and construction type in the same market area.
- The financial viability of the applicant itself, including the capacity to carry the project over an extended period, and a good credit and repayment history.
- The financial viability of the proposed project itself, including the capacity to manage development risks such as cost overruns and delays in construction.
- Rural communities that have existing water and/or sewer infrastructure.
About the funding
The Subdivision Development Financing Program will provide qualified developers and landowners with access to 2% financing on up to 90% of eligible project costs associated with subdividing and developing vacant land into individual residential lots for sale.
This financing will be provided for a term of 5-years and amortized over a 25-year period. If there is outstanding debt at the end of the 5-year term, there will be an option to renew the loan at Finance PEI’s prevailing interest rate at the time of maturity.
Collateral security for Subdivision Development Financing Program loans will include:
- A registered collateral mortgage, conveying a 1st security interest over the land being developed.
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- Where the borrower is a corporation, the shareholder(s) of the corporation will provide their personal guarantee(s) for the full amount of the loan.
To assist with cash flow, approved loan applicants will have the option to pay ‘interest only’ for a 2-year period from the date of 1st disbursement of the Subdivision Development Financing Program loan.
Lots must be listed for sale within 30 days of reaching substantial completion and the Subdivision Development Financing Program loan will be paid down with the proceeds from the lot sales.
Proceeds of Lot sales will be applied directly against the principal balance as a ‘lump sum payment’ using a formula based on the number of lots created.
Any non-repayable contributions received from the Municipal Infrastructure Fund by a qualified developer at substantial completion of the subdivision will be applied directly to the outstanding Subdivision Development Financing Program loan with Finance PEI.
Eligible costs will include, but are not limited to:
- Professional fees for surveying and subdividing land into individual residential lots.
- Costs associated with the construction of roads, sidewalks, and water and/or sewer service for connection to an existing public road and eligible central municipal water and/or sewer system.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Apartment Construction Loan Program: Seniors Rental Housing | Loan | Up to 100% loan to cost for residential space and up to 75% loan to cost for non-residential space, with up to a 50-year amortization period | Open |
| Apartment Construction Loan Program: Standard Rental Housing | Loan | Low-cost loan of up to 100% loan to cost for residential space and up to 75% loan to cost for non-residential space, with up to a 50-year amortization period | Open |
| Apartment Construction Loan Program: Student Housing | Loan | Low-cost loan of up to 100% loan to cost for residential space and up to 75% loan to cost for non-residential space, with up to a 50-year amortization period and a fixed interest rate | Open |
| BDC Commercial real estate loan | Loan | Typically starts at $100,000 and can go up to several million dollars | Open |
