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. This program will support projects funded through the Municipal Infrastructure Fund (MIF).

How much financing is available under this program?

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.
• 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.

What are the eligible costs?

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.

Are there other requirements for this program? 

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 Muncipal 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. 

Am I eligible to 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.

How long will this program be available? 

The Subdivision Development Financing Program will remain available for the same period as the Municipal Infrastructure Fund and will be reviewed six months after its launch. 

How do I apply?

An eligible applicant should follow these steps to apply: 

• Applications must first go to the Federation of PEI Municipalities for review as they are administering the Municipal Infrastructure Fund.
• Eligible applications approved through Municipal Infrastructure Fund will be forwarded to Finance PEI, who will then complete their credit analysis and due diligence for the Subdivision Development Financing Program loan.

It is important to note that a Municipal Infrastructure Fund-approved project does not automatically qualify applicants for an Subdivision Development Financing Program loan.

Loan applications for the Subdivision Development Financing Program are available at Finance PEI, 94 Euston Street 2nd Floor in Charlottetown or online.

Who do I contact with questions or for additional support?

Jeff Ready
Director, Finance PEI 
94 Euston Street, 2nd floor
Charlottetown, PE C1A 7M8

T: 902-368-6435
E: jcready@gov.pe.ca