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Considerations for Extending Existing Latecomer Agreements

 

There is no legislative requirement for local governments to make any changes to their current policies on latecomer agreements. The amendment to the Community Charter Bill 10, 2006, provides local governments and front-ending developers with the flexibility to consider a 15-year maximum time frame for new agreements on the collection of latecomer charges. If both parties agree, existing latecomer agreements can be renegotiated to extend them by five years for a total collection period of 15 years.
 

The amendment to extend latecomer agreements to 15 years does not affect the principles for establishing latecomer agreements described in the Development Finance Choices Guide. There is no change to the process for establishing a cost recovery period, which requires the original developer and the local government to negotiate a latecomer agreement. The local government’s role remains to:

  • Calculate the latecomer charges;
  • Impose them on latecomers;
  • Collect the latecomer revenues; and
  • Forward them to the front-ending developer

Local governments with business processes in place to manage the existing 10-year maximum recovery period should be able to use similar processes to manage a 15-year maximum, should they decide this is appropriate. This decision should be based on the following considerations:

  • Is a longer recovery period mutually agreeable to the local government and the original developer?
  • What additional administrative requirements might a longer recovery period create in managing latecomer agreements, both for the local government and the original developer?
  • Is the original developer likely to continue as a going concern over a 15-year cost recovery period?
  • How will the bylaw which establishes latecomer charges deal with inflation when it sets an interest rate?

 

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