Latecomer Agreements

Local governments may require an owner of land that is to be subdivided or developed to provide roads, water, sewage and/or drainage works with enough capacity to service properties that are situated near their development. Such works may be termed “excess” or “extended” services. A water main that must be constructed along vacant properties in order to reach a proposed subdivision is an example of an extended service. A requirement that a water main be sized larger than immediately required to service a proposed subdivision is an example of an excess service. The up-front cost of the excess or extended service must be paid by the local government, or the local government can require the subdivider or developer to pay the costs.
 

Whether it is the local government, subdivider, or developer that pays the up-front costs, they are entitled to recover a portion of the costs from the owners of properties beyond their development that will benefit from the works in the future (latecomers). This is accomplished by having the local government collect a latecomer tax or fee (latecomer charge). Where a subdivider or developer have paid the up-front costs, the local government must collect the latecomer charge and remit monies collected to the subdivider or developer. The latecomer charge is payable at the time a latecomer connects to the service or the use begins. For example, where a developer financed the cost of a water main that is considered to be an excess or extended service, the latecomer charge would be payable when a latecomer obtains a water connection to the works financed by the developer.
 

In order to initiate a latecomer scheme, the local government usually enters into an agreement with the subdivider or developer that identifies the costs that will be recovered by a latecomer charge, the amount of the latecomer charge and the term of the agreement. The term of the agreement cannot exceed 15 years and no latecomer charges are payable after the term of the agreement. Previously, under the Community Charter, latecomer agreements could not exceed 10 years. Local governments have the flexibility to amend existing latecomer agreements and extend them to a maximum of 15 years, if there is agreement with the original developer.
 

Considerations for Extending Existing Latecomer Agreements
 

Local governments, subdividers, or developers who finance excess or extended services accept the risk that not all of their costs will be recovered before the end of the latecomer agreement. This is because some or all of the owners of the properties that will benefit from the excess or extended service may not connect or use the service before the term of the agreement ends.