Under the British Columbia Local Government Act, there are several ways that a municipality can fund infrastructure that is required as a result of development. One of these is to imposes a latecomer’s charge, to be levied against all developable parcels. Essentially, the developer puts in the infrastructure and the City enters into an agreement to ensure that the developer is fairly paid back by other future developments that benefit from the excess or extended services being installed.
There are a few traps with this as a means of funding infrastructure:
- It is front end loading the cost of supplying the infrastructure onto one developer – which may be entirely fair if it is a small but critical item for that development, or if it is the difference between the size of infrastructure required for that development and upsizing it to accommodate future growth.
- Highways can only be treated under latecomers if they are wider than required for the immediate development, or if the request from the municipality is to extend the road to lands other than those being subdivided.
- Typically pipes can only be treated under latecomers as whether the pipe is larger than that required by the immediate development, or if the service is extended beyond that required for the lands being subdivided.
- The terms of the agreement are only for fifteen years.
I’m sure there are more traps, and I’m not a lawyer, so there could be discrepancies in my interpretation from the wording and intent of the act, however, this is how I have seen it successfully applied in latecomers policies around the province. If in doubt read the act (excerpt below taken October 2008)and seek advice from a lawyer.
For more information on the options for development financing by Municipalities, check out some of the links on this page.
For those who are keen to learn more, the relevant section of The Act reads as follows:
939 Excess or extended services and latecomer payments
(1) For the purposes of this section, “excess or extended services” means
(a) a portion of a highway system that will provide access to land other than the land being subdivided or developed, and
(b) a portion of a water, sewage or drainage system that will serve land other than the land being subdivided or developed.
(2) A local government may require that the owner of land that is to be subdivided or developed provide excess or extended services.
(3) If an owner, in accordance with a bylaw under section 938, provides a highway or water, sewage or drainage facilities that serve land other than the land being subdivided or developed, this section applies.
(4) If a local government makes a requirement under subsection (2), the cost of providing the excess or extended services must be paid for by
(a) the municipality or regional district, or
(b) if the local government considers its costs to provide all or part of these services to be excessive, by the owner of the land being subdivided or developed.
(5) If the owner is required under subsection (4) (b) to pay all or part of the costs of excess or extended services, the municipality or regional district must
(a) determine the proportion of the cost of providing the highway or water, sewage or drainage facilities that it considers constitutes the excess or extended service,
(b) determine which part of the excess or extended service that it considers will benefit each of the parcels of land that will be served by the excess or extended service, and
(c) impose, as a condition of an owner connecting to or using the excess or extended service, a charge related to the benefit determined under paragraph (b).
(6) If the municipality or regional district pays all or part of the costs of excess or extended services, it may recover costs
(a) by a charge under subsection (5) (c),
(b) by a tax imposed in accordance with Division 5 [Local Service Taxes] of Part 7 of the Community Charter, other than section 211 (1) of that Act, or
(c) by fee imposed in accordance with section 363 [imposition of fees and charges] of this Act or section 194 [municipal fees] of the Community Charter.
(7) If the owner pays all or part of the costs of excess or extended services, the municipality or regional district must pay the owner
(a) all the charges collected under subsection (5) (c), if the owner pays all the costs, or
(b) a corresponding proportion of all charges collected, if the owner pays a portion of the costs.
(8) A charge payable under subsection (5) (c) must include interest calculated annually at a rate established by bylaw, payable for the period beginning when the excess or extended services were completed, up to the date that the connection is made or the use begins.
(9) Charges payable for latecomer connections or use under subsection (5) (c) must be collected during the period beginning when the excess or extended services are completed, up to a date to be agreed on by the owner and the local government and, failing agreement, to a date determined under the Commercial Arbitration Act, but no charges are payable beyond 15 years from the date the service is completed.
Latecomers are useful, but not the only way for municipalities to finance infrastructure, click here for more options.
Some useful policy links…