When a municipality or a developer finances a service, such as sewer and water, properties subsequently connecting to said service are charged a latecomer charge. In case of a developer it is the municipality that request the oversizing of the particular service and the cost of this oversizing is covered by the latecomer charge. This latecomer charge can only be collected for a maximum of 15 years.
So how does a developer handle the uncertainty of latecomer income? He can’t wait 15 years to recover his investment. It is also possible that much of the income never materializes as the 15-year time limit expires.
Recently I discussed this problem of latecomer charges with a developer. He told me that the only way this dilemma can be solved by making sure that the development is viable without the latecomer income. The cost of the total infrastructure cost is written off against the project. Of course, this cost is calculated into the purchase price of the properties. He considered any amount coming in from latecomer charges as a gift. This approach makes total sense as 15 years could be an eternity for a company.
In this context the latecomer buyout of Coldstream Meadows by the Municipality was an instant gift of $250,000 to CM. Providing a sewer trunk line gift worth $665,000 and paid by the sewer utility could also be construed as a gift.
It is worthwhile to consider the following prohibition in the Community Charter (Division 2. – Restrictions on Providing Assistance):
So how does a developer handle the uncertainty of latecomer income? He can’t wait 15 years to recover his investment. It is also possible that much of the income never materializes as the 15-year time limit expires.
Recently I discussed this problem of latecomer charges with a developer. He told me that the only way this dilemma can be solved by making sure that the development is viable without the latecomer income. The cost of the total infrastructure cost is written off against the project. Of course, this cost is calculated into the purchase price of the properties. He considered any amount coming in from latecomer charges as a gift. This approach makes total sense as 15 years could be an eternity for a company.
In this context the latecomer buyout of Coldstream Meadows by the Municipality was an instant gift of $250,000 to CM. Providing a sewer trunk line gift worth $665,000 and paid by the sewer utility could also be construed as a gift.
It is worthwhile to consider the following prohibition in the Community Charter (Division 2. – Restrictions on Providing Assistance):
General prohibition against assistance to business and exceptions
25 (1) Unless expressly authorized under this or another Act, a council must not provide a grant, benefit, advantage or other form of assistance to a business, including
(a) any form of assistance referred to in section 24 (1) [publication of intention to provide certain kinds of assistance], or
(b) an exemption from a tax or fee.
Is it possible that the provision of an extended sewer line to assist Coldstream Meadows in reducing its sewer costs could be viewed as "assistance to business"? I wonder! Don't you?
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