Division IV. Utility Extensions
Chapter 13.98
DEVELOPER REIMBURSEMENT COLLECTION AGREEMENTS
Sections:
13.98.010 Purpose and authorization.
13.98.040 Application for developer reimbursement collection agreement.
13.98.050 Preliminary determinations.
13.98.060 Preliminary determination notice.
13.98.070 Developer reimbursement collection agreement.
13.98.080 Recording – Effective date – Payment of charge – Lien for nonpayment.
13.98.085 Final determination notice.
13.98.095 Relief from charges.
13.98.100 Term of developer reimbursement collection agreements.
13.98.110 Removal of unauthorized connections or taps.
13.98.130 City administrative fees.
13.98.140 Payment of developer reimbursement charge.
13.98.160 Enforcement of developer reimbursement obligations.
13.98.170 City creation of or participation in developer reimbursement collection agreement.
13.98.010 Purpose and authorization.
A. The city council may contract with private developers who use private funds to construct public utility and/or street system improvements pursuant to Chapters 35.72 and 35.91 RCW.
1. The purpose of this chapter is to establish a uniform methodology and process for the administration of reimbursement contracts applied for after June 1, 2010, for developers in circumstances where a developer uses private funds to construct a public utility and/or street system improvement(s) and desires to be compensated by property owners benefited by the improvements.
2. If Chapters 35.72 and/or 35.91 RCW are amended in any manner as to make this chapter inconsistent or to create a conflict, the appropriate statute shall control.
B. The city council is authorized, but not required, to accept, review, and/or approve proposed developer reimbursement collection agreements. This process is voluntary, both on the part of the developer and the city.
C. The city manager is authorized to sign a developer reimbursement collection agreement on behalf of the city, after the agreement has been reviewed by the city attorney and approved by the city council.
D. The provisions of this chapter are in addition to and intended to supplement any other requirements contained elsewhere in the Sequim Municipal Code. (Ord. 2010-009 § 2)
13.98.020 Definitions.
A. “Adjacent” means abutting or having frontage upon the sides or margins of any public roads, streets, rights-of-way or easements in which street system improvements are installed or directly connecting to street and/or utility system improvements.
B. “Benefit” means:
1. Street improvements that would be required for subsequent developers within the reimbursement area, but who do not need to install those improvements because the improvements already exist;
2. Actual and/or physical use of utility system improvements.
C. “Charge” or “charges” means an equitable pro rata charge to be paid by an owner of property within the reimbursement area for the cost of private construction of public street and/or utility system improvements made pursuant to a developer reimbursement collection agreement.
D. “Reimbursement area” means that area that includes all parcels of real property that will benefit, as determined by the public works director, from the installation of public utility and/or street system improvements. For streets, the reimbursement area includes those parcels that are adjacent to street system improvements and that would require similar improvements upon development. For utilities, the reimbursement area includes parcels that are likely to require direct connection to or service by utility system improvements constructed by a developer.
E. “Cost of construction” is the sum of the direct construction costs incurred to construct the street and/or utility system improvements plus indirect costs, which are limited to the city latecomer administrative fee (SMC 13.98.130) and developer administrative costs (subsection G of this section). “Direct construction costs” include but are not limited to all related design services, engineering, surveying, legal services, bonding costs, environment mitigation, relocation and/or new construction of private utilities as required by the city (i.e., power, telephone, and cable), relocation and/or installation of street lights, relocation and/or installation of signage, acquisition of right-of-way and/or easements, government agency fees, testing services, inspection, plan review and approval, labor, materials, equipment rental, and contractor and/or subcontractor fees or charges.
F. “Developer” means the individual or entity that contracts with the city for the construction of street and/or utility system improvements, where such improvements are a requirement for development of real property owned by the entity or individual.
G. “Developer administrative costs” means all indirect costs incurred by the developer in the creation and execution of a developer reimbursement collection agreement and managing the project, such as office supplies, mailings, clerical services, telephone expenses, accounting expenses, project oversight, and the like. Administrative costs shall not exceed three percent of all direct construction costs.
H. “Developer extension agreement” means an agreement between the developer and the city prior to the construction of required city improvements.
I. “Developer reimbursement collection agreement (latecomer’s contract)” means a written contract between the city and one or more developers in which the contract provides partial reimbursement for cost of construction of street system improvements and/or utility system improvements to the developer by owners of property who are likely to utilize the improvements and who did not contribute to the original cost of construction. References to “agreement” in this chapter means a developer reimbursement collection agreement.
J. “Direct connection” means a service connection, owned and maintained by the property owner and not the city, from existing or new utility improvements to the property owner’s system as may be required by SMC Titles 13 and 15 as enacted or as amended.
K. “Segregation” means a large parcel, upon which is levied a reimbursement charge, is divided into smaller parcels. The associated charge is divided among the smaller parcels in accordance with the provisions of the original means of allocating the reimbursement charge.
L. “Street system improvements” means public street and alley improvements made in existing or subsequently dedicated or granted rights-of-way or easements and any associated improvements, including but not limited to acquisition of right-of-way and/or easements, design, engineering, surveying, inspection, grading, paving, installation of curbs, gutters, pedestrian facilities, street lighting, bike lanes, and traffic control devices, relocation and/or construction of private utilities as required by the city (such as power, telephone, and cable), relocation and/or construction of street lights, traffic control devices, signage, and other similar improvements.
M. “Utility system improvements” means public water, sewer and storm drainage system improvements, including but not limited to the acquisition of rights-of-way and/or easements, design, engineering, surveying, inspection, testing, connection fees, and installation of improvements, which may include increased pipe size, as required by the city and includes all appurtenances. (Ord. 2010-009 § 2)
13.98.030 Applicability.
A. This chapter is intended to apply to all street system improvements and all utility system improvements where the construction of such improvements are the result of a city of Sequim ordinance or ordinances that require such improvements as a prerequisite to property development. A valid developer extension agreement must be in place. Street system improvements shall be limited to those improvements set forth in the developer extension agreement as required by Chapter 35.72 RCW.
B. Developer reimbursement collection agreements are allowed only for those improvements constructed within city limits. For the purposes of this chapter, improvements constructed or properties benefited within the city’s urban growth area may be eligible for or subject to a reimbursement agreement if there is a valid interlocal agreement between the city and Clallam County in place at the time of contracting that allows improvement construction and reimbursement.
C. Only projects in which the amount exceeds $50,000, as determined by the public works director, shall be eligible for a developer reimbursement collection agreement.
D. The improvement costs associated with the developer’s abutting right-of-way and transitions shall not be included in or eligible for a developer reimbursement collection agreement. An exception to this provision may be granted by the public works director when vertical grade and alignment changes are required to promote traffic safety and the public works director recommends inclusion in or application for a developer reimbursement collection agreement.
E. If the applicant takes advantage of impact fee credits or general facilities charge credits or other similar credits or offsets that the city has in place to assist in community development, those credits shall reduce the costs sought for reimbursement.
F. The developer(s) may be reimbursed only for that portion of the allowed costs that did not benefit the developer(s). (Ord. 2010-009 § 2)
13.98.040 Application for developer reimbursement collection agreement.
A. Any developer using private funds to construct street system improvements and/or utility system improvements in the city or within the city’s utility service area may apply for a developer reimbursement collection agreement in order to recover a fair pro rata share of the costs of construction from other property owners that will later derive a benefit from the street and/or utility system improvements made by developer.
B. If there is more than one developer for a single project, all developers seeking reimbursement must join in the application for that project. Any developer not joined shall have that developer’s contribution excluded from the calculation of the reimbursement charge and shall not be entitled to reimbursement. Developer(s), at the time of application, must include a signed, written statement from any developer that does not intend to seek reimbursement.
C. The application for a developer reimbursement collection agreement shall be made within 30 days after the date street and/or utility system improvements have been accepted by the city. The developer shall test all portions and elements of the improvements as specified by the city to demonstrate the satisfactory construction of the improvements prior to acceptance. “Acceptance by the city” shall mean, for purposes of this section, the date the improvements are conveyed to the city by a deed of conveyance or other equivalent written document. Application shall be made on forms prepared by the planning and public works department and shall be accompanied by the city base fee set forth in SMC 13.98.130. The application shall contain the following information, which shall be approved by a state of Washington licensed engineer:
1. A legal description of the developer’s property.
2. A legal description of the properties within the developer’s proposed developer reimbursement area together with the name and address of the owners of each property as shown in the records of the auditor’s office of Clallam County.
3. Vicinity maps of developer’s property.
4. The developer’s proposed reimbursement area and general location of the street and/or utility system improvements.
5. Itemized costs, dated and approved by a state of Washington licensed engineer for the final cost of construction evidenced by actual invoices and receipts.
6. The developer’s proposed allocation of the final cost of construction to the individual properties within the proposed reimbursement area and the method used for such allocation.
D. Within 30 days of the planning and public works department receiving the application for a developer reimbursement collection agreement, the public works director or designee will provide the applicant written notice of whether the application is complete and, if incomplete, what must be done for the application to be considered complete. The applicant will have no more than 30 days from the date of the written notice to respond and provide the information required to complete the application or, if the applicant cannot submit the required information within the 30-day period, the applicant shall provide the city a written explanation of why they cannot provide the information within the designated time period and a date that the requested information will be submitted. In his/her discretion, the public works director or designee may grant the applicant one extension of not more than 60 days to submit the required information if the decision is supported by written evidence. If the applicant fails to meet the foregoing time frame, the application shall be rejected as untimely.
E. The public works director or designee shall establish procedures and/or checklists for processing applications and complying with the requirements of this chapter. (Ord. 2010-009 § 2)
13.98.050 Preliminary determinations.
The public works department shall review the developer’s proposed preliminary reimbursement area and the preliminary charge for real property benefited by the street and/or utility system improvements. The public works director may revise or modify the developer’s proposed reimbursement area and charge, or formulate another reimbursement area and charge. The public works director shall provide the developer with the preliminary reimbursement area and the preliminary charge upon completion. Formulation, review, and modification shall be based on the criteria specified in subsections A through F of this section.
A. Whether the properties directly benefit from the improvements.
B. The likelihood that benefited property will be developed within 15 years or the maximum time allowed by statute (Chapter 35.72 RCW for streets, Chapter 35.91 RCW for utilities) from the date of recording of the developer reimbursement collection agreement.
C. The likelihood that at the time of development of the benefited property, the property will not be required to install similar street and/or utility system improvements because these improvements were already installed by the developer.
D. For street system improvements, benefited parcels that are adjacent to the street system improvements. Parcels not adjacent to the street system improvements shall not be included in the reimbursement area.
E. For utility system improvements, the likelihood (1) that the improvements will be tapped into or used by direct connections or connections to laterals or branches by properties within the reimbursement area, and that the improvements do not constitute mainline extensions to be owned and maintained by the city, or (2) that the properties will receive a special benefit from the utility system improvements including but not limited to pump stations, sewer lift stations, and additional utility pipe depth to accommodate future utility expansion.
F. An equitable allocation of the final cost of construction among the properties within the reimbursement area, so that each pays for benefits attributable to those improvements. The method or combination of methods used to calculate the allocation of the charge may be front footage, number of units, square footage, the zone and termini method, or other recognized methods of assessment authorized by Chapter 35.44 RCW for local improvement districts. The public works director is not required to use the same method that the applicant proposes for the allocation of costs. (Ord. 2010-009 § 2)
13.98.060 Preliminary determination notice.
A. The preliminary reimbursement area and the preliminary charge provided by the public works department shall be sent by certified mail to the property owners of record within the preliminary reimbursement area in accordance with Chapter 35.72 RCW, as from time to time amended.
1. If the city is participating in the project as a developer, the city shall send out notices.
2. If the project is funded solely by the applicant, the applicant shall send out notices on forms provided by the city. The applicant shall provide the city with a notarized affidavit providing proof of mailing within five days of mailing.
B. The city council has the authority to determine whether to enter into a developer reimbursement collection agreement pursuant to SMC 13.98.010(B), which includes the right to adopt, reject, or modify the reimbursement area and charge.
C. The applicant or any property owner within the preliminary reimbursement area may, in writing within 20 days of mailing the notice, request a hearing to be held before the city council to contest the preliminary reimbursement area and preliminary charge.
1. The city council, by ordinance or voice vote, may delegate a hearings officer to hold the requisite public hearing and establish a record, together with a recommendation for the city council.
2. Notice of the hearing shall be given to all property owners within the preliminary reimbursement area, and the hearing shall be conducted as soon as is reasonably practical.
3. The city council may adopt or reject the recommendations from the public works director, or the hearings officer, if applicable, in whole or in part or it may render its own findings and conclusions.
4. The city council’s determination of the reimbursement area and the charge for each parcel shall be final.
D. If the preliminary determination of reimbursement area boundaries and charges is amended, which raises any charge or includes previously omitted property, a new notice of reimbursement area boundaries and charges shall be given as in the case of an original notice. In any renotification, property owners who received the original notice and whose charges were not raised, but did not request a hearing, shall be deemed to have waived any right to a hearing. Requests for a hearing on any amendments to the reimbursement area boundaries or any increased charge shall be processed in the same manner as in the case of an original hearing.
E. In the event no written request for a hearing is timely received as required, the public works director’s recommendation of the reimbursement area and charge shall be presented to the city council. The council’s determination of the reimbursement area and charge shall be final. (Ord. 2010-009 § 2)
13.98.065 Future services.
A. Preliminary or final approval of a developer reimbursement collection agreement shall not be construed to vest or grant the right to the extension or allocation of utility service to properties affected by the developer reimbursement collection agreement.
B. Payment of infrastructure improvements and/or payment of reimbursement charges, without actual connection from the property to be served to the system, shall not be construed to vest or grant the right to the extension or allocation of utility service to properties affected by the developer reimbursement collection agreement. (Ord. 2010-009 § 2)
13.98.070 Developer reimbursement collection agreement.
A. If approved by the city council and based upon the city council’s determination of the reimbursement area and charge, the city council shall direct the city manager to enter into and execute a developer reimbursement collection agreement. The planning and public works department shall prepare and give to the applicant a developer reimbursement collection agreement for execution. The agreement must be signed by both parties within 60 days of receiving council direction.
B. Upon completion and acceptance of construction, the system(s) shall become the property of the city. The city may charge and receive rates and fees, in accordance with the city’s established rates, for each utility system used.
C. Improvements shall be accepted only in accordance with the terms of the associated developer extension agreement. Nothing in this chapter shall be construed to relieve a developer from the duties associated with the developer extension agreement.
D. Any modification to the developer reimbursement collection agreement, including amendment, rescission, or assignment in any manner, shall be in writing and signed by an authorized person for the party to be charged. The agreement shall be binding to and for the benefit of all successors and/or assigns to this agreement.
E. Developer reimbursement collection agreements are controlled by the version of this chapter attached to the agreement entitled “Developer Reimbursement Collection Agreement Ordinance – Exhibit C.” (Ord. 2010-009 § 2)
13.98.080 Recording – Effective date – Payment of charge – Lien for nonpayment.
A. The developer’s right to reimbursement charges shall be effective as of the date of recording. The developer understands that any development within the reimbursement area that occurs prior to the date of recording shall not be subject to reimbursement charges, nor shall the city be liable for any such charges.
B. Any property described in the recorded application summary shall be subject to the charge after it has been approved by the city pursuant to this chapter.
1. Property owners who do not develop their property to the extent necessary to trigger the charges shall not be required to pay reimbursement charges. For streets, if a property owner, upon development, would not have been required to install similar improvements on which the charge is based, no payment shall be due. For utilities, if a property owner does not make a direct connection to the utility system upon which the charge is based, no payment shall be due.
2. If the developer is reimbursed for the cost of the improvements prior to the expiration of the period specified in the agreement, the agreement immediately terminates.
3. There is no guarantee that the developer will be reimbursed for any funds expended.
C. The developer reimbursement collection agreement shall be recorded by the developer with the Clallam County auditor within 30 days of the agreement’s final execution. The developer shall provide the city with a copy of the properly recorded agreement within 15 days of recording. No charges shall be collected prior to the city receiving a copy of the recorded agreement. The city shall not be liable for any charges that may be due but not collected during the time between recording and receipt of proof of recording.
D. The city shall not issue or approve a building permit or similar development permit, nor grant permission to use water, stormwater, or sewer service, unless the city has received full payment of the charge applicable to the property connecting to or using the street and/or utility system improvements constructed by developer; if the developer reimbursement collection agreement’s validity is being challenged, the city reserves the right to issue a permit, or give approval or permission without liability or prejudice to the city and without prejudicing the developer’s rights or remedies under this chapter, at law, or in equity. The city will notify the developer in writing of its decision not to collect a reimbursement charge and the reason(s) for its decision within 30 days of its determination.
E. If improvements are made to a property within the reimbursement area without payment of a charge otherwise due and without challenging the validity of the developer reimbursement collection agreement, the amount of such charge shall be a binding obligation upon the owner of record (and successors) of the affected property. Any city liability resulting from the city’s failure to collect a charge not challenged under subsection D of this section shall be limited to the amount of the charge that should have been collected.
F. Failure by a property owner to pay the charge due within 180 days of notice to this effect shall entitle the developer to pursue any remedy available at law or in equity. (Ord. 2010-009 § 2)
13.98.085 Final determination notice.
After the agreement is executed and recorded, final notice must be sent to all property owners within the reimbursement area. The final notice shall be implemented as set forth in SMC 13.98.060(A). There is no right to a public hearing in the final notice. (Ord. 2010-009 § 2)
13.98.090 Segregation.
A. The public works director or designee shall, upon the request of any property owner within the reimbursement area, segregate the reimbursement charge. The segregation shall be based upon the same factors applied when the charges were originally established, pursuant to SMC 13.98.050. The property owner seeking segregation of the charge shall pay an administrative fee to the city of Sequim based upon a segregation fee schedule to be established by the planning and public works department.
B. Properties derived from the parcel that is subject to the reimbursement charge shall be subject to that portion of the charge as determined by the public works director or designee. (Ord. 2010-009 § 2)
13.98.095 Relief from charges.
A. The city, through its designated agency, may relieve a parcel of a reimbursement charge if the property has a benefit from either (but not both) of two similar facilities. Relief shall be based upon sound engineering and policy justifications as to which facility(ies) directly benefit and/or are utilized by the parcel. Absent such justifications, the city shall give the applicant requesting relief the choice of facilities to utilize. The charge due shall be that charge associated with the utilized facility. The city shall provide notice to the developer within 30 days of relieving the parcel of the reimbursement charge.
B. In the event that a parcel is relieved from the reimbursement charge, the city shall not be liable for failure to collect the charge. (Ord. 2010-009 § 2)
13.98.100 Term of developer reimbursement collection agreements.
A. Each developer reimbursement collection agreement shall be valid for a period not to exceed 15 years or the maximum amount of time allowed by statute as enacted at the time of the agreement from the date of its recording.
B. Extension of a developer reimbursement collection agreement shall be allowed only when the city’s action, such as a moratorium, phasing ordinance, concurrency designation, or other similar action, prevents making application for or approval of any new development within the reimbursement area for a minimum of six consecutive months. If an extension is granted, the agreement must specify the duration of the extension and must be recorded pursuant to and in accordance with SMC 13.98.080(C) prior to the city collecting any charges. (Ord. 2010-009 § 2)
13.98.110 Removal of unauthorized connections or taps.
A. Whenever any tap or connection is made into any utility improvement without payment of the charge being made as required by this chapter, the public works department is authorized to remove and disconnect, or cause to be removed and disconnected, such unauthorized tap or connection including all connecting tile or pipe located in the right-of-way and to dispose of such unauthorized material without liability.
B. The owner of the property where the unauthorized connection is located shall be liable for all costs and expenses of any type incurred to remove, disconnect, and dispose of the unauthorized tap or connection. The city reserves the right to collect for the costs and expenses related to an unauthorized connection, and assertion of this right is a separate and distinct matter from any right that the developer may assert in another proceeding. (Ord. 2010-009 § 2)
13.98.120 Defective work.
The developer shall be responsible for all defective work pursuant to the terms of the developer extension agreement. The city retains all rights and remedies available under the developer extension agreement. (Ord. 2010-009 § 2)
13.98.130 City administrative fees.
A. The city shall charge for processing developer reimbursement collection agreements a base fee as set by resolution. To the base fee shall be added one percent of the cost of construction. The base fee shall be paid at the time of application.
B. Further, for every separate parcel of property within the reimbursement area as approved by the city council, a parcel fee shall be added to the base fee. This fee and the one percent cost of construction fee shall be paid prior to execution of the agreement.
C. The base fee and the parcel fee shall be adjusted annually and shall be set by resolution. The base fee and parcel fee(s) are nonrefundable.
D. The base fee, parcel fee(s), and one percent cost of construction fee shall be included in construction and administration costs for the purposes of developing the reimbursement charge. (Ord. 2010-009 § 2)
13.98.140 Payment of developer reimbursement charge.
A. Each charge shall be due in its entirety upon connection to or use of a street and/or utility system improvement by a property subject to a charge, and shall be paid to the city in one lump sum as set out in the agreement until date of payment. The city will pay over to developer any reimbursement charges within 60 days of receipt.
B. The developer, successors, and/or assigns shall provide the public works director and the finance director with current contact and mailing information in writing at least every two years from the agreement execution date for the duration of the agreement. Failure to provide current contact and mailing information within 60 days of the specified time may result in forfeiture of any funds presently due or due in the future.
C. In the event funds are forfeited, the city may collect any funds due and must deposit those funds in the appropriate capital fund. The city has no obligation to seek out, identify, or otherwise determine the appropriate recipient of any collected funds.
D. When the charge for any property has been paid in full, the public works director or designee shall prepare a certification of payment and release that will release that property from charges associated with the developer reimbursement collection agreement. Recording of the certification of payment and release at the Clallam County auditor’s office is the responsibility of the property owner to be released. The property owner must provide the city with a copy of the properly recorded release within 15 days of recording.
E. If payment of the reimbursement charge is made to someone other than the city prior to recording the agreement, the city will require proof of payment in the form of a written and signed release from the beneficiary and proof of the recorded release before allowing connection to or use of any system.
F. The city shall not be involved in enforcing private payment arrangements or mediating payment dispute between parties. (Ord. 2010-009 § 2)
13.98.150 Appeal.
With the exception of determination of the preliminary reimbursement area and preliminary charge as provided by SMC 13.98.060(B), a developer may appeal the interpretation and/or decisions of the public works department concerning any aspect of this chapter pursuant to Chapter 7.16 RCW. (Ord. 2010-009 § 2)
13.98.160 Enforcement of developer reimbursement obligations.
A. In processing and imposing obligations in this chapter for developer reimbursement, the city in no way guarantees payment, or enforceability of charges, or enforceability of the developer reimbursement collection agreement, or the amount(s) charged against persons or property within the reimbursement area, nor will the city offices or finances be used for enforcement or collection of any obligations beyond those duties specifically undertaken by the city as set out in the agreement. It shall be the developer’s obligation to take whatever authorized means are available to enforce payment of reimbursement charges; and developers are authorized to take such actions. The city shall not be responsible for locating any beneficiary or survivor entitled to any benefits by or through a developer reimbursement collection agreement.
B. Any funds collected under this chapter that are undeliverable to the developer after 60 days from the expiration of the developer reimbursement collection agreement may be forfeited and deposited into the city’s capital fund pursuant to SMC 13.98.140(C). (Ord. 2010-009 § 2)
13.98.170 City creation of or participation in developer reimbursement collection agreement.
A. Streets. The city may create or participate in a street improvement reimbursement agreement as a developer where the city has fully or partially funded the financing of the street improvements pursuant to Chapter 35.72 RCW.
B. Utilities. The city may participate in a utility improvement reimbursement agreement as a developer where the city has contributed to the financing of utility improvements pursuant to Chapter 35.91 RCW. (Ord. 2010-009 § 2)
13.98.180 Severability.
If any clause, sentence, paragraph, section or part of this chapter or its application to any person or circumstance is held to be invalid or unconstitutional by a court of competent jurisdiction, such order or judgment shall not affect the validity or constitutionality of the remainder of any part of this title. To this end, the provisions of each clause, sentence, paragraph, section or part of this law are declared severable. (Ord. 2010-009 § 2)