County of Vermilion River, Alberta
· adopted 2012-07-24
· summary & facts
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Policy # AD 022
Policy Statement:
The County of Vermilion River strives to remain consistent and transparent in its policies
concerning the collection of Off-Site Levies. Policy AD 022 provides detailed information
concerning County policy with regards to Off-Site Levies in the County of Vermilion River.
Purpose:
With the adoption of Off-Site Levies in the County of Vermilion River there is a need to
define policies concerning the collection of such funds. Policy AD 022 outlines the County's
Off-Site Levy policies and requirements to County ratepayers, County administration and
County Council.
Policy:
Attached as Schedule 'A'
POLICY NO:
POLICY TITLE:
DEPARTMENT:
AD 022
OFF-SITE LEVY POLICY
ADMINISTRATION
APPROVAL DATE:
REVISION DATE:
REVIEW DATE:
60-07-12 (July 24, 2012)
County of Vermilion River Off-Site Levy Policy Document
1
SCHEDULE 'A'
1 DOCUMENT INFORMATION
1.1 Glossary
At the outset, it is critical to have a common understanding of the terminology. The following terms
and acronyms have been used throughout the document.
Term
Description
Off-site Levy Exemption
Conditions that must be satisfied in order to have to an off-site levy assessment
waived on a subdivision or development permit application.
Off-site Levy Offset
Front-end infrastructure costs incurred by the developer used to reduce the
amount of off-site levy assessment payable by the developer.
Off-site Levy Deferral
Agreement
An agreement between the developer and municipality that permits the
developer to pay off-site levies on an installment basis.
Off-site Levy Down
Payment
The amount of off-site levy that is immediately due upon the issuance of a
subdivision or development permit.
Off-site Levy Installment
The amount of off-site levy assessment that is due annually.
"Qualified" Off-site
Infrastructure
Developer front-ended infrastructure that is outlined in the Off-site Levy Bylaw
and contained within the "qualified" portion of the Capital Plan (next 5 years).
"Non-Qualified" Off-site
Infrastructure
Developer front-ended infrastructure that is outlined in the Off-site Levy Bylaw
and is contained within the "non-qualified" portion of the Capital Plan (beyond 5
years).
Guaranteed Repayment
Date
The guaranteed repayment date on developer front-ended "qualified"
infrastructure as established from the date of issue of the Construction
Completion Certificate.
County of Vermilion River Off-Site Levy Policy Document
2
Term
Description
Capital Plan
Outlines off-site infrastructure approved for construction. Note, items approved
for construction do not necessarily mean that they are funded.
Annual Financial Plan
Outlines future anticipated disbursement / retention of off-site levy reserve
funds. The plan considers front-ending claims, development infrastructure
staging, off-site levy reserve balances, future off-site levy receipts, municipal debt
capacity etc.
Construction Completion
Certificate
Issued by the municipality to signify that front-end off-site infrastructure has
been constructed to standard. The certificate issue date can also commences the
guaranteed repayment schedule.
Final Acceptance
Certificate
Issued at the completion of a two-year warrantee period and when front-end
infrastructure is free of defects and deficiencies. The Final Acceptance Certificate
signals the release of hold back on front-ended construction repayment.
Holdback
The amount of funds held-back after issuance of the Construction Completion
Certificate during the warranty period. Holdback may be released upon issue of
the Final Acceptance Certificate (subject to availability of reserve funds).
County of Vermilion River Off-Site Levy Policy Document
3
2 CONTENTS
2.1 Table of Contents
1
DOCUMENT INFORMATION ...................................................................................................................................... 1
1.1
GLOSSARY ..................................................................................................................................................................... 1
2
CONTENTS ................................................................................................................................................................ 3
2.1
TABLE OF CONTENTS ....................................................................................................................................................... 3
2.2
LIST OF FIGURES ............................................................................................................................................................. 3
3
INTRODUCTION ........................................................................................................................................................ 4
4
ASSESSMENT / COLLECTION PROCESS OVERVIEW .................................................................................................... 4
4.1
LEVY ASSESSMENT, ASSESSMENT EXEMPTIONS AND THRESHOLDS .............................................................................................. 5
4.1.1
Legislated Exemption ........................................................................................................................................ 6
4.1.2
County Exemptions ............................................................................................................................................ 6
4.2
LEVY ASSESSMENT DEFERMENT AND INSTALLMENT PAYMENTS ............................................................................................... 10
4.2.1
Eligibility for Payment Deferment ................................................................................................................... 10
4.2.2
Repayment Period and Terms ......................................................................................................................... 12
4.2.3
Repayment Indemnification ............................................................................................................................ 14
4.2.4
Increasing Amounts Due for Any Increase in Off-site Levy Rates .................................................................... 14
5
OFF-SITE LEVY INFRASTRUCTURE FRONT-ENDING....................................................................................................17
5.1
CONSTRUCTION OF "QUALIFIED" AND "NON-QUALIFIED" OFF-SITE INFRASTRUCTURE.................................................................. 18
5.2
OFFSETTING OFF-SITE LEVIES FOR FRONT-END INFRASTRUCTURE COSTS .................................................................................... 20
6
INFRASTRUCTURE FRONT END CLAIM REIMBURSEMENT .........................................................................................22
6.1
CONSTRUCTION INSPECTION AND ACCEPTANCE .................................................................................................................... 23
6.2
INTEREST ON UNPAID BALANCE........................................................................................................................................ 24
6.3
FRONT ENDING REPAYMENTS .......................................................................................................................................... 25
6.4
PAYMENTS ON DEVELOPER FRONT END DEBTS .................................................................................................................... 26
2.2 List of Figures
Figure 1: Off-site Levy Assessment and Collection ................................................................................................. 5
Figure 2: Off-site Levy Deferment ........................................................................................................................ 12
Figure 3: Off-site Levy Collection .......................................................................................................................... 16
Figure 4: Off-site Levy Front-ending Process ........................................................................................................ 17
Figure 5: Front-ending Claim Reimbursement Process ........................................................................................ 22
Figure 6: Apportioning Off-site Levy Reserve For Payment .................................................................................. 25
County of Vermilion River Off-Site Levy Policy Document
4
3 INTRODUCTION
Charges on land development and how they are levied will affect not only land and housing prices
(and hence housing affordability), but also the demand for developed land, urban growth rates and
development patterns, and ultimately, the viability of the development industry and general health
of County of Vermilion River's economy. The County is adopting levies to pay for all or part of the
infrastructure required in respect of lands to be subdivided or developed (i.e. transportation and
storm water). This document outlines the administrative policies that County of Vermilion River will
use to help guide when to assess levies to developers, when levy amounts are payable (deferrals),
when and how front-end infrastructure construction will be assigned to developers, when and how
developer front-end construction will be reimbursed.
4 ASSESSMENT / COLLECTION PROCESS OVERVIEW
The flow chart below outlines the various process steps and decisions that will be used to guide off-
site levy assessment and collection.
County of Vermilion River Off-Site Levy Policy Document
5
Figure 1: Off-site Levy Assessment and Collection
4.1 Levy Assessment, Assessment Exemptions and Thresholds
The obligation to pay off-site levies occurs in two steps: (1) the levy is "incurred" upon application
Exempt from
Offsite Levy
Assessment
Has the development
previously paid an offsite
levy?
Decision
Does the development fit
with an exemption category?
Decision
Calculate Offsite Levy
Is the applicant constructing
offsite infrastructure?
Calculate Offsite Levy
Payment and complete
payment procedures
No
Yes
No
Yes
End
Exempt from
Offsite Levy
Assessment
End
Decision
No
Yes
End
Go to
Front End
Procedure
County of Vermilion River Off-Site Levy Policy Document
6
for a subdivision agreement or development permit, and (2) the levy is paid upon issuance of the
subdivision or development permit or may be deferred to a future time of payment. This section of
the Policy and Procedure document focuses on the principles and options that will guide the County
in determining "when" the submission of an application for a subdivision agreement or
development permit would result in a levy obligation being "incurred".
4.1.1 Legislated Exemption
The first criteria to be considered in determining if an application for a subdivision agreement or
development permit is eligible or exempt from incurring an off-site levy obligation is outlined in
legislation. County guiding policies are consistent with these legislative requirements.
Municipal Government Act, Section 648(4) states:
"An off-site levy imposed under this Part of the former Act may be collected once only in
respect of land that is the subject of a development or subdivision."
4.1.2 County Exemptions
Except for exemption conditions outlined in legislation, off-site levies would apply to all
"development" or "subdivision" situations within the County of Vermilion River off-site levy
development area unless such development or subdivision is explicitly exempted.
According to Section 616 of the Municipal Government Act (b) "Development" means (i) an
excavation or stockpile and the creation of either of them, (ii) a building or an addition to or
replacement of a building and construction or placing of any of them on, in over or under land, (iii) a
change of use of land or a building or an act done in relation to land or a building that results in or is
likely to result in a change in the use of the land or building or (iv) a change in the intensity of use of
Guiding Principle
If a parcel of land was previously developed or subdivided, and an off-site levy was
paid in accordance with Section 648 of the Municipal Government Act on that entire
parcel, then any new development or subdivision is exempt from any future
assessment and payment of off-site levies.
County of Vermilion River Off-Site Levy Policy Document
7
land or a building or an act done in relation to land or a building that results in or is likely to result in
a change in the intensity of use of the land or building.
According to Section 616 of the Municipal Government Act (ee) "Subdivision" means the division of
a parcel of land by an instrument.
As such, all improvements on a site including: buildings, other structures, parking and loading areas,
landscaping, paving or graveling areas, devoting areas to exterior display, etc. might be considered
development. Further, the placement of any land instrument that divides land might be considered
subdivision.
The broad application of these definitions to the assessment of off-site levies would result in
obligations due where there may be no intent to develop or where the nature and size of the
development would not warrant payment of an off-site levy. Whereas the intent of the off-site levy
assessment is clearly to pay for the construction of off-site infrastructure that supports the
development. Clearly then, a subdivision or a development application that does not place any or
little burden on off-site infrastructure might be considered exempt from off-site levy assessment
and payment obligation.
Off-site levy assessment exemptions and exemption thresholds:
Exemption / Exemption Threshold
Rationale
a) Temporary Development / Land Uses -
Temporary land uses will be considered exempt
so long as the use or structure proposed will not
If a use is truly temporary in nature the impact
on off-site levy infrastructure will also be
temporary and therefore complies with the
Guiding Principle
If a development or subdivision is, in the opinion of the County, likely not to place a
burden on the water, and/or sanitary, and/or storm water off-site infrastructure then
the development or subdivision may, subject to the approved administrative
policies, be considered exempt from off-site levy assessment and payment
obligation.
County of Vermilion River Off-Site Levy Policy Document
8
be used beyond 1 year (can be extended upon
reapplication)
guiding principle. The timeframe threshold
ensures that a temporary use is not extended to
permanent use.
b) Replacement of a Structure - Replacement of
a structure with a new structure of the same size
and use at the same site or lot when such
replacement is substantially completed within 1
year of the demolition or destruction of the prior
structure will be considered exempt.
This is intended to exempt residential rebuilding
/ commercial rebuilding in the event of a fire or
similar catastrophic lost, etc. The replacement
structure would not use off-site infrastructure to
any greater extent than the previous structure.
The threshold timeframe is intended to ensure
that replacement of the structure occurs in a
timely fashion.
c) Altering a Residential Structure - Altering
residential structures to 4-plex size will be
considered exempt.
This is intended to exempt the various forms of
residential alterations that may be applied for
ranging from a room addition through to
creation of a duplex. Alterations beyond a
duplex would be considered a development that
would result in greater demand on off-site
infrastructure and therefore not exempt from
off-site levies.
d) Ancillary improvements - includes but may
not be limited to fences, walls, berms and signs.
These miscellaneous improvements will be
considered exempt.
This is intended to exempt various residential,
commercial and industrial development
applications that would not create any additional
burden on off-site infrastructure.
e) Division of Lands so that Further Subdivision
Can Take Place - includes situations where lands
are subdivided into blocks that in turn would
require further subdivision of individual lots or
blocks, consistent with the MDP threshold.
This allows large tracks of lands to be assembled
and divided among developers. The parcel size
threshold is established to help guide application
of this exemption.
County of Vermilion River Off-Site Levy Policy Document
9
f) Non-residential Farm Buildings - agricultural /
farming structures will be considered as exempt.
This would include bona fide farming operations
encompassing barns, silos and other ancillary
development for agricultural use.
Exempting non-residential farm buildings would
permit existing farms to modernize without
facing off-site levy assessments and payments.
g) Division of Agricultural Lands - includes
situations where a farm is subdivided consistent
with the MDP threshold. An exemption is also
permitted for the severance of 2 residential
parcels of land from the agricultural lands for
residential sites.
This would allow land owners to sell their
farmland and create 2 residential sites on the
divided lands.
h) Enlargement of Existing Industrial Buildings -
Industrial buildings may be enlarged to a
threshold of 25% of the existing building floor
size before off-site levies are assessed.
Cumulative building enlargement in excess of
25% building threshold size will result in the
assessment of off-site levies.
The floor area % threshold is easy to administer.
A cumulative threshold has been created to
ensure that multiple / staged building
enlargements do not bypass the payment of off-
site levies.
i) Intensified Land Development - Non-building
site development use (processing / production
facilities, storage etc.) can be increased by a
threshold of 25% before off-site levies are
assessed. Cumulative increased site use in excess
of the 25% use increase threshold will result in
the assessment of off-site levies.
The site use % threshold is easy to administer. A
cumulative threshold has been created to ensure
that multiple / staged site developments do not
bypass the payment of off-site levies.
j) Alteration of a Non-Residential Structure That
Does Not Change the Use or Size of the
Structure - This would permit any existing
industrial or commercial structure to be
modernized and be exempt from off-site levy
This would allow existing developments to make
office renovations etc. within the existing
development floor plate. However if a structures
floor plate size were increased the exemption
would be lost. Further, if an alteration changed
County of Vermilion River Off-Site Levy Policy Document
10
assessment and payments provided that the
improvement occurred within the existing floor
plate size and the use of the structure did not
change.
the use of the structure then the exemption
would also be lost.
k) Demolition or Removing of a Structure - This
would permit any existing property to remove
existing structures while remaining exempt from
off-site levy assessments.
This would allow existing property owners to
demolish older structures in readying the
property for future development.
4.2 Levy Assessment Deferment and Installment Payments
Once an off-site levy is "incurred" the next decision is "When should the levy be paid?"
Off-site levy payment can have a material impact on developers' cash flow, particularly during start
up or early stages of development. Off-site levy deferment allows the developer to pay their levy
obligation over a period of time.
Deferment of off-site levy payments has a direct and negative impact on off-site levy cash
availability for construction of off-site levy infrastructure and repayment of off-site infrastructure
front-ending obligations.
4.2.1 Eligibility for Payment Deferment
Off-site Levy payment deferment criterion does not consider the financial capacity of developers--
all developers are considered to have equivalent financial capacity and an equal right to payment
deferment. Off-site Levy payment deferment criterion is focused on the amount of off-site levy that
is to be paid by the developer. Developments below the off-site levy deferment threshold amount
are required to pay off-site levy amounts as a condition of subdivision or development permit
approval. Developments above the deferment threshold amount may "elect" to defer off-site levy
payment over a period up to two years by entering into agreement (executing a Deferral
Agreement) with the County for off-site levy deferred payment.
County of Vermilion River Off-Site Levy Policy Document
11
Off-site levy deferment includes:
Deferment Threshold
Rationale
a) Off-site Levy Deferment Threshold - The
option to defer payment of levies would be
extended to any subdivision or development
application with off-site levies greater than
$300,000. The maximum deferment period is 2
years.
The dollar value threshold provides the
developer with a clearly understood threshold
for payment deferment. Off-site levies below the
threshold are payable as a condition of
approving a development or subdivision
application.
The following flow chart outlines the payment deferment process.
Guiding Principle
A development or subdivision that is assessed cumulative off-site levies in excess
of $300,000 may elect to defer off-site levy payments.
County of Vermilion River Off-Site Levy Policy Document
12
Figure 2: Off-site Levy Deferment
4.2.2 Repayment Period and Terms
The repayment period is akin to the terms established in a credit agreement whereby the lender
(the County) determines the term of the agreement and the creditor (developer) must meet the
terms of the agreement. The creditor has the ability to pay out amounts owing any time prior to the
Applicant is eligible and
wishes to defer off-site levy
payment
Decision
Calculate the off-site levy
down payment and payment
installment amounts
Decision
Complete payment deferral
contract with Applicant
Obtain off-site levy down
payment form Application
and complete payment
procedure
No
Yes
No
Yes
Recalculate installment
amounts
Go to
Collection
Procedure
Is the Applicant construction
off-site levy infrastructure?
Go to
Front End
Procedure
Go to
Front End
Procedure
Does the applicant wish to
pay more than the minimum
down payment?
Obtain payment security for
value of installments and
complete security log in
process
County of Vermilion River Off-Site Levy Policy Document
13
terms of the agreement.
Off-site levy payment (installment) terms:
Installment Terms
Rationale
a) Initial Off-site Levy Down Payment - A
portion of the off-site levy assessment is payable
as a condition of the subdivision or development
permit being issued. The down payment must be
50% of the off-site levy assessment. The balance
to be paid in installments.
The payment of a portion of the off-site levy
ensures that some level of funding will
immediately flow into the off-site levy reserves.
b) Installment Payments - The balance owing
would be paid within a maximum period of 2
years. The recommended repayment period is 2
years, as follows:
1st Year Anniversary Date - 50% of the
balance owing will be paid. The balance
owing is adjusted to reflect the approved
off-site levy rates as at date of payment.
2nd Year Anniversary Date - payment of the
remaining balance. The balance owing will
be adjusted to reflect the approved off-site
levy rates as at the time of payment.
The payment installment period is intended to
provide a cash flow outlet to the developer.
Deferral however does not lock in the amount to
be paid by the developer. A developer would be
required to adjust amounts due to the County as
a result of any levy rate changes that occurred
over the deferment period.
c) Early Repayment - Developers have the
ability to pay off any off-site levy balances earlier
This will accommodate situations where a
developer wishes to pay out all levy obligations.
Guiding Principle
Developers that are eligible and elect to defer off-site levy payments must enter
into agreement with the County (execute a Deferral Agreement). The Deferral
Agreement with the County outlines the terms and conditions upon which off-site
levy payments will be made. Non-qualified infrastructure is not eligible for deferral.
County of Vermilion River Off-Site Levy Policy Document
14
than the repayment date terms.
Early payment may be desired to avoid off-site
levy rate increase adjustments.
4.2.3 Repayment Indemnification
Off-site levies are required to be paid as a condition of issuing a subdivision or development permit.
However, if eligible, the applicant may elect to pay the off-site levy in installments as outlined
earlier. In order to secure the position of the County in the case of non-payment of an installment
the applicant will provide the County with indemnification that can be easily converted to cash by
the County in the case of payment default by the developer.
Off-site levy indemnification:
Indemnification Terms
Rationale
a) Irrevocable Letter of Credit - An irrevocable
letter of credit in the amount of the balance
owing will be provided by the developer to the
County. As installments are provided to the
County a new letter of credit for the remaining
balance owing will be provided. This balance will
be adjusted to reflect any off-site levy rate
changes that have occurred.
The irrevocable letter of credit provided through
a bank or lending institution may be readily
converted in the case of payment default.
4.2.4 Increasing Amounts Due for Any Increase in Off-site Levy Rates
Off-site levy monies owed to the County on deferred payment schemes will be adjusted by off-site
levy rate changes that occur prior to payment of levies. Off-site levy assessments are in effect
"floating" and subject to adjustment as rates change. Deferral applicants are liable for increases in
Guiding Principle
Developers that elect to defer off-site levy payments must provide the County with
indemnification in the event of payment default.
Failure of the developer to pay an off-site levy installment will result in the
indemnification held by the County to be exercised and applied against amounts
owed by the developer.
County of Vermilion River Off-Site Levy Policy Document
15
levy rates that occur after they elect to defer payment to the date that payment is actually made.
Should the developer elect to pay an installment or any amount owing prior to a scheduled
installment date the off-site levy assessment will be determined based upon the off-site levy rates in
effect at the time of payment.
Calculation of off-site levy payments:
Assessment Adjustment Terms
Rationale
a) Assessment at Time of Payment - Off-site
levy balances owing are "floating" and subject to
adjustment for off-site levy rates in effect at the
time of payment.
Off-site infrastructure is subject to changes for
cost changes, interest rate changes etc. These
changes will be considered in off-site levy rate
changes annually.
The following flow chart outlines the installment collection process.
Guiding Principle
Developers that elect to defer off-site levy payments will be assessed their off-site levy
obligation based upon the off-site levy rate in effect at time of payment.
County of Vermilion River Off-Site Levy Policy Document
16
Figure 3: Off-site Levy Collection
Applicant has defer Offsite
Levy Payment
Forward collection billing and
instructions to developer and
follow-up
Is the Applicant installment
due for collection?
Decision
No
Has developer provided the
full offsite levy installment
before deadline?
Decision
Is the payment the final
installment?
Have offsite levy rates
increased since the
deferment agreement was
executed?
Decision
Yes
Recalculate installment
amount due given the new
off-site levy rates
Yes
No
From
Developer
Yes
Followup then execute the
Developers payment
guarantee collateral
Decision
Close out the payment
deferral contract and
complete
payment procedures
Yes
Decision
Has the developer provided
updated payment guarantee
collateral?
Update the payment deferral
contract and complete
payment procedures
No
Yes
Followup then execute the
Developers payment
guarantee collateral
No
End
County of Vermilion River Off-Site Levy Policy Document
17
5 OFF-SITE LEVY INFRASTRUCTURE FRONT-ENDING
The timing of off-site infrastructure is such that all off-site levy funds will not be in place prior to
construction. County of Vermilion River is interested in working with the development community.
Therefore, in order to attract developers to front end construction, incentives will be provided
including: offsetting levies due by the value of off-site levy infrastructure constructed by the
developer, providing interest on front-ending balances owed to the developer.
The following flow chart outlines the infrastructure front-ending process.
Figure 4: Off-site Levy Front-ending Process
Is the value of the offsite
levy (for the offsite category)
less than the value of the
infrastructure to be
constructed?
Decision
Deduct the value of the
infrastructure from the levy
calculation for that category
No
Yes
End
Determine value of offsite
infrastructure to be
constructed
Applicant is eligible and
wishes to construct (front-
end) offsite infrastructure
Complete the offsite
infrastructure construction
agreement
Complete the offsite
infrastructure construction
agreement
Collect offsite levy payment
and complete payment
procedures
End
County of Vermilion River Off-Site Levy Policy Document
18
5.1 Construction of "Qualified" and "Non-Qualified" Off-site Infrastructure
We have used the term "qualified" off-site infrastructure. "Qualified" means that the County has
approved off-site infrastructure construction and entered into contract (Front-end Construction
Agreement) with the developer. The agreement will outline the standards and specifications of the
infrastructure to be constructed. The decision to approve the construction as "qualified" is based
upon the off-site infrastructure being outlined within the County's Off-site Levy Bylaw and the
infrastructure being required by the County in the near immediate term. This later condition is
denoted by the project being reflected in the next 5 years of the County's Capital Plan.
There may be instances where a developer may wish to construct off-site infrastructure to support
their development however the County may not require the infrastructure to be built at this time
("non-qualified"). For example, a developer may wish to construct all four lanes of an arterial road
when only two lanes are required. The County will permit the developer to offset the cost of off-site
infrastructure constructed that may be constructed beyond the County's construction staging plan
however repayment of the construction would not commence until the front-end construction
becomes "qualified" for repayment i.e. being reflected in the next 5 years of the County's Capital
Plan.
County of Vermilion River Off-Site Levy Policy Document
19
Qualified Infrastructure
Non-qualified Infrastructure
Relationship to
Off-site Levy Bylaw
and Capital Plan
Is contained in the County's Off-site
Levy Bylaw and the next 5 years of
the County's Capital Plan.
Is contained in the County's Off-site
Levy Bylaw but is not contained in the
next 5 years of the County's Capital
Plan.
Standards &
Specifications
Constructed to the standards and
specifications of the County.
Constructed to the standards and
specifications of the County.
Front-end
Agreement
Developers are required to enter
agreement with the County.
Developers are required to enter
agreement with the County
Guiding Principle
Off-site infrastructure constructed by a developer will be constructed to the standards and
specifications of the County.
Developers are required to enter agreement with the County on all off-site infrastructure
constructed (qualified or non-qualified infrastructure).
"Qualified" off-site infrastructure is outlined within County of Vermilion River's Off-site
Levy Bylaw and is contained within the next 5 years of the County's Capital Plan.
"Non-qualified" off-site infrastructure is outlined with County of Vermilion River's Off-site
levy but is not referenced within the next 5 years of the County's Capital Plan.
Developers that construct "Qualified" or "Non-qualified" off-site infrastructure are
permitted to offset off-site levies up to the cost of infrastructure being constructed (see
offsetting off-site levies).
Developers
that
construct
"qualified"
off-site
infrastructure
will
be
reimbursed
infrastructure construction costs by a guaranteed repayment date and interest will accrue
on unpaid balances.
Developers that construct "non-qualified" off-site infrastructure will not be reimbursed
costs and will not receive interest on unpaid balances until such time as the infrastructure
becomes "qualified" (i.e., contained in the next 5 years of the County's Capital Plan).
County of Vermilion River Off-Site Levy Policy Document
20
Qualified Infrastructure
Non-qualified Infrastructure
Offset Off-site
Levies
Developers may offset the value of
off-site levies being collected by the
cost of construction. Offset may only
be applied to levies in the same
category as infrastructure being
constructed.
Developers may offset the value of off-
site levies being collected by the cost
of construction. Offset may only be
applied to levies in the same category
as infrastructure being constructed.
Interest on Unpaid
Balance
Developers will receive interest on
the balance of off-site infrastructure
amounts due to the developer.
No Interest Payment Until Qualified -
Developers will not receive interest on
non-qualified infrastructure
constructed. Interest will only accrue
once the infrastructure is "qualified".
5.2 Offsetting Off-site Levies for Front-end Infrastructure Costs
Developers who front end the construction of off-site levy infrastructure whether "qualified" or
"non-qualified" may apply the cost of this infrastructure against off-site levies due to the County. If
the developer is constructing off-site infrastructure or contributing land that will be used to site off-
site levy infrastructure the County will award the developer a credit up to the value of construction.
However, the construction credit may only be applied against the same category of levy as the
constructed front-end infrastructure. No construction credits may be applied to off-site levies owing
that differ from the off-site levy infrastructure being constructed. For example, if a developer were
front-ending the construction of stormwater off-site infrastructure, then the off-site levy
assessment for stormwater can be offset by the value of front-ended stormwater infrastructure. The
value of construction cannot be offset against any other off-site levy assessments.
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Calculation of off-site front end amounts and levy credits for front-ended off-site levy infrastructure:
Front-end Construction Amount / Offset Credits
Rationale
Offset Based Upon Professional Estimate /
Adjusted for Actual - The offset credit will be
based upon the County approved construction
estimates. The developer will provide this
estimate. The developer estimate must be
certified by a professional architect or engineer
or based on a fixed price bid from a contractor.
When the infrastructure is ultimately
constructed the actual cost of construction,
approved by the County, will be applied to
adjust any off-site levies still owing.
The developer must advise the County of any
change orders that impact the cost of the
approved infrastructure and the change order
must be approved in writing by the County to be
eligible for reimbursement or levy assessment
offset.
Obtaining external pricing ensures that all
parties understand the potential cost of the
project.
Final actual construction cost is required to
finalize amounts that may be due to the
developer and / or the County.
The notification and approval of change orders
will keep the County and developer apprised of
the cost changes and potential impact on levy
assessments outstanding.
Guiding Principle
Developers that front end the construction of off-site infrastructure may offset the off-site
levy assessments on this category of off-site infrastructure up to the cost of infrastructure
construction.
Front-end infrastructure costs may only be applied against the same off-site levy category
as the infrastructure being front-ended.
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22
6 INFRASTRUCTURE FRONT END CLAIM REIMBURSEMENT
The following flowchart outlines the reimbursement of front-ending claims process.
Figure 5: Front-ending Claim Reimbursement Process
Applicant was eligible and
constructed (front-end)
offsite infrastructure
Is the offsite infrastructure
construction complete?
Decision
Has a Construction
Completed Certificate been
received for the offsite
infrastructure?
Decision
Contact Engineering Services
for Construction Completed
Certificate
From
Eng
Services
Calculate interest on unpaid
balance and update front
end contract
Determine amount of
funding available for
reimbursement
From
Finance
Financial Plan
Pay and update front end
contract
End
No
Yes
No
Yes
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6.1 Construction Inspection and Acceptance
Developers who are front-ending the construction of off-site levy infrastructure will construct
infrastructure to the standards and specifications demanded by the County. In this regard the process
used to inspect and accept other development infrastructure will be used for off-site infrastructure
construction. The County will inspect constructed infrastructure and issue a Construction Completion
Certificate when the infrastructure is completed. This certificate will "start the clock" on the timing of
guaranteed repayment on "qualified" off-site infrastructure. The developer will be responsible for
correcting any deficiencies in off-site infrastructure construction. Front-end off-site infrastructure will be
subject to a warrantee period as outlined in the County Municipal Servicing Standards. To ensure that
the developer corrects deficiencies in front-end infrastructure, cost reimbursement will be subject to
hold back. The County will issue a Final Acceptance Certificate when all deficiencies have been remedied
and the warrantee period has expired. The Final Acceptance Certificate will trigger the release of front-
end infrastructure reimbursement hold back (subject to the availability of funds in the offsite levy
reserve).
Infrastructure inspection and acceptance conditions are outlined below:
Inspection / Acceptance Terms
Rationale
a) Inspection, Correction of Deficiencies,
Acceptance - Developer constructed
infrastructure will be built to County standards
and specification.
At completion, infrastructure will be subject to
County inspection. The developer will remedy
construction deficiencies.
A Construction Completion Certificate will be
issued by the County to signify that
infrastructure conforms to County standards.
The developer is accountable for the
infrastructure constructed. The inspection
process will ensure that standards have been
met and that deficiencies are noted and subject
to future correction by the developer. The
Construction Completion Certificate "starts" the
guaranteed repayment schedule.
Guiding Principle
Developers will be responsible to construct off-site infrastructure to the standards
and specifications of the County.
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b) Hold Back on Deficiencies, Issuance of Final
Acceptance Certificate - The County will
withhold an amount (ranging from 25% of the
cost of construction to the estimated value of
rectifying noted deficiencies) of the cost of front-
end off-site infrastructure repayment amounts
to expedite correction of deficiencies (subject to
the availability of funds in the offsite levy
reserve).
After construction deficiencies are completed in
accordance with the County Engineering Design
Standards a final acceptance inspection will be
undertaken, a Final Acceptance Certificate will
be issued and holdback on reimbursement may
be released (subject to the availability of funds
in the offsite levy reserve).
To ensure that a developer corrects any off-site
infrastructure deficiencies a hold back amount
will be established.
The issue of a Final Acceptance Certificate by the
County will be used to signal release of holdback
on payment to the developer.
6.2 Interest on Unpaid Balance
Developers who construct "qualified" off-site infrastructure, where the cost of construction exceeds off-
site levies payable, will earn interest on balances due to them. Interest will accrue from the point of the
issuance of the Construction Completion Certificate, and will be posted to the developers account
annually and upon final repayment of the construction cost by the County. Interest accrued on unpaid
balances owed to the developer will be earned at the borrowing rates periodically agreed to by the
County in the "County Banking Agreement". The "County Banking Agreement" represents the interest
cost to the County if it were to borrow money to front-end construction of the off-site infrastructure.
Interest earned on outstanding balance due to the developer for construction of "qualified" off-site
Guiding Principle
Balances due to developers as a result of front-ending the construction of
"qualified" off-site infrastructure will earn interest at the nominal cost of capital to
the County as would be received in a loan through the County's Banking
Agreement.
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infrastructure:
Inspection / Acceptance Terms
Rationale
a) Interest on Outstanding Balance at County
Cost of Capital - Developer constructed off-site
infrastructure will earn interest on any
outstanding balance at the interest rate the
County would receive if it were to borrow
money under the terms and conditions of the
"County Banking Agreement". Interest will be
credited to developer accounts annually and at
time of final payment to the developer.
Developers who construct "qualified"
infrastructure will receive credit for the working
capital invested in constructing front-ending off-
site infrastructure.
The MGA indicates that parties that front end
infrastructure construction will be entitled to
interest on their investment.
6.3 Front Ending Repayments
The County will decide annually the amount of off-site levy reserves that are to be used / retained for
drawn down of outstanding front-end balances (less holdbacks) and future construction. The following
illustration outlines how off-site levy reserves will be apportioned.
Figure 6: Apportioning Off-site Levy Reserve For Payment
The County will develop a plan annually describing how it intends to distribute off-site levy reserve
funds. The plan will consider future off-site front-ending, future staging of off-site infrastructure, the
balance in off-site levy reserves, the balance of outstanding qualified front-end obligations, the County's
borrowing capacity, interest rates, development trends etc. This information will be used to create the
County's Capital Plan as well as a Finance Plan that outlines anticipated levy receipts, expenditures and
the allocation of expenditures between repayments, front end debt draw down, monies drawn by the
Offsite Levy Reserve
Front End Repayment
Funding For Future Offsite
Construction
County of Vermilion River Off-Site Levy Policy Document
26
County to construct off-site infrastructure and amounts retained in the reserve to finance future
disbursements including future construction, repayments etc.
Repayment prioritization:
Reserve Use
Rationale
a) Use for Funding Payouts, Construction of
New Off-site Infrastructure or Draw Down of
Off-site Infrastructure Debts - Off-site levy
funds will be drawn down as may be required to
meet front-end payments (less holdbacks).
Off-site reserve funds may also be used /
retained for future infrastructure projects or
draw down of "qualified" front-end obligations
at the discretion of the County.
Repayment of developer payouts may be given
the same priority as funding of new
infrastructure or draw down of front-end debts.
6.4 Payments on Developer Front End Debts
Any off-site levy reserve funds that are assigned to the draw-down of obligations related to "qualified"
front-end construction will be distributed to front-ending parties (County and / or private developers) in
an equitable fashion. Equity will be achieved by prorating repayment funds across the outstanding
balance of all amounts owed.
The following outlines the administrative processes that will be used when reserve payments are
allocated to the repay / draw down of "qualified" front-end obligations.
Guiding Principle
The County will develop annually a financial plan describing how off-site levy funds
will be disbursed.
Guiding Principle
Funds drawn from the off-site levy reserve to pay down "qualified" front end
obligations will be prorated across all outstanding loan balances.
When an amount owed on "qualified" front-ending obligation is less than $25,000,
the amount due will be paid out in its entirety.
County of Vermilion River Off-Site Levy Policy Document
27
Repayment of "Qualified" Debts
Rationale
a) Payments on Amounts will be Prorated on All
Balances Due - The County will determine the
amount of funding to be applied to the pay
down of front ending obligations for "qualified"
balances. Such funding will be prorated across all
debts.
The County will determine the amount of off-site
levy reserve funding to be applied against debt
draw-downs.
This amount will be distributed equally to all
debts, County and private developer alike.
b) Payments on Amounts Below $25,000 will be
paid out - When the balance of a "qualified"
front-end obligation falls below $25,000, the
balance will be paid out in its entirety.
Small outstanding balances will be paid out to
reduce the administrative efforts associated with
these amounts.