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Servicing Agreements for Municipalities

A servicing agreement is a legal contract that a municipal council may require with a subdivision applicant. With this agreement, council accepts responsibility for maintaining services in a new subdivision in exchange for the developer installing the services needed for the subdivision. 

A servicing agreement can provide services and facilities that directly or indirectly serve a subdivision.  It ensures that: 

  1. a municipality will not incur all the costs of servicing a new subdivision, and 
  2. new services are installed to municipal specifications and standards. 
An agreement may address on-site services such as:
  • roads;
  • water lines;
  • sewers; 
  • sidewalks;
  • street lighting, etc.

It may also provide for the payment of servicing or off-site fees needed for facilities such as water reservoirs, sewage lagoons and arterial roads which may located within or outside the area being subdivided.  An agreement can have performance guarantees, construction specifications, time limits and may include items such as liability insurance and termination provisions.

A subdivision applicant or developer may be required to provide a bond or an irrevocable letter of credit to cover construction costs.  The municipality may register an interest on the title to the land being subdivided.  The municipality may obtain easements for utility lines that cross private land.  

Community Planning can advise a municipality on what an agreement should contain in conjunction with the review of the subdivision application.  The municipal solicitor should draft the formal agreement, and municipal engineers should provide construction standards and inspection services.  These costs may be apportioned in an agreement.

The Planning and Development Act, 2007 does not provide for a developer to be responsible for the long term maintenance of the constructed services.  A servicing agreement should have construction time limits after which the municipality begins maintaining the services and the servicing agreement is terminated.

The sample servicing agreements provided below are meant only to initiate discussions and negotiations.  They need substantial revision to suit any given situation. Section 172 of The Planning and Development Act, 2007 must be consulted for legislative authority.  Solicitors acting for the parties should review a tentative agreement before it is executed.  

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