Utility Latecomer Agreement Statutes Change on July 1, 2014
February 10, 2014
by
John W. Carpita, PE
Category:
Public Works Finance
In 2013, the Legislature passed ESHB 1717, which, among other things, modified chapter 35.91 RCW in several key areas for sewer and water facility latecomer agreements entered into by cities, towns, counties, and drainage districts. These changes to chapter 35.91 RCW do not become effective until July 1, 2014. No changes were made, however, to chapter 35.72 RCW, the corresponding statutes for street and road latecomer agreements.
Key changes in chapter 35.91 RCW, discussed below, include:
Unchanged is a municipality’s ability to participate in a utility latecomer’s agreement and be reimbursed in the same manner as a private property owner. (The street latecomer agreement statutes also allow a city, town, or county to create an assessment reimbursement area on its own initiative, without the participation of a private property owner, finance the costs of the road or street improvements, and become the sole beneficiary of the reimbursements that are contributed.)
MRSC has prepared a new web page on latecomer agreements for projects that begin after July 1, 2014. Go to our current web page for projects that begin before July 1, 2014.
New Definitions
RCW 35.91.015 is new:
(1) "Latecomer fee" means a charge collected by a municipality, whether separately stated or as part of a connection fee for providing access to a municipal system, against a real property owner who connects to or uses a water or sewer facility subject to a contract created under RCW 35.91.020.
(2) "Municipality" means the governing body of any county, city, town, or drainage district. [Note that this definition excludes water-sewer districts, who have their own procedures in chapter 57.22 RCW.]
(3) "Water or sewer facilities" means storm, sanitary, or combination sewers, pumping stations, and disposal plants, water mains, hydrants, reservoirs, or appurtenances.
Mandatory vs. Optional
RCW 35.91.020 states that “at the owner's request, a municipality must contract with the owner of real estate for the construction or improvement of water or sewer facilities that the owner elects to install solely at the owner's expense.” As road and utility improvements are most often a package deal, it is unlikely that a municipality would not also contract under chapter 35.72 RCW, the corresponding statute for street and road latecomer agreements, which still reads “may contract.” So, in that circumstance, a municipality really doesn’t have the option to not accept a request to contract for a street/road latecomer agreement as well.
Conditions for Connection
RCW 35.91.020 also provides that connection of the water or sewer facility to the municipal system under a latecomers agreement must be conditioned upon:
Minimum Agreement Length
As noted above, the minimum length of a utility latecomer agreement is now 20 years, while the maximum length of a street latecomer agreement in chapter 35.72 RCW is still only 15 years. As such, any combined street/utility latecomer agreement must be structured to recognize those different timeframes.
Both the utility and street latecomer agreement statutes provide for a possible extension of the 20- and 15-year reimbursement periods for a time not to exceed the duration of any moratorium, phasing ordinance, concurrency designation, or other governmental action that prevents making applications for, or the approval of, any new development within the benefit area for a period of six months or more.
Project Approval and Compliance with Comp Plan/Development Regulations
ESHB 1717 provides more clarity as to when a developer can request a latecomer agreement. RCW 335.91.020 requires a developer to submit a request before the water and sewer facilities proposed for construction are approved. While there is no corresponding specificity in the street latecomer’s statutes, the municipality should include similar language in its code provision or ordinances addressing street latecomer agreements.
A project for which a utility latecomer agreement is sought must be in compliance with the municipality’s comprehensive plan and development regulations, and the municipality’s ordinances must require construction of the facilities as a prerequisite to development of the property. Unless the municipality provides written notice to the owner of its intent to request a comprehensive plan approval, the owner must request a comprehensive plan amendment for a water or sewer facility, if required. Again, there is no corresponding specificity in the street latecomer’s statutes, so the municipality should include such language in its code provisions or ordinances addressing street latecomer agreements.
These changes to the utility latecomer agreement statutes will necessitate amendment of city/county codes and ordinances addressing such agreements. Please provide us with revised ordinances and code sections as you prepare them in anticipation of the July 1st effective date of these changes. Send them to John Carpita (jcarpita@mrsc.org).
Key changes in chapter 35.91 RCW, discussed below, include:
- new definitions of key terms;
- municipalities must contract with an owner of real estate rather than having an option (may contract);
- re-stated conditions for connection to a municipal system;
- minimum length of an agreement is 20 years, which was the maximum length in previous statutes;
- a developer must request a latecomer agreement before approval of the project by the municipality; and
- the project must be in compliance with the municipality’s comprehensive plan and development regulations, and construction of the facilities must be a prerequisite to development of the property.
Unchanged is a municipality’s ability to participate in a utility latecomer’s agreement and be reimbursed in the same manner as a private property owner. (The street latecomer agreement statutes also allow a city, town, or county to create an assessment reimbursement area on its own initiative, without the participation of a private property owner, finance the costs of the road or street improvements, and become the sole beneficiary of the reimbursements that are contributed.)
MRSC has prepared a new web page on latecomer agreements for projects that begin after July 1, 2014. Go to our current web page for projects that begin before July 1, 2014.
New Definitions
RCW 35.91.015 is new:
(1) "Latecomer fee" means a charge collected by a municipality, whether separately stated or as part of a connection fee for providing access to a municipal system, against a real property owner who connects to or uses a water or sewer facility subject to a contract created under RCW 35.91.020.
(2) "Municipality" means the governing body of any county, city, town, or drainage district. [Note that this definition excludes water-sewer districts, who have their own procedures in chapter 57.22 RCW.]
(3) "Water or sewer facilities" means storm, sanitary, or combination sewers, pumping stations, and disposal plants, water mains, hydrants, reservoirs, or appurtenances.
Mandatory vs. Optional
RCW 35.91.020 states that “at the owner's request, a municipality must contract with the owner of real estate for the construction or improvement of water or sewer facilities that the owner elects to install solely at the owner's expense.” As road and utility improvements are most often a package deal, it is unlikely that a municipality would not also contract under chapter 35.72 RCW, the corresponding statute for street and road latecomer agreements, which still reads “may contract.” So, in that circumstance, a municipality really doesn’t have the option to not accept a request to contract for a street/road latecomer agreement as well.
Conditions for Connection
RCW 35.91.020 also provides that connection of the water or sewer facility to the municipal system under a latecomers agreement must be conditioned upon:
- Construction of the water or sewer facility according to plans and specifications approved by the municipality;
- Inspection and approval of the water or sewer facility by the municipality;
- Transfer to the municipality of the water or sewer facility, without cost to the municipality, upon acceptance by the municipality of the water or sewer facility;
- Full compliance with the owner's obligations under the contract and with the municipality's rules and regulations;
- Provision of sufficient security to the municipality to ensure completion of the water or sewer facility and other performance under the contract;
- Payment by the owner to the municipality of all of the municipality's costs associated with the water or sewer facility including, but not limited to, engineering, legal, and administrative costs; and
- Verification and approval of all contracts and costs related to the water or sewer facility.
Minimum Agreement Length
As noted above, the minimum length of a utility latecomer agreement is now 20 years, while the maximum length of a street latecomer agreement in chapter 35.72 RCW is still only 15 years. As such, any combined street/utility latecomer agreement must be structured to recognize those different timeframes.
Both the utility and street latecomer agreement statutes provide for a possible extension of the 20- and 15-year reimbursement periods for a time not to exceed the duration of any moratorium, phasing ordinance, concurrency designation, or other governmental action that prevents making applications for, or the approval of, any new development within the benefit area for a period of six months or more.
Project Approval and Compliance with Comp Plan/Development Regulations
ESHB 1717 provides more clarity as to when a developer can request a latecomer agreement. RCW 335.91.020 requires a developer to submit a request before the water and sewer facilities proposed for construction are approved. While there is no corresponding specificity in the street latecomer’s statutes, the municipality should include similar language in its code provision or ordinances addressing street latecomer agreements.
A project for which a utility latecomer agreement is sought must be in compliance with the municipality’s comprehensive plan and development regulations, and the municipality’s ordinances must require construction of the facilities as a prerequisite to development of the property. Unless the municipality provides written notice to the owner of its intent to request a comprehensive plan approval, the owner must request a comprehensive plan amendment for a water or sewer facility, if required. Again, there is no corresponding specificity in the street latecomer’s statutes, so the municipality should include such language in its code provisions or ordinances addressing street latecomer agreements.
These changes to the utility latecomer agreement statutes will necessitate amendment of city/county codes and ordinances addressing such agreements. Please provide us with revised ordinances and code sections as you prepare them in anticipation of the July 1st effective date of these changes. Send them to John Carpita (jcarpita@mrsc.org).
MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.
About John W. Carpita, PE
John was MRSC’s resource for many years on engineering design, purchasing and contracting issues, local improvement districts, and other infrastructure issues. He had a widely varied career as a consultant, county engineer, city engineer and project manager. He is now retired.
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