Chapter 20.20
REIMBURSEMENT COLLECTION (LATECOMER) AGREEMENTS
Sections:
20.20.010 Authorization – Purpose.
20.20.040 Application for reimbursement collection agreement.
20.20.050 Preliminary determinations.
20.20.060 Preliminary determination notice.
20.20.070 Reimbursement collection agreement.
20.20.080 Recording – Effective date – Payment of charge – Lien for nonpayment.
20.20.085 Final determination notice.
20.20.100 Term of reimbursement collection agreements – Termination.
20.20.110 Removal of unauthorized connections or taps.
20.20.120 Administrative costs.
20.20.130 Payment of reimbursement charge.
20.20.140 Final decisions – Appeal.
20.20.150 City creation of or participation in reimbursement collection agreement.
20.20.010 Authorization – Purpose.
A. The city council is authorized to enter into reimbursement collection agreements pursuant to Chapter 35.72 RCW (Contracts for Street, Road, and Highway Projects) and Chapter 35.91 RCW (Municipal Water and Sewer Facilities Act).
B. 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 controls.
C. The purpose of this chapter is to establish a uniform methodology and process for the administration of reimbursement collection agreements for public infrastructure built by others or by the city of Sequim (a.k.a. latecomer agreements, hereafter “agreements” or “agreement”).
D. The city council is authorized to review and render decisions taken pursuant to this chapter, or delegate the preliminary hearing to a hearing examiner, and the city council’s or hearing examiner’s decisions are deemed to be determinative and final, subject to judicial review.
E. The city manager is authorized to sign an agreement on behalf of the city, after the agreement has been reviewed by the city attorney and approved by the city council or hearing examiner.
F. State law makes agreements mandatory or discretionary, depending on the type of improvement and other factors.
1. Utility Improvements (Chapter 35.91 RCW). If a developer requests, the city must enter into an agreement if the utility facilities to be constructed are consistent with all applicable comprehensive plans and development regulations. If the proposed facilities are not consistent with the city’s plans and development regulations, the city may decline to enter into an agreement under this chapter.
2. Street Improvements (Chapter 35.72 RCW). The city council has discretion on whether to enter into agreements for street improvements and will decide on a case-by-case basis, dependent on the street improvements relative to the value to the community and cost to administer the agreement.
G. The provisions of this chapter are in addition to and intended to supplement any other requirements contained elsewhere in the Sequim Municipal Code. (Ord. 2024-032 § 1 (Exh. A))
20.20.020 Definitions.
A. “A” Definitions.
“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.
“Administrative costs” means those amounts that may be collected under a reimbursement agreement in addition to direct construction costs, as allowed in this chapter and the applicable statute.
“Agreement” in this chapter means reimbursement collection agreement or latecomer agreement, unless specifically identified otherwise.
B. “B” Definitions.
“Benefit” (noun) means:
1. Street improvements that would be required for subsequent developers within the reimbursement area which no longer need to be installed by such developers because they already exist; or
2. Actual and/or physical use of utility system improvements.
C. “C” Definitions.
“Charge” or “charges” as used in this chapter (unless otherwise specifically noted) means a pro rata amount to be paid by an owner of property within the reimbursement area for that owner’s share of the costs of improvements made pursuant to an agreement, as authorized under RCW 35.72.030 for street improvements and RCW 35.91.020 for utility improvements.
“Cost of construction” is the sum of the direct construction costs incurred to construct the street and/or utility system improvements plus indirect or administrative costs authorized under the applicable statute. Direct construction costs include but are not limited to all related design services and construction costs necessary to provide all components of work/infrastructure approved of by the city and directly attributed to the agreement value. Other development costs for items not directly requested to be a part of the agreement will not be included in the valuation calculations.
D. “D” Definitions.
“Developer” means the individual or entity that obtains permits from 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. Pursuant to RCW 35.91.060, the city of Sequim may act as a developer for some purposes covered in this chapter, subject to the limitations set forth in the statute.
E. “E” Definitions.
Reserved.
F. “F” Definitions.
Reserved.
G. “G” Definitions.
Reserved.
H. “H” Definitions.
Reserved.
I. “I” Definitions.
Reserved.
J. “J” Definitions.
Reserved.
K. “K” Definitions.
Reserved.
L. “L” Definitions.
Latecomer Agreement. See “Reimbursement collection agreement.”
Latecomer Fee. See definition for “Charge.”
M. “M” Definitions.
Reserved.
N. “N” Definitions.
Reserved.
O. “O” Definitions.
Reserved.
P. “P” Definitions.
Reserved.
Q. “Q” Definitions.
Reserved.
R. “R” Definitions.
“Reimbursement area” means an area determined to be subject to a charge for the costs of public street and/or utility infrastructure subject to a reimbursement collection agreement (a.k.a. latecomer agreement). For streets, the reimbursement area includes parcels that are adjacent to street system improvements and would require similar improvements upon development. For utilities, the reimbursement area includes parcels that are likely to require direct connection to or service by the utility system improvements.
“Reimbursement collection agreement,” also known as a “latecomer agreement,” 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” or “contract” in this chapter mean a reimbursement collection agreement unless otherwise specifically stated.
S. “S” Definitions.
“Segregation” means a large parcel, upon which is levied a reimbursement charge, that 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.
“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 as allowed under RCW 35.72.020 (as enacted and as may be amended).
T. “T” Definitions.
Reserved.
U. “U” Definitions.
“Urban growth area” or “UGA” is as defined in SMC 18.08.020(U).
“Utility system improvements” means public water, sewer, and storm drainage system improvements, including but not limited to sanitary sewers, pumping stations and disposal plants, water mains, hydrants, reservoirs, stormwater facilities, or appurtenances. Utility system improvements also include 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.
V. “V” Definitions.
Reserved.
W. “W” Definitions.
Reserved.
X. “X” Definitions.
Reserved.
Y. “Y” Definitions.
Reserved.
Z. “Z” Definitions.
Reserved. (Ord. 2024-032 § 1 (Exh. A))
20.20.030 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 (1) a city of Sequim ordinance or ordinances that require such improvements as a prerequisite to property development, as required by the city’s engineering standards and as set forth in Chapters 35.72 and 35.91 RCW; or (2) a city of Sequim project implemented to advance the city’s goals as outlined in the city’s comprehensive plan and master plans.
B. Agreements for water and sewer facilities are allowed only for those improvements constructed within city limits or within the UGA. 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 an 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. Street system improvements must exceed $100,000, as determined by the Engineering News-Record Index, to be eligible for consideration of a reimbursement collection agreement.
D. The improvement costs associated with the developer’s abutting right-of-way and transitions are not included in or eligible for an 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 director recommends inclusion in or application for an 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 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. 2024-032 § 1 (Exh. A))
20.20.040 Application for reimbursement collection agreement.
A. Any developer meeting the requirements set forth in SMC 20.20.030 and 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 an agreement pursuant to this chapter’s requirements.
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 has their contribution excluded from the calculation of the reimbursement charge and is not entitled to reimbursement. Applications on a project that included developers who do not intend to seek reimbursement must include that developer’s signed, written statement by a person with legal authority that they are not seeking reimbursement.
C. The application for an agreement must be made within 30 calendar days after the date improvements have been accepted by the city. “Acceptance by the city” means the date the improvements are conveyed to the city by a deed of conveyance or equivalent instrument. Application must be made on forms prepared by the city and must be accompanied by the city base fee set forth in SMC 20.20.150. The application must contain the following information:
1. A legal description of the developer’s property.
2. A legal description of the properties within the developer’s proposed reimbursement area together with the name and address of the owners of each property as shown in the records of the Clallam County auditor’s office.
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. All other information as outlined in the city’s latecomer agreement guidelines.
D. Within 30 calendar days of the city receiving the application for an 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 60 calendar days from the date of the written notice to respond and provide the information required to complete the application. Within 90 calendar days after the applicant provides all the information set forth in subsection C of this section, the public works director or designee will give the applicant written notice of the proposed allocation distribution and preliminary reimbursement area. If the applicant cannot submit the required information within the 60-day period, the applicant must 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. The public works director or designee has discretion to grant the applicant one extension of not more than 60 calendar 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 must be rejected as untimely.
E. The public works director or designee establishes guidelines, procedures and/or checklists for processing applications and complying with the requirements of this chapter. (Ord. 2024-032 § 1 (Exh. A))
20.20.050 Preliminary determinations.
The public works department establishes the proposed preliminary reimbursement area and determines the preliminary charge for real property benefited by the street and/or utility system improvements. The public works director or designee may revise or modify the proposed reimbursement area, or formulate another reimbursement area and charge based upon additional information. Formulation, review, and modification is 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 the maximum time allowed by statute (15 years per Chapter 35.72 RCW for streets, 20 years per Chapter 35.91 RCW for utilities) from the date of recording of the 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 others.
D. For street system improvements, benefited parcels are those that are adjacent to the street system improvements and/or will utilize the improvements for access to their parcels.
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 upon development, 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. (Ord. 2024-032 § 1 (Exh. A))
20.20.060 Preliminary determination notice.
A. The preliminary reimbursement area and the preliminary charge provided by the public works department must be sent by certified mail to the property owners of record within the preliminary reimbursement area exclusive of the properties within the boundaries covered by any applicant for this agreement in accordance with Chapter 35.72 RCW, as from time to time amended.
1. If the city is initiating the project, the city must send out the notices.
2. If the project is funded primarily by the applicant, the applicant must send out notices on forms provided by the city. The applicant must provide the city with proof of mailing within five business days of mailing. The proof of mailing must be signed under penalty of perjury.
B. The city council has the authority to determine whether to enter into an agreement pursuant to SMC 20.20.010(A), 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 and within 20 calendar 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 hearing examiner to hold the requisite public hearing and establish a record, together with a recommendation for the city council.
2. Notice of the hearing must be given to all property owners within the preliminary reimbursement area, and the hearing must be conducted as soon as is reasonably practicable.
3. The city council may adopt or reject the recommendations from the public works director, or the hearing examiner, if applicable, in whole or in part. Any findings and conclusions rendered by council must be clearly explained in writing. Council may request further analysis from the public works director on specific issues before making a determination.
4. The city council’s determination of the reimbursement area and the charge for each parcel is 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 must 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, are 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 will be processed in the same manner as in the case of an original hearing.
E. If no written request for a hearing is timely received as required, property owners are deemed to have waived any right to a hearing. The public works director’s recommendation of the reimbursement area and charge will be presented to the city council. The council’s determination of the reimbursement area and charge is final. (Ord. 2024-032 § 1 (Exh. A))
20.20.065 Future services.
A. Final approval of an agreement under this chapter cannot be construed to vest or grant the right to the extension or allocation of utility service to properties affected by the agreement.
B. Payment of infrastructure improvements and/or payment of reimbursement charges, without actual payment of connection fees and physical connection from the property to be served to the system, cannot be construed to vest or grant the right to the extension or allocation of utility service to properties affected by the agreement. (Ord. 2024-032 § 1 (Exh. A))
20.20.070 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 directs the city manager to enter into and execute a reimbursement collection agreement. The city will prepare and give to the applicant a reimbursement collection agreement for execution. The agreement must be signed by both parties within 60 calendar days of receiving council direction.
B. Any modification to the agreement, including amendment, rescission, or assignment in any manner, must be in writing and signed by an authorized person for the party to be charged. The agreement is binding to and for the benefit of all successors and/or assigns to this agreement.
C. All agreements executed under the authority of this chapter are controlled by the version of this chapter in effect at the time of execution of the agreement. A printout of this chapter must be attached as an exhibit and incorporated into the agreement by reference. (Ord. 2024-032 § 1 (Exh. A))
20.20.080 Recording – Effective date – Payment of charge – Lien for nonpayment.
A. The developer’s right to reimbursement charges is effective as of the date of recording. The developer understands that any development within the reimbursement area that occurs before the date of recording is not subject to reimbursement charges, nor is the city liable for any such charges.
B. Any property described in the recorded application summary is subject to the charge after it has been approved by the city pursuant to this chapter.
C. The agreement must be recorded by the developer with the Clallam County auditor within 30 calendar days of the agreement’s final execution. The developer must provide the city with a copy of the properly recorded agreement within 15 calendar days of recording. No charges can be collected before the city receives a copy of the recorded agreement. The city is not 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 will 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 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 calendar 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 reimbursement collection agreement, the amount of such charge is a binding obligation upon the owner of record of the affected property and their successors and assigns. Nothing in this chapter, however, creates a private cause of action against the city for failure to collect any fees due under this chapter, except for willful or intentional failure.
F. Failure by a property owner to pay the charge due within 180 calendar days of notice to this effect entitles the developer to pursue any remedy available at law or in equity. (Ord. 2024-032 § 1 (Exh. A))
20.20.085 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 must be implemented as set forth in SMC 20.20.060(A). There is no right to a public hearing in the final notice. (Ord. 2024-032 § 1 (Exh. A))
20.20.090 Segregation.
A. Upon request of any property owner within the reimbursement area, the public works director or designee will segregate the reimbursement charge. Segregation will be based upon the same factors applied when the charges were originally established, pursuant to SMC 20.20.050. The property owner seeking segregation of the charge must pay all administrative costs associated with the segregation to include engineering staff time, administrative staff time, and any other direct costs incurred. A deposit will be required to initiate the process and will be reasonably determined by the public works director based on the complexity of the segregation requested. Additional hours needed beyond the initial deposit will be paid after discussion with the applicant and agreement on those estimated hours.
B. Properties derived from the parcel that is subject to the segregation are subject to that portion of the charge as determined by the public works director or designee. (Ord. 2024-032 § 1 (Exh. A))
20.20.100 Term of reimbursement collection agreements – Termination.
A. Each reimbursement collection agreement is valid for a period not to exceed the maximum amount of time allowed by the applicable statute as enacted at the time of the agreement from the date of its recording:
1. For agreements for street improvements entered into pursuant to Chapter 35.72 RCW, the maximum term is 15 years (as may be amended).
2. For agreements for utility improvements entered into pursuant to Chapter 35.91 RCW, the maximum term is 20 years (as may be amended).
B. Extension of the term of a reimbursement collection agreement is 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 of term is granted, the agreement must specify the duration of the extended term and must be recorded pursuant to and in accordance with subsection C of this section before the city collects any charges.
C. Termination. The city may terminate a reimbursement collection agreement if the developer fails to commence or complete construction within the time and in the manner required in the right-of-way use permit or required utility permit(s) for the improvements. In the event of termination, the city will record a release of the agreement in the Clallam County auditor’s office. (Ord. 2024-032 § 1 (Exh. A))
20.20.110 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 is 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. 2024-032 § 1 (Exh. A))
20.20.120 Administrative costs.
The city charges a fee for establishing a latecomer agreement as set forth in Chapter 3.68 SMC (Rates and Fees). The fee is nonrefundable. (Ord. 2024-032 § 1 (Exh. A))
20.20.130 Payment of reimbursement charge.
A. Each charge is 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 must be paid to the city in one lump sum before issuance of any associated permit. The city will pay the developer any reimbursement charges within 60 calendar days of receipt.
B. The developer or its successors and/or assigns must provide the public works director and the administrative services director with current contact and mailing information in writing at least every two years, or whenever the developer(s) contact information changes, from the agreement execution date for the duration of the agreement. Failure to provide current contact and mailing information within 60 calendar days of the specified time may result in forfeiture of any funds presently due or due in the future.
C. If funds are forfeited, the city will 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 will prepare a certification of payment and release that acknowledges that the property owner has satisfied the obligations under the latecomer agreement. Recording of the certification of payment and release at the Clallam County auditor’s office is the responsibility of the property owner. The property owner must provide the city with a copy of the properly recorded release within 15 calendar days of recording.
E. The city will not enforce private payment arrangements or mediate payment disputes between parties.
F. Property owners who do not develop their property to the density or intensity as anticipated in the final reimbursement area and charge may be eligible for a reduced or waived reimbursement charge. Any reduction must be approved by the public works director or city engineer in writing and provide an analysis that is consistent with the established criteria and guidelines. For utilities, if a property owner does not make a direct connection to the utility system upon which the charge is based, no payment is due.
G. If the developer is reimbursed for the total cost of the improvements before expiration of the period specified in the agreement, the agreement immediately terminates.
H. There is no guarantee that the developer will be reimbursed for any funds expended. (Ord. 2024-032 § 1 (Exh. A))
20.20.140 Final decisions – Appeal.
All decisions by the city council are final. Except for the determination of the preliminary reimbursement area and preliminary charge, appeals of city council decisions are subject to judicial review in the Clallam County superior court pursuant to Chapter 7.16 RCW. (Ord. 2024-032 § 1 (Exh. A))
20.20.150 City creation of or participation in reimbursement collection agreement.
For purposes of this chapter, the city of Sequim may act in the role of “developer” and can establish a reimbursement area for cost recovery of city projects constructed to encourage development of lands in accordance with the city’s development goals where utility or street extension costs are limiting factors on development activities. This is at the city council’s discretion and authorized through annual budget processes. (Ord. 2024-032 § 1 (Exh. A))
20.20.160 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 does not affect the validity or constitutionality of the remainder of any part of this chapter. To this end, the provisions of each clause, sentence, paragraph, section, or part of this chapter are declared severable. (Ord. 2024-032 § 1 (Exh. A))