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  • Subdivisions - A Guide from Start to Finish....

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    Johnson Engineering Consultants is committed to being the leader in delivering innovative engineering services through our employees. We continually strive for excellence in engineering and to set standards by which our industry is measured.

    We have created this guide to provide an outline of how a subdivision development progresses from its onset to final completion based on a developer's perspective. This information sheet acts as an overview of a residential subdivision development typically located in Ontario. Although there are variances between municipalities, the majority of the regulations are provincial and therefore similar throughout the province.

    Many people are surprised to find that the minimum time commitment for a subdivision developer is about 5 years. Developers usually need to budget for close to double the cost of the servicing construction, as well as the cost of the land to bring the subdivision to the point that building lots are saleable.

    Smaller site developments not classified as subdivisions, generally face a reduced set of requirements. Their time line as well as development costs are also reduced. Industrial subdivisions usually contain lots that have specific requirements depending on their use, thus reducing the role of the industrial subdivision developer.

    At some point in the development approval phase, numerous studies will typically be required in addition to the design drawings and design notes showing what is to be constructed. Study costs are usually picked up by the developer.

    An example of a study or report would be a stormwater management report. It discusses water quality and water quantity that is produced and where it will run off in the subdivision lands when it rains. Typically it will compare pre-development run-off to post-development run-off, usually concluding that a detention area or pond is required capture rain water and to release the stormwater run-off more slowly.

    Periodically, a full environmental assessment complete with public meetings may be required. When a subdivision's sewer and water main servicing will be an extension of an existing municipal system, a Schedule A, Class Environmental Assessment (EA) may be applicable requiring less time. Occasionally, a pollutant investigation may also be required. These investigations are typically referred to as a Phase 1, 2, or 3 EAs. If a Phase 1 EA shows evidence of possible pollutants present, further investigations are carried out in an escalating order (Phase 2 and Phase 3 EAs).

    Traffic studies are sometimes required to determine how the proposed subdivision will impact the existing traffic flow in the surrounding area. The study may conclude that additional traffic lanes as well as traffic signals may be required to accommodate the increased road/pedestrian activity.

    Some municipalities request tree studies to inventory existing trees on site and label which ones are to remain, be transplanted, or removed.

    One project recently required an Archaeological study for determination if precious artifacts required protection.

    Noise studies are often required when a potential development is proposed within close proximity of busy roads or railway tracks. When proposed residential developments are close to "urban noise" such as major roads or railways, the study will often require that warning clauses must be stated on the registered title of the property informing future home owners of these lots that they are subject to periodic noise. Sound barriers such as berms, fencing, or a combination of both are used to soften the impact of the noise.

    Municipalities require performance securities (financial guarantees) from the developer prior to start of construction to ensure that the proposed work will be completed. Securities are usually accepted in the form of performance bonds, letters of credit, or cash ranging from 60% to 100% of the estimated cost of construction based on the items covered within the development agreement. Most developers will arrange for letters of credit from their financial institution. Banks often require an equivalent amount of cash be available or on deposit in some form of investment. As the subdivision progresses, the municipality reduces the amount of performance securities required, however maintenance securities are then required until the subdivision works are accepted by the municipality (usually a one year fixed term). This process is still important to the Developer because it sets the timing of the eventual release of their financial obligation contained in securities. Since the municipality releases performance securities in a conservative fashion, timing does not allow the developer to use the same funds to pay for the actual work as it is completed.

    Some municipalities may allow the developer to proceed with construction prior to the final approval of the subdivision design provided that securities are in place. This option carries potential risks since the design may change midstream. Timing for the start of servicing construction should be discussed with your consultant(s).

    Although the design drawings contain information showing work to be completed, these drawings typically do not contain all of the information required to construct the job. A "tendering process" is usually carried out to hire contractors to perform the work. Tender documents are prepared outlining details and additional information of the particular job such estimated quantities of material required, method of construction, timing, etc., insurance and security requirements. Tender calls may be "public" or open to any contractor for bidding, or "private" meaning only selected contractors are invited to bid on the contract. When it comes time for contractors to bid on work for the new subdivision, performance bonds are usually required from the construction company to guarantee their work to the developer. These bonds are usually obtained through the contractor's insurance company. Securities from the contractor to the developer function similarly to securities provided by the developer to the municipality. Since subdivisions usually require several contractors to complete the job, security amounts are much lower than those of the developer. Some developers have been able to negotiate the use of securities provided by contractors to partially cover securities required by the municipality, however this is not common. Most municipalities recognize that securities are valid only for certain periods of time. Tracking maturity dates on securities that may only cover certain phases of work can be cumbersome, therefore the municipality usually accepts securities from the developer only.

    Most municipalities require on-site inspection from an engineering firm during construction (generally, the developer's design engineer). Information to be recorded including lengths and elevations of all sewers placed in the ground is required as well as providing direction to the contractor on construction methods. The inspection staff plays a triple role: to protect the interests of the developer; to protect municipal interests; to ensure that work is done satisfactorily with little interference in the authority of the contractor since they maintain responsibility for the work until the end of their maintenance period.

    Various municipalities will begin issuing building permits once the as-built information is submitted by the inspection staff and a certain point of construction has been reached. That point usually occurs at the completion of gravel roads and when the base layer of asphalt has been applied. In some cases curb may be required as well. This milestone is very important to the developer since many lot sales begin to occur only when building permits become obtainable. This is when the Developer can begin to see some income from the investment.

    Once the subdivision has reached the house building stage, there is reduced involvement with the design professionals. Questions usually revolve around lot grading and elevations for the house. We recommend that the developer collect a deposit for each lot from the homebuilder. The deposit is held to cover damages, site clean-up, or other costs during construction of the house on its particular lot. Damage to transformers, light poles, etc. are costs that are considered the responsibility of the developer until final assumption of the subdivision has been accepted by the municipality.

    Final stages of the development include: curbs, sidewalk, top layer of asphalt, boulevard restoration. Driveway ramps are typically left until the majority of the house construction has been completed. Some of these items may be done by the homebuilders, however, continuity across multiple lots may become a concern. Timing for these finishing touches can play an important role when it comes to house sales.

    We hope this information has outlined the various stages of property development and that it has answered some of the more "common" questions you may have. Johnson Engineering Consultants has been involved in a lengthy list of land development projects in Stratford and its surrounding areas and we would be happy to provide this expertise that we have collected over the years and apply it to your project needs.

    Subdivisions - Typical Costs Encountered....

    Please note that it is impossible to predict every eventuality and please consider this brochure as a guide only and not a complete list.

    Costs prior to servicing (not entirely in order of occurrence)

    1. Lawyers fees - land purchase, agreements, easements, etc.

    2. Surveyor - legal survey prior to land purchase, topographical survey (needed to start any design), Draft Plan of Subdivision & Draft Plan of Subdivision Application

    3. Engineer - studies may be required such as: servicing study, noise study, traffic study, soils report, phasing report, stormwater management report, construction estimates, and servicing / construction drawings. It's a good idea to involve an engineer before you purchase land in order to determine how difficult the land will be to service and this may also influence the configuration of the proposed lot layout

    4. Land purchase

    5. Draft Plan of Subdivision Application

    6. Rezoning Application - usually required and can often run concurrently with the Draft Plan of Subdivision Application

    7. Minor Variance Application - usually not required

    8. Conservation Authority - application for construction (review of stormwater management for quantity, quality, erosion, slope stability, wildlife sensitivity, groundwater recharge, etc., may be waived in special circumstances)

    9. Ministry of the Environment - Certificate of Authority application (for public use storm, sanitary, and water distribution systems)

    10. Securities and Administration fees - usually specified in the Development Agreement and these securities are mostly based on the estimated cost of construction. They can consist of a variety of financial instruments but are most commonly cash and letters of credit. Securities are usually a combination of deposits, performance securities, and maintenance securities. It should be noted that a reduction in performance securities usually only happens with an increase in maintenance securities. The advantage of the shift is that maintenance securities are typically for a set term and then expire. It is important to note that securities are not returned fast enough to release funds to pay the contractor who did the construction work.

    11. Fee for trees in boulevards - most municipalities require that the Developer pay a fee to cover the cost to plant trees in the boulevards. Usually one tree per lot plus is adequate as well as one or two additional trees for the sides of corner lots.

    12. Parkland - the Ontario Planning Act permits municipalities to claim up to 5% of your land as parkland or cash-in-lieu of land (at the municipality's discretion)

    13. Electrical Agreement - fees and securities. Usually the electrical system is partially installed by a private contractor with some final hookups done by the local utility company. The dividing line between what the Developer hires a Contractor to do and what he pays the local Hydro Company to do varies by project.

    14. Development Charges - Some municipalities collect these charges at the time a building permit application is received. Others collect them for all lots prior to signing the Development Agreement. Occasionally, a Developer will choose to pay a portion of the development charges in order to partially fund public services that are needed to service the Developer's land

    Bare land prior to development

    Construction as the development progresses

    Costs of Construction Prior to Obtaining Building Permits

    1. Tendering - optional. The Developer can publicly tender the construction to any Contractor that answers a public advertisement, or he/she chooses one from a small list of Contractors, or selects just one Contractor . Each method has its pros and cons. However, it should be noted that approved construction drawings do not address all aspects of the construction (such as municipally accepted construction standards) or contract items (such as payment schedules, warranty periods, Lien holdbacks, etc). We typically involve at least 2 Contractors prior to building permits being available. One Contractor is used for the underground servicing and road base construction, and another Contractor is used for the electrical system installation. If the Developer opts for some asphalt and/or curb installation (discussed below), those items would each normally be done by separate Contractors.

    2. Layout - often included in the Contractor's responsibilities

    3. Construction Supervision - it is typical that the Municipality expects the Developer's Engineer to regularly inspect the construction as it occurs. Full time presence on-site during construction is usually specified in the Development Agreement

    4. Material and compaction testing - often included in the Contractor's responsibilities

    5. Underground servicing (storm sewer, sanitary sewer, water distribution system)

    6. Sewer testing, sewer videos, and water quality testing - required to check the construction done prior to building permits being issued. These items are usually included in the Contractor's responsibilities

    7. Road base (granular "B" and granular  "A") installation

    8. Base asphalt - optional. Roads typically have two layers of asphalt. We normally recommend doing a 6m wide strip of base asphalt. An exposed gravel surface usually gets contaminated by clay and mud during house construction and has to be removed and replaced with fresh gravel. An asphalt surface also looks more complete to prospective house buyers. Finally, the municipality will often expand its snow clearing contract (and possibly garbage collection) to include asphalted streets but not gravelled streets. However, it is very difficult for asphalt Contractors to lay asphalt without a continuous curb on each side to use as a guide. It is likely that some of the asphalt will have to be removed and replaced prior to the placement of final asphalt. A decision to have maintenance holes and catchbasins installed to final grade or intentionally left low and raised later should be made prior to base asphalt.

    9. Curb - optional. We normally recommend leaving the curb until most of the house construction is finished and installed just prior to the placement of top asphalt. This decreases the chance of damage to the curb during house construction and snow plowing. It is the Developer's responsibility to replace damaged sections prior to Municipal assumption of the Development. Some Municipalities have procedures influencing the timing of curb installation.

    10. Electrical installation - all but street lights are usually installed at this time

    11. As-recorded drawings - required prior to the issuance of building permits; a second set of second set of as-recorded drawings will be required at completion and will be discussed below.

    Costs to finish

    1. Tendering - optional. The same notes for tendering that are listed above apply. Separate asphalt and concrete contractors are typically used.

    2. Curb (if it has not been completed prior to building permits)

    3. Base asphalt (if not completed prior to building permits)

    4. Top asphalt - usually requires adjustment to the tops of the maintenance holes and catchbasins

    5. Sidewalk

    6. Monitoring and testing of stormwater management ponds (usually after a significant rainfall event); site visits are made to review the pond's functionality; lab samples are obtained and sent to laboratories for analysis; reports regarding results are sent to the municipality

    7. Sign permit and sign construction - only required if a sign is proposed

    8. Surveyor - has to confirm that all survey bars are in place

    9. As-recorded drawings (2nd set showing more detailed information than what is required for building permits)

    10. Lawyer - to process the completion of the Development Agreement

    11. It is also important to note that municipal standards may change during construction. Even though the standard may have been different when the design was approved, the developer will be expected to bring the constructed works to meet the new standard

    Other Items

    1. Lot grading plans and review fees (also discuss grading deposits) - the individual home builders typically are required by the Municipality to have a lot grading plan prepared as part of the building permit process. The lot plan must show the specific house they propose, where it will fit on the lot, and the ground elevations throughout the lot indicating where rainwater will drain. Most municipalities require this lot grading plan to be approved by the Developer's Engineer prior to being accepted by the Municipality. The Developer can decide whether to cover all, none, or part of the costs to prepare and review grading plans. Typically the Developer stays out of these transactions and costs are paid by the home builder (or lot purchaser).

    2. Damage Deposits - we recommend that a damage deposit be taken from lot purchasers. The Municipality holds the Developer responsible for all damage repairs until the end of the agreement. It is only appropriate that the lot purchasers be held to the same accountability.

    3. Costs for other items. It has happened that a Municipality has required a Developer to pay for items outside of his Development. Drainage works, outlets for sewers, sidewalk approaches to the development, park benches, playground equipment, or other exterior costs may be encountered.

    Choose Johnson Engineering Consultants Inc. to competently handle all of your engineering requirements for your Development. With over 40 years of practical engineering expertise as well as a lengthy list of development projects, let us put our team to work for you.

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    Last Modified: Friday January 29, 2010
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