What Is a Recapture Agreement for Public Improvements?

A recapture agreement is a formal contract that facilitates reimbursement for a developer who initially funds public infrastructure. This ensures that subsequent property owners who benefit from these new improvements contribute their fair share to the costs. The parties involved are the developer, the local municipality, and owners of nearby properties that gain value from the new infrastructure.

Determining Recapturable Costs and Allocation

A recapture agreement identifies which project expenses are eligible for reimbursement and how those costs will be distributed. Recapturable costs are typically limited to the direct expenses for constructing public infrastructure like sanitary sewers, water mains, storm drainage systems, and public streets. These must be improvements that serve a broader area beyond the initial developer’s property. The total costs are then allocated to each benefiting parcel using a clear methodology.

Several common methods exist for this allocation. The front-foot method calculates a fee based on the length of a property’s boundary parallel to the new improvement; for example, a $200,000 water line serving 2,000 feet of frontage would have a fee of $100 per front foot. Another approach is the acreage method, where the total cost is divided by the total area of all benefiting properties. A per-lot or per-unit basis is often used for residential subdivisions, where the cost is divided by the number of new lots or units. The method chosen depends on the improvement and local standards.

Information Required for the Agreement

To draft an agreement, a developer must compile several documents. A component is the final, certified costs of the public improvements, which requires detailed, itemized invoices from contractors and suppliers to substantiate the expenses claimed for recapture.

In addition to financial records, “as-built” engineering plans for the installed infrastructure are required. These drawings show the exact location and details of the improvements as constructed. A plat map must be included that delineates the developer’s property and all other benefiting parcels. The legal descriptions for all affected properties are also necessary, along with a proposed fee calculation for each property.

The Municipal Approval and Recording Process

The developer initiates the approval process by submitting the application package to the appropriate municipal department, such as Public Works or Planning. This submission triggers an internal review by city staff. The engineering department will verify the “as-built” plans and certified costs, while the legal department reviews the proposed agreement to ensure it complies with local ordinances and state law.

Following the staff-level review, the recapture agreement is scheduled for consideration by the municipality’s governing body, like a city council. This step often involves a public meeting where the board votes to approve the agreement. Once approved, the agreement is signed by the developer and municipal officials. The final step is to record the executed agreement with the county recorder of deeds office, which attaches the recapture obligation to the legal titles of the benefiting properties. This makes it an enforceable lien that must be paid before building permits are issued or the property can be connected to the new infrastructure.