Guide to Service Agreements - FCM

UNIT 3
66 – Service Agreement Toolkit
Consent by interested party
When one party hires a developer to develop an area, the other party will want to ensure that the
developer is aware of the provisions of the service agreement. Therefore, include in the agreement
a clause stating that the party contracting the services will be obligated to provide the corporation
with notice and a copy of the agreement. This clause should also state that although the developer
consents to the terms of the agreement, it does not replace a separate agreement between all
three parties (i.e., band, municipality and developer) outlining construction responsibilities.
The other partner may also want to ensure that it is indemnified from liability of losses or
damages as a result of the corporation’s actions.
2.2.2 Checklist 2: Description of services in a service agreement
Description of services
The Description of Services section explains what one party is willing and able to supply to the
other and that the party receiving the services is willing to purchase the aforementioned services
from the service provider. Services may include one or more hard services (e.g., water and
wastewater) and a range of other services such as solid waste, fire protection, animal control
and parks and recreation. In this section, ensure you are as clear as possible about which services
are included and what those services entail. This may include schedules with maps of serviced
properties, lists of facilities and service schedules (e.g., schedules for solid waste pick-up or
transit timetables).
Level of services
A description of the level of services should state the standard of the level of services. For example,
commonly this provision will mention that the recipient of services shall receive services
equal to those of residents of the service provider’s community.
Charges for services
This section should outline the costs for providing services. Often, payment is a lump sum with
several caveats due to variables such as increases in municipal taxes or expenses, and the addition
of new residences to the agreement. In the case of water or wastewater, it is possible to charge by
metered use similar to residents of the service provider. The overall objective of this section is to
set pricing formulas that ensure equitable prices between service providers and service receivers.
Both capital and operation costs must be considered in the pricing formulation. Charges for
services may include previously incurred, but ongoing, capital costs for a project. Parties will need
to have a discussion about how capital costs and operations and maintenance will be covered.
Rationales for pricing or demonstrations of pricing calculations should be shown in the agreement
or in a schedule to the agreement to ensure corporate memory over the term of the agreement due
to staff and elected official turnover. See more information about pricing, charges, and considerations
in Unit 3, Chapter 3: Guidelines for pricing options in a service agreement.