Development Security Policy

Legislative History: Enacted as Subdivision & Development Agreement Security Policy April 4, 2017 (By-law No. CPOL.-13-114); Amended June 26, 2018 (By-law No. CPOL.-301-292); Replaced by Development Security Policy July 21, 2026 (By-law No. CPOL.-416-210)

Last Review Date: July 21, 2026

Service Area Lead: Director, Planning and Development

1. Policy Statement

1.1 The Corporation of the City of London (the “City”) requires financial security for all land development projects to ensure completion of works under applicable Planning and Development Agreements.

1.2 This policy establishes minimum security requirements and defines the processes for calculation, administration, reduction, and release of securities.

2. Definitions

Acceptance of External Works (formerly “FINAL”) shall mean a stage where an Owner may apply for Acceptance of External Works once all External Works are complete. At this stage the City assumes responsibility for maintenance, repair, and liability of the accepted works and services.

Assumption shall mean the stage at which Council passes a by-law to formally assume responsibility for the maintenance, repair and liability of installed works and services in a subdivision plan, subject to the Owner providing End of Warranty.

City shall mean The Corporation of the City of London.

Current Value Adjustment shall mean the required security amount to reflect the present-day cost of completing the remaining works. This adjustment accounts for changes in construction, engineering, labour, and material costs since the original estimate was prepared. 

Planning and Development Agreement(s) shall mean a legally binding contract between the Owner and the City outlining the terms, conditions, and obligations for the development of land or property, including agreements related to the following planning applications: Subdivision Applications, Site Plan Applications, Condominium and Vacant Land Condominium developments, and Consents.

Director, Planning and Development shall mean the City’s Director of Planning & Development or their delegate.

End of Warranty (EOW) shall mean the triggering point at which a minimum of one year post-Assumption warranty period has lapsed; all remaining obligations of the relevant agreement must be satisfied and any defects corrected to the City’s satisfaction.

External Works shall mean construction activities undertaken outside the boundaries of a Subdivision, Site Plan, Condominium, Consent, or any other form of development, as a condition of a Planning and Development Agreement. These works typically occur on existing assumed municipal streets, municipal lands, or adjacent properties and are required to ensure safe access, capacity, and service availability for the new development.

Final Clearance shall mean a Certificate issued by the City upon all required works, deficiencies, documentation, and financial obligations, under the relevant Planning and Development Agreement, being fully satisfied and accepted by the City.

Initial Clearance shall mean a Certificate issued by the City, per conditions of the relevant Planning and Development Agreement being met. Formally known as Conditional Approval.

Owner shall mean the Owner or party specifically named in a Planning and Development Agreement or Site Alteration Permit.

Site Alteration shall mean as defined in the Site Alteration By-law.

Substantially Complete shall mean all works and services required under the relevant Planning and Development Agreement, whether on municipal property or private lands, have been constructed, installed, and maintained to the point where they are operational, safe, and can support their intended use, with only minor deficiencies outstanding. All remaining deficiencies shall be addressed to the satisfaction of the City prior to Final Clearance.

Surface Works shall mean all works and services at or above finished grade constructed by the Owner under a relevant Planning and Development Agreement, including but not limited to base & surface asphalt, curb & gutter, sidewalk, traffic islands; driveway ramps, fences, landscaping, boulevards, asphalt walkways; street signs.

Underground Works shall mean all works and services required to be constructed by an Owner pursuant to a relevant Planning and Development Agreement and which are located primarily below grade including but not limited to sanitary sewers and private drain connections, storm sewers and leads, watermains and services, appurtenances (manholes, catch basins, valves, hydrants), and granular road base such as Granular “B”.

Works & Services shall mean all surface and underground works required by an Owner under the relevant Agreement. 

3. Applicability

3.1 This policy applies to all Owners undertaking development within the City, including subdivisions, site plans, condominiums, consents, and site alterations.

4. Acceptable Forms of Security

Security may be converted between acceptable forms of security, subject to City approval.

4.1 Cash

Cash, certified cheque, Electronic Funds Transfers (EFT), wire transfers or bank draft are acceptable forms of security. Credit card payments are not accepted as a form of security.

4.2 Letter of Credit

The City accepts Letters of Credit, see template in Appendix “C”, issued by financial institutions identified under Schedule I and Schedule II of the Bank Act, S.C. 1991, c. 46 which hold a Dominion Bond Rating Service (DBRS) credit rating of R1 (middle) or higher (or an equivalent rating from a nationally recognized rating agency). 

Letters of Credit issued by trust companies or credit unions may be accepted, subject to the following conditions:

a) Where the institution demonstrates a DBRS credit rating of R1 (middle) or higher (or equivalent), Letters of Credit may be accepted with no aggregate limit; otherwise,

b) Aggregate Letters of Credit may total up to 3% of the Owner’s / Shareholders’ Equity as reported in the most recent audited financial statements, to a maximum of $1.5 million per institution, and subject to the following:

(i)   The financial institution must provide the most recent audited financial statements with an unreserved audit opinion, with no qualifications or comments regarding the institution’s ability to operate as a going concern; and

(ii)   The institution must have its head office located in Ontario; and

(iii)   Despite meeting the above criteria, Civic Administration may, at the sole discretion of the City Treasurer (or designate), reject a Letter of Credit if information suggests the institution presents an unacceptable credit risk.

4.3 Surety Bonds

In accordance with Ontario Regulation 461/24 under the Planning Act, the City shall accept Surety Bonds as a form of financial security for Planning and Development Agreement(s).

Surety Bonds must meet the requirements of Clause 2 of O. Reg. 461/24 and be provided in accordance with the form provided in Appendix “D”. 

4.4 Alternative Arrangements

Alternative forms of security may be considered at the discretion of the Director, Planning & Development, on a case-by-case basis for all Planning and Development Agreements to the satisfaction of the City. This may include land security specifically for Subdivision Agreements.

5. Security Requirements

All subdivision developments are subject to the City’s Standard Security Requirements outlined in Table A within Appendix “A” as determined by calculations outlined in Section 5.1.

Owners may be eligible for reduced security requirements only if they meet the criteria outlined in Section 5.2, and such eligibility is approved by the City at its sole discretion.

An annual review will be completed by the City where the Reduced Security eligibility can be revoked if the criteria in Section 5.2 are not met on an ongoing basis.

All Site Plan, Condominium, Vacant Lot Condominium, and Consent(s) prescribed under Section 5 are subject to the City’s Standard Security Requirements outlined in Appendix “B”, Table B as determined by calculations outlined in Section 5.1.

Provincially funded School Boards may be exempt from these security requirements, excluding External Works, subject to the satisfaction of the City.

5.1 Security Calculation

The Security Calculation establishes the amount of financial security an Owner must provide to the City to ensure the completion of all works required under Planning and Development Agreement(s), where applicable.

Security requirements apply to all works and services items including external works necessary to fulfill the obligations of the applicable agreement.

Security must be calculated using the Development Security Form, as provided by the City, prepared and certified by the Owner’s Professional Engineer, and submitted in accordance with accepted plans, relevant agreement requirements, and City standards.

The Professional Engineer’s cost estimate must include all works required under the agreement, including but not limited to:

a) Internal Works

All infrastructure and works located within the boundaries of the Site Plan, Condominium, Consent, or other Development, including but not limited to:

(i)   Underground Works: sanitary, storm, water, appurtenances, PDCs, etc.

(ii)   Surface Works: asphalt, sidewalks, curbs, granulars, ramps, boulevards, illumination, traffic islands, fencing, etc.

b) External Works

All works required outside the development boundary to support or integrate the development with existing municipal infrastructure, including but not limited: 

(i)   Widening existing roads, adding turning lanes, modifying or upgrading intersections, improving sightlines, and implementing traffic control measures required due to the development.

(ii)   Extending or upgrading water, sanitary, or storm services from existing municipal systems to serve the development.

(iii)   Constructing or upgrading sidewalks, or multi-use paths to connect the development with surrounding neighbourhoods, or community facilities.

(iv)   Installing new or upgraded street lighting along existing public roads, adjacent to the development, to meet current standards.

(v)   Enhancing existing drainage systems, upsizing culverts, or implementing off-site stormwater measures needed to accommodate the development’s runoff.

External Works must be designed and estimated in accordance with accepted plans, City standards, and the relevant Planning and Development Agreement. These works are subject to inspection and remain secured at 100% of their estimated value until they are completed to the City’s satisfaction and a Certificate of Acceptance is Issued.

Following the issuance of the Certificate of Acceptance, a one-year warranty period on workmanship and materials begins.

A 5% End of Warranty Holdback is retained to ensure the durability and quality of the completed External Works. This holdback:

(i)   Is calculated as 5% of the total value of completed External Works,

(ii)   Remains in place for the duration of the one-year warranty period, and,

(iii)   Is released only after the City verifies that all warranty obligations have been fulfilled and issues the End of Warranty Certificate.

c) Additional Items

The total security amount shall include all additional items required to fully secure the works and services, as outlined in the City’s Security Calculation Form. These include, but are not limited to, erosion and sediment control measures, tree planting, noise walls, community amenities, turning circle removals, auto flushers, engineering and contingency allowances, Net HST, and any other development specific requirements identified through the approval process. 

Important to note: contingency (5%) applies to all works & services, engineering (10%) applies to contingency and all works & services, and Net HST (1.76%) applies to all works & services, engineering and contingency.

5.2 Eligibility Criteria for Reduced Security Requirements

An Owner may be considered for Reduced Security Requirements outlined in Appendix “A” when all of the following conditions are met, to the satisfaction of the City:

a) Successful completion of at least Twenty Million Dollars ($20,000,000.00) of Planning Applications within the City of London;

b) No major non-compliance with the active Planning and Development Agreement(s) as identified by the City;

c) All invoices related to active Planning and Development Agreement(s) paid when due and no outstanding amounts. The City may, at its sole discretion, consider an Owner eligible where a late payment is determined to be isolated in nature and where the Owner has otherwise demonstrated a satisfactory payment history;

d) No construction liens registered on any of their subdivisions within the past three (3) years;

e) Full compliance with City policies, guidelines, permitting requirements and development procedure to the Satisfaction of the Director, Planning and Development; and

f) Where a reduced security amount is permitted under this policy, the City may require, as a condition of eligibility of Reduced Security, that:

(i)   The Owner shall designate a property within the City of London, owned by the same legal entity or a related corporation, against which the City may add any unrecovered costs to the tax roll under sections 446 and 398(2) of the Municipal Act, 2001; or

(ii)   The Owner provide a guarantee from a parent or affiliated corporation, in a form satisfactory to the City Solicitor, confirming joint and several liability for all obligations and authorizing the City to recover any outstanding costs in the event of default.

(iii)   The Owner provide a financial statement of the corporation entering into the Planning and Development Agreement.

g) No reduced security amount shall be accepted until the designated property or corporate guarantee has been reviewed and approved by the City, where applicable.

5.3 Security for Site Alterations

Before entering into a Planning and Development Agreement with the City, the Owner may choose to apply for a Site Alteration Permit to begin grading or other preparatory works. Prior to commencing any site alteration works, the Owner’s Professional Engineer must complete and submit the Site Alteration Security Calculation Sheet, as provided by the City, to the City for review. The Site Alteration Security Calculation Sheet outlines the methodology used to calculate the required security. Once reviewed and accepted, the Owner is required to provide the necessary security to the City before any site alteration activities commence, as required by the Site Alteration by-law.

6. Security Reduction and Release Procedures

This section outlines the requirements, process, and eligibility criteria for requesting security reductions and releases for Planning and Development Agreement(s) requirements and External Works. All reductions are milestone based and subject to City review and approval.

6.1 Eligibility and General Process

a) Owners may request a security reduction once the applicable milestone has been achieved as outlined in:

(i)   Appendix A, Table A – Required Security for Subdivision Developments, or

(ii)   Appendix B, Table B – Required Security for Private Developments 

b) A security reduction request will not be processed if:

(i)   Required milestones have not been met;

(ii)   The Owner has outstanding fees, invoices, claims, or liens;

(iii)   Erosion and Sediment Control (ESC) measures have not been stabilized;

(iv)   The development perimeter has not been graded, seeded, and/or sodded;

(v)   The requested reduction is less than $25,000 (unless final release); or

(vi)   The required documentation is incomplete.

c) The City will release security only after confirming compliance through a physical inspection and documentation.

6.2 Required Submission

To request a reduction, the Owner must submit the following:

a) Security Calculation Form, as provided by the City, completed and stamped by the Owner’s Professional Engineer

b) Supporting documentation, including but not limited to:

(i)   Certifications

(ii)   Timed requirements completion, if applicable.

(iii)   As-constructed plans, if applicable.

(iv)   Supporting documents requested by the City for any relevant clause of all applicable agreements.

Note: Incomplete requests will be returned to the Owner without processing.

6.3 End of Warranty (EOW) Holdback (if applicable)

he EOW Holdback applies to all development types (except Internal works for Site Plans), as outlined in Appendix A, and is intended to ensure that materials and workmanship continue to perform at the required standard.

a) The standard EOW Holdback is 5% of the total value of completed works and services.

b) For Subdivisions and External Works, the holdback is released after EOW.

c) For Site Plans, Condominiums, Vacant Land Condominiums, and Consents, the holdback is released upon final completion of all works, unless otherwise specified in the relevant Planning and Development Agreement.

To release the EOW security the following are required:

a) All warranty obligations are to be satisfied.

b) All deficiencies corrected.

c) A City issued End of Warranty Certificate.

6.4 Construction Act Holdback (If Applicable)

This holdback applies to Subdivisions and External Works. For works subject to the Construction Act, the mandatory ten percent (10%) holdback may be released once the statutory 60-day period has expired and one of the following conditions has been met:

a) A Certificate of Substantial Performance has been published in a construction trade newspaper; or

b) The Owner’s Professional Engineer has certified that the works are complete; or

c) The contract has been formally abandoned.

Notwithstanding the above, the total amount released, including any Construction Act Holdback, shall not exceed 15% of the total security amount prior to Assumption.

6.5 Financial Security Cancellation and Indemnity Procedures

This section outlines the procedures the City will follow when:

a) A financial institution provides notice that a Letter of Credit (LC) will be cancelled; or

b) A LC, Surety Bond, Bank Draft, or other financial security instrument has been lost or cannot be located, and the issuing institution requires an Indemnity Letter from the City.

These procedures ensure compliance with the relevant Planning and Development Agreement, protect the City’s financial interests, and maintain consistency in administering development securities.

6.5.1 Letter of Credit Cancellation

If the City receives notice from the Owner’s financial institution that their Letter of Credit (LC) will be cancelled, the City will:

a) Notify the Owner of the pending cancellation.

b) Provide the Owner with two weeks to respond by either renewing the LC or submitting an alternative form of security.

c) If the Owner does not respond within two weeks, or fails to provide replacement security:

(i)   The City will draw on the LC in full; and

(ii)   Hold the funds until all obligations under the relevant Planning and Development Agreement are satisfied.

Funds drawn due to non-renewal will be treated as security and administered in accordance with this policy.

6.5.2 Indemnity Letters for Lost or Misplaced Securities

If an LC or other security instrument is lost or cannot be located, and the issuing institution requires indemnification before issuing a replacement or cancellation, the City may issue an Indemnity Letter subject to the following conditions:

a) The security instrument has been lost, misplaced, or is otherwise unavailable despite reasonable efforts to locate it;

b) The financial institution or surety has formally requested indemnification;

c) The Owner has confirmed in writing that they do not possess the instrument, and it has not been returned; and

d) All obligations under the agreement are complete or replacement security has been provided.

e) Indemnity Letters shall not be issued where there is uncertainty, dispute, or risk of fraud.

f) All Indemnity Letters must be signed by the Director, Planning and Development.

6.6 Administration of Security Release

Cash security will only be released by the City to the registered owner(s) of the lands subject to the relevant Planning and Development Agreement, as determined by the City at the time of security release. In the event of a change in ownership for the subject lands, the City shall not be responsible for any losses incurred by the party which originally posted the cash security.

Letters of Credit and Surety Bonds will be returned to the issuing financial institution and to the individual(s) named on the Letter of Credit, as applicable.

Cash security will only be released by the City to the registered owner(s) of the lands subject to the relevant Planning and Development Agreement, as determined by the City at the time of security release. In the event of a change in ownership for the subject lands, the City shall not be responsible for any losses incurred by the party which originally posted the cash security.

Letters of Credit and Surety Bonds will be returned to the issuing financial institution and to the individual(s) named on the Letter of Credit, as applicable.

6.7 Long-Held Development Agreement Security

Where security has been deposited with the City and remains on file for seven (7) years from the date of receipt, with no development-related activity (including correspondence) within the preceding two (2) years, the City may initiate the following process to resolve and clear the outstanding security:

a) The City will review the applicable Planning and Development Agreement to determine whether there remains any requirement to retain the security

b) The City will notify the Owner that security continues to be held for the development. The notice will outline any outstanding requirements that must be met prior to the release of security.  The Owner will be required to acknowledge receipt within sixty (60) days.

c) If the Owner acknowledges the notice and provides sufficient information demonstrating their intention and steps to satisfy outstanding requirements, no further action will be taken.

d) If the Owner does not acknowledge the City’s notice within the 60-day period, the City will publish a notice advising that security is still being held.
The notice will invite any interested parties to contact the City to coordinate the release of the security, subject to completion of all obligations under the Agreement.

e) A submission deadline will be included in the advertisement. If the security remains unclaimed by the deadline identified in the notice, the City will draw the security and deposit the funds into a designated City account, and the Owner forfeits any further claim to the returned security. Notwithstanding the retention of security, the City shall reserve its right to pursue any additional remedies available under the relevant Planning and Development Agreement or otherwise at law to recover costs incurred and ensure compliance with any outstanding Owner obligations.

7. Default and Cost Recovery

7.1 Security collected by the City pursuant to this policy is held as collateral to the Owner’s obligations under a Planning and Development Agreement. In the event of a default by the Owner under a Planning and Development Agreement, the City may recover all or part of the security held in accordance with the applicable agreement terms and require replacement security, if necessary. 

7.2 Where the City incurs costs to complete, repair, maintain, or rectify any works or obligations under a relevant Planning and Development Agreement, the City may recover these costs from the Owner’s security and, if the total City incurred costs exceed the security held, the Owner remains fully responsible for the outstanding balance.

Appendices

Appendix A - Required Security for Subdivision Developments

Appendix B - Required Security for Private Developments

Appendix C - Example Letter of Credit

Appendix D - Example Bond Agreement 

Appendix A

Appendix B

Appendix C - Example Letter of Credit

IRREVOCABLE AND UNCONDITIONAL LETTER OF CREDIT

TO:      The Corporation of the City of London    (DATE)

P.O. Box 5035

London, ON N6A 4L9

Pursuant to the request of our customer (name of Subdivider/Owner) we the undersigned (name of Financial Institution) hereby establish unconditionally an irrevocable line of credit in your favour in the total amount of (amount of Security) which may be drawn on by you to the extent required in connection with every term and condition of the (type of Agreement: Subdivision/Development) Agreement with you dated (Date) and registered (Date) as Number (Registration Number) pertaining to [For Subdivision Insert: Registered Plan (Plan Number)], otherwise called (Subdivision Name)/(for Development insert type and municipal address of Development).

The amount of this credit may be reduced from time to time as advised by notice in writing given by you to the undersigned. It is understood that this obligation is between (Name of Financial Institution) and the Corporation of the City of London and any such notice shall not be used for any other purpose than set forth herein.

Drawings under this letter of credit shall be in the form of a written demand for payment made by the Corporation of the City of London. We shall pay to you the amount stated in the said demand, to be payable to you by way of our draft, without enquiring whether you have a right to such amount as between yourself and our customer, provided that such amount, together with other amounts paid to you under this letter of credit, if any, does not exceed in the aggregate that total amount of this letter of credit, reduced if at all in accordance with your written notice referred to above.

This letter of credit shall continue up to (Expiry Date) and will expire on that date and you may call for payment of the full amount outstanding under this letter of credit at any time prior to that date. This letter of credit and every extension thereof shall be deemed to be automatically extended without amendment to such expiry date or any future expiration date, unless at least 60 days prior to any expiration date that we notify you in writing by registered mail that we elect not to extend this Irrevocable and Unconditional Letter of Credit or any extension thereof after it expires. Upon receipt by you of such notice, you may draw hereunder by means of your demand accompanied by your written certification that the amounts drawn will be retained and used by you to meet obligations incurred or to be incurred in connection with the matter referred to in the first paragraph above; further, that you will release any amount not required by you.

Except so far as otherwise expressly stated, this credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce, Publication No. 500.

FOR:               (FINANCIAL INSTITUTION)

[Authorized Signatures]

Appendix D - Example Bond Agreement

Rider No. [insert Rider Number]

This rider is to be attached to and form part of bond number [insert Bond Number] dated the [insert Day] day of [insert Month], 20[insert Year] and issued on behalf of [insert Principal Name] (“Principal”) by [insert Insurance Institution Name] (“Surety”) in favour of The Corporation of the City of London (“Obligee”).

WHEREAS the Principal and the Surety issued the Bond in favour of the Obligee in the amount of [insert amount of bond in numbers]; and

WHEREAS on the [insert Day] day of [insert Month], 20[insert Year] the Obligee authorized amending the amount of the Bond to [insert amended amount of bond in numbers];

NOW THEREFORE IT IS HEREBY UNDERSTOOD AND AGREED THAT:

1. the Bond amount is amended to read:

[insert amended bond amount in words] ($[insert amended bond amount in numbers])

2. All other terms and conditions of the Bond remain unchanged.

3. This rider is effective as of the [insert Day] day of [insert Month], 20[insert Year].

Signed this [insert Day] day of [insert Month], 20[insert Year].

[Insert Principal Name and Insurance Institution Name, followed by Authorized Signatures]