Local Area Services

Division 5 of Part 7 of the Community Charter provides municipalities with authority to provide a local area service within a part of the municipality. Division 5 sets out the legal framework for the establishment of a local service area and any borrowing in relation to a local area service. Section 216 provides authority for a municipality to levy a property value tax and/or a parcel tax to recover all or part of the costs of a service provided within a local service area.
 

What is Required

• describe the service,
• define the boundaries of the local service area,
• identify the methods of cost recovery for the service, including the form of local service tax (property value tax and/or parcel tax) and the portion of the costs of the service that are to be recovered by the local service tax, and
• if applicable, identify the portion of the costs of the service that are to be recovered by a general property tax.

The municipal council may only adopt a local area service establishment bylaw if the service and its cost recovery methods have been proposed by petition, by council initiative, or the bylaw has received assent of the electors in the local service area in accordance with section 85 of the Community Charter.
 

When to Consider

• A council may wish to establish a local area service to provide sewer or water only to part of the municipality, with all costs of the service to be paid by the property owners within the local service area.
   
• A municipality may choose to establish a local area service to provide for downtown revitalization projects, to be paid for in part by the property owners within the local service area.
   
• A large municipality might wish to establish a local area service to provide for a community hall to serve the residents of a part of the municipality, with some or all of the costs of the facility to be paid for by the property owners within the local service area.

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What to Consider

1. A petition for the establishment of a local area service pursuant to section 212 could be considered if the proposed local service area is small, or if the local service has been requested by property owners within the proposed service area. Each page of the petition must:
    
   • Describe the service in general terms;
   • Define the boundaries of the local service area;
   • Provide an estimate of the costs of the service;
   • If it is proposed that the municipality borrow for the purposes of the service and all or part of the costs of the borrowing are to be recovered by means of the local service tax, indicate:
      
     • The total amount proposed to be borrowed under the bylaw;
     • The maximum term for which the debentures may be issued, and
     • The portion of those costs that are to be recovered by a local service tax;
        
   • Indicate the proposed methods of cost recovery for the service, including the form of local service tax, property value tax and/or parcel tax, and the portion of the costs of the service that are to be recovered by the local service tax;
   • If applicable, indicate what portion of the costs are proposed to be recovered by a general municipal tax;
   • Include any other information that council requires.
      

   In order for a petition for the establishment of a local area service to be successful, the petition must be signed by the owners of at least 50% of the parcels that would be subject to the local area tax. In addition, the persons signing must be the owners of parcels that in total represent at least 50% of the assessed value of land and improvements that would be subject to the local service tax.
    

2. A council might consider the establishment of a local area service by a council initiative, subject to petition against pursuant to section 213, if council wishes to take the initiative in the establishment of the service. Council might consider this alternative if the area to be served is large or if the service is proposed by council rather than by the property owners. A council initiative requires:
    
   • A public notice in accordance with section 94, and
   • A notice to each of the owners of each property located within the proposed local service area.
   • These notices must contain:
      
     • the information required to be included on a petition as set out above,
     • if council is proposing that all or part of the costs may be waived or reduced in accordance with section 201(3), the amount that the property owner will be required to pay for this purpose, and
     • a statement that the council may proceed with establishing the service unless a petition against the service is presented within 30 days after notice has been given.
        

   In order for a petition against the establishment of a local area service to be successful, the petition must be signed by the owners of at least 50% of the parcels that would be subject to the local area tax. In addition, the persons signing must be the owners of parcels that in total represent at least 50% of the assessed value of land and improvements that would be subject to the local service tax.
    

3. A council might consider the establishment of a local area service on council initiative, with the assent of electors in the local service area; ie, council could hold a referendum.
    
4. If a council wishes to establish a “business improvement area service” to provide grants to implement a “business improvement scheme” pursuant to section 215:
    
   • A bylaw establishing a “business improvement area service” must:
      
     • identify the “business promotion scheme” and the organization to which money will be granted.
     • establish the maximum amount of money to be granted and the maximum term over which it may be granted.
     • if applicable, set conditions and limitations on the receipt and expenditure of the money.
        
   • Money granted for a “business improvement scheme” must be expended only:
      
     • by the organization to which it is granted,
     • in accordance with the conditions and limitations set out in the bylaw, and
     • for the “business promotion scheme” described in the bylaw.
        
   • A local service tax for this purpose may only be imposed on land or improvements, or both, that are used to operate a business of a class specified in the bylaw, or classified as Class 5 or 6 property class.
   • Council may establish different tax rates for different classes of business, as those classes are established by bylaw.

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If all the costs of borrowing for the purposes of a local area service are to be recovered by a local service tax, the loan authorization bylaw may only be adopted if:

• the borrowing has been proposed by petition,
• the borrowing has been proposed by a council initiative, or
• the bylaw has received assent of electors in the local service area.

If part of the costs of borrowing for the purposes of a local area service is to be recovered by any other means such as a general property tax, a separate loan authorization bylaw is required, with the bylaw adopted in accordance with Part 6 of the Community Charter.
 

A bylaw establishing a local area service may be amended to enlarge or reduce the size of the local service area. The requirements for the establishment of a local area service apply only within the area to be included or excluded from the local service area and not to the rest of the local service area.
 

If a local service area has been enlarged or reduced, the liabilities incurred on behalf of the area as it was established, must be borne by all the owners of parcels of land in the area as enlarged or reduced.
 

Transitional provisions:

Please direct questions or comments to the Advisory Services Branch.