Local Area Services

A municipality has the authority to provide services such as water and sewer or business improvement to specific areas within its community. These local area services are paid for in whole or in part by local property owners in that area through local service taxes.

Local area services may be initiated either by owners of property in the proposed local area, or by the municipal council.

Each local area service must be established by bylaw to authorize imposing a type of property tax for the service within the local area. For example, a municipality may choose to establish a local area service bylaw to provide:

  • Sewer or water to only part of the municipality, with all costs of the service paid by the property owners within the local service area
  • Downtown revitalization projects that would be paid for in part by the property owners within the local service area
  • 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.

Taxation

While a municipal council has authority to set general tax rates to recover costs of services across the municipality through its annual budget process and financial plan bylaw, the rules and restrictions are slightly different for taxes that only apply to a sub-set of municipal taxpayers.

A local service tax is created by the municipal council to pay all or part of the cost of a local area service. The tax may be structured as a property value tax, a parcel tax or a combination of the two. The proceeds of a local service tax may only be spent for the local area service for which it is collected. The form of the local service tax ultimately chosen must be specified in the local area service bylaw.

Requirements

A local area service must be established by bylaw. The bylaw must:

  • 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
  • Identify the portion of the costs of the service that are to be recovered by a general municipal property tax, if applicable.

In most situations, the municipal council may only adopt a local area service bylaw if the service and its cost recovery methods have been approved by the taxpayers or electors within the service area. Approval can occur by a petition proposing the service, or by council initiative where an insufficient number of property owners petition against the proposed service, or an assent vote of electors within the service area.

Waste Management Plan Exception

Under the Environmental Management Act, if a municipality or regional district has been directed by the minister responsible for the Act to prepare a waste management plan for approval, or already has a waste management plan approved by the minister, then a bylaw adopted for the purpose of preparing the plan or implementing an approved plan does not require a petition, the assent of the electors or the approval of the electors.

Petition For Service

Petitions are usually initiated by local residents interested in receiving a service in their area. Because the threshold is high (petition must be signed by at least 50 percent of the owners representing at least 50 percent of the assessed value of land and improvements that would be subject to the tax), this method is frequently used if the proposed local service area is small. Petitions that meet the threshold are usually the result of prior discussion with the municipality to ensure that the information outlined in the petition can be translated into a workable service and local area service bylaw.

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
  • Indicate the proposed methods of cost recovery for the service
  • Indicate what portion of the costs will be recovered by a general municipal property tax, if applicable
  • Include any other information that council requires.

If it is proposed that the municipality borrow for the purposes of the local area service, the petition must also indicate the:

  • Total amount proposed to be borrowed under the bylaw
  • Maximum term of the loan
  • Portion of those costs that are to be recovered by a local service tax.

In order for the council to rely on the petition as authority to create the local area service, the petition must be signed by the owners of at least 50 percent of the parcels that would be subject to the local area tax and those persons must be the owners of parcels that in total represent at least 50 percent of the assessed value of land and improvements that would be subject to the local service tax.

Council Initiative - Subject to Petition Against

A municipal council can initiate the establishment of a local area service by providing an opportunity for a petition against the proposed service--which means that the bylaw cannot be adopted if at least 50 percent of owners representing at least 50 percent of the assessed value of land and improvements that would be subject to the local tax sign a petition opposing the local area service.

Council must give notice of a petition against in accordance with section 94 of the Community Charter and by mailing notice to all the owners of parcels that would be subject to the local service tax. The notice must:

  • Describe the service in general terms
  • Define the boundaries of the local service area
  • Provide an estimate of the costs of the service
  • Indicate the proposed methods of cost recovery for the service
  • Indicate what portion of the costs will be recovered by a general municipal property tax, if applicable
  • If council is proposing to waive or reduce some or all of the parcel tax in accordance with section 201(3) of the Community Charter, indicate the remaining amount the property owner will be required to pay
  • Include 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
  • Include any other information that council requires.

If it is proposed that the municipality borrow for the purposes of the local area service, the notice and petition must also indicate:

  • The total amount proposed to be borrowed under the bylaw
  • The maximum term of the loan
  • The portion of those costs that are to be recovered by a local service tax.

Council Initiative - Subject to Assent Voting

A municipal council can also initiate a local area service by providing an opportunity for assent voting (often referred to as referendum). In this case, the council would follow the procedures for assent voting as outlined in Part 4 of the Local Government Act. If the bylaw receives assent of the electors of the area affected, then it can be adopted by council.

If it is proposed that the municipality borrow for the purposes of the local area service, the loan authorization bylaw must also receive elector assent.

Business Improvement Area Services

A business improvement area is a specific type of local area service where the local area service tax may be based on any factor set out in the establishing bylaw, and the tax may only be levied against properties classified as business or light industry within the designated area.

Business improvement areas can be established through petition or council initiative subject to petition against. Council initiative subject to an assent vote of electors is not permitted for business improvement areas as this would limit the ability for some businesses that hold properties within the service area to participate in the process.