Improvement District Property
Improvement districts can acquire, hold, lease and sell land and other property in order to carry out their functions. Proceeds from the sale of land and improvements (infrastructure and assets) must be used for services (objects) the improvement district provides under its letters patent.
Improvement districts have authority to provide specific services to the properties within the improvement district boundary. To do that, the improvement district itself may need to acquire, manage and dispose of property, such as land for a water facility, improvements such as water pipes or other infrastructure or property such as fire vehicles. Improvement districts can only acquire, manage and dispose of property for the purposes of carrying out their functions; they cannot acquire land for purposes unrelated to their objects.
Land and improvements owned by an improvement district are exempt from taxation by the B.C. government, regional districts and municipalities.
There are several ways an improvement district may acquire land and improvements. An agreement bylaw is required for an improvement district to enter into a contract to purchase or otherwise control land.
Donation or Bequest
If a landowner or their estate intends to donate or bequeath land or improvements to an improvement district, the board of trustees must consider several factors. Those factors include the cost implications (maintenance, development and liability) and being aware of any special conditions or covenants attached to the transfer of those lands or improvements that may limit the board's decision-making authority over the property.
Improvement district boards of trustees must make every effort to negotiate a purchase price that reflects the value of the property. A formal appraisal may be necessary to determine fair market value of the property.
Monies used to acquire property must be raised for the purpose for which the property is to be used. For example, monies raised from water revenues (taxes, tolls) may only be used for water-related property acquisitions.
If the improvement district board enters into a lease or mortgage, it must do so by bylaw.
An improvement district may hold a public auction of property owned by a delinquent taxpayer in order to recover taxes. If property taxes are 24 months overdue the improvement district must hold a tax sale of the land for at least a sufficient amount to recover all outstanding taxes and charges plus any costs related to holding the tax sale. An improvement district may acquire property at tax sale by bidding or by default if there are no other qualified bids.
Improvement district boards of trustees may expropriate property for the purposes of performing their powers, duties and functions. With these powers, improvement districts may take possession of a property without the consent of the landowner.
Compensation for the property is paid to the landowner based on the market value. Expropriation is a last resort when all other attempts at negotiating a purchase with the landowner have failed. Improvement districts need to exercise great care if considering expropriation, as it can create many liabilities for the improvement district, both financial and legal.
Improvement districts may only exercise their expropriation powers in accordance with the procedures set out in the Expropriation Act and any court decisions that have interpreted those rules. The Expropriation Act outlines detailed process and rules for determining the appropriate compensation payable by the improvement district to the property owner.
If an improvement district is considering using this authority, they should contact Ministry of Municipal Affairs as soon as possible—the minister responsible for local government is considered the approving authority for expropriations by improvement districts.
The board of trustees makes decisions about the disposal of any land or improvements owned by the improvement district. Disposal includes the sale or lease of property, or any other ways by which the board divests itself of an interest in the land.
The board may wish to review why a property, that is being considered for a sale, is no longer required or for a lease, whether the proposed temporary use is consistent with the purposes of the improvement district. The board should also consider if any property use restrictions (covenants or land use) may affect its use before disposing of any land or improvements.
The board may wish to review relevant minutes and correspondence about how the property was acquired and for what purpose before disposing of it.
Once the board of trustees has determined that a piece of property or item is no longer needed for improvement district services (objects), the property or item is typically sold at public auction or through another public procurement process (unless the property is being transferred to a government body). The assistance of realtors or appraisers helps keep the sale at arms-length from the board and helps negotiate the best price.
Proceeds from Sale
If the property or item can be tied to a particular service – either purchased by, or financed through, specific service revenues such as water or fire protection—the proceeds from the sale are best used in a renewal reserve fund to ensure the service's long-term viability. The reserve fund could be used towards capital costs and improvement repairs.
Leasing of Property
Land or improvements owned by an improvement district may be leased to a society, a community association or business. The board of trustees must pass a bylaw to enter into such a lease agreement.