Local Government Property Ownership & Disposal

Physical property such as land, building, infrastructure and vehicles are considered assets used to provide public services. Municipalities and regional districts have the authority to sell, lease or otherwise dispose of such property subject to specific statutory requirements.

Property Disposal

Disposition of property may include: assigning, granting, selling, charging, conveying, leasing, or divesting property owned and controlled by the local government. Local governments may dispose of properties for a number of reasons including:

  • Age and obsolescence
  • Need for new development
  • Exchange for other property
  • Contribute to community development objectives

This must be balanced against a local governments duty to provide stewardship of the public assets of the community. Disposal of land and improvements should be considered in the context of the overall policies of the local government, including:

Property Disposal Requirements

Some of the highlights of the broad power of property disposal include the following:

Providing Public Notice

Before a local government can dispose of land or improvements, it must publish public notice of the proposed disposition. The information in the notice varies depending whether the land or improvements will be available for purchase by the public.

Proceeds of Sale

Local governments must place the proceeds of sales of land and improvements in a reserve fund. In most cases that reserve fund must have as its purpose the purchase of other land, improvements or other capital assets. In some cases, the proceeds must be deposited to a reserve fund with a more specific purpose.

Examples of dispositions and the use from the proceeds from the disposition:

  • Disposition 1: Sale of parkland
    • Proceeds of Disposition - A reserve for the purpose of acquiring new parkland
  • Disposition 2: Sale of closed roads which provided access to a body of water
    • Proceeds of Disposition - Acquiring property that will provide public access to a body of water which previously had closed access roads sold
  • Disposition 3: Sale of land or improvements whose purchase was financed by debt that has not yet been repaid
    • Proceeds for Disposition - Repaying the debt associated with a sold property

Special Rules & Provisions

Elector Approval

Because of the significance of parks to community values, elector approval is required for disposal of parklands or the removal of a park dedication.

Utilities

Sewer, water and other utility systems are core local government assets with high visibility and strong community interest. Councils and boards can only dispose of these systems where there is assent of the electors and where an agreement is in place to ensure that the water or sewer service is continued.

Municipal Forests

The rules for municipal forests are detailed, specific and, in practice, limited to a few municipalities. The Local Government Act governs disposal of municipal forest lands.

Tax Sales

Property purchased by a municipality at a tax sale may be resold at a price greater than the original upset price and accrued interest.

Expropriation

There are specific rules regarding expropriation by local governments and compensation for property expropriated.

Assistance to Business & Not-for-Profit Organizations

Unless there is a qualifying partnering agreement, a disposition at less than market value may violate the prohibition against assistance to business.

A local government must provide notice if it proposes to dispose of land below market value to non-profit organizations.

If lands are going to be disposed of to a non-profit organization (i.e. not a business), local governments may want to have a consistent policy to guide these decisions to ensure fairness to all groups.

Public or Direct Offers to Sell

Local governments may choose to dispose of land by public offer or by direct offer to a single person or organization. However, offers to sell are governed differently for regional districts and municipalities.

Regional District Offers to Sell

Regional districts are required to make land and improvements available for purchase by the public unless certain potential buyers exist.

Municipality Offers to Sell

Municipal councils may sell land and improvements without a public offer. They may want to create policy to guide those choices. For example, they may offer all property for sale by public offer unless there are strong identifiable reasons to make an exception. Council may decide a direct offer is appropriate when:

  • Selling a closed road to an adjacent property owner
  • Leasing land as part of a private-public partnership
  • Selling land to the regional district for the regional water supply service
  • Exchanging land as a component of a comprehensive urban redevelopment project
  • Leasing land under an agreement with a non-profit housing provider to develop affordable housing