Local government property ownership and 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:

• Official Community Plan: Establishes long-range physical development goals and objectives
• Financial Plan: Includes identification of a capital expenditures and proposed revenue sources
• Annual Municipal Report: Sets out municipal objectives, establishes measures and reports on progress
• Regional Growth Strategy: Directs long-term planning for municipal and regional district official community plans

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.

• Community Charter, section 94 - Requirements for public notice

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.

• Community Charter, section 188 - Establishment of reserve funds

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 and 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.

• Community Charter, section 27 - Exchange or other disposal of parkland
• Community Charter, section 30 - Reservation and dedication of municipal property
• Local Government Act, section 280 - Disposition of regional parks and trails

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.

• Community Charter, section 28 - Disposal of water systems, sewage systems and other utilities
• Local Government Act, section 288 - Disposal of water systems, sewage systems and utilities

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.

• Local Government Act, section 641 - Sale or lease of municipal forest reserve

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.

• Local Government Act, section 655 - Resale of land purchased by municipality at annual tax sale

Expropriation

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

• Expropriation Act, Part 4 — Expropriation

Assistance to business and 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.

• Community Charter, section 21 - Partnering agreements
• Local Government, section 274 - Exception for assistance under partnering agreements

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

• Community Charter, section 24 - Publication of intention to provide certain kinds of assistance
• Local Government Act, section 272 - Publication of intention to provide certain kinds of assistance

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.

• Local Government Act, section 285 - Disposition of land and improvements

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