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Governance &
Structure Division
 

Property Disposal

 

Municipalities have "natural person powers," or broad powers of a corporation. One of the things natural persons can do is acquire and dispose of real property. As well, Part 3, Division 3, (Municipal Property) of the Community Charter sets out additional powers and some limitations with respect to property disposition. The broad power of property disposal provides municipalities with the flexibility to dispose of municipal assets in ways that best suit the needs of their communities.
 

What is required

Some of the highlights of the broad power of property disposal include the following:
  • Disposal can be by bylaw or by resolution.
  • Council can dispose of most property without providing notice. However, before council can dispose of land or improvements, it must publish public notice of the proposed disposition in accordance with section 94.
  • In the case of land or improvements that are made available to the public for acquisition, the notice must contain the following:
    • a description of the land or improvements;
    • the nature and, if applicable, the term of the proposed disposition;
    • the process by which the land or improvements may be acquired.
  • In the case of land or improvements which are not available to the public for acquisition, the notice must include the following:
    • a description of the land or improvements;
    • the person or public authority which is to acquire the property under the proposed disposition;
    • the nature and, if applicable, the term of the proposed disposition;
    • the consideration to be received.
  • Council is not legally obligated to place the proceeds of property sales in a reserve fund except in the case of:
    • the sale of parkland dedicated on subdivision or received in place of a development cost charge; or
    • the sale of closed roads which provided access to a body of water.

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In a number of cases, specific powers and restrictions in relation to disposal of properties are unchanged. These include:

  • Exchange or disposal of parkland: Because of the significance of parks to community values, there are special provisions. Two cases need to be distinguished here:
    • Parkland dedicated on subdivision: Elector approval continues to be required for disposal of these parklands (section 27). All proceeds from sale must be placed in a parkland acquisition reserve fund;
    • Parkland dedicated by bylaw: Elector approval is required to remove the dedication (section 30). Once a dedication is removed, the municipality could dispose of the property under regular land disposal rules.
  • Disposal of water and sewer systems and other utilities: Special rules are laid out in section 28 for sewer and water systems and other specified utilities (e.g., gas and transportation):
    • Sewer and water systems: These are core municipal services with high visibility and strong community interest. Council can only dispose of operating water and sewer 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.
    • Other utilities: Council can only dispose of these with approval of the electors, which means either a vote or an alternative approval process.
  • Disposal of municipal roads: New specific provisions are provided since municipalities now have title to roads (sections 40 and 41). However, the general rules for disposing of closed and undedicated roads remains the same as for disposing of land.
  • Municipal forests: The rules for municipal forests are detailed, specific and, in practice, limited to a few municipalities. As a consequence, section 307 of the Local Government Act continues to govern disposal of municipal forest lands.
  • Disposal of assets acquired using provincial grants: Section 12 of the Community Charter Transitional Provisions, Consequential Amendments and Other Amendments Act, 2003 continues the requirements formerly contained in section 189 of the Local Government Act, but only in relation to grants provided prior to January 1, 2004.
  • Disposal of lands obtained by tax sales: These continue to be governed by Part 11, Division 8, Annual Tax Sale of the Local Government Act.

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Specific rules regarding expropriation by municipalities and compensation for property expropriated are contained in Community Charter, Part 3 Division 4.
 

When to consider

Municipal lands are a valuable resource. They are a strategic community asset which can be used to achieve a variety of municipal objectives. Land resources can be used for public purposes: roads, parks, schools and community facilities. They can also be sold, leased or otherwise disposed of in various ways - for example, in a partnering agreement. Disposal of municipal lands can create an important revenue source, yield new development, produce additional property tax revenues, facilitate creation of municipal assets and contribute to community development objectives. This must be balanced against a municipality’s purpose, under the Community Charter, to provide “for stewardship of the public assets of the community.”
 

It is important that disposal of municipal land resources are considered in the context of the overall policies of the municipality, including:

  • The Official Community Plan, which establishes long-range physical development goals and objectives;
  • The five-year Financial Plan, which includes identification of a capital expenditures and proposed revenue sources;
  • The Annual Report, which sets out municipal objectives, establishes measures and reports on progress.

These are the fundamental policy documents of council and are important touchstones for municipal policies and actions in all areas.
 

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What to consider

In addition to the context set by these three documents, other considerations in developing policies include:
 

To whom is council going to dispose of land?

  • If land is being disposed of to a business, council needs to be aware of the prohibition against assistance to business: “council must not provide a grant, benefit, advantage or other form of assistance to a business,” unless specifically provided for (section 25). Assistance includes disposing of land or improvements for less than market value.
  • If council wishes to dispose of land below market value to assist a business it can only do so in the context of a partnering agreement (section 21). A partnering agreement enables a person to provide a service on behalf of council. Council must provide prior notice of its intention to provide such assistance (section 24).
  • If lands are going to be disposed of to a non-profit organization, council may want to have a consistent policy to guide these decisions to ensure fairness to all groups ( e.g., for what purposes will it dispose of land; to which type of non-profit organizations; for what consideration).
  • If council proposes to dispose of land below market value to non-profit organizations (e.g., to encourage an affordable housing project), it must provide prior notice of its intentions to provide this form of assistance (section 24).

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What process is council going to use to dispose of land?

  • Councils have choices to dispose of land by public offer or by direct offer to a single person or organization.
  • Councils may want to start with a policy that all property should be offered for sale by public offer unless there are strong identifiable reasons to make an exception. For example, 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.

What is council going to do with the proceeds of property sales?

  • Subject to the exceptions noted earlier, municipalities have almost complete discretion to make decisions on the use of monies gained from disposal of lands. In exercising that discretion, some considerations for council include:
    • What is the nature of the money received (i.e., is it extraordinary, one time or an on-going source of revenue?)
    • Can it be relied upon for on-going operating revenues?
    • If placed in a reserve fund, what would be the purpose of the fund?

Please direct questions or comments to Advisory Services Branch.
 

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