The Municipal Government Act (MGA) provides municipalities with planning authority and several key tools to successfully enact municipal plans and bylaws.
A person wishing to divide a parcel of land into two or more parcels must apply for subdivision approval from the municipality in which the land is located. A municipality may approve the application, with or without conditions, or may refuse the application.
A person wishing to undertake development must obtain a development permit from the municipality. Development is defined very broadly to include excavation, stockpiling, building, or the use of land or change in the intensity of use of land or buildings. The land use bylaw sets out the specific requirements for applying for a development permit and the conditions that may be attached to any development permit approval. The municipality may approve, with or without conditions, or refuse a development permit.
Development agreements and offsite levies
A municipality may require an applicant for subdivision or development to enter into a development agreement to construct or pay for the construction of roads, walkways, and utilities. The agreement may also require the developer to construct or pay for the construction of an improvement with excess capacity. A companion agreement called a Servicing Agreement sets out the standards for construction of municipal roads and utilities. A developer is normally required to sign this agreement as well to ensure compliance with municipal standards. A municipality may require a developer to enter into an agreement to pay an offsite levy to cover the capital cost of new or expanded facilities and land relating to water, sewer, storm water or roads.
The Principles and Criteria for Offsite Levies Regulation sets out the factors to be considered in developing an offsite bylaw and the requirements for consultation with affected parties prior to adoption.
Standard practice is to undertake studies to determine the cost of improvements required to serve the developing areas. This information is used to determine the amount of any offsite levy and to aid in discussions with developers over the cost of items to be included in a development agreement. Levies are often differentiated by catchment area as defined by major utilities, as development costs can vary substantially between different areas of the municipality.
Two significant challenges arise in apportioning costs to developers. The first is determining the portion of improvements that are necessary to serve the new development versus those that benefit the municipality as a whole. Various court cases have determined that a reasonable allocation must be made between the two elements. The split in these costs is often a matter of contentious discussion with developers. The second challenge relates to limits placed on what costs can be included in development agreements and offsite levies. The legislation limits these to water, sewer, storm water, and roads. The real cost of new development extends to a much broader range of improvements including police stations, fire halls, libraries, recreation facilities, as well as a host of minor matters ranging from traffic lights and signs to survey monuments. Recent court cases have tended to re-enforce the more limited terms of the legislation notwithstanding the natural person powers of municipalities to enter into agreements. Many municipalities negotiate with developers to pay or construct additional improvements such as grading and seeding of park areas, special landscaping, traffic signals, and other matters. There is often considerable debate with developers over what road and infrastructure improvements should be considered in an offsite levy depending on whether these costs are attributable to the proposed development or should be covered out of general revenue as the improvements benefit the entire community.
The larger challenge, however, is that, as several analyses have shown, new residential development does not generate sufficient revenue to cover the cost of servicing the development over its lifetime. In the past municipalities have relied upon increasing the amount of commercial and industrial assessment in a municipality and shifting an increasing proportion of taxes onto this commercial and industrial tax base. Municipalities can ensure that land use planning enables appropriate commercial and industrial development. Ultimately, however, the ability to attract such uses is subject to external market forces. Shifting the tax burden to commercial and industrial assessment also has limits. Changes to development agreement and offsite levy legislation may assist in redressing the imbalance but it may not be sufficient. Moreover, these charges place the burden of new development entirely on new residents which raises questions of the impact on housing prices and housing affordability as well as the fairness of placing all costs on new residents.
AUMA and offsite levies
As part of the Municipal Government Act (MGA) review, AUMA and AAMDC made a joint submission calling on the province to broaden the scope of offsite levies to better enable municipalities to cover the capital costs of new infrastructure for essential and soft services.
The scope of how municipalities can utilize offsite levies is currently very narrow. The MGA restricts offsite levies to capital costs related to specific projects such as roads and water facilities. However, new developments also need many other municipal services such as new or expanded facilities for fire rescue services, police service, transit service, and recreation facilities. Therefore, AUMA and AAMDC recommend that offsite legislation be modernized to enable municipalities to recover the true costs of new developments.
Currently, many municipalities are using their natural person power to enter into master agreements or community investment agreements with developers to cover some of these community capital costs. In many cases, this practice has been mutually beneficial from the perspective of developers and municipalities. However, in other cases, there have been legal disputes between developers and municipalities. Such disputes can become quite complex since there seems to be a lack of alignment between the current legislation (i.e., MGA) and the notion of natural person powers when it comes to offsite levies as well as a lack of clarity about the responsibility of developers, municipalities, and the province in terms of supporting community infrastructure.
AUMA understands that some developers may be opposed to expanding the scope of offsite levies due to concerns that it will negatively impact the affordability of housing. However, the requested increases to offsite levies are a more sustainable and equitable than the current practice of passing these additional infrastructure costs to the property tax system.
Revisions to the scope of offsite levies will also help address the problem of infrastructure debt for municipalities. Many municipalities have had to borrow to finance capital projects not covered by the current scope of offsite levies. Growing debt is a short term solution to a long term problem of inadequate funding for municipal infrastructure. Municipal debt has grown significantly in recent years and some municipalities are bumping up against their legislated debt limits. Alternative forms of debt financing do not eliminate this issue. Current offsite levies and other municipal revenues are insufficient and this lack needs to be addressed. While AUMA understands that a number of tools may be needed to address the funding gap which municipalities face when financing growth and development, it is critical to address the current challenges with offsite levies in light of the recent legal disputes.
At the time of subdivision a developer may be required to provide the following lands at no cost to the municipality:
- up to 30 percent of the land that is the subject of the application for roads and utilities
- land that is a swamp, gully, ravine, coulee, land that is subject to flooding or a strip of land not less than 6 metres in width adjacent to the bed and shore of a body of water as environmental reserve
- up to 10 percent of the land that is the subject of the application for park, school and recreation purposes or to separate areas of land that are used for different purposes
Reserve lands are designated on title as either environmental reserve (ER), municipal reserve (MR), school reserve (SR), or municipal and school reserve (MSR). Lands with these designations can only be used for park, recreation or school authority purposes. ER must be left in its natural state or used as a park. A municipality may pass a bylaw allowing ER to be used for some other purpose or lease an ER for a term not exceeding three years.
If a municipality no longer requires municipal reserve land to be used for park or recreation purposes, it may dispose of the land after giving notice and holding a hearing to consider the views of those affected. The proceeds from the sale of reserve land may only be used for park, recreation or school authority purposes. If a school board no longer requires a site that has been designated SR or MSR for school purposes it may not dispose of the land itself. Rather, it may declare the site surplus and if the Minister of Education approves this surplus declaration the school board may transfer the land to the municipality. The municipality may dispose of the land as noted above or alternatively, the municipality may designate the school building envelope portion of the site as community service reserve (CSR). A community service reserve may be used for a broader range of public purposes including
- A public library,
- A police station, a fire station or an ambulance services facility,
- A non-profit day care facility,
- A non-profit senior citizen facility,
- A non-profit special needs facility,
- A municipal facility providing direct service to the public, and
- Affordable housing.
AUMA and environmental reserves
As part of the Municipal Government Act (MGA) review, AUMA and AAMDC made a joint submission calling on the province to expand the current definition of environmental reserves to allow for municipalities to be responsible environmental stewards and effectively protect other sensitive or high-value ecological areas from development (e.g. tree stands, wildlife habitat, and wetlands).
Environmental reserves are currently restricted to specific scenarios that are limited largely to bodies of water or areas likely to flood. The current legislation does not allow municipalities to effectively protect other sensitive or high-value ecological areas from development. Additionally, the legislation does not appropriately define bodies of water, or address the need for wetlands to be included for environmental reserves. Therefore AUMA’s 2013 Municipal Water Policy on Wetlands calls for the MGA be amended to provide greater clarity in the definition of environmental reserve including:
- Adding wetlands to the list of eligible ecosystems in section 664(1) (a).
- Clarifying which classes of wetland are eligible to be designated as environmental reserves.
- Clarifying that the setback referred to in section 664(1) (c) applies to wetlands.