Amendments
to the
Municipalities Act, 1999
Background…
• Municipalities in this province are governed
mainly by the Municipalities Act, 1999
• Amendments will:
 Modernize legislation and make it more consistent with
national trends
 Strengthen municipal governance
 Address administrative issues
 Improve municipal operations, allowing municipalities
to operate more effectively
Pension & Group Benefits
Section(s) of Act
• 2, 72, and 73
Background
• Councils have authority to establish pension and
group benefits for municipal employees, but
cannot provide such benefits to councillors
• Legislation does provide authority for payment
of remuneration to councillors
Pension & Group Benefits
Amendment
• Councils will have discretionary authority to
establish pension and group benefits for
councillors
• Any pension or group benefit will have to be
provided within current guidelines for
expenditures for councillor remuneration, as
established in the Municipal Councillor
Remuneration and Reimbursement Regulations,
2001
• i.e. It does not authorize spending additional
municipal dollars
Cont’d…
Pension & Group Benefits
Amendment, cont’d…
• Any municipal pension plan on a go-forward
basis must be defined-contribution
• Alternate types of plans may be approved at the
discretion of the Minister
Pension & Group Benefits
Analysis
• Provision of pension and group benefits to
councillors:
 May benefit councillor recruitment and
retention
• Defined-contribution
 Fixed contributions
 Investment risk and reward assumed by
individual receiving the contribution, and not
by municipality
Grants for Charitable Causes
Section(s) of Act
• 99
Background
• Councils not currently authorized to provide a
grant to charitable or philanthropic causes it
considers appropriate
Grants for Charitable Causes
Amendment
• Councils are now authorized to provide a grant
to charitable or philanthropic causes, excluding
political parties or candidates in
federal/provincial/municipal elections
• By 2/3 vote of Councillors in office
Grants for Charitable Causes
Analysis
• Councils can now provide grants to causes it
deems worthy
• Increased ability for councils to play an active
role as a philanthropic leader in the community
Minimum Property Tax
Section(s) of Act
• 114 and 414
Background
• Pelley v. Town of Springdale
• This case clarified that, where the real property
tax is imposed, all property in a municipality
must be subject to assessment and taxation,
including saltwater wharves and sheds
Cont’d…
Minimum Property Tax
Background, cont’d…
• A municipality may establish a separate
minimum property tax for residential and for
commercial property, but cannot establish a
minimum tax for vacant land or land which
contains only a small structure
• Issue: Minimum property tax did not reflect the
modest value of this land / small structures
• Therefore, owners of land containing these
structures were taxed disproportionately
Minimum Property Tax
Amendment
• Municipalities now have the authority to impose
a separate minimum real property tax for:
 Vacant land, and
 Land upon which there is a building used for
non-residential purposes that does not
exceed the square meterage specified by the
municipality
Minimum Property Tax
Analysis
• Municipalities will have flexibility in establishing
property tax structure
• Reduced tax burden for owners of such
properties
• Inequity is reduced
• Taxation structure which encourages the
development of land
Tax Sales
Section(s) of Act
• 134, 137, and various sections from 140 to 147
Background
• Currently, all third party liens (i.e. mortgages,
mechanics’ liens, court judgments against
owner) remain attached to a property sold at a
municipal tax sale
• As a result, a purchaser would inherit any debts
that have attached to the property
Cont’d…
Tax Sales
Background, cont’d…
• This limits the use of the tax sale as a collection
tool in cases where a property owner has
accumulated significant debts to multiple parties
Tax Sales
Amendment
• Municipalities will be authorized to eliminate
third party liens when selling real property at a
municipal tax sale
• Exceptions: pre-existing easements and claims of the
Crown
• Municipalities will be required to notify (in
writing) registered mortgagees, judgment
creditors, and lien holders of the tax sale,
consistent with existing timeframes for public
notice by advertisement
Cont’d…
Tax Sales
Amendment, cont’d…
• Where the balance of proceeds of the tax sale is
less than $200 (after payment of outstanding
municipal taxes and expenses related to tax
sale), these proceeds shall be returned to the
former property owner
Tax Sales
Amendment, cont’d…
• Where the proceeds of the tax sale exceed the
tax arrears and expenses related to the sale by
$200 or more:

These proceeds shall be returned to the former
property owner, unless an application is made to the
Supreme Court, within 90 days of the auction, by a
person claiming entitlement to the proceeds.

The municipality must notify all applicable registered
mortgagees, judgment creditors, and lienholders of the
excess and the requirement to apply to court.
Tax Sales
Analysis
• These changes will bring our legislation in line
with that of other provinces
• Ensures that third party liens no longer form a
barrier to tax collections through tax sales
• Potential reduction of aggregate tax arrears if
municipalities use the new tool to collect monies
owing
Adverse Possession
Section(s) of Act
• 201
Background
• What is adverse possession?
• The mechanism by which a person may occupy and
possess land owned by another, ultimately
extinguishing the ownership claim of that other
person.
Adverse Possession
Amendment
• Municipal real property is protected from claims
of adverse possession by a third party (also
known as squatters’ rights)
Analysis
• A municipality cannot have title to its land
extinguished by a person who occupies such
lands for a prolonged period, without
authorization
Response to Emergencies
Section(s) of Act
• 183 and 395
Background
• Municipal fire departments authorized only to
fight fires, carry out fire prevention activities, and
respond to other emergencies as authorized by
the Minister
Response to Emergencies
Amendment
• Municipalities no longer require ministerial
authorization to respond to emergencies
 Municipalities are now authorized to
determine the types of emergencies to which
their Fire Departments may respond
 While municipalities no longer require the
authorization of the Minister to respond to other
types of emergencies, they will need the
authorization of Council
Response to Emergencies
Analysis
• Decisions regarding the extent of emergency
response coverage will be made at the local
level, by the people most informed about local
circumstances
• Municipalities will have increased control over
the scope of emergency services provided
Disposal of Municipal Property
Section(s) of Act
• 201
Background
• Municipalities must currently comply with the
Public Tender Act when acquiring goods and
services but no guidance is provided by the
legislation regarding the disposal of assets
Disposal of Municipal Property
Amendment
•
Municipalities are now authorized to sell
surplus or unused real or personal property, in
accordance with the following requirements:
1.
Where the item or lot has a probable market value of
more than $500,
• Sale by public tender or auction
• Advertised for at least 30 days before the date of
the auction or tender; and
Cont’d…
Disposal of Municipal Property
Amendment, cont’d…
2. Where the item or lot has a probable market value
of less than $500, or where a public auction or
tender did not produce a purchaser for an item or
lot with a probable market value of more than $500,
• The municipality may dispose of the item or
lot by private sale.
Disposal of Municipal Property
Analysis
• A gap in the legislation has been addressed,
and
• Municipalities now have much needed direction
on the disposal of assets in a transparent
manner
Municipal Budgets
Section(s) of Act
• 78 and 79
Background
• A municipality may not currently budget for a
capital reserve without the approval of the
Minister
• The Act requires that municipal expenditures
and revenues balance
Municipal Budgets
Amendment
• The Act has been amended so that:
• Expenditures in municipal budgets shall not
exceed revenues, and
• A capital reserve can be established without
requiring Ministerial approval
Municipal Budgets
Analysis
• Municipalities will now have the flexibility to
create capital reserves as determined by local
circumstances.
• The ability to budget a surplus will permit
municipalities to create reserves for unexpected
expenses such as equipment or infrastructure
breakdowns.
• This will give municipalities another tool to help
them implement prudent financial planning.
Audited Financial Statements
Section(s) of Act
• 86
Background
• Municipalities are required to prepare annual
audited financial statements
• Historically prepared on a cash-basis
• However, cash-based statements are dated and
do not align with current standards established
by Public Sector Accounting Board (PSAB)
Audited Financial Statements
Amendment
• Annual financial statements are now required to
be consistent with the standards of the Public
Sector Accounting Board
Analysis
• Financial reporting by municipalities will be in
line with national standards for public sector
bodies
• This will provide municipalities with improved
tools for assessing their long-term financial
sustainability and future infrastructure needs
Municipal Departments
Section(s) of Act
• 63 and 64
Background
• Section 63 of the Act authorizes a council to
create various departments and department
heads, listing the most common:
•
•
•
•
•
Engineer / Superintendent of works
Treasurer
Planner
Recreation Director
Fire Chief
Municipal Departments
Amendment
• Councils now have the authority to:
 Establish those departments and appoint
those department heads that are necessary
for the effective operation of the Council
 Establish the roles and responsibilities of
those department heads
Municipal Departments
Analysis
• Provides flexibility to councils in structuring their
operations
• Decisions regarding council administrative
structures will be made at the local level
Appointment of Auditor
Section(s) of Act
• 87
Background
• Municipalities are required to appoint an auditor
by August 1 in the year before the year in which
the audited financial statements are due.
• Municipalities are required to notify the Minister
in writing within 30 days of that appointment.
Appointment of Auditor
Amendment
• Notification of the Minister with respect to the
appointment of an auditor by a municipality is no
longer required
Analysis
• Notification of the appointment of an auditor is
unnecessary
• Municipalities still required to submit audited
financial statements
• Reduction of red tape
Report on Insurance Coverage
Section(s) of Act
• 91
Background
• Municipal auditors are currently not required to
report on the adequacy of insurance carried by
a municipality
Report on Insurance Coverage
Amendment
• The Act has been amended so that auditors are
required to report on adequacy of insurance
coverage for municipal property
Analysis
• This will provide municipalities with critical
information needed to make informed decisions
on risk and liability management
Approval to Borrow
Section(s) of Act
• 94
Background
• Prior to borrowing for capital purposes, a
municipality is required to obtain the prior written
approval of the Minister
Cont’d…
Approval to Borrow
Background, cont’d…
• However, some municipalities enter into capital
lease arrangements without obtaining Ministerial
approval
• Legislation does not clearly require such
approval
• This is a gap in the legislation, as a capital lease
arrangement is often simply an alternative to
capital borrowing
Approval to Borrow
Amendment
• Ministerial approval will be required before a
municipality enters into a capital lease
agreement for three years or more
Analysis
• This will ensure that long-term borrowing /
financial commitments receive Ministerial
approval
• Close an existing loophole in legislation
• Department of Municipal Affairs will have
accurate picture of long-term financial
commitment of Councils
Supplementary Assessment
Section(s) of Act
• 119
Background
• The provisions of section 119 are not consistent
with those of the Assessment Act, 2006
• Section 119: provides for taxation of real
property based on a supplementary assessment
in the case of new or newly-occupied buildings
Cont’d…
Supplementary Assessment
Background, cont’d…
• Assessment Act, 2006: provides for
supplementary assessments in additional
circumstances
 Destruction of a building
 A change in use
 The end of the application of a tax exemption
Supplementary Assessment
Amendment
• The Act will now provide for full integration and
consistency with the provisions of the
Assessment Act, 2006 in regards to
supplementary assessments.
Analysis
• This will create consistency across related
legislation, ensuring ease of use.
Definition of Real Property
Section(s) of Act
•2
Background
• The definition of ‘real property’ in the Act includes
‘machinery’ and ‘equipment’
• This is not consistent with the definition of ‘real
property’ in the Assessment Act, 2006, which does
not include ‘machinery’ and ‘equipment’
Definition of Real Property
Amendment
• The Act has been amended to define ‘real
property’ as it is defined in the Assessment Act,
2006
Analysis
• Consistency between the Act and the
Assessment Act, 2006
• Provide clarity to councils
Debt Collection Mechanism
Section(s) of Act
• 133
Background
• Municipalities are authorized to collect arrears of
taxes, and interest on those taxes, through court
action
• No explicit authority to use other legitimate
means of debt collection, such as collection
agencies
• No clear authority to recover reasonable costs of
collection
Debt Collection Mechanism
Amendment
• The Act has been amended to allow
municipalities to use lawful means of civil debt
collection and to be reimbursed the reasonable
costs of such collection
Analysis
• This will facilitate tax collection and give
municipalities a cost-effective collection tool
Interest Charges
Section(s) of the Act
• 133
Background
• Municipalities have a statutory lien upon real
property in relation to which property tax,
business tax, and water/sewer tax are imposed
• However, interest owing in relation to
outstanding taxes is not included in the lien
Interest Charges
Amendment
• The Act has been amended such that interest
owing in relation to outstanding taxes will now
be included in the statutory lien
Analysis
• Allowing municipalities to recover interest
charges is consistent with prevailing commercial
practices
Written Permits
Section(s) of Act
• 197 and 198
Background
• A person wanting to sell food or goods from a
stand or vehicle or erect a sign must obtain a
permit for doing so, but there is no requirement
for this permit to be in writing
Written Permits
Amendment
• Written permits are now required to be obtained
from a municipality, in relation to sales from
stands/vehicles and the erection of signs
Analysis
• Easier enforcement
• Ensures that questions do not arise as to
whether or not a permit has been issued
Final Comments…
• Please note that these amendments have received
approval of the House of Assembly but have not yet
received Royal Assent and are therefore not yet in
force.
• Several of the amendments, including the tax sale
amendments, will not come into force immediately,
but at a date to be proclaimed by the LieutenantGovernor in Council.
• The Department of Municipal Affairs will be issuing a
Circular with additional details and will be providing
further information sessions.
Thank You!
Last updated on May 2, 2011 by Melanie Sheppard