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REPORT
CLERK'S DEPARTMENT
Meeting:
GE ERAL PURPOSE AND ADMINISTRATION COMMITTEE
Report #: CLD-059-02
File#: U I
6ffl-flJ-O ;;L
By-law #:
Date: December 2, 2002
Subject:
MUNICIPAL ACT, S.O. 2001
RECOMMENDATIONS:
It is respectfully recommended to the General Purpose and Administration Committee the
following:
1. THAT Report CLD-059-02 be received; and
2. THAT one-third of the remuneration paid as annual allowances to the Mayor and
Members of Council continue as expenses incident to the discharge of their duties, in
accordance with By-law 98-178.
Submitted b~.
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Reviewed by: Franklin Wu,
Chief Administrative Officer
PLB'hk
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L 1 C 3A6 T 905-623-3379 F 905-623-6506
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REPORT NO.: CLD-059-02
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BACKGROUND AND COMMENT:
1.0 Backaround
As members of Council are aware, a new Municipal Act (the Act) received Royal
Assent on December 12, 2001 and comes into effect on January 1, 2003. Because the
Act encompasses so many activities of the municipality, this report is provided as an
overview; as specific actions are undertaken, information will be brought forward in the
individual reports outlining how the new Act is being complied with.
We have been advised that up to 100 regulations will be filed to augment the legislation.
To date, seven have been filed. Therefore, there are still a great number of unknowns.
Staff will be reviewing and addressing the additional regulations as they become
available. It is understood that the Ministry will be conducting training sessions at the
time the regulations appear.
The current Municipal Act, which was enacted 150 years ago, is a prescriptive piece of
legislation, allowing municipalities to do only those things specifically set out in the
legislation. Under the current Act, if a municipality wishes to do something, it has to
determine if the authority to undertake that action is provided in the Act. In theory, a
municipality as a corporation created by statute has only those powers that are
expressly or by necessary implication delegated to it by provincial legislation.
Under the new Act municipalities are deemed to have the capacity, powers, etc. of a
natural person. Consequently, the new Act allows an action to be undertaken by a
municipality unless there is a restriction on the action set out in the new Act or other
statute. Rather than searching for authority to act, we must now determine whether the
Act prevents specific actions. If it does not prevent specific actions, municipalities may
undertake them. Therefore, to a limited extent, the powers that may be exercised by a
municipality under the new Act will be increased.
2.0 Purposes of Municipalities
Section 2 of the Act outlines the purposes of a municipality as being created by the
Province of Ontario to be responsible and accountable government with respect to
matters within their jurisdiction and each municipality is given powers and duties which
include:
. To provide the services and other things that the municipality considers are
necessary or desirable for the municipality
. To manage and preserve the public assets of the municipality
. To foster the current and future economic, social and environmental well-being of
the municipality
. To deliver and participate in provincial programs and initiatives.
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REPORT NO.: CLD-059-02
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This approach is accomplished through the use of three key concepts:
. Natural Person Powers
. Spheres of Jurisdiction
. Specific Municipal Powers
2.1 Natural Person Powers
Under the current Municipal Act, a municipality is a statutory corporation whose powers
are limited to those expressly or by necessary implication assigned to it by provincial
legislation. In contrast, under provincial legislation, a business corporation is deemed to
have the capacity and powers of a natural person, that is a human being, except to the
extent of restrictions set out in provincial legislation. The result is that the range of
situations in which a business corporation's acts will be declared by the court to be
beyond its powers and void is very limited, while the courts are much more active in
declaring a municipality's acts to be beyond the powers delegated to it under provincial
legislation.
The new Municipal Act deems each municipality to have capacity, rights, powers and
privileges of a natural person of the purpose of exercising its authority. However,
instead of simply deeming a municipality to be a natural person and to be subject only
to those laws which apply to natural persons such as the Criminal Code and the
Environmental Protection Act, the new Municipal Act restricts municipalities and the
powers they may exercise by provisions respecting spheres of jurisdiction and
restrictions on municipal powers.
In theory, under the new Municipal Act, municipalities will be brought closer to business
corporations in law. In practice, however, the acts of municipalities are likely to be only
marginally less vulnerable to attack before the court than the acts of municipality is
under the current Municipal Act.
The new Municipal Act natural person provision is important in another respect. One
can expect that over time new challenges and opportunities for municipalities will open
up as a result of economic, social or technological change that is unpredictable today.
By deeming municipalities to have the capacity and powers of a natural person,
municipalities should be able to respond relatively more quickly and more effectively to
change when it occurs since they will not have to petition the province for new powers
and authority before undertaking such actions.
2.2 Soheres of Jurisdiction
The Act gives the municipality the general power to govern in ten areas which are
referred to as spheres of jurisdiction. Lower-tier and upper-tier municipalities may pass
by-laws respecting matters within the spheres of jurisdiction described in the table which
is included as Attachment No. 1 to this report, subject to certain provisions. If the
sphere or part of sphere is not assigned to an upper-tier municipality, it cannot pass
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by-laws under that sphere. If the sphere is assigned exclusively to the upper-tier
municipality, the lower-tier municipality cannot pass by-laws under that sphere. If the
sphere or part of a sphere is assigned non-exclusively, both upper and lower-tier
municipalities can pass by-laws under the sphere. It will be necessary for a review of all
of the municipality's by-laws to be undertaken to determine whether authority still exists
for the passage of the by-law. Part II of the Act places certain restrictions on the
exercise of general powers allocated to upper-tier and lower-tier municipalities by the
spheres of jurisdiction.
2.3 Soecific Powers
Part III of the Act, grants specific powers not necessarily included in the Spheres to
municipalities. Many of the provisions of Part III provide conditions that must be
satisfied before these powers can be exercised.
3.0 ReQuirement of Notice
In the new Act, there are numerous references to having to give public notice in some
form. Some references require the giving of notice, while others require a public
meeting to be held. Further guidelines will most likely be included in the upcoming
regulations. In order to provide guidance in this regard, a by-law will be brought forward
to outline a notice procedure for the municipality.
4.0 Practices and Procedures
The new Act clearly sets out the roles of the head of council, the council and the
administration as follows:
. Head of Council
(a) To act as chief executive officer of the municipality (as in the previous
Act);
(b) To preside over council meetings;
(c) To provide leadership to the council;
(d) To represent the municipality at official functions; and
(e) To carry out the duties of the head of council under this or any other Act
. Council
(a) To represent the public and to consider the well-being and interests of the
municipality;
(b) To develop and evaluate the policies and programs of the municipality;
(c) To determine which services the municipality provides;
(d) To ensure that administrative practices and procedures are in place to
implement the decisions of council;
(e) To maintain the financial integrity of the municipality; and
(f) To carry out the duties of council under this or any other Act.
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. Administration
(a) To implement council's decisions and establish administrative practices
and procedures to carry out council's decisions;
(b) To undertake research and provide advice to council on the policies and
programs of the municipality; and
(c) To carry out other duties required under this or any Act and other duties
assigned by the municipality.
This subject was dealt with more fully in Report ADM-06-02 which was presented to the
General Purpose and Administration Committee on June 17, 2002.
4.1 Lame Duck Council
With the old Act, Council was restricted from carrying out certain acts after voting day,
which is legislated as the second Monday in November of an election year (for 2003,
this date is November 10). The new Act has amended this to be nomination day. Bill
177, which received third reading November 25, 2002, moves Nomination Day to
Friday, the 45th day before voting day (September 26 for the 2003 election).
Accordingly, the "lame duck" council period is relatively longer with the new Act.
During this timeframe, Council cannot appoint or remove officers or hire or fire
employees, dispose of real or personal property with a value over $50,000 or make any
expenditures or incur a liability over $50,000. If the disposition or liability was included
in the most recent budget adopted by the council before nomination day, the action can
be proceeded with during this period.
5.0 Licencina
Unlike the provisions of the old Municipal Act, the new Act provides a wide spectrum of
situations and opportunities for municipalities to licence and regulate businesses and
trades. However, unless otherwise provided in the Act, a by-law can only be enacted if
it is in response to one of the following needs:
. health and safety
. nuisance control
. consumer protection
Any new by-law must contain an explanation of the reason why the municipality is
creating the by-law and which of the three approved needs the by-law will address.
Prior to the passage of a licencing by-law, the municipality must hold at least one public
meeting to allow for input on the proposed by-law. Fees to be charged for licences shall
not exceed the costs directly related to the actual administration and enforcement of the
by-law. These costs may include the cost of preparation of the by-law, inspections and
enforcement and prosecution of offences. A by-law passed under the provisions of the
new Act shall expire five years after its passage unless it is repealed and replaced
sooner.
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The Act allows for a municipality to enter into an agreement with one or more
municipalities to arrange reciprocal licencing agreements. This agreement would allow
one municipality to issue a business licence on behalf of another or allow one
municipality to recognize the other's licence as valid within both municipalities. The
agreement can also speak to the sharing of services and payment of costs related to
the enforcement of the by-law.
As an alternative to licencing, a municipality may choose to register a business, trade or
occupation. Requirements for notice and grounds for the enactment of the by-law
remain the same as with licencing, however, registration does not require the inspection
of the vehicles or premises involved nor does it involve any municipal fees. As with
licencing, a registration by-law expires after five years.
The municipality is required to maintain a list for public inspection documenting all the
classes of businesses licenced and registered and the amount of all fees related to the
licence and how those fees were arrived at. Staff is working on the compilation of this
list.
Staff is currently reviewing all licencing by-laws and will be reporting to Council in the
near future.
6.0 Imoact of the New Municioal Act uoon the Finance Deoartment
6.1 General Provisions
Finance staff have reviewed the relevant sections of the new Act to determine the
provisions that affect the policies and procedures currently carried out by the Finance
Department. The Municipal Finance Officers Association has done significant work in this
area to assist its members in determining changes that need to be made. The following
represents a summary only of the significant items that need to be reflected in the
Finance Department's revised responsibilities. Some items in the Act are of a
housekeeping nature only and simply reflect the current practice that takes place in many
municipalities. For example, references to the Clerk have been removed in the provisions
affecting the tax roll and tax information. The Treasurer has replaced the reference to the
Clerk in these areas because tax information has been handled by the Treasurer in many
municipalities for many years. The summary below includes items that require a change
in process or policy.
Section
150(9)
1, 2003.
271
283
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REPORT NO.: CLD-059-02
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284(1 )
291
292
294(1 )(2)
299
300(1 )(2)
304
326
345(6)
347(2)
357(4)
373(1)
378(1 )
379(5)(b)
Statement of remuneration of Councillors due date extended from
Februa 28 to March 31.
Public notice re uirements for bud et meetin s.
Changes to financial reporting requirements by Ministry affecting
surplus/deficit (ie. Public Sector Accounting Board) may be phased
in sub'ect to re ulations.
Treasurer (formally Municipality) now guilty of an offence if the
Financial Information Return not submitted to the Province.
"Objectives and standards" added to efficiency and effectiveness for
potential new performance measures to be added to the Municipal
Performance Measures Pro ram.
Requirement to annually table report on efficiency and effectiveness
im rovements. Re ulations will follow.
Permits use of collection a enc for tax collection.
New s ecial area rate rovisions to consolidate former sections.
Municipality must pay interest on overpayments resulting from
munici al errors. This was formerl 0 tional.
Partial tax payments may be applied to earlier or later years.
Formerl ,it was re uired to be a lied a ainst earliest ears.
Treasurer now has until April 30 of year following tax year to apply
to MPAC if gross manifest error for municipal property. Formerly
there was no deadline
With respect to registration of tax arrears certificates:
. Improved land 3 years in arrears - tax sale;
. Vacant land chan ed from 2 to 3 ears.
Extension agreements can now be entered into with spouse or other
arties with an interest, not 'ust owner.
Treasurer may choose not to vest a property in the name of the
Municipality if a tax sale is unsuccessful. This can affect
roceedin s relatin to contaminated ro erties.
6.2 Prooosed Chanaes to the New Municioal Act
Bill 177, which has recently passed, changes some of the provisions indicated above.
They are primarily of a housekeeping nature only with two notable exceptions. Section
347(2) above is changed to note that application of tax payments will be to interest first,
oldest to newest, then to tax, oldest to newest.
The other change is to add a new section to allow the Treasurer to delegate powers
with respect to tax collection and to repeal Section 473(2) regarding the Tax Collector
deemed to be Deputy Treasure as of January 1, 2003. The intention is to allow the
Treasurer the option to delegate some authority back to the tax collector.
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6.3 Aoolicable Reaulations Filed in Coniunction with the New Municioal Act
The Municipal Finance Officers Association with the assistance of the Ministry of
Municipal Affairs and Housing prepared the following summary of the new regulations
that would have an impact upon Clarington.
6.3.1 Leasina - Reaulation 266/02
. Provisions with respect to council approval, lease terms and notification of upper
tiers apply to all leases extending beyond the current term of council. Leases
ending within the current term of council may be deemed to be "material" at the
discretion of the treasurer and accordingly subject to reporting requirements.
. Leases are required to include a schedule of payments of all fixed amounts (if
applicable) that are required under the terms of the lease as well as under any
extensions or renewals.
. Prior to council approval the treasurer shall prepare a report addressing the
following:
o A comparison of lease costs with other financing methods
o Effective financing rate(s)
o Contingent payment obligations
o Assumptions related to potential variations in lease payments
o Any additional relevant matters
. Council is required to assess the report and provide an opinion with respect to
the costs of financing for the proposed lease being lower than alternative
financing methods available to the municipality and the risks associated with the
lease(s) is reasonable.
. With respect to the proposed financing lease council is required to obtain legal
and financial advice. The council should consider obtaining the advice of
independent legal or financial advice should the scope of the proposed lease
warrant that additional expertise.
. Lower tier municipalities within regional municipalities are required to advise their
respective upper-tier municipalities of any material leases prior to passing the
by-law authorizing the agreement.
. Prior to entering into any new leases, councils are required to adopt a statement
of leasing policies. That statement is required, at a minimum, to address the
financial and other risks associated with leasing arrangements. Within this
statement the municipality may find it prudent to define "material" for the purpose
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of leasing within the municipality and the applicability of inclusion in the reporting
of those leases.
. The treasurer is required to prepare and present to the municipal council each
year, or may frequently as desired by council, a detailed report on all ongoing
leases.
. The leasing regulation became effective September 20, 2002.
6.3.2 Leasina and Debt & Financial Obliaation Limit - Reaulation 267102
. Housekeeping amendment establishes that all payments, current or capital,
under leases extending beyond the council term are to be included in the Ministry
calculation of the Annual Repayment Limit (ARL).
. Leases with expirations within the current term of council, but determined to be
"material" should also be included in the ARL calculation.
. Municipalities must include such payments when updating their ARL.
. Any payment under a long term lease is considered a long term financial
obligation and should be included in the ARL calculation.
. The regulation became effective September 20, 2002.
6.3.3 Eliaible Investments Reaulation 265/02
. Additional Investment Instruments
o Municipalities with an AA- or better credit rating are permitted to invest in
the following additional instruments
. Commercial Paper (minimum R-1 (mid) rating)
. Asset Backed Securities (minimum R-1 (high) 1 AAA rating)
o Other municipalities are permitted to invest in the previously mentioned
instruments only through participation in the investment pool offered by
the ONE Fund, sponsored by Local Authority Services Ltd. And CHUMS
Financing Corporation.
. Investment Policy Statement
o Municipalities could consider additional criteria in their investment policies
· Risk tolerance
. Preservation of capital
. Diversification of portfolio
. Obtaining legal 1 financial advice on proposed investments
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. Municipal Electricity Corporations
o Provided there is a pre-existing municipal investment in an electric
corporation, that investment is allowed to continue.
o Through the restructuring of existing municipal investments in electric
corporations no additional money can be provided by the municipality.
o Municipal investments in electric corporations are to rank equally with all
other unsecured debt issued by the municipal electric corporation.
o Municipalities must divest these investments within ten years.
o Upon disposition of such an investment the treasurer is required to report
the proposed use of funds so realized.
. The regulation became effective September 20, 2002.
Other regulations have also been filed but generally have applicability to the upper tier
only.
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Attachment #1
Spheres of Jurisdiction
Sphere of Jurisdiction Part of Sphere Upper-tier Municipality(ies) to which Exclusive or
Assigned Part of Sphere assigned Non-
Exclusive
Assi~mment
1. Highways, including Whole Sphere All upper-tier municipalities Non-exclusive
parking and traffic on
hiQhwavs
2. Transportation systems Airports All upper-tier municipalities Non-exclusive
other lhan hiahwavs
Ferries All uDDer-tier municiDalities Non-excl us ive
Disabled passenger Peel, Halton Non-exclusive
transDortation svstem
Bus passenger Waterloo, York Exclusive
transportation svstem
3, Waste management Whole sphere, except Durham, Halton, Lambton, Oxford, Peel, Exclusive
waste collection Waterloo, York
4. Public Utilities SewaQe treatment All counties, NiaQara, Waterloo, York Exclusive
Durham, Halton, Muskoka, Oxford, Peel Exclusive
Collection of sanitary All counties, Niagara, Waterloo, York Non-exclusive
sewaae
Durham, Halton, Muskoka, Oxford, Peel Exclusive
Collection of storm water All upper-tier municipali1ies Non-exclusive
and other drainage from
land
Water production trealment All upper-tier municipalities except counties Exclusive
and storaae
Oxford, Durham, Halton, Muskoka, Peel Exclusive
5. Culture, parks, recreation Whole sphere All upper-tier municipalities Non-exclusive
and heritaae
6. Drainage and flood control, Whole sphere All upper-tier municipalilies Non-exclusive
excepl storm sewers
7. Struclures, including Whole sphere, except Oxford Non-exclusive
fences and siQns fences and sians
8. Parking, except on Municipal parking lots and All upper-tier municipalities Non-exclusive
hiqhways structures
9, Animals None None
10. Economic Development Promotion of the Durham, Halton, Oxford Exclusive
Services municipality for any
purpose by the collection All counties, Muskoka, Niagara, Peel, Non-exclusive
and dissemination of Waterloo, York
informa1ion
Acquisition, development Durham, Halton, Oxford, Peel Exclusive
and disposal of sites for
industrial, commercial and
institulional uses
Lambton Non-exclusive
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