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A NEW MUNICIPAL ACT FOR ONTARIO: WHAT TO EXPECT

By Qunito M. Annibale

INTRODUCTION

Ontario municipalities are on the verge of change which will be unprecedented in the history of municipal governance since the enactment of the Baldwin Act in 1849; change more profound even than the radical fiscal restructuring that almost all municipalities have had to undergo recently. By this time next year, Ontario municipalities should be preparing to hold municipal elections pursuant to new electoral rules which are to be enacted within the next 2 months and will be learning to adjust to new legislative and administrative tools contained in a new Municipal Act which is to be enacted in the spring or summer of 1997.

In October 1995, the government announced the creation of an "Advisory Group on Municipal Government Reform" which is to make recommendations to the government as it seeks "to make meaningful reform to municipal structure and to legislation regulating municipalities".1 Ernie Hardeman, MPP for Oxford was appointed chair of the Advisory Group, which colloquially came to be known as the "Hardeman Committee".

In keeping with the philosophy of the Mike Harris government, the Committee was given a short time frame within which to act and make recommendations. The timetable was ambitious to say the least. The Committee was to have reported back to the government in time to permit enactment of a new Municipal Act in the fall of 1996 and well in time for the 1997 election.

Also in keeping with the philosophy of the current government, the Committee’s mandate did not provide for any kind of meaningful public consultation, at least not the kind that had become the norm in Ontario in recent years, leading up to the NDP planning reforms of the early 90s. In keeping with the experience of Ontario governments generally however, draft legislation is not yet available (at the time of writing of this paper). Given the magnitude and importance of the task which the government has undertaken, the inaccuracy of the government’s prediction with respect to timing was, to say the least, predictable.

The Committee’s work was to have parallelled the work of Anne Golden’s "GTA Taskforce" (the "Golden Commission" and presumably reforms in the structure of government and the delivery of service within the GTA would be accompanied by legislative changes for the whole of the province in the form of a new Municipal Act. As noted below, the government has since expressly indicated an intention to deal with assessment reform, one aspect of the Golden Commission’s review as part of the ongoing reform initiative. However, we can only presume that the balance, government structure and methods of service delivery, will also be dealt with in due course as part of the same process.

"WHO DOES WHAT" PANEL ("WDW")

The work of the Advisory Group appears to have been unceremoniously subsumed into the mandate of yet another advisory group in the middle of this year. On May 30, 1996 the Government announced the creation of a new "panel" which was charged with the much broader responsibility of clarifying the role of various governments in Ontario and determining "who does what". Thus was born the "Who Does What" Panel (the "WDW"). The panel was asked to review every area of responsibility shared by the province with municipalities. Specifically, the mandate of the Panel was to eliminate duplication and over-regulation and divide responsibilities (in philosophy, similar to the "disentanglement" exercise of 1993) among levels of government.

The Hardeman Committee has not been disbanded and continues to do its work. The WDW mandate indicates that the panel will "build on" the work already (and continuing to be) done by the Hardeman Committee.2 The Hardeman Committee appears now to be acting in an advisory capacity to the WDW, and many of the ideas and recommendations of Hardeman are being incorporated into the WDW recommendations.

However, it seems that the primary responsibility of Hardeman continues to be recommending what the new Municipal Act will look like (i.e. how the province will grant power or responsibility to the province) and the WDW will determine (recommend) what those powers should be.

David Crombie, former mayor of Toronto and former federal cabinet minister, was appointed chair of the now 14 member panel. Membership on the panel consists of elected and appointed municipal officials and politicians.3 The panel consists of a number of "sub-groups" of panel members, each charged with responsibility for a particular area or areas of jurisdiction. To date, 5 "sub-panels" as they are now called have been constituted. They are:

1) Assessment and Property Tax Reform

2) Transportation and Utilities

3) Municipal Administration

4) Emergency Services

5) Social Services

A sixth panel on Education is scheduled to be established shortly. What follows is a brief discussion of the mandate, and a summary of recommendations to date made by each sub-panel.

1. Assessment and Property Tax Reform

This sub-panel was charged with the responsibility of reviewing the plethora of information already undertaken on behalf of government with respect to reforming the property tax assessment system in Ontario. As mentioned above, the sub-panel is reviewing the recommendations of the Golden Commission on tax assessment and will recommend to government the most appropriate province wide system of assessment. All indications are that it will recommend some form of Actual Value Assessment based on the British Columbia model. The government has indicated that tax assessment will be given a priority because of the crisis in assessment in Ontario.4 One fact that both critics and supporters of the government’s reforms agree upon is that the current system is broken and needs fixing.

Either this sub-panel or the sub-panel dealing with Education will deal with the issue of how our school system should be funded (should it be funded through the municipal tax system? should assessment revenue be pooled?). Already the government has indicated that one option being considered is the abolition of school boards and the setting of curriculum by the province, with some input at the local level. Locally elected municipal representatives seem like good candidates for this role.

On August 20, 1996 this sub-panel reported to the Minister with the following specific recommendations:5

a) By 2004, the new assessment system should be fully implemented. In the interim, assessment values will be updated at two to three year intervals. Following 2004, values will be updated annually. It is believed that a province-wide single assessment system which is updated annually will prevent the inconsistent assessment practices which have developed under the current system;

b) Province-wide three year rolling averages should be implemented to temper any sharp fluctuations in property assessments;

c) The recommendations are quite vague in explaining what the basis of assessment will be (the $64,000.00 question), other than to say that value will be determined based on current use, determined by looking at current sales and rentals and not on speculative values. In addition, the panel recommends that special consideration will have to be given to properties in transition (obsolete buildings, vacant properties or properties in areas undergoing major re-development);

d) The cost of the re-assessments to be implemented as a result of this process and any appeals arising from it, should be borne by the province;

e) The concept of "mill rate" should be replaced with one which is actually understandable by ratepayers. The sub-panel recommends adoption of a "tax rate", expressed as a percentage of the assessed value of property as the basis for the calculation of the tax payable. The sub-panel feels this will allow ratepayers to understand the relationship between assessed value and tax paid;

f) Municipalities should be able to set variable "tax rates" for different classes of property, subject to provincial parameters which are narrow enough to prevent destructive tax competition or bonusing. Municipalities outside of these parameters will only be permitted to move closer, not further away from these parameters;

g) Ostensibly for economic development reasons, the sub-panel has recommended that only municipalities, and not school boards, be responsible for establishing these variable tax rates;

h) As indicated, the sub-panel has recommended that the new system will be fully in place by 2004. In the interim, it has suggested that municipalities be given the opportunity to choose how to "phase in" the tax changes which result from the new basis of assessment, over a period of up to eight years. Municipalities should be allowed to phase in tax increases at a rate different than decreases;

i) Tax changes should be introduced in equal annual installments or alternatively, with the greater changes occurring in the earlier years of the phase in, regardless of the time period chosen. Assessment updates would not extend the phase in period;

j) The impact of renovations, additions, business changes, zoning changes or conversions to condominium should not be phased in;

k) Municipalities should be able to offer low income seniors who own homes a tax deferral, at a market rate of interest;

l) Recommendations with respect to multi-unit residential properties are yet to be determined;

m) Relief for small businesses whose taxes would rise substantially (either because their assessments are based on outdated values or because they have historically been under-assessed when compared to larger retailers) should be given through tax measures, and not through adjustment in assessment, subject to restrictions on bonusing. In addition, municipalities should be given the ability to create a special property tax class for small retail properties;

n) The Committee has also announced that it will be making further recommendations with respect to:

i) business occupancy tax for small retailers;

ii) governance issues surrounding variable tax rates, phase in policy, collection of taxes and apportionment of costs. (i.e. which level of local government should do this);

iii) development charges;

iv) exempt properties;

v) payments in lieu of taxes;

vi) creation of additional classes of properties (linear properties, multi-unit residential properties, farms, managed forests, conservation lands, international bridges, farmlands under development, hotels and recreational properties);

vii) telecommunications tax; and

viii) provincial land tax.

2. Transportation and Utilities

This panel is attempting to unravel and clarify responsibilities and jurisdiction for utilities, roads, transit, sewer and water. With respect to roads, it is rumoured that responsibility for all but "4-series" highways in Ontario will be devolved to municipalities.

In an interim report,6 this sub-panel has already recommended that municipalities be given responsibility for the inspection and approval of septic systems. The cost of undertaking this function will be recovered from applicants (a continuation of the "user fee" reforms contained in Bill 267) and all provincial subsidization of this function will end. The government has recognized a continuing provincial interest in ensuring minimum health and environmental quality standards, monitoring of the quality of the overall environment and in ensuring a consistent quality of septic system installation across the province. Therefore, the sub-panel has recommended that the province continue to be responsible for the licensing and certification of septic system installers.

In the area of community transportation, the sub-panel has endorsed the recommendations of the Community Transportation Action Program (CTAP) of the MTO to assist communities in co-ordinating and integrating transportation services (school buses, public transit, disabled transit and ambulances).

The sub-panel has given a preliminary endorsement to the principle of municipal jurisdiction over the treatment of sewage and water.

It is also expected that this sub-panel will make recommendations on GO Transit and ferry services.

3. Municipal Administration

This sub-panel will look at all aspects of municipal administration, including provincial offences, the Ontario Building Code and Act, and labour relations. This sub-panel has already made some significant and far reaching recommendations with respect to municipal legislation (discussed below).

Generally speaking, this sub-panel has recommended flexibility in the legislation, less provincial regulation and removal of the need for complex provincial legislation to authorize municipal action in an increasingly complex local environment. In tandem with this, the panel is recommending that the philosophy of allowing municipalities to develop and access new sources of revenue, commenced with the expansion of user fee powers in Bill 26, will be expanded. Since many of the WDW recommendations appear to be "down loading" new areas of service delivery to municipalities, new sources of revenue must be found.

In order to have legislation in place for the November 1997 Ontario municipal elections, the government has indicated it will be phasing Municipal Act reform. Phase 1 will consist of new electoral rules, which must be in place by January 1, 1997 to be effective for the next election. This legislation is to be introduced this fall. The balance of the reforms (Phase 2) are now scheduled for legislative introduction in the spring of 1997.

Some8 of the more significant recommendations of this sub-panel are:

a. Legislative

A new Municipal Act giving municipalities "natural person powers" for the purposes of carrying out administrative functions and granting legislative authority on the basis of the "spheres of jurisdiction" model (as done in the Municipal Government Act of Alberta (the "MGA")9) rather than the "prescriptive grant of authority" model as in the existing Act, is proposed. This model of legislation is discussed below. It is intended that the new act will also result in new powers of taxation and regulation.

b. Municipal Elections

i) Complete local control over size, composition, title and method of election of local Councils (subject to a minimum of 5 members and a Head of Council);

ii) Voting day to be changed from the second Monday in November to the Thursday after Thanksgiving (October 16 in 1997);

iii) All elected bodies will be able to place a question on the ballot, without OMB approval;

iv) The existing Municipal Elections Act will be streamlined and modernized to permit as much local discretion as possible;

v) Municipalities will be permitted to utilize alternative voting methods such as phone-in or mail-in voting;

vi) Eliminate the need for a specific municipal enumeration;

vii) Nomination and registration papers will be a paper copy with an original signature. No faxed copies will be permitted;

viii) The Clerk will conduct a lot to determine the order of appearance of names on a ballot;

ix) Any person will be able to bring a court action for violations of campaign finance provisions;

x) A Council or local board will be permitted to undertake a compliance audit;

xi) Campaign contributions, fund raising and expenses will only be permitted during the campaign period;

xii) Clarify that services donated by people acting on a volunteer basis do not count as a campaign contribution;

xiii) The number of prescribed municipal election forms should be reduced from 40 to 5.

 

c. Other Phase I Recommendations

i) Eliminate tax free allowances for local government representatives (the government has indicated that it will not be moving to implement this recommendation in the Phase 1 reforms);10

ii) Eliminate inquiries into municipal conduct under the Municipal Act, Section 178;

iii) Delegate authority of non-legislative duties to committees and staff by Council, subject to limitations;

iv) Complementary amendments to facilitate these recommendations, including the repeal of Private Acts which deal with i) under the heading of "Municipal Elections" above.

d. Debt and Investment

i) The Trustee Act11 will form the basis for defining municipal investment powers and Cabinet will be able to add or delete eligible investments and prescribe conditions by regulation;

ii) Prescribed municipalities will be able to issue variable rate debentures, subject to regulations which will prescribe the pre-conditions of issuance of same. Recommended pre-conditions relate to amount of debt that may constitute variable debentures (15%of gross debt), the credit rating of the municipality (AA minus), indices to be used (BA and LIBOR rate), requirement to "hedge" (fix) rate (not principal) after one year and reporting requirements related to variable rate debenture issues;

iii) Allow municipalities and prescribed public sector bodies to cover each other’s short term borrowing requirements.

e. Pensions

i) A number of changes the Ontario Municipal Employees Retirement System Act (the "OMERS Act")12 and regulations, which appear to be largely housekeeping or administrative in nature, have been made. The three most significant appear to be:

a) The OMERS board will be permitted to index pensions to a prescribed extent;

b) Assets will be permitted to be transferred from OMERS to private sector plans; and

c) The OMERS board will not be permitted to make final decisions on benefits.

The Minister has indicated that the government will not be moving on the recommendations of this sub-panel on pensions in the first phase of amendments (for this fall).13 The reason given is that these recommendations will be reviewed when the government moves to reform pensions in general.

f. Municipal Liability

Of greater interest to municipal lawyers will be this sub-panel’s recommendations with respect to municipal liability. Over the last decade, we have seen the increasing exposure of municipalities to liability and the erosion of municipal statutory and common law defences in our courts. The sub-panel on Municipal Administration has made some significant recommendations in this area:

i) Nuisance Liability

That municipalities and their Public Utility Commissions be provided immunity from liability resulting from nuisances that are caused by the failure of municipal sewer and water systems.

ii) Joint and Several Liability

That the existing framework of joint and several liability under the Negligence Act be replaced by a new process which would reallocate the share of liability of any defendant that is unable to pay his or her share (i.e. insolvent, carry inadequate insurance, or untraceable) to all remaining defendants and the plaintiff (if found to be partially at fault), according to their relative shares of fault. That payments be limited to two times the liability. However, the government has indicated that because this recommendation has implications beyond the municipal sector, it will require more study.14

iii) Negligence Liability for Statutory Duties

That current statutory duties requiring municipalities to maintain roads, bridges and sidewalks, to maintain property in a condition that is safe for occupants and to inspect the construction of buildings be maintained.

That existing common law protections from liability arising from the performance of these statutory duties by municipalities be codified in legislation.

iv) Negligence Liability for Discretionary Functions

That existing common law protections from liability arising from municipalities’ performance or failure to perform discretionary functions be codified in legislation.

g. Provincial Offences Act

The sub-panel has made the following recommendations with respect to Provincial Offences:

i) Transfer of the enforcement and prosecution of Part I Offences (Certificate of Offence) and completion of the transfer of the enforcement and prosecution of Part II Offences (Parking Infractions) to municipalities. Part III Offences (Information) will continue to be enforced and prosecuted by the province;

ii) Fine revenue for these new responsibilities will be redirected to the municipalities (presumably by amendment to the Fines and Forfeitures Act or the inclusion in the new Municipal Act, or both.15

4. Emergency Services

This panel will examine the delivery of emergency services, including police, fire and ambulance services. Presumably the issue of whether the delivery of fire services at the local level is the model for the future (especially in the Metro and many regional municipalities where there are a number of local departments providing firefighting services). To date, no specific recommendations have been released by this sub-panel.

 

5. Social Services

This panel will examine the role of the province and municipalities in the delivery of social services, including social assistance, employment services, public health, homes for the aged, child care, child welfare and social housing. To date, no specific recommendations have been released by this sub-panel.

However, left vague (purposely, I think) in all the recommendations of the WDW panel is a clear indication as to which level of municipal government (local or upper tier) will be responsible for these new areas of jurisdiction. Presumably this will be made clearer when the government announces its intentions with respect to the restructuring of municipal boundaries and responsibilities as between local and upper tier municipalities (if any). It is expected that the Golden recommendations will be dealt with at that time.

ALBERTA’S MUNICIPAL GOVERNMENT ACT: THE MODEL FOR ONTARIO?

Although neither the press releases surrounding the WDW recommendations, nor the recommendations themselves indicate so, there appears little doubt that the new Municipal Act for Ontario will be modelled on the MGA of Alberta and the principles of "natural person powers" and "spheres of jurisdiction" (certainly both the press releases and the recommendations do say that the concepts of natural person powers and spheres of jurisdiction will be adopted). This conclusion is inescapable given the similarities between the language used and the concepts being put forward in Ontario and those which came to the fore during the development of the MGA. For example, when making recommendations with respect to a new Municipal Act for Alberta, the Municipal Statutes Review Committee expressed a concern about the potential of the natural person power approach; it foresaw that some restrictions would be necessary in relation to other municipalities, the province and the general public interest.16 In the August 14, 1996 recommendations of the WDW sub-panel on Municipal Administration, the following statement appears:

"... municipalities would be accorded the authority, rights, powers and privileges of a natural person, except to the extent that these powers are limited by legislation. The limits are intended to protect the interests of the public, other municipalities, and the Province."17

As a result, the Committee recommended, and the legislature adopted, the safety net (from the province’s point of view) provision that the natural person powers and spheres of jurisdiction would be subject to any limitation set out in provincial legislation. Ontario appears poised to do the same.

In order to get a feel for how the new Ontario Act will be drafted, it is useful to review the principles underlying the MGA and the structures of the Act itself. Since the Act itself was adopted in 1994 and proclaimed in force as well as amended in 1995, there is not a lot of jurisprudence available to guide us in predicting how the courts in Ontario might interpret these new powers. The decisions rendered since the MGA came into effect are listed in Appendix "D". Unfortunately, they are not terribly insightful in understanding the new concepts in the MGA and amazingly, none of the cases deal with a challenge to the natural person powers or spheres of jurisdiction approaches.

 

The Process

The legislation which pre-dated the MGA in Alberta was enacted in 1967.18 In the 1986 Speech from the Throne, the Alberta government of the day committed itself to a review of the MGA and related legislation. In 1987, the government established the Municipal Statutes Review Committee, which embarked on a seven year process, culminating in the enactment of the MGA in 1994.

By contrast, the Ontario Municipal Act finds its origins in the Baldwin Act of 1849. The provincial government established the Advisory Group on Municipal Government Reform almost exactly one year ago and gave it a mandate to recommend a new Municipal Act for introduction into the Ontario legislature within one year (by now). Quite a difference in timing.

The Approach

As mentioned, the MGA adopts the "Natural Person Powers" and "Spheres of Jurisdiction" principles of delegation of powers. The majority of municipal legislation in Canada is what is referred to as "prescriptive" in nature meaning that it prescribes in detail all of the powers of a municipality. In Ontario, and in most provinces, a municipality is established as a "creature of statute"19 and therefore has only those powers which are expressly granted to it or which can necessarily implied or are necessarily incidental to the express grant.20

The Municipal Act of Ontario contains precious few broad grants of power and those that do exist (such as the health, safety, morality and welfare provision contained in the current Section 102 and the authority to abate public nuisances in Section 210, paragraph 140) have been narrowed by the courts to the point where they are almost21 meaningless. Thus, municipal legislation has ballooned to some 150 separate pieces of legislation22 taking up over 1400 pages in the provincial statute books. The current Ontario Act sets out in "mind numbing detail",23 what powers a municipality has and the areas in which it may legislate. While the MGA does many other things, this paper will primarily review the provisions of the MGA related to the concepts of Natural Person Powers and Spheres of Jurisdiction.

General

The MGA itself is quite lengthy, consisting of some 645 sections when it first came into effect, and 740 sections when the 1995 amendments came into effect (in May of that year). The length of the Act is largely due to the fact that it contains most of the legislation applicable to municipalities (including planning which was added in 1995, the establishment and operation of public utilities, access to information, property assessment and taxation, a planning appeal tribunal (the Municipal Government Board) and matters of expropriation). A complete index of the 1994 MGA is set out in Appendix "A". Parts 1 and 2 of the MGA set out how the concepts of natural person powers and spheres of jurisdiction are to work. Part 3 of the MGA contains additional powers which the drafters of the legislation felt that the grant of natural person powers did not give to municipalities, in addition to the inability to make laws (covered by Section 7 spheres of jurisdiction approach). As well, Part 3 contains the limits on the grant of natural person powers which the drafters felt were necessary because they might be interpreted as having been included.24 Therefore Part 3 includes the power to expropriate, the power to regulate and manage roads, the power to tax, the ability to provide services in other municipalities and the power to declare public holidays. We also see restrictions on the disposal of land, the acquisition of mines and minerals, the acquisition of land beyond the municipal boundaries, the control of for profit corporations and the regulation of firearms.

These sections are the culmination of a process in which the drafters of the MGA reviewed all of the existing legislation applicable to municipalities and made a determination as to whether the existing power or authority would be included in the grant of natural person powers or fall within one of the general spheres of jurisdiction. It also had to undertake the opposite exercise of trying to anticipate all of those new powers that a general grant of authority and a grant of natural person powers would give to municipalities. This was necessary to determine if such a grant of authority needed to be specifically restricted in this or another provincial act. If the MGA model is adopted in Ontario, legislative counsel at Queen’s Park will have to undertake the same monumentous task with respect to the 1400 pages of municipal related Ontario legislation.

Natural Person Powers

Broadly stated, the "natural person powers" concept reverses the concept of "prescriptive" delegation of authority by giving to municipalities all of the powers and capacity of a natural person. Thus, the municipality is given the power to enter into contracts, deal with all matters of an administrative nature, buy and sell goods and services, buy and sell land, hire and fire employees, make investments and borrow money. However, as a natural person, a municipal corporation does not have the power to make laws. Therefore, "natural person powers" are intended to give municipalities greater latitude in its ability to act administratively. Flexibility is achieved by the grant of "spheres of jurisdiction", rather than specific prescriptions of power (discussed below).

Section 6 of the MGA reads as follows:

"A municipality has natural person powers, except to the extent that they are limited by this or any other enactment."

Sub-section 1(1)(t) of the MGA defines "natural person powers" as "the capacity, rights, powers and privileges of a natural person". "Natural person" however is not defined in the MGA, nor is it defined in the Alberta Interpretation Act. The latter does however define "person" to include a corporation. The Ontario Interpretation Act is similar.

Therefore, it will be left to the common law and the courts to determine the full extent of the "natural person" powers, based presumably on the plain and ordinary meaning of the words.

Also of relevance is Section 4 which states "A municipality is a corporation".

Spheres of Jurisdiction

Section 7 of the MGA sets out the 9 general spheres of jurisdiction. It reads as follows:

"A council may pass by-laws for municipal purposes respecting the following matters:

(a) the safety, health and welfare of people and the protection of people and property;

(b) people, activities and things in, on or near a public place or place that is open to the public;

(c) nuisances, including unsightly property;

(d) transport and transportation systems;

(e) businesses, business activities and persons engaged in business;

(f) services provided by or on behalf of the municipality;

(g) public utilities;

(h) wild and domestic animals and activities in relation to them;

(i) the enforcement of by-laws made under this or any other enactment, including any or all of the following:

(i) the creation of offences;

(ii) for each offence, imposing a fine not exceeding $10,000 or imprisonment for not more than one year, or both;

(iii) providing for the imposition of a penalty for an offence that is in addition to a fine or imprisonment so long as the penalty relates to a fee, cost, rate, toll or charge that is associated with the conduct that gives rise to the offence;

(iv) providing that a specified penalty prescribed under section 42 of the Provincial Offences Procedure Act is reduced by a specified amount if the penalty is paid within a specified time;

(v) providing for imprisonment for not more than one year for non-payment of a fine or penalty;

(vi) providing that a person who contravenes a by-law may pay an amount established by by-law and if the amount is paid, the person will not be prosecuted for the contravention;

(vii) providing for inspections to determine if by-laws are being complied with;

(viii) remedying contraventions of by-laws."

Upon review of Sub-section 7(a), one sees obvious similarities between the language used and the language used in Section 102 of the existing Ontario Act, which reads as follows:

"General Power.-Every council may pass such by-laws and make such regulations for the health, safety, morality and welfare of the inhabitants of the municipality in matters not specifically provided for by this Act and for governing the conduct of its members as may be deemed expedient and are not contrary to law."

As we know, the courts have over the years gradually narrowed the ability of municipalities to rely on Section 102 as a grant of substantive powers to the point where Section 102 now has more symbolic meaning than anything else.25 This leads to the obvious question of what then is to prevent the courts from interpreting the spheres of jurisdictions in the same manner that the Ontario courts have interpreted Section 102?

The answer lies in the language of Sections 8 and 9 of the MGA. In these 2 sections the MGA drafters have attempted (just as they did in Part 3 with the grant of special powers in addition to natural person powers on the one hand and the restrictions on the general grant on the other) to strike a balance between flexibility and control. Section 8 sets out how the powers of Section 7 are to be utilized. It enumerates, with greater clarity the full extent of the by-law making power granted by Section 7. It provides:

"Without restricting section 7, a council may in a by-law passed under this Division

(a) regulate or prohibit;

(b) deal with any development, activity, industry, business or thing in different ways, divide each of them into classes and deal with each class in different ways;

(c) provide for a system of licences, permits or approvals, including any or all of the following:

(i) establishing fees for licences, permits or approvals, including fees for licences, permits and approvals that may be in the nature of a reasonable tax for the activity authorized or for the purpose of raising revenue;

(ii) establishing fees for licences, permits and approvals that are higher for persons or businesses who do not reside or maintain a place of business in the municipality;

(iii) prohibiting any development, activity, industry, business or thing until a licence, permit or approval has been granted;

(iv) providing that terms and conditions may be imposed on any licence, permit or approval, the nature of the terms and conditions and who may impose them;

(v) setting out the conditions that must be met before a licence, permit or approval is granted or renewed, the nature of the conditions and who may impose them;

(vi) providing for the duration of licences, permits and approvals and their suspension or cancellation for failure to comply with a term or condition or the by-law or for any other reason specified in the by-law;

(d) provide for an appeal, the body that is to decide the appeal and related matters." Similarly, Section 9 acts almost as a statutory interpretive aid by clarifying that the by-law making power is intended to give broad authority to councils in the manner they see fit, but within the jurisdiction given to them by the MGA (Sub-section 9(a)). Sub-section 9(b) appears to be intended to signal to the courts that the Act was drafted in anticipation of the role of municipal governments changing over time. It appears to be saying that the intention of the legislation is to give municipalities jurisdiction over new matters, areas or issues as they arise in the future, without the necessity of further amendment to the act; a sort of "municipal living tree". Section 9 reads as follows:

"The power to pass by-laws under this Division is stated in general terms to

(a) give broad authority to councils and to respect their right to govern municipalities in whatever way the councils consider appropriate, within the jurisdiction given to them under this or any other enactment, and

(b) enhance the ability of councils to respond to present and future issues in their municipalities."

By contrast, Section 3 sets out what the "municipal purposes" mentioned in the pre-amble to Section 7 are meant to be. It sets out the larger parameters of the spheres of jurisdiction. It reads:

"The purposes of a municipality are

(a) to provide good government,

(b) to provide services, facilities or other things that, in the opinion of council, are necessary or desirable for all or a part of the municipality, and

(c) to develop and maintain safe and viable communities."

Despite the pronouncement in Section 4 that the municipality is a corporation and the broad grant of natural person powers in Section 6, it is Section 3 that ensures that these powers will be exercised for municipal purposes only. In this way, the municipality will not have all of the powers of a business corporation, nor all of the powers of a natural person. However, within the sphere of municipal purposes, it will share all of the characteristics of those two entities (or concepts).

The only other restrictions on the by-law making power are found in Sections 10 (conflicts with by-law making powers granted by other statutes), 12 (applicable within municipal boundaries only (with exceptions) and 13 (which gives paramountcy to provincial legislation).

Necessity of a By-law: Natural Person or Sphere of Jurisdiction

Traditionally, municipalities have been granted authority to do some things specifically by by-law only, some things by resolution and some things by either method. Section 180(2) of the MGA attempted to clarify this distinction by providing that:

"Where a council or municipality is required or authorized under this or any other enactment or by-law to do something by by-law, it may only be done by by-law."

However, this section created a problem because of the very fact that natural person powers were intended to remove the requirement of specific statutory or by-law authority for acts considered to be of an administrative nature. The issue arises26 when there is an overlap between an act authorized under natural person powers and also authorized under the spheres of jurisdictions. For example, the natural person power to hire, fire and remunerate employees might overlap with the sphere of jurisdiction power to run a public transit system.

Section 180(2) might be interpreted to mean that the hiring or firing of employees of a Transit Commission might require a by-law. Section 11 solves this problem. It provides:

"11(1) Despite section 180(2), a municipality may do something under its natural person powers even if the thing could be done under a by-law passed under this Division.

(2) Section 7(i) does not apply to a by-law passed under a municipality’s natural person power."

Thus, the hiring or firing of employees in this scenario could be done by by-law or resolution or could be delegated to the Chief Administrative Officer.

Generally speaking, it appears that natural person powers can be exercised by council by either by-law or resolution or may be delegated to the Chief Administrative Officer. Spheres of jurisdiction powers, generally speaking, must be exercised by council, by by-law only, unless it also involves the exercise of a natural person power, in which case the Section 11 exception mentioned above kicks in. This seems to be the combined effect of Sections 202, 180, 11, 7 and 6 of the MGA.

CONCLUSION

The balancing act of competing interests demonstrates how difficult moving away from a system of prescriptive grants of power can be. The effectiveness of the drafting will remain to be seen. While a number of decisions, both reported and unreported, have been given by the Alberta courts under the new act, few of them really test the effectiveness of the new approach (evidence either of the superb drafting or the relative newness of the legislation (a combination of both I think)).

While the radical departure in approach of MGA probably will make it "the model for municipal legislation in Canada well into the next century, just as the Ontario Act has been the model for this century",27 the MGA did not go so far as to grant municipalities constitutional status, nor did it even adopt the plenary powers approach (i.e. municipalities authorized to legislate in any field in which the province is competent to legislate and in which it has not). These approaches have been advocated by a number of people or organizations over the years.28 It stopped short of both of those more extreme models of local governance. Notwithstanding, it appears so far to have worked for the province of Alberta. Whether it can be effectively harnessed in Ontario will be seen shortly. I think it is safe to say that, in Ontario at least, there is very little, if any consideration being given to either of the constitutional or plenary power models. I believe a constitutional amendment for municipalities is out of the question and I think the granting of the kind of power inherent in the plenary powers approach is politically out of the question given the population skews in the Greater Toronto Area, as compared to the rest of the province. It has been long said that the province would never create a local authority with as much (or nearly as much) power as itself. If that is true, the best we could hope for as municipal solicitors is an act modelled on the Alberta Act.


  1. Terms of Reference of the Advisory Group on Municipal Government Reform (October 18, 1995, Minister of Municipal Affairs at the 1995 Annual Conference of Association of Municipalities of Ontario).
  2. Memorandum from David Crombie, Chair, "Who Does What" Panel and Peter Meyboom, Chair, Municipal Administrations Sub-panel to The Honourable Al Leach, Minister of Municipal Affairs and Housing containing recommendations of the sub-panel on municipal administration, August 14, 1996.
  3. "Who Does What" Panel Members: David Crombie, Chair, William F. Bell, Mayor, Town of Richmond Hill, Gordon Chong, Councillor, Municipality of Metropolitan Toronto, Morley L. Daiter, Chief Administrative Officer, City of North Bay and President, Ontario Good Roads Association, Grant Hopcroft, Deputy Mayor, City of London and Member of the Advisory Group on Municipal Government Reform, Giséle LaLonde, former Mayor the City of Vanier and former Chair of the Ottawa Roman Catholic Separate School Board, Steve B. Lowden, past President at Metropolitan Toronto Board of Trade and Vice-Chair of Sobeco Ernst & Young, Hazel McCallion, Mayor, City of Mississauga and Chair of the Greater Toronto Area Mayors' Committee, Tom McCormick, Consultant and President of Strategic Projections Inc., Peter Meyboom, Interim Chief Administrative Officer, City of Ottawa and Principal of P. Meyboom Consulting Services Inc., Marion Millman, Reeve, Township of Yarmouth and Second Vice-President of Ontario Good Roads Association, Enid Slack, Economic Consultant and President of Enid Slack Consulting Inc., Douglas Pearcy, Reeve, Village of Norwood and Warden of Peterborough County, Terry Cooke, Chair, Region of Hamilton-Wentworth.
  4. The Honourable Al Leach, Minister of Municipal Affairs and Housing in the Ontario Legislature, May 30, 1996.
  5. Letter from David Crombie, Chair, "Who Does What" Panel to the Minister of Municipal Affairs and Housing dated August 20, 1996 setting out the second report from the "Who Does What" Advisory Sub-panel on assessment and property tax reform.
  6. Letter from David Crombie, Chair, "Who Does What" Panel and William F. Bell, Chair, Transportation and Utilities Sub-panel to The Honourable Al Leach, Minister of Municipal Affairs and Housing dated August 14, 1996 containing the status report of the Transportation and Utilities Sub-panel.
  7. Now section 220.1 of the Municipal Act, R.S.O. 1990, c. M.45.
  8. Memorandum from David Crombie, Chair, "Who Does What" Panel and Peter Meyboom, Chair, Municipal Administration Sub-panel to The Honourable Al Leach, Minister of Municipal Affairs and Housing dated August 14, 1996 containing recommendations of the sub-panel on municipal administration; the balance of the recommendations are contained in Appendix "E".
  9. Municipal Government Act, S.A. 1994, c. M-26.1, as amended by the Municipal Government Act, 1995, c. 24.
  10. Minister Leach's letter to all heads of council dated October 14, 1996 under cover of the Ministry of Municipal Affairs and Housing, Office of the Minister.
  11. Trustee Act, R.S.O. 1990, c. T.23.
  12. Ontario Municipal Employees Retirement System Act, R.S.O. 1990, c. O.29.
  13. Minister Leach's letter to all heads of council dated October 14, 1996 under cover of the Ministry of Municipal Affairs and Housing, Office of the Minister.
  14. Ibid.
  15. Fines and Forfeitures Act, R.S.O. 1990, c. F.13.
  16. Forgrave, Tom, The Alberta Municipal Government Act: How We Got There, Canadian Institute for the Administration of Justice, Regulations and By-laws; Real Laws in the Real World, November 27-28, 1995, Ottawa, page 12.
  17. Memorandum from David Crombie, Chair, "Who Does What" Panel and Peter Meyboom, Chair, Municipal Administration Sub-panel to The Honourable Al Leach, Minister of Municipal Affairs and Housing dated August 14, 1996 containing recommendations of the sub-panel on municipal administration; the balance of the recommendations are contained in Appendix "E".
  18. Municipal Government Act, S.A. 1967.
  19. I. MacF. Rogers, Q.C., The Law of Canadian Municipal Corporations (2d) Carswell 309.
  20. Ibid.
  21. For example, Section 102 has been held by the courts to be insufficient authority for the enactment of a by-law regulating gambling devices (Re Morrison and the City of Kingston, [1938] O.R. 21 (C.A.) (1932)). An example of where the provision has been successfully used is Re Weir v. R. (1979), 26 O.R. (2d) 326.
  22. Association of Municipalities of Ontario, Ontario Charter: Proposed Bill of Rights for Local Government, Policy Direction Series 1994, page 7.
  23. News Release of the "Who Does What" Panel recommending a new Municipal Act, August 14, 1996, page 1.
  24. As expressed by Brand Inlow of the City of Calgary Law Department in a paper presented to the Canadian Institute for the Administration of Justice in Ottawa on November 27, 1995 called The Alberta Municipal Government Act: A Municipal Perspective, page 5.
  25. See footnote 21.
  26. As pointed out by Alex Fyfe, Legislative Counsel, Government of Alberta in a paper called A New Approach to Enabling Legislation - Alberta's Municipal Government Act presented to the Canadian Institute for the administration of justice in Ottawa on November 27-28, 1995, page 5.
  27. Forgrave, Tom, an article called The New Alberta Municipal Government Act presented to the National Institute of Municipal Law Officers at its conference in Edmonton on September 14, 1992, page 2.
  28. The Association of Municipalities of Ontario in Ontario Charter: A Proposed Bill of Rights for Local Government, Policy Direction Series 1994; Don Lindstone, both in Municipal Lawyer, July/August 1996 at page 36 and in Municipal World, August 1996, as well as to a certain extent Craig MacFarlen in Municipal Law Reform in Ontario in a paper presented to NIMLO on October 13, 1995 in Chicago.

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