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Community Charter

[SBC 2003] CHAPTER 26

Part 6 — Financial Management

Division 1 — Financial Planning and Accountability

Fiscal year

164  The fiscal year for a municipality is the calendar year.

Financial plan

165  (1) A municipality must have a financial plan that is adopted annually, by bylaw, before the annual property tax bylaw is adopted.

(2) For certainty, the financial plan may be amended by bylaw at any time.

(3) The planning period for a financial plan is 5 years, that period being the year in which the plan is specified to come into force and the following 4 years.

(3.1) The financial plan must set out the objectives and policies of the municipality for the planning period in relation to the following:

(a) for each of the funding sources described in subsection (7), the proportion of total revenue that is proposed to come from that funding source;

(b) the distribution of property value taxes among the property classes that may be subject to the taxes;

(c) the use of permissive tax exemptions.

(4) The financial plan must set out the following for each year of the planning period:

(a) the proposed expenditures by the municipality;

(b) the proposed funding sources;

(c) the proposed transfers to or between funds.

(5) The total of the proposed expenditures and transfers to other funds for a year must not exceed the total of the proposed funding sources and transfers from other funds for the year.

(6) The proposed expenditures must set out separate amounts for each of the following as applicable:

(a) the amount required to pay interest and principal on municipal debt;

(b) the amount required for capital purposes;

(c) the amount required for a deficiency referred to in subsection (9);

(d) the amount required for other municipal purposes.

(7) The proposed funding sources must set out separate amounts for each of the following as applicable:

(a) revenue from property value taxes;

(b) revenue from parcel taxes;

(c) revenue from fees;

(d) revenue from other sources;

(e) proceeds from borrowing, other than borrowing under section 177[revenue anticipation borrowing].

(8) The proposed transfers to or between funds must set out separate amounts for

(a) each reserve fund under Division 4 of this Part, and

(b) accumulated surplus.

(9) If actual expenditures and transfers to other funds for a year exceed actual revenues and transfers from other funds for the year, the resulting deficiency must be included in the next year's financial plan as an expenditure in that year.

Public process for development of financial plan

166  A council must undertake a process of public consultation regarding the proposed financial plan before it is adopted.

Annual financial statements

167  (1) Municipal financial statements for a fiscal year must be

(a) prepared by the financial officer, and

(b) presented to council for its acceptance.

(2) Subject to subsection (3), the financial statements must be prepared in accordance with generally accepted accounting principles for local governments.

(3) The inspector may require or authorize, generally or for a specified municipality, that the financial statements vary from or include additional information to the requirements of subsection (2).

(4) By May 15 in each year, a municipality must submit to the inspector its audited financial statements for the preceding year and any other financial information requested by the inspector.

(5) In addition to any requirement under subsection (4), the financial officer must compile and supply information on the financial affairs of the municipality requested by the inspector.

Reporting of council remuneration, expenses and contracts

168  (1) At least once a year, a council must have prepared a report separately listing the following for each council member by name:

(a) the total amount of remuneration paid to the council member for discharge of the duties of office, including any amount specified as an expense allowance;

(b) the total amount of expense payments for the council member made to the council member as reimbursement for expenses incurred by the council member or as an allowance that is not reported under paragraph (a);

(c) the total amount of any benefits, including insurance policies and policies for medical or dental services, provided to the council member or the member's dependants;

(d) any contracts reported under section 107[disclosure of contracts with council members and former council members], including a general description of their nature.

(2) If applicable, the report under this section must also list contracts referred to in subsection (1) (d) for each former council member.

Division 2 — Audit

Municipal auditor

169  (1) A council must appoint an auditor for the municipality.

(2) A municipal auditor must be a person who is authorized to be the auditor of a company under section 205 of the Business Corporations Act.

(3) A municipal auditor has the power and duty to conduct the examinations necessary to prepare the reports required under this Division and, for these purposes, has the same authority in relation to the municipality as the auditor of a company under the Business Corporations Act.

(4) A municipal auditor who receives information from a person whose right to disclose that information is restricted by law holds that information under the same restrictions respecting disclosure that govern the person from whom the information was obtained.

Audit committee

170  (1) As a limitation on section 154[delegation of council authority], a council may only delegate its powers, duties and functions under this Division to a committee comprised of council members.

(2) Reports submitted by the municipal auditor to a committee under this section are deemed to have been submitted to council.

Auditor's reports

171  (1) The municipal auditor must report to the council on the annual financial statements of the municipality.

(2) The report under subsection (1) must be in accordance with the form and the reporting standards recommended by the Canadian Institute of Chartered Accountants.

(3) In addition to the report under subsection (1),

(a) the council or the inspector may require further reports from the municipal auditor, and

(b) the municipal auditor may, on the auditor's own initiative, make further reports.

(4) On request by the inspector, the municipal auditor must forward to the inspector copies of

(a) reports under subsections (1) and (3), and

(b) recorded communications in relation to those reports from the auditor to the council, a council committee or a municipal officer.

Complaints to council or auditor about financial affairs

172  (1) A person may complain in writing to the council or to the municipal auditor, if the person considers that

(a) a disbursement, expenditure, liability or other transaction is not authorized under this or another Act, or

(b) there has been a theft, misuse or other defalcation or irregularity in the funds, accounts, assets, liabilities and financial obligations of the municipality.

(2) If a complaint is made under subsection (1) to the council, the council must give notice of the matter to the municipal auditor.

(3) If a complaint is made under subsection (1) to the municipal auditor, the auditor must give notice of the matter to the council and must report to the council on the subject matter of the complaint.

Division 3 — Expenditures, Liabilities and Investments

Limit on expenditures

173  (1) A municipality must not make an expenditure other than one authorized under subsection (2) or (3).

(2) A municipality may make an expenditure that is included for that year in its financial plan, so long as the expenditure is not expressly prohibited under this or another Act.

(3) A municipality may make an expenditure for an emergency that was not contemplated for that year in its financial plan, so long as the expenditure is not expressly prohibited under this or another Act.

(4) The following apply in relation to the authority under subsection (3):

(a) the council must establish procedures to

(i)   authorize expenditures under that subsection, and

(ii)   provide for such expenditures to be reported to the council at a regular meeting;

(b) if an expenditure is made under that subsection, as soon as practicable, the council must amend the financial plan to include the expenditure and the funding source for the expenditure;

(c) the authority under that subsection does not include the authority to borrow for the purpose of making the expenditure.

Limit on borrowing and other liabilities

174  (1) A municipality may only incur a liability as expressly authorized under this or another Act.

(2) A municipality may not incur a liability if incurring the liability would cause the municipality to exceed a limit established under subsection (3) unless this is approved under subsection (4).

(3) For the purposes of subsection (2), the Lieutenant Governor in Council may make regulations

(a) establishing a limit on the aggregate liabilities and the method for determining that limit, and

(b) establishing a limit on the annual cost of servicing the aggregate liabilities and the method for determining that limit.

(4) With the approval of the inspector, a municipality may exceed the limit established under subsection (3).

(5) Except for borrowing under section 177[revenue anticipation borrowing], a municipality must not incur a liability for which expenditures are required during the planning period for its financial plan, unless those expenditures are included for the applicable year in the financial plan.

Liabilities under agreements

175  (1) A council may, under an agreement, incur a liability if

(a) the liability is not a debenture debt, and

(b) the period of the liability is not longer than the reasonable life expectancy of the activity, work or service under the agreement.

(2) Subject to subsections (4) and (5), if an agreement under subsection (1) is

(a) for more than 5 years, or

(b) for a period that could exceed 5 years by exercising rights of renewal or extension,

the council may only incur the liability with the approval of the electors.

(3) The matter put before the electors under subsection (2) must identify the other parties to the agreement and the nature, term and amount of the liability.

(4) Approval of the electors is not required under subsection (2) for the following:

(a) a liability to be incurred under an employment contract or collective agreement;

(b) a liability to be incurred for the supply of materials, equipment or services under an agreement referred to in section 3 of the Police Act;

(c) a liability to be incurred in circumstances prescribed by regulation or in relation to an agreement or class of agreement prescribed by regulation, subject to any conditions established by regulation.

(5) If

(a) the concept for a partnering agreement has received the approval of the electors, and

(b) within 5 years after that approval, the municipality enters into a partnering agreement that is in accordance with that approved concept,

approval under subsection (2) is not required for the partnering agreement.

(6) For the purposes of subsection (5), the concept for the agreement to be put before the electors must identify the following:

(a) the nature of the activity, work or facility to be provided under the partnering agreement;

(b) the maximum term of the agreement;

(c) the maximum liability that may be incurred by the municipality under the agreement;

(d) any other information required by regulation.

Liabilities imposed under prescribed enactments

176  (1) A municipality may incur a liability that is within a class prescribed under this section.

(2) The authority to incur a liability under this section is not authority to borrow for the purposes of the liability.

(3) The Lieutenant Governor in Council may make regulations prescribing classes of liability that are imposed under an enactment as liabilities to which this section applies.

Revenue anticipation borrowing

177  (1) A council may, by bylaw, provide for the borrowing of money that may be necessary to

(a) meet current lawful expenditures, and

(b) pay amounts required to meet the municipality's taxing obligations in relation to another local government or other public body.

(2) The debt outstanding under this section must not exceed the total of

(a) the unpaid taxes for all purposes imposed during the current year, and

(b) the money remaining due from other governments.

(3) Before the adoption of the annual property tax bylaw in any year, the taxes in that year are deemed to be 75% of all property taxes imposed for all purposes in the preceding year.

(4) When collected, revenue from property taxes must be used as necessary to repay money borrowed under this section.

Short term capital borrowing

178  (1) A council may, by bylaw adopted with the approval of the inspector, contract a debt for any purpose of a capital nature.

(2) A bylaw and the debt under this section must comply with the following:

(a) the debt must not cause the municipality to exceed the limit prescribed by regulation;

(b) the debt and securities for it must be payable no later than the lesser of

(i)   5 years from the date on which the securities were issued, and

(ii)   the reasonable life expectancy of the capital asset for which the debt is contracted;

(c) the bylaw must set out

(i)   the amount of the debt intended to be incurred, and

(ii)   in brief and general terms, the purpose for which the debt is to be incurred.

Loan authorization bylaws for long term borrowing

179  (1) A council may, by a loan authorization bylaw adopted with the approval of the inspector, incur a liability by borrowing for one or more of the following:

(a) any purpose of a capital nature;

(b) lending to any person or public authority under an agreement;

(c) guaranteeing repayment of the borrowing, or providing security for the borrowing, of a person or public authority, if this is provided under an agreement with the person or public authority;

(d) complying with an order or requirement to pay money into the Supreme Court as security

(i)   for payment of a judgment or other debt,

(ii)   for damages or costs, or

(iii)   for the costs of an appeal from the decision of a court or an arbitrator;

(e) satisfying a judgment or other order of a court against the municipality;

(f) satisfying an award resulting from an arbitrator's determination of liability or quantum of damages against the municipality, including orders of the arbitrator related to that determination;

(g) paying compensation in respect of property expropriated or injured or carrying out works referred to in section 32 (3)[entry on land to mitigate damage].

(2) A loan authorization bylaw must set out the following:

(a) the total amount proposed to be borrowed under the bylaw;

(b) in brief and general terms, each of the purposes for which the debt is to be incurred;

(c) the amount allocated by the bylaw to each of the purposes for which the debt is to be incurred;

(d) the maximum term for which the debentures may be issued.

(3) A loan authorization bylaw may not be included as part of a general bylaw.

(4) The authority to borrow under a loan authorization bylaw ends,

(a) in the case of a loan authorization bylaw under subsection (1) (b) or (c), at the end of the term of the agreement required by that subsection, and

(b) in other cases, 5 years from the date of adoption of the bylaw,

for any part of the amount authorized by the bylaw that has not already been used to secure borrowing under section 181[temporary borrowing under loan authorization bylaw] or 182 [municipal financing through regional district].

(5) The maximum term of a debt that may be authorized by a loan authorization bylaw is as follows:

(a) in the case of a bylaw under subsection (1) (a), the lesser of

(i)   30 years, and

(ii)   the reasonable life expectancy of the capital asset for which the debt is contracted;

(b) in the case of a loan authorization bylaw under subsection (1) (b) or (c), the remaining term of the applicable agreement;

(c) in all other cases, 30 years.

(6) A decision of the inspector refusing to approve a loan authorization bylaw may be appealed in accordance with section 1024 [appeal from inspector's decisions in relation to borrowing] of the Local Government Act.

Elector approval required for some loan authorization bylaws

180  (1) Subject to subsection (2), a loan authorization bylaw may only be adopted with the approval of the electors.

(2) Approval of the electors is not required for the following:

(a) money borrowed for a purpose referred to in section 179 (1) (d) to (g) [loan authorization bylaws for court, arbitration and expropriation requirements];

(b) money borrowed for works required to be carried out under

(i)   an order of the Inspector of Dikes, or

(ii)   an order under section 84[abatement of municipal pollution], 85 [environmental protection orders] or 87 [environmental emergency measures] of the Environmental Management Act.

(c) money borrowed for a purpose prescribed by regulation or in circumstances prescribed by regulation, subject to any conditions established by regulation.

(3) In addition to the exception provided by section 137 (2)[power to amend or repeal], a loan authorization bylaw may be amended or repealed without the approval of the electors if the inspector approves and subject to any terms and conditions the inspector considers appropriate.

Temporary borrowing under loan authorization bylaw

181  (1) A council that has adopted a loan authorization bylaw may, by bylaw, temporarily borrow money not exceeding the difference between the total amount authorized by the loan authorization bylaw and the amount already borrowed in relation to that bylaw.

(2) To the extent necessary, the proceeds of the borrowing under section 182[municipal financing through regional district] must be used to repay the money temporarily borrowed.

Municipal financing through regional district

182  (1) Except as permitted by section 181[temporary borrowing under loan authorization bylaw] or the Municipal Finance Authority Act, a municipality must not borrow money under a loan authorization bylaw unless

(a) the financing is undertaken by the applicable regional district under section 824[financing municipal undertakings] of the Local Government Act through the Municipal Finance Authority of British Columbia, and

(b) the regional district board has consented to undertake the financing.

(2) In giving consent referred to in subsection (1), the board may

(a) separately consent to financing each amount proposed to be borrowed under the authority of the loan authorization bylaw, or

(b) consent to financing all the borrowing authorized by the loan authorization bylaw or all the remaining amount that has not already been financed by the regional district.

(3) In relation to regional district financing under section 824 of the Local Government Act after giving consent under subsection (2) of this section, the municipal loan authorization bylaw is the regional district's authority to proceed under that section and must not be amended or repealed without the consent of the board.

Investment of municipal funds

183  Money held by a municipality that is not immediately required may only be invested or reinvested in one or more of the following:

(a) securities of the Municipal Finance Authority;

(b) pooled investment funds under section 16 of the Municipal Finance Authority Act;

(c) securities of Canada or of a province;

(d) securities guaranteed for principal and interest by Canada or by a province;

(e) securities of a municipality, regional district or greater board;

(f) investments guaranteed by a chartered bank;

(g) deposits in a savings institution, or non-equity or membership shares of a credit union;

(h) other investments specifically authorized under this or another Act.

Property accepted in trust

184  (1) All money that is held by a municipality and is subject to a trust must be invested in accordance with section 183 until it is required for the purposes of the trust.

(2) If, in the opinion of a council, the terms or trusts imposed by a donor, settlor, transferor or will-maker are no longer in the best interests of the municipality, the council may apply to the Supreme Court for an order under subsection (3).

(3) On an application under subsection (2), the Supreme Court may vary the terms or trusts as the court considers will better further both the intention of the donor, settlor, transferor or will-maker and the best interests of the municipality.

(4) Section 87 [discharge of trustee's duty] of the Trustee Act applies to an order under subsection (3).

Ownership of corporations

185  (1) A municipality may only

(a) incorporate a corporation other than a society, or

(b) acquire shares in a corporation

with the approval of the inspector or as authorized by regulation.

(2) An incorporation or acquisition under subsection (1) applies as an exception to the restriction under section 183[investment of municipal funds].

Self insurance

186  A municipality may self insure, but may only enter into a scheme of self insurance protection involving other participants in accordance with section 300[self insurance by local authorities] of the Local Government Act.

Indemnification against proceedings

187  A council may only provide for the indemnification of municipal officials referred to in section 287.2[indemnification against proceedings] of the Local Government Act in accordance with that section.

Division 4 — Reserve Funds

Establishment of reserve funds

188  (1) A council may, by bylaw, establish a reserve fund for a specified purpose and direct that money be placed to the credit of the reserve fund.

(2) If a municipality receives money in respect of any one of the following, the council must establish a reserve fund for the applicable purpose:

(a) money received from the imposition of a development cost charge, which must be placed to the credit of a reserve fund in accordance with section 935[use of development cost charges] of the Local Government Act;

(b) money received

(i)   from the sale of park land,

(ii)   under section 27 (2) (b)[disposal of park land], or

(iii)   under section 941 (12)[provision of park land on subdivision] of the Local Government Act,

which must be placed to the credit of a reserve fund for the purpose of acquiring park lands;

(c) money received under section 41 (1) (d)[disposal of highway property that provides access to water], which must be placed to the credit of a reserve fund in accordance with that section;

(d) money received under section 906 (2)[parking space requirements] of the Local Government Act, which must be placed to the credit of a reserve fund for the purpose of providing

(i)   off-street parking spaces, or

(ii)   transportation infrastructure that supports walking, bicycling, public transit or other alternative forms of transportation;

(e) except for tax sale proceeds, money received from the sale of land and improvements, which must be placed to the credit of a reserve fund for the purposes of paying any debt remaining in relation to the property and of acquiring land, improvements and other assets of a capital nature.

Use of money in reserve funds

189  (1) Subject to this section, money in a reserve fund, and interest earned on it, must be used only for the purpose for which the fund was established.

(2) If the amount to the credit of a reserve fund is greater than required for the purpose for which the fund was established, the council may, by bylaw, transfer all or part of the amount to another reserve fund.

(3) If the current municipal revenue is not sufficient for the amount required to pay compensation in respect of property expropriated or injured or to carry out works referred to in section 32 (3)[entry on land to mitigate damage], the council may, by bylaw, use money from a reserve fund to the extent required.

(4) As a restriction on subsection (2), a transfer from a reserve fund established for a capital purpose may only be made to another reserve fund established for a capital purpose.

(4.1) Despite any other enactment, if

(a) money in a reserve fund established for a capital purpose, including a reserve fund under section 935 of the Local Government Act established for a capital purpose, is not currently required for that purpose, and

(b) the municipality has another reserve fund established for a capital purpose,

the municipality may use money in the first reserve fund for the purposes of the second reserve fund.

(4.2) If money from one reserve fund is used under subsection (4.1) for the purposes of another reserve fund, the municipality must repay to the first reserve fund, no later than the time when the money is needed for the purposes of that reserve fund,

(a) the amount used, and

(b) an amount equivalent to the interest that would have been earned on the amount used had it remained in the first reserve fund.

(5) As a restriction on subsections (2) and (3), a council may not transfer amounts or use money from a fund required under section 188 (2) (a)[development cost charge reserve fund] or (b) [park land acquisition reserve fund] unless the bylaw is approved by the minister.

Division 5 — Restrictions on Use of Municipal Funds

Purposes for which borrowed money may be used

190  (1) Subject to this section, money borrowed by a municipality under any Act must not be used for a purpose other than that specified in the bylaw or agreement authorizing the borrowing.

(2) A council may, by bylaw adopted with the approval of the electors, use all or part of money borrowed for a specific purpose and not repayable in the current year for any other lawful purpose of the municipality.

(3) If some of the money borrowed for a specified purpose remains unused after payment of the costs related to that purpose, a council may, by bylaw, provide for the use of the unused money for one or more of the following:

(a) to retire debentures issued for the purpose;

(b) to purchase and cancel debentures issued for the purpose;

(c) for expenditures of a nature similar to the purpose in the bylaw authorizing the money to be borrowed;

(d) for a reserve fund for matters in paragraph (a), (b) or (c).

Liabilities for use of money contrary to Act

191  (1) A council member who votes for a bylaw or resolution authorizing the expenditure, investment or other use of money contrary to this Act or the Local Government Act is personally liable to the municipality for the amount.

(2) As an exception, subsection (1) does not apply if the council member relied on information provided by a municipal officer or employee and the officer or employee was guilty of dishonesty, gross negligence or malicious or willful misconduct in relation to the provision of the information.

(3) In addition to any other penalty to which the person may be liable, a council member who is liable to the municipality under subsection (1) is disqualified from holding office

(a) on a local government,

(b) on the council of the City of Vancouver or on the Park Board established under section 485 of theVancouver Charter, or

(c) as a trustee under the Islands Trust Act

until 4 years from the date of the vote to which the disqualification relates.

(4) Money owed to a municipality under this section may be recovered for the municipality by

(a) the municipality,

(b) an elector or taxpayer of the municipality, or

(c) a person who holds a security under a borrowing made by the municipality.

Contents  |  Part 1  |  Part 2  |  Part 3  |  Part 4  |  Part 5  |  Part 6  |  Part 7  |  Part 8  |  Part 9  |  Schedule