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Changes to Allow Municipalities to Enter into Municipal Capital Facilities Agreements for Electricity Generation

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Revisions to regulations under the Municipal Act, 2001 and the City of Toronto Act, 2006 mean that municipalities can now enter into municipal capital facilities agreements for the generation of electricity.

This provides flexibility for municipalities to partner with the private and not-for-profit sectors as well as other municipalities to invest in municipal sustainable green energy electricity generation projects.

The GEA amends the Electricity Act, 1998 (Section 144) to permit municipalities to generate electricity through renewable energy generation facilities that do not exceed 10 megawatts or any capacity prescribed by regulation or if the generation facility meets prescribed criteria. Municipal capital facilities agreements with respect to the generation of electricity can only be entered into for these types of generation projects.

Municipal capital facilities agreements are a commonly used exception to the general prohibition against municipalities providing funding, less than market value land transfers and/or guaranteeing borrowing for commercial or industrial businesses.  This exception has been provided because there is a link to a public good (a capital facility for the community) beyond direct business assistance. Municipalities have used capital facilities agreements for the delivery of other municipal facilities  such as affordable housing, recreational facilities and for parking facilities.

Financial assistance under a municipal capital facilities agreement can be any of the following:
  • giving or lending money and charging interest;
  • giving, lending, leasing or selling property;
  • guaranteeing borrowing;
  • providing the services of employees of the municipality;
  • exempting land (either all of it or part of it) from all or part of the taxes levied for municipal and school purposes (under certain circumstances); or
  • development charges exemptions (under certain circumstances).

The municipality is responsible for informing the Minister of Education about the passing of a by-law permitting it to enter into a municipal capital facilities agreement. If the agreement provides any exemptions from taxation, a notice of the by-law is to be provided to MPAC, any other municipality that would have had the ability to levy taxes on the subject land and any applicable school board.