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LOCAL GOVERNMENT ACT — Continued
[RSBC 1996] CHAPTER 323

Part 9 — Financial Management

Division 1 — Financial Planning

Financial plan

327 (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, being the year in which it is specified to come into force and the following 4 years.

(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 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 and charges;

(d) revenue from other sources;

(e) proceeds from borrowing, other than borrowing under section 334.3 [revenue anticipation borrowing].

(8) The proposed transfers between funds must set out separate amounts for each of the following as applicable:

(a) special funds under Part 13;

(b) development cost charge funds;

(c) 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

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

Division 2 — Financial Reporting

Annual financial statements

328 (1) The fiscal year for a municipality is the calendar year.

(2) Municipal financial statements for a fiscal year must be

(a) prepared by the municipal officer assigned responsibility under section 199 [financial administration], and

(b) presented to council for its acceptance.

(3) Subject to subsection (4), the financial statements must be prepared in accordance with generally accepted accounting principles for local governments.

(4) 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 (3).

(5) 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 required by the inspector.

Annual reporting on municipal finances

329 (1) By June 30 in each year, a municipality must hold a council or other public meeting for the purpose of presenting

(a) the audited financial statements of the preceding year, and

(b) the report under section 329.1 [reporting of remuneration and expenses].

(2) The council must give notice of the meeting by publication in a newspaper, including

(a) the date, time and place of the meeting, and

(b) a statement that the financial statements and any reports to be presented at the meeting are available for inspection at the municipal hall.

(3) A copy of the financial statements and reports must be available for public inspection at the municipal hall during its regular office hours from the time the notice under subsection (2) is given until June 30 in the following year.

Reporting of remuneration and expenses

329.1 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.

Right of elector to complain about accounting

330 (1) An elector may complain in writing to the council or to the municipal auditor, if the elector considers that

(a) a disbursement, expenditure, liability or other transaction is not authorized by or 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 or of one of its administrative bodies.

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

Division 3 — Audit

Appointment of auditor

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

(2) The auditor must be

(a) a member in good standing, or a partnership whose partners are members in good standing, of the Canadian Institute of Chartered Accountants, or the Certified General Accountants' Association of British Columbia, or

(b) a person certified by the board established under section 181 of the Company Act.

Auditor may appeal termination

331.1 (1) If the engagement of an auditor is terminated, the auditor may appeal the decision to the inspector, who may confirm or set aside the termination.

(2) An appeal under this section must be made in writing to the inspector within one month after the auditor is notified of the termination.

(3) The auditor must file a copy of the notice of appeal under subsection (2) with the municipality.

(4) The council must not appoint another auditor until the time allowed for an appeal by the auditor has elapsed or, if an appeal has been made, until the appeal has been dealt with by the inspector.

Audit committee

331.2 (1) As a limitation on section 176 (1) (e) [corporate powers — delegation], a council may only delegate its powers, duties and functions under this Division to a committee of council.

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

Auditor's reports

331.3 (1) The auditor for the municipality 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 auditor, and

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

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

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

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

Access to information by auditors

331.4 (1) The auditor has the power and duty to conduct the examinations necessary to prepare the reports referred to in section 331.3 [auditor's reports].

(2) The auditor has a right of access at all reasonable times to

(a) the records of the council and municipality,

(b) the records of any other body that, under this or another Act, exercises the powers of the municipality, including a municipal police board, and

(c) any computer, other data processing equipment and software that are owned or leased by the municipality or other body and used for financial recording or reporting purposes.

(3) Council members, municipal officials, employees and agents of the municipality and other persons must give the auditor any information, reports or explanations the auditor considers necessary.

(4) An 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.

Division 4 — Expenditures, Liabilities and Investments

General revenue sources

332 Revenues from the following may be used towards the payment of municipal expenditures:

(a) property value taxes under Division 1 of Part 10.1;

(b) parcel taxes under Division 2 of Part 10.1;

(c) fees and charges under Division 3 of Part 10.1;

(d) revenues raised by other means authorized under this or another Act;

(e) revenues received by way of agreement, enterprise, gift, grant or otherwise.

Limit on expenditures

333 (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 provided for that year in its financial plan, other than an expenditure that is expressly prohibited by 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, other than an expenditure that is expressly prohibited by this or another Act.

(4) In relation to the authority under subsection (3), the council must establish procedures

(a) to authorize expenditures under that subsection, and

(b) to provide for such expenditures to be reported to the council at a regular meeting.

(5) If an expenditure is made under subsection (3), as soon as practicable, the council must amend the financial plan to include the expenditure and the funding source for the expenditure.

(6) For certainty, the authority under subsection (3) does not include the authority to borrow for the purpose of making the expenditure.

Limit on borrowing and other liabilities

334 (1) A municipality may only incur a liability under the authority of this or another Act.

(2) Except as permitted under subsection (5), a municipality must not incur a liability that causes the aggregate liabilities for all purposes to exceed the total of

(a) 20% of the current value, as shown on the most recent audited financial statements, of the tangible capital assets of the municipality, and

(b) 20% of the average of the converted value of land and improvements in the municipality for the current year and the 2 immediately preceding years.

(3) The following are to be excluded in determining the aggregate liabilities referred to in subsection (2):

(a) liabilities under section 334.2 [authority to incur prescribed liabilities];

(b) debt under section 334.3 [revenue anticipation borrowing];

(c) debt of another public authority for which the municipality is jointly and severally liable under this or another Act.

(4) Except for a liability referred to in subsection (3) (b), 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.

(5) With the approval of the inspector, the aggregate liabilities of a municipality may exceed the limit under subsection (2).

Liabilities under agreements

334.1 (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) If an agreement under subsection (1) is

(a) for more than 5 years, or

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

the council must not incur the liability until it has provided a counter petition opportunity in relation to the proposed liability.

(3) In addition to the information required by section 172.4, the notice of a counter petition opportunity under subsection (2) must include the nature, term and amount of the liability.

(4) As an exception to subsection (2), a counter petition opportunity is not required for a liability to be incurred

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

(b) under an employment contract or collective agreement.

Authority to incur prescribed liabilities

334.2 (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 by or under an enactment as liabilities to which this section applies.

Revenue anticipation borrowing

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

(a) to meet current lawful expenditures, and

(b) to 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 taxes imposed for all purposes in the preceding year.

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

Short term capital borrowing

334.4 (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 aggregate liabilities under this section to exceed the amount equal to $50 multiplied by the municipal population;

(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, or

(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

335 (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) to provide assistance within the meaning of section 181 [definition of assistance] by

(i) lending to any person or public authority to which the municipality may provide assistance under Part 5 [Corporate Powers], or

(ii) guaranteeing repayment of borrowing, or providing security for the borrowing, of a person or public authority referred to in subparagraph (i),

but only if the assistance is provided under an agreement;

(c) to comply 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;

(d) to satisfy a judgment or other order of a court against the municipality;

(e) to satisfy 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.

(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) The power to adopt a loan authorization bylaw may not be exercised through the adoption of a comprehensive general bylaw under section 259.1 and loan authorization bylaws may not be consolidated into a comprehensive general bylaw under section 280.3.

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

(a) in the case of a loan authorization bylaw under subsection (1) (b), 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 335.2 [temporary borrowing under loan authorization bylaw] or included under a security issuing bylaw.

(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), the remaining term of the agreement under which the assistance is provided;

(c) in all other cases, 30 years.

Counter petition opportunity required for borrowings

335.1 (1) Except as provided in subsection (2), the council must provide a counter petition opportunity in relation to a proposed loan authorization bylaw.

(2) A counter petition opportunity is not required if the money to be borrowed is for one or more of the following:

(a) a purpose referred to in section 335 (1) (c) to (e) [loan authorization bylaws — borrowings for court orders and other matters];

(b) a purpose referred to in section 313 [funding for expropriation or mitigation];

(c) works under an order of the Inspector of Dikes;

(d) works required to be carried out pursuant to an order under section 32 of the Waste Management Act;

(e) works required to be carried out under the Environment Management Act pursuant to an order of the minister responsible for that Act or the Lieutenant Governor in Council.

(3) A counter petition opportunity must not be provided in relation to a loan authorization bylaw unless the necessary consent or approval required by an Act has been obtained.

(4) In addition to the information required by section 172.4, the notice of a counter petition opportunity under this section must include the information referred to in section 335 (2) [loan authorization bylaw].

(5) With the approval of the inspector, a loan authorization bylaw may be amended or repealed without providing a counter petition opportunity.

(6) If a council exercises the option of seeking electors' assent to a loan authorization bylaw, rather than providing a counter petition opportunity, any number of specified services is deemed to be a single distinct purpose for the purposes of section 160 (1) [each vote must be for a distinct purpose].

Temporary borrowing under loan authorization bylaw

335.2 (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) The proceeds of the borrowing under a security issuing bylaw, or as much as may be necessary, must be used to repay the money temporarily borrowed.

Security issuing bylaws

335.3 (1) A council may, by a security issuing bylaw adopted with the approval of the inspector, provide for the issue of debentures or other evidence of debt for all or part of the debt authorized by one or more loan authorization bylaws.

(2) A security issuing bylaw must specify the following:

(a) the loan authorization bylaws that authorize the borrowing;

(b) the amount of borrowing authorized by each loan authorization bylaw;

(c) the amount already borrowed under each loan authorization bylaw;

(d) the amount remaining to be borrowed under each loan authorization bylaw;

(e) the amount now being issued under each loan authorization bylaw;

(f) the term of the debt.

(3) The proceeds of the borrowing under a security issuing bylaw must be allotted proportionately for the purposes of each loan authorization bylaw referred to in subsection (2) (a).

(4) A security issuing bylaw must not be adopted

(a) while any proceeding is pending in which the validity of a loan authorization bylaw containing the authority under which the security issuing bylaw is to be adopted is called into question or by which it is sought to be set aside, or

(b) until the time for giving notice of intention to apply to set aside the loan authorization bylaw expires.

(5) A security issuing bylaw may authorize the issue of debentures under terms and conditions specified in the bylaw.

Regional district financing of municipal undertaking

335.4 (1) Except as permitted by the Municipal Finance Authority Act, a municipality must not adopt a security issuing bylaw unless the financing is to be undertaken under section 835 [financing municipal undertakings] of this Act through the Municipal Finance Authority of British Columbia.

(2) In relation to regional district financing under section 835 for a municipality, the security issuing bylaw of the municipality is the regional district's authority to proceed under that section and must not be amended or repealed without the consent of the board.

Appeal from inspector's decision regarding borrowing bylaws

335.5 (1) If the inspector refuses to approve a loan authorization bylaw or a security issuing bylaw, the municipality may appeal to the minister.

(2) On an appeal under subsection (1), the minister must hear and determine the matter, and may confirm or rescind the decision of the inspector.

(3) The determination on the appeal is conclusive and binding on all parties, including the inspector.

Investment of municipal funds

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

(a) securities of Canada or of a province;

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

(c) securities of a municipality or regional district;

(d) securities of the Greater Vancouver Water District, if the municipality is in or partly in the district;

(e) securities of the Municipal Finance Authority;

(f) investments guaranteed by a chartered bank;

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

(h) pooled investment funds under section 16 of the Municipal Finance Authority Act.

Division 5 — Restrictions on Use of Municipal Funds

Purposes for which money may be used

337 (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 assent 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), in which case Part 13 applies.

Liabilities for use of money contrary to Act

338 (1) A council member who votes for a bylaw or resolution authorizing the expenditure, investment or other use of money contrary to this 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 wilful 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 municipal office for 5 years from the date of the vote.

(4) Money due 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.


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