Managing Changes to

Local Government

Structure in

British Columbia:

A Review and

Program Guide

OCTOBER, 2000

Prepared by:LOCAL GOVERNMENT STRUCTURE BRANCH

M I N I S T RY O F M U N I C I PA L A F FA I R S

Ministry of Municipal Affairs

www.marh.gov.bc.ca

Table of Contents

1.0 Introduction 1

2.0 Purpose of this Document 2

3.0 Reasons for Restructuring Local Governments 2

3.1 Local Governments Must Match Local Needs 2

3.2 The Impacts of Population Growth 4

3.3 Provincial Involvement in Restructuring 5

4.0 Types of Local Government Restructuring 6

4.1 Municipal Restructuring 6

4.2 Regional District Restructuring 7

4.4 Restructuring Improvement Districts 9

5.0 The Pros and Cons of Restructuring 10

5.1 Municipal Restructuring 10

5.2 Municipal Amalgamation 11

5.3 Regional District Restructuring and Amalgamation 12

5.4 Restructuring Improvement Districts 13

6.0 British Columbia’s Approach to Restructuring Local Governments 14

6.1 Historic Approach: The Passive Strategy 14

6.2 The Directive Strategy 14

6.3 The Current Strategy: A Facilitative Approach 15

7.0 Principles for Restructuring 16

8.0 The Restructuring Process 17

9.0 Roles and Responsibilities in the Restructuring Process 18

9.1 The Public 18

9.2 The Ministry 18

9.3 Other Provincial Ministries 19

9.4 Regional Districts 19

9.5 Municipalities 20

9.6 The Restructuring Committee 20

9.7 The Restructuring Study Consultant 20

10.0 Conclusion 21

APPENDIX 1: The Benefits of Local Governments 22

1.0 Introduction

Under the Constitution Act of Canada, provincialgovernments have responsibility for localgovernments. British Columbia is thereforeresponsible for the legislative framework whichcreates and maintains the system of localgovernments within the province, including theprocesses for changes to the structure of localgovernments. This constitutional responsibility issupported by the belief that the benefits of localself-government are a fundamental part of aflourishing, democratic society. When localcitizens participate in local affairs by electingcommunity members to represent them, to makedecisions on their behalf, and to be accountableto them, those citizens are shaping theircommunities and determining their future.

In British Columbia, the system of localgovernment, as described in the LocalGovernment Act, is composed of three mainforms of local government: municipalities,regional districts and improvement districts.There also exists other legislated forms of localgovernance for special purposes (for example,the Islands Trust, and the Greater VancouverWater, Sewer and Drainage District), and thesebodies overlap with the areas and powers of local government. However, the concept ofrestructuring of local government is primarilyfocused on municipalities, regional districts andimprovement districts.

At a fundamental level, the province’sresponsibilities to local governments include:

• providing a legislative framework forthe system of local government whichbalances powers, authorities, resourcesand public accountability;

• allowing for the system to adapt overtime to make sure that the needs ofcitizens, and the goals of both the localgovernments and the province, continueto be met; and

• maintaining constructive andharmonious relations among localgovernments, between the province andlocal governments, and between localgovernments and First Nations.

The Ministry of Municipal Affairs has theresponsibility for overseeing change to the localgovernment system, to ensure that the structureof local governments best fits local needs, as wellas local and provincial objectives. The localgovernment restructuring program exists to fulfilthis responsibility. The scope of the programincludes significant change to:

• local government boundaries;

• the jurisdiction for and organization oflocal government services; and

• local governance mechanisms.

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2.0 Purpose of

this Document

This paper provides the framework for localgovernment restructuring activity in BritishColumbia. It will:

• explain the provincial interest in localgovernment structures that adapt tochanging circumstances;

• review the options available to localgovernments and communities that areconsidering restructuring;

• summarize the historical trends in localgovernment restructuring;

• outline the principles underlying restructuring;

• outline the ministry programs whichfacilitate the process for restructuringlocal governments; and

• clarify the roles of those involved in therestructuring process.

3.0 Reasons for

Restructuring Local

Governments

3.1 Local Governments MustMatch Local Needs

Local governments provide local services topeople at the level they want and at a priceelected officials determine they can afford.They do this while working within provincialstandards in areas like public health, environmentalprotection and safety. As a very diverse province,British Columbia has communities ranging fromlarge rural areas with low population densities tohigh growth communities with dense populations.Each type of community requires differentservices, different methods of service delivery anddifferent forms of political representation.Clearly, a “one-size-fits-all” form of local governmentwould fail to meet most local needs adequately.The structure of each local government mustmatch the governed area’s settlement pattern,the services required, and local needs for politicalrepresentation. As communities change, so theneed for restructuring may arise, to ensure that thelocal government continues to meet local needs.

Consider, for example, the following situations:

A low density rural community has minimumrequirements for local services, perhaps irrigationand fire protection, which are provided by animprovement district. However, there is a desirefor additional services, such as recreationalfacilities, and for a more consolidated voice onissues affecting the community. In such a case,since the community is not a candidate formunicipal incorporation, restructuring mightinvolve expanding and consolidating the role ofthe regional district by transferring improvementdistrict services to the regional district, and

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establishing a community committee orcommission under the regional district umbrellaas a forum for discussion of local issues.

A higher density rural community which isquite distant from an existing municipality, andwhich has several local services provided bydifferent jurisdictions (community water andcommunity hall provided by an improvementdistrict; fire protection and the arena provided bythe regional district), and the services requiresubstantial investment and upgrading. In such acase, restructuring may focus on the potential formunicipal incorporation, or on the consolidationof services within the regional district frameworkwith a view to direct residents’ involvement inservice management decisions through an elected body.

An urban community which has the full rangeof local services provided by the regional districtand improvement districts, and where thecombination of the relatively high population andresidents’ demands for new services is difficult tomanage through the regional district form of localgovernment. In such a case, restructuring wouldfocus on the potential incorporation of thecommunity as a municipality, to achieve theconsolidation of service delivery and level of localpolitical representation required to manage acomplex urban area.

Around the province, each community is unique,although there are often shared characteristics.A key feature of the province’s approach to localgovernment restructuring is to ensure that thescope and process for a community to considerrestructuring is the appropriate response to dealwith the unique characteristics and issues in the community.

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A municipality is a general purpose localgovernment incorporated by the B.C.cabinet after an area’s citizens vote in favourof incorporation. A locally elected councilgoverns the municipality. Municipalitieshave few mandatory service responsibilities:local roads and, for those with a populationof more than 5,000, policing. Generally, amunicipality provides all local services, andunder the Local Government Act has the broadpower to provide any service councilbelieves is necessary or desirable.

There is no legislated minimum populationfor incorporation as a municipality.However, it is generally considered that apermanent population in the order of 500people is the minimum required to supportthe municipal form of local government.Population and area are both considered inthe classification scheme for municipalities,which provides for incorporation as a Village,Town, City, or District. However, there islittle or no distinction between the powersor responsibilities of the various classes of municipalities.

Population also has a role in defining thesize of the municipal council:

• Village or Town - population less than5,000: mayor and four councillors

• City or District - population 50,000 orless: mayor and six councillors

• City or District - population 50,000 ormore: mayor and eight councillors.

defining municipalities

3.2 The Impacts of Population Growth

Population growth is the most common andimportant characteristic which generates interestby local government and citizens in municipalrestructuring. Population growth puts pressureson local governments as service providers, and asdecision makers. Demands for new and more complexservices increase, as does the community awarenessof financial decisions about services whichdirectly impact local property taxes. Added to thisis an increase in the community’s desire to havemore local control of its decision making.

This impact of population growth is evident intwo main situations. The first is the communitywhich wants to consider municipal incorporationwhen population growth leads to concerns aboutthe level of services offered to citizens, thecommunity’s ability to control local planning, andthe lack of a local government which is looking atthe community, local services and property taxesas a whole. Restructuring to consider municipalincorporation becomes attractive to a communityexperiencing population growth because thecommunity believes its interests are better servedby a locally elected and autonomous councilwhich can manage that growth and provide acoordinated approach to services.

Second, population growth often occurs equally(or more) in urban fringe areas, or areas justoutside municipal boundaries as within themunicipality itself. This population growth cancreate, or emphasize, a range of issues. Often, inthese municipal fringe areas, important localservices are not in place to match the requirementsof the new development. Growth may alsoexacerbate “free rider” problems where residentsof the municipal fringe area benefit from servicesprovided by the municipality for which they donot pay the full costs. Growth can also result inan unfair sharing of industrial or commercial tax

base between local governments that are part ofthe same urban economy. All of these problemstend to increase local political tensions betweenthe municipality and the regional district.

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Since 1965, regional districts have served asa form of local government in almost all ofBritish Columbia. They are governed by aboard of directors, composed of representativesfrom the municipalities and the electoralareas (that is, the non-municipal areas)within the regional district boundary.Regional districts exist to provide:

• Regional government including thegeneral government role of representingthe interests of the region, deliveringregion-wide services (such as regionalparks and economic development) and preparing various types of plans for the region as a whole (such as solidwaste management plans and regionalgrowth strategies).

• A political and administrativeframework for service partnershipsbetween members of the regionaldistrict, where two or more jurisdictionsagree to providing a service jointly. For example, the Capital RegionalDistrict provides a recreation facility on behalf of the Central Saanich, Sidney and North Saanich municipalities.

• The general local government for non-municipal areas, providing a rangeof local and regulatory services toresidents within electoral areas.

For more information, see A Primer on Regional

Districts in British Columbia atwww.marh.gov.bc.ca/LGPOLICY/MAR/content.html.

regional districts

These issues can be resolved often through localplanning and servicing arrangements, but in theabsence of these solutions, the local governmentsmay consider major restructuring of the municipalboundary as the best approach.

3.3 Provincial Involvement in Restructuring

The province meets its constitutional responsibilityfor local governments by making sure they havethe ability to adapt to population growth or otherchange. The province is ultimately involved in alllocal government restructuring, since restructuringis approved by the provincial cabinet.

However, the province recognizes that there is anatural evolution in the form of local governmentwhich suits a community. Communities mayevolve from sparsely populated rural areas toself-contained rural communities, from ruralcommunities to urban ones, or from municipalfringe areas with minimum development toextensive development. The province seeks toadapt local government structures progressivelyto match the evolution of the area.

Although the province is integrally involved inlocal government restructuring, the process ofchange is always locally driven. Under the LocalGovernment Act, decision-making rests with localcitizens through the requirement for an approvedvote of electors prior to cabinet approval ofmunicipal incorporation. The provincialinvolvement is to act as a resource and facilitator,to assist communities to overcome barriers tochange and to renew local government structuresso that they address current local circumstances.

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An improvement district is a special purposelocal government incorporated by the B.C.cabinet, to provide only the specific servicesauthorized. Most improvement districtsprovide just one service, usually water orfire protection, but they do not have landuse planning or general regulation powers.They are governed by a board of trusteeselected at an annual general meeting by landowners. Improvement districts have been along-standing feature of the localgovernment system, but are gradually beingphased out as regional districts assume theirservice roles.

For more information see the ministry’sPolicy Statement on Improvement District Governance atwww.marh.gov.bc.ca/MUNIADMIN/IMPROVEMENT/on the Internet.

improvement districts

4.0 Types of Local

Government Restructuring

Local government restructuring can take variousforms. Generally, all restructuring activity fallsinto one of two categories:

• restructuring of municipal boundaries; or

• restructuring of regional districts,improvement districts and othercomponents of the local government system.

Municipal restructuring has been the primaryfocus of local government restructuring in recentdecades. However, the second category isbecoming an increasing focus of localgovernment restructuring, reflecting growinginterest in improving the efficiency andeffectiveness of service delivery and localgovernance. The following sections provide moredetail about each type of restructuring activity.

4.1 Municipal RestructuringSince 1985, 35 municipalities in B.C. have beenthe subject of a major municipal restructuring.In addition, many more municipalities haveundertaken minor boundary extensions, which areconsidered to be in a separate category frommunicipal restructuring. The main forms ofmunicipal restructuring include the following:

Incorporation of a new municipality. Since 1985,voters have approved incorporation of 12 newmunicipalities, ranging in size from the District ofLangford (population 14,425) to the District ofWells (population 227).

Boundary Restructuring of one existingmunicipality, to enclose a substantial populationand area into the boundaries of a municipality.This may be implemented as a major boundaryextension, or as a transformation of an existingmunicipality into a new municipal corporationincluding a change in municipal classification or

status, for example from village to city status.A substantial number (13 since 1985) of this typeof restructuring have been approved in recentyears, to a large extent motivated by an attemptto solve complex servicing, land use ordevelopment issues. The largest boundaryextensions were in Vernon (Okanagan Landing)

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In 1992, the Town of Hope and theadjacent parts of the two rural electoralareas, each with about 3,000 population,joined together to create one newmunicipality, the District of Hope. Over the years, the municipality and ruralrepresentatives had worked together throughthe regional district to provide recreationand other services on a cooperative basis.Residents recognized that restructuring as anew municipality would help them meet thechallenges of expansion of those servicesand the management of growth.

major boundary extension &status change: district of hope

As a growing community of about 9,000people, located west of Victoria within theCapital Regional District, residents ofSooke voted to incorporate, and the Districtof Sooke was created in December, 1999.The major issues in this decision related tothe desire for greater local control over landuse planning decisions, downtownrevitalization, road and traffic improvements,and sewerage. In addition to having thecouncil manage local affairs, the communityis now a municipal partner in the regionaldistrict discussions of region-wide issuessuch as the development of a regionalgrowth strategy.

incorporation: district of sooke

and Campbell River (Quinsam Heights and NorthCampbell River) which added 4,400 and 4,060people respectively to those municipalities.Six other major boundary extensions werecompleted, four of these bringing major industrialestablishments within municipal boundaries.

Multi - Municipality Restructuring whichinvolves two or more municipalities and asubstantial unincorporated area adjacent to theexisting municipal boundaries. This situationrepresents the most complex type ofrestructuring. Between 1973 and 1975,4 restructures of this type were implemented(Kamloops, Nanaimo, Kelowna and PrinceGeorge). None have proceeded since that time,although some studies have been undertaken.

Amalgamation of two or more existingmunicipalities into a single new municipality,which is approved by voters within eachmunicipality. Amalgamation is a rare form ofrestructuring in B.C., the most recent being themerger of Abbotsford and Matsqui to form theCity of Abbotsford in 1995.

Clearly, municipalities have been very active in restructuring. The restructuring pattern hasbeen relatively even across the province,occurring in almost every corner of B.C., althoughrestructuring activity has been greatest in thehigh growth regions of B.C. — the LowerMainland, lower Vancouver Island, the FraserValley and the Okanagan.

4.2 Regional District RestructuringThe forms of restructuring included in thiscategory are as follows:

• changes to regional district boundaries,including amalgamation of regionaldistricts, creation of new regionaldistricts, adjustment of regional districtboundaries, and changes to the numberand boundaries of electoral areas;

• evaluation and implementation ofcomprehensive reviews of regional orsub-regional service partnerships, withinthe framework of the regional district;

In 1993, the City of Vernon extended itsboundaries to include the community ofOkanagan Landing. Protecting the waterquality of Okanagan Lake through extensionof the city’s sewer and water infrastructurewas the key reason for this restructuring.The citizens of Okanagan Landing had achoice of incorporating as a separatemunicipality or joining the City of Vernon.In a referendum, they voted to join Vernon.The boundary extension added 4,400residents to Vernon and dissolved siximprovement districts.

boundary restructure: city ofvernon - okanagan landing

In 1995, the District of Abbotsford and theDistrict of Matsqui amalgamated to formthe new City of Abbotsford, a community of110,000. The two municipalities hadexisted side-by-side over the years and haddeveloped joint approaches to providing anumber of important services includingsewage treatment, parks and recreation, andfire protection. Municipal amalgamationhad been voted on in 1990, and was approvedby Abbotsford voters but narrowly rejectedby Matsqui voters. The challenges of rapidgrowth and desires for major infrastructureimprovements, more closely integratedpolice services, and a more diversifiedeconomy, led the two communities toapprove municipal amalgamation.

amalgamation:city of abbotsford

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• transfer of improvement districts toregional districts; and

• general consideration of localgovernance and service delivery fornon-municipal communities within theregional district framework.

Ministry programs are designed to assist with all of the above forms of local government restructuring.

Since regional districts were established in thelate 1960’s, very little regional district restructuringhas taken place. Major restructuring in regionaldistricts includes the following:

In 1987, the Peace River-Liard Regional Districtsplit to create the Fort Nelson-Liard RegionalDistrict, now called Northern Rockies RegionalDistrict and the Peace River Regional District.The split occurred because the Fort Nelsonportion of the region felt remote and inaccessiblefrom the Dawson Creek “county seat”.Although the Northern Rockies Regional Districthas only a small population, it can stand on itsown as a regional district because it has a largearea and a rich industrial and utility tax base.

In 1988, the Greater Vancouver Regional District(GVRD) expanded its boundaries to include theCity and District of Langley. This expansion reflectedthe fact that the two municipalities were alreadymembers of a number of GVRD services, includingthe regional sewer, water and park services.

In 1995, the GVRD added the municipalities ofPitt Meadows and Maple Ridge because thesemunicipalities were already members of a numberof GVRD services.

In 1995, the Dewdney-Alouette, Fraser-Cheamand Central Fraser Valley Regional Districtsamalgamated to create the Fraser Valley RegionalDistrict. This is the only amalgamation of regionaldistricts that has occurred.

These examples show that regional districtsrestructure themselves for different reasons.In the case of the GVRD, restructuring created alarger local government unit with economies ofscale and more effective growth management.Conversely, in the case of Northern Rockies,splitting a single regional district into two createdsmaller units that improved access to government.

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The Fraser Valley Regional District wascreated in 1995 following the amalgamationof the Central Fraser Valley, Dewdney-Allouette and Fraser Cheam RegionalDistricts. It is now the third largest regionaldistrict in the province. The amalgamationcame about because of rapid growth andbecause several former members of theregional district, including Langley City,Langley District, Pitt Meadows, and Maple Ridge, shifted membership to theGreater Vancouver Regional District. This amalgamation occurred to create amore efficient local government structureand to provide for more effective growthmanagement. The adoption of the Growth

Strategies Statutes Amendment Act and the GVRD’sLivable Region Strategic Plan also providedthe impetus for the establishment of theFraser Valley Regional District. The region is now well established and isactively engaged in developing a regionalgrowth strategy.

regional districtrestructuring: fraser valley

regional district

4.4 Restructuring ImprovementDistricts

The Ministry of Municipal Affairs inherited theresponsibility for improvement districts from theMinistry of Environment, Lands and Parks in1979. By 1988, the number of improvementdistricts peaked at 324. As a result of the ministry’sRural Services Task Force policy paper in 1990,the ministry began to limit the incorporation ofnew improvement districts and began activelyencouraging existing improvement districts torestructure instead. Since then, the number ofnew improvement districts that have beenincorporated has fallen dramatically, with onlythree in the past six years, and the number ofdissolutions has increased. Today, there are 275 improvement districts.

The province recognizes municipalities andregional districts as the main components of thelocal government system. Because of this,it expects that improvement districts will, overtime, convert to municipal or regional districtjurisdiction and, eventually be eliminated.The process of change will be gradual andvoluntary. In the meantime, improvementdistricts play an important role in providing localservices to rural areas.

The ministry uses the following tools to encourageimprovement districts to restructure themselves:

• The creation of new improvementdistricts is only done if there is no alternative.

• The statutory powers of the LocalGovernment Act to eliminate as manyimprovement districts as possible whenmunicipalities restructure. For example,when Lake Country incorporated fourimprovement districts were eliminated.When Vernon enclosed the OkanaganLanding community within the city, siximprovement districts were eliminated.Eight more disappeared when Sookeand Bowen Island incorporated.

• Infrastructure grants are used as incentives for restructuringimprovement districts. Improvementdistricts do not receive infrastructuregrants, but can gain access to thesecapital grants by converting to regionaldistrict service areas.

For more information, see the ministry’s PolicyStatement on Improvement District Governance atwww.marh.gov.bc.ca/MUNIADMIN/IMPROVEMENT/.

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5.0 The Pros and Cons

of Restructuring

This section looks at the arguments for andagainst various forms of restructure.

5.1 Municipal RestructuringAs an inclusive term, municipal restructuringcovers a wide variety of structural changes tomunicipalities, including incorporation, majorextensions of municipal boundaries andamalgamation. The main arguments favouringmunicipal restructuring are:

LOCAL CONTROL: Residents of rural areas,through the election of a municipal council,gain enhanced local autonomy and responsibility.This means decision making on issues like landuse planning, road maintenance and policing aremade closer to home.

EFFECTIVE POLITICAL REPRESENTATION ANDACCOUNTABILITY: Bringing rural territory intomunicipal jurisdiction provides rural residentswith a more representative and accountable localgovernment. Rather than relying on a singleelectoral director to represent their interests,they would have a full council.

SERVICE PROVISION: Restructuring allowsmunicipalities to provide services like water,sewerage and fire protection to formerly ruralareas more effectively.

FAIR COST SHARING: Restructuring caneliminate urban fringe problems or the concernthat rural residents living adjacent to municipalboundaries consume municipal services withoutpaying the full cost.

FAIR REVENUE SHARING: Restructuring canlead to a fairer sharing of a scarce industrial andbusiness tax base.

COMMUNITY INTEREST: Restructuring providescommunities with an opportunity to assert theirinterests in dealing with the province, othermunicipalities and the region.

EFFECTIVE GROWTH MANAGEMENT:Restructuring can lead to more effective growthmanagement by providing for a stronger politicalbody for the community and by eliminatingproblems which cross jurisdictions.

The major arguments against municipalrestructuring are as follows.

LOSS OF POLITICAL CONTROL: Residents of anunincorporated area may be fearful of losingcontrol by being absorbed within a largemunicipality and losing easy access to theirelectoral area director.

COSTS: Residents of unincorporated status maybe concerned with the increased costs of municipalstatus and the impact on their tax bills.

REGIONAL DISTRICT SERVICES: Many of theissues in urban fringe areas can be resolvedthrough establishment of regional district serviceareas. For example, these can enable rural areasto contribute to municipal services and solve“free-rider” problems. As well, service areas canbe used to provide municipal services like fireprotection to unincorporated areas.

COMMUNITY PLANNING: Inclusion of residentsin a municipal area may raise fears that residentswill lose rural environment or atmosphere.

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5.2 Municipal AmalgamationMunicipal amalgamation is a special form ofmunicipal restructuring that merits its owndiscussion. Amalgamation is defined ascombining two or more municipalities into asingle new municipality. In its purest form, anamalgamation does not involve bringing ruralterritory into a municipal jurisdiction at the sametime; however, in practice, this may happen.For the purposes of this paper, amalgamation willbe examined in its purest form.

As mentioned in the historical discussion ofamalgamation in Section 4, amalgamation is rarein British Columbia. The most recent example ofamalgamation was the 1995 union of theDistricts of Abbotsford and Matsqui into the newCity of Abbotsford.

The relatively low level of amalgamation activitycan be explained by the following factors:

• the presence of a flexible regionaldistrict system allows municipalities to achieve the advantages ofamalgamation, for example economiesof scale, by creating regional districtservice areas or purchasing servicesfrom regional districts;

• the Ministry of Municipal Affairs’ grantprograms, especially the SmallCommunity Protection component ofthe basic grant under the LocalGovernment Grants Act, provides abasic level of provincial financialsupport for small communities.This level of support has been a long-established feature of provincial policy;

• the existing police cost formuladiscourages small municipalities fromamalgamating with their neighbors.

Communities under 5,000 in populationdo not pay for the cost of policing whilethose above pay between 70 and 90per cent of the cost, depending on their size.

There are strong arguments in favour ofamalgamation. Through amalgamation,municipalities may benefit from:

• more effective government;

• better ability to manage growththrough integrated planning;

• economies of scale or lower per capitaservice costs when providing someservices to a larger population;

• fairer cost sharing;

• elimination of the “free rider” problemin which citizens of borderingmunicipalities benefit from services theydon’t pay for;

• better integration of infrastructureservices like sewerage or solid waste management; and

• more equitable access to resources;for example, an industrial tax base.

Strong arguments can also be made against amalgamation:

• small communities can achieveeconomies of scale through joint serviceprovision agreements;

• the regional district system can addressmany of the issues otherwise solvedthrough amalgamation by creatingservice areas;

• the regional district system allows forfairer distribution of service costs acrossan urban area;

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• the regional district system allowsservices, like sewerage and solid wastemanagement, to be organized on aregional or sub-regional basis;

• the regional district system canovercome the “free-rider” problem ifkey services are provided on a regionalor sub-regional basis;

• economies of scale vary significantly byservice and population level;

• the growth management problems created by having many small communities can be reduced by using tools provided by the GrowthStrategies Act;

• local autonomy sometimes outweighsthe efficiency values of amalgamation;

• smaller community councils can bemore accessible to their citizens andhave stronger local identities; and

• smaller communities are better able tomatch the interests of local residents,their willingness to pay and the services provided.

5.3 Regional District Restructuringand Amalgamation

Over the past few years there has not been arestructuring or amalgamation of regional districts.This can be explained by a number of factors:

• Most regional districts are geographicallylarge, have large populations, a long history,a well-established staff, and the resourcesthey need to provide services, and

• Changing regional boundaries iscomplicated and requires consensus among a wide number of political units that the current structure does not work and that an alternative structure is better.

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5.4 Restructuring ImprovementDistricts

Improvement districts play an important role inrural service delivery in many parts of theprovince. They provide the following key benefits:

COST SAVINGS: Smaller improvement districtshave low costs because they are essentially runby volunteers; and

ACCESSIBILITY: Improvement districts are anexample of self-help and grass roots democracy.

Improvement districts have been restructuring ata quick pace for the past few years for thefollowing reasons:

GROWTH MANAGEMENT: Restructuringimprovement districts under a municipal orregional district umbrella creates a closer linkbetween responsibilities and decisions in land useplanning and servicing.

ACCOUNTABILITY: Regional districts andmunicipalities have more fully developedaccountability provisions than improvementdistricts, particularly for elections.

EFFICIENCY AND EFFECTIVENESS:Municipalities and regional districts haveprofessional staff and can provide professionalservices better than improvement districts.

INTER-JURISDICTIONAL HARMONY:Improvement districts are often in conflict withregional districts and municipalities over issuessuch as service standards and land use policies.

FINANCIAL EFFECTIVENESS: Municipalities andregional districts have a broader range offinancial tools and resources available to themincluding access to Local Government Grants Actprograms, the provincial tax roll and the HomeOwner Grant.

ECONOMIES OF SCALE: Municipalities andregional districts can provide for economies of scale.

Improvement districts will continue to be animportant part of the rural service deliverysystem. Moreover, provincial policy supports thegradual elimination of improvement districts andthat municipalities and regional districts assumethe responsibilities of improvement districts overtime. The provincial strategy is articulated in theministry’s Policy Statement on ImprovementDistrict Governance, available atwww.marh.gov.bc.ca/MUNIADMIN/IMPROVEMENT/.

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6.0 British Columbia’s

Approach to

Restructuring

Local Governments

6.1 Historic Approach:The Passive Strategy

Until the early 1970s, the provincial governmentemployed a passive approach to localgovernment restructuring because it was seen asa local issue. If local communities perceived aninterest in restructuring, the province assumedthey would organize themselves, undertake thenecessary technical analysis and request that theMinister order a referendum. Under thisapproach, all parties assumed the province hadno interest except to perform the most basicconstitutional roles: holding referenda onrestructure proposals, and developing LettersPatent for newly incorporated municipalities orrestructured local government units. The level ofprovincial transitional assistance was minimal.

6.2 The Directive Strategy By the mid-1970s, after it became clear that thepassive approach was inadequate to deal withgrowth and change, the provincial governmenthad developed a strong interest in restructuring.As a result of the surge in provincial governmentinterest in restructuring between 1972 and 1975,the province shifted from a passive strategy to adirective strategy. The ministry abandoned thepassive approach to restructuring because itrecognized that:

• The province had interests inrestructuring that extended beyond itsnarrow constitutional responsibilities,including local autonomy, financial goalsand growth management objectives.

• A passive approach had failed to inducethe desired level of change andconsequently both the province andlocal governments were losing out onthe benefits created by restructuringlocal governments.

The province believed it had the greatest interestin restructuring and asserted itself over localgovernments to achieve its interests. At the time,the province held a major interest in managinggrowth. The province’s directive approach tookthe form of either legislating structural changeand/or using the persuasive powers of theprovince to induce change.

The province used the first two approachesbetween 1972 and 1975, most notably torestructure the fast-growing major regionalcentres of Kamloops, Kelowna, Nanaimo andPrince George. Kamloops and Kelowna wererestructured through legislation over theobjections of the local politicians. Nanaimo andPrince George were restructured throughprovincial mandates, but local politicianssupported the action and the electorate ratified it in overall referenda.

The directive approach has the advantage ofproviding a quick and decisive outcome to arestructuring process. As a result, it can overcomelocal political resistance or a lack of localconsensus on change. As well, the province can dictate the form of restructuring it wants.The directive approach has many disadvantages:

• the political cost to the province andlocal governments can be high if localpoliticians resist;

• the financial cost to the province can behigh if localities resist;

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• it can create an atmosphere whichnegatively affects voluntary change inother areas; and

• forced restructuring may not achievegrowth management objectives withouta voluntary commitment to effectiveland use planning.

The province stopped using the directiveapproach as a general strategy in the 1980s.However, it remains in the province’s restructuringtool kit and has been used to solve isolatedsituations where there are deeply entrenchedlocal problems. The province used the directiveapproach to:

• dissolve the Greater Campbell RiverWater Board in 1986 and turn over control to the District of Campbell River;

• dissolve the South Okanagan LandsIrrigation District (SOLID) in 1989 andturn over control to the towns of Oliverand Osoyoos;

• restructure the Greater Victoria WaterDistrict in 1997, giving control to theCapital Regional District whilepreserving the water supply andcreating parkland;

• achieve provincial economicdevelopment objectives byincorporating Whistler in 1975 andTumbler Ridge in 1981.

6.3 The Current Strategy:A Facilitative Approach

The ministry shifted from a directive strategy to afacilitative approach in the mid-1980s. This moveaway from top-down restructuring built uponB.C.’s local tradition of changing local governmentstructures through local assent using referenda.At the same time, the province recognized thatboth the province and local governments wouldbenefit if the province remained actively involvedin local government restructuring processes. As aresult, the province created a formal program ofincentives and disincentives to guide localgovernment restructuring without forcing change.To meet the new interest in restructuring, theministry fully developed a restructuring programin the mid-1980s. It created a Local GovernmentStructure Branch in 1986.

The province raised the provincial rural servicelevy under the Taxation (Rural Area) Act to moreevenly match provincial tax revenues from ruralareas with provincial expenditures on rural roadsand policing. The higher levy almost neutralizedthe fiscal differences between rural and municipalareas, allowing local areas to make choices aboutlocal government restructuring without financialpenalty. Decisions could be made on the basis oflocal control, community aspirations, serviceeffectiveness and political accountability.

At the same time, the province also developed a program of incentives to assist localgovernments to plan and implementrestructuring. These incentives include RestructurePlanning and Implementation Grants under theLocal Government Grants Act and parallelprograms to deal with policing costs from theMinistry of Attorney General, road costs from theMinistry of Transportation and Highways, andrural tax refunds from the Ministry of Finance andCorporate Relations. Further information on

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Ministry of Municipal Affairs grants is availablefrom the ministry website atwww.marh.gov.bc.ca/grants.html.

This two-sided approach of equalizing taxes andproviding incentives has been highly effective inmotivating communities to restructure because it:

• builds local consensus and politicalsupport for restructure;

• respects local autonomy and the will ofthe electorate;

• avoids compulsory participation in restructuring;

• provides a political benefit for both localgovernments and the province; and

• provides financial benefits to localgovernments and minimizes theprovince’s financial exposure.

7.0 Principles for

Restructuring

The Ministry of Municipal Affairs’ facilitativeapproach to restructuring local governmentsreflects a number of fundamental principles:

• the process for examining localgovernment restructuring should belocally focussed;

• a local committee oversees anindependent consultant;

• local government restructuring shouldbe decided by the electorate through a referendum;

• local government restructuringdecisions should be made by aninformed electorate after an extensiveprocess of research, analysis andcommunity discussion; and

• all sectors of the community need to be represented and involved in the discussion.

These fundamental principles underlie therestructuring process itself. As well, they providethe context for discussing the roles of theparticipants in the process.

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8.0 The Restructuring

Process

Local government restructuring has evolved into a well-established process that is completed infive phases.

In the preliminary phase, communities make theirfirst contact with the Ministry of MunicipalAffairs. The ministry evaluates the local contextand provides the community with generalinformation on the restructuring process. At thisstage, the ministry may facilitate a public meetingwithin the community to provide informationabout the process.

Next, local governments create a restructuringcommittee that represents a broad range of localinterests. The committee’s main task at this pointis to oversee the preparation of a restructuringstudy and to manage public consultation.The ministry sanctions the study process.Ministry staff provide the committee with adviceon how to form the committee and design theconsultation process.

Thirdly, the restructuring committee establishesthe terms of reference for a restructuring study,issues a call for proposals and selects aconsultant. The ministry approves a RestructurePlanning Grant to fund the study and providesstaff who act as resources when necessary.The study is then conducted, with the goal ofobtaining information on the impact ofrestructuring on fiscal issues, service delivery,political representation, etc.

In the fourth phase, the restructuring committeepresents the study findings to the communityand, based on public input, decides whether torecommend a referendum to the ministry. If thecommittee wishes to proceed, the Minister offersa restructuring assistance grant and orders areferendum on restructuring.

Finally, a referendum is held. If the vote passes,the implementation process begins. Ministry staffprepare the Letters Patent, which are thenconsidered by cabinet. If the Letters Patent areapproved, ministry staff then coordinate theimplementation of the restructuring. The ministryalso provides financial assistance to thecommunity to implement restructuring.

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9.0 Roles and

Responsibilities in the

Restructuring Process

9.1 The PublicAll local government restructuring is based on choices made by local citizens.Generally, restructuring takes place only with theassent of the electorate through a referendumusing procedures set out in the Local GovernmentAct. These procedures make sure that localcitizens make decisions based on complete andaccurate information.

9.2 The MinistryThe Ministry of Municipal Affairs plays a pivotalrole in the restructuring process. It fulfils aconstitutional role by establishing municipalitiesand regional districts. It also provides the meansof communication between communities, localgovernments and provincial ministries.

The ministry follows a set of basic principles todirect its involvement in local governmentrestructuring processes. The ministry:

• gets involved in a restructuring processonly when invited to do so;

• will offer helpful, informative andgenerous advice without interfering in alocally initiated and sustained process;

• acts as a broker, creating a bridgebetween the community, the localgovernment and provincial ministries;and

• assists a community in determiningwhether it needs to restructure andwhat form that restructure will take,while remaining as neutral as possible.

Based on these principles the ministry plays anumber of significant roles in the restructuringprocess. The ministry:

• provides restructure planning grants torestructuring committees, allowingthem to hire a restructuring consultantto undertake feasibility studies;

• provides a significant source ofinformation on restructuring and localgovernment in general;

• serves as a corporate memory ofprevious restructuring initiatives and isa point of contact with othercommunities and restructuringcommittees, allowing the committee tolearn from the experiences of others;

• acts as a mediator where differencesarise within the community or betweenthe community, local governments andprovincial agencies;

• organizes and supervises thereferendum on restructuring;

• works with other ministries to provide a comprehensive offer of assistance for restructuring;

• develops the Letters Patent toimplement restructuring if thereferendum passes;

• works with the council and regionaldistrict to implement restructuring,including holding elections formunicipal council if required; and

• works with the new or restructuredmunicipality to ensure a smoothtransition to its new status.

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9.3 Other Provincial MinistriesA number of other provincial ministries haveimportant roles to play in the local governmentrestructuring process. Their role arises becauserestructuring local governments involves a shift ingovernance, service and financial responsibilityfrom the province to local governments.These agencies are both a source of informationand a support in managing the transition to arestructured government. The Ministry ofMunicipal Affairs plays a key role in the processby bringing these provincial agencies to the table.

The Ministry of Transportation and Highways(MoTH) is responsible for maintaining all publicroads in rural areas. Restructuring means that allroads except those in the provincial highwaynetwork will be transferred to the localgovernment. MoTH provides information toMunicipal Affairs on the implications of thesetransfers and offers transitional assistance.After restructuring, MoTH generally makes suremaintenance contractors continue to providemaintenance services for roads transferred to themunicipality for five years or to the end of themaintenance contractor’s contract, whichever isthe less.

The Ministry of Attorney General (MAG) isresponsible for policing in rural areas. If a newmunicipality is incorporated and its population isover 5,000, or if restructuring pushes thepopulation of an existing municipality past 5,000,then the municipality becomes responsible forpolicing on April 1 following the census whichestablishes the population at that level. The MAGprovides transitional assistance so that themunicipality does not pay these costs forapproximately five years following the date of restructuring.

Once the municipality assumes responsibility, theMinistry of Municipal Affairs may also provide agrant to ease the transition.

The Ministry of Finance and CorporateRelations (MFCR) is responsible foradministering the property tax system in ruralareas. As well, it sets and levies the provincialrural services tax under the Taxation (Rural Area)Act. The ministry provides a newly incorporated orrestructured municipality with a refund of taxescollected under this Act. If restructuring takeseffect before July 1 in a given year,100 percent of the taxes are refunded. If therestructure takes place after June 30, 50 percentof the taxes are refunded.

9.4 Regional DistrictsRegional districts play a major role in any localgovernment restructuring that involves ruralterritory — meaning they are involved in allrestructuring except municipal amalgamation.A regional district serves as the government ofrural areas in both a political and technical role.

The electoral area director for the restructuringrural area plays a pivotal role as the politicalrepresentative for rural residents. The ministry willgenerally consider incorporation of a newmunicipality only if the electoral area directorsupports the restructuring process. The areadirector is often the person who approaches theMinistry of Municipal Affairs seeking informationand assistance to get the process underway.In particular, the director is involved inestablishing a broadly-based restructuringcommittee. When restructuring an existingmunicipality involves a rural territory, theelectoral area director, as well as the mayor and municipal council, request or support therestructuring study process.

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The regional board has an interest in what isoccurring within its territory and in the impact ofrestructuring on its services, but the decisionabout the form of government is made by thecitizens of the community consideringrestructuring. Regardless of the outcome of areferendum on restructuring, the residents of therural area will continue to be citizens of theregional district and receive services from theregional district, although the services providedcould change.

The regional district’s main role in therestructuring process is administrative. Becausethe ministry generally provides RestructurePlanning Grants to the regional district, it acts asthe banker for the restructuring committee bydisbursing funds both to the committee and therestructure study consultant. Also, the regionaldistrict provides administrative support andcrucial information on service provision undervarious restructuring scenarios to therestructuring committee.

9.5 MunicipalitiesMunicipalities play a critical role in anyrestructuring involving a municipality, whether itis extending boundaries to include rural territoryor amalgamating. When amalgamating, themunicipalities have the primary interest in therestructuring process and outcomes and should,therefore, dominate the restructure committee.When restructuring involves a rural area, both themunicipality and the rural area should berepresented on a restructuring committee.

9.6 The Restructuring CommitteeA restructuring committee guides and managesthe restructuring process by researching,analyzing and discussing possible changes to thelocal government’s structure. The committeemakes sure the process is — as much as possible— neutral and at arms length from the Ministryof Municipal Affairs, the regional district andmunicipalities. This means that the committeeshould be broadly representative of all of theinterests in the community, includinggeographical areas, sectors and localgovernments. The committee must not be biasedor represent any single viewpoint in thecommunity. Restructuring committees can beestablished under a wide variety of approaches.

9.7 The Restructuring Study Consultant

Major local government restructuring should bepreceded by a full feasibility study, called arestructuring study. This study is done by anindependent and qualified consultant from theprivate sector. The consultant researches theimpacts of restructuring on the community’s fiscalarrangements, service delivery and politicalrepresentation. The consultant is a technician whoshould facilitate discussions and provideinformation without taking a position within thecommittee or community.

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10.0 Conclusion

Local government restructuring plays a vital roleby contributing to a prosperous economy andhealthy society in British Columbia. By servingthe needs and interests of local citizens and theirgovernments, restructuring offers a clear,straightforward way of addressing local prioritieswith a government structure that matches localconditions. Adaptable and serving local prioritiesand desires, local government restructuring is animportant tool that can be used to help BritishColumbians build a better future.

For more information contact:

Ministry of Municipal Affairs Local Government Structure BranchP.O. Box 9490 Stn. Prov. Govt.Victoria, BC V8W 9N7

Phone: (250) 387-4054 Fax: (250) 387-7972

E-mail: structure@hq.marh.gov.bc.ca

Ministry of Municipal Affairs website –www.marh.gov.bc.ca

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Appendix 1:

The Benefits of

Local Governments

By supporting an efficient and effective localgovernment system, citizens, local governmentsand the province benefit in the following vital areas:

ECONOMIC DEVELOPMENTA strong local government system provides asolid foundation for effective economicdevelopment by delivering basic infrastructureservices like roads, sewerage and water.Also, well-planned, safe and appealingcommunities attract and retain businesses and a skilled labour force.

ENVIRONMENTAL PROTECTIONLocal governments play a vital role inenvironmental protection through communityplanning and regulatory powers directed atprotecting environmentally sensitive areas,resource lands and open space. As well, localgovernments provide important environmentalinfrastructure services like sewage treatment andsolid waste management.

HEALTHLocal governments play a major role inmaintaining a healthy society. They areresponsible for providing a potable water supply,making sure sewerage is managed effectively anddisposing of solid waste. At a more general level,they are responsible for creating and maintaininghealthy communities that are safe and wellplanned. They provide a range of recreation andcultural facilities that promote health, includingparks, swimming pools, libraries and art galleries.

SAFETYLocal governments play a major role inmaintaining safe communities. This comes aboutthrough their responsibility for policing servicesand for creating a physical environment andinfrastructure that prevents crime.

EDUCATIONLocal governments contribute to the developmentof the education system. At the most fundamentallevel, they plan for and assist in acquiringappropriate school sites. At a more general level,they provide the community infrastructurenecessary for developing a literate society.

AFFORDABLE HOUSINGLocal governments play an important role inproviding affordable housing through appropriateplanning policies, regulations and financial policies.

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