On October 25, 2012, Kathleen Wynne, Minister of Municipal Affairs and Housing filed O.Reg. 322/12, an amendment to O.Reg. 586/06 under the Municipal Act, 2001 regarding local improvement charges.

The amendments will enable municipalities to use the LIC mechanism to help residents finance energy efficiency and renewable energy projects (among other listed works such as water conservation). LICs are financing payment obligations included on a property owner’s tax bill as a surcharge until they are completely paid off. On sale, an outstanding LIC obligation remains with the property.

Research indicates that people often need upfront financing to conduct energy improvements. Many homeowners may resist making energy-saving retrofits if they plan to move before they have recouped their costs through energy cost savings or before they have repaid retrofit financing.

By selectively funding cost-effective energy retrofits the municipality will have greater indirect control over program impacts. The municipality can obtain lower interest financing through the issuing of bonds than would be available to homeowners through the private sector.

If an LIC payment is in arrears, it triggers a tax lien (on the defaulted payments only) and as per municipal protocols, if default continues, the municipality can proceed with a tax sale or foreclosure. Given the priority lien, an outstanding payment would take priority over any outstanding mortgage on sale and the new owner would resume the LIC payments.

Of note under the revised LIC mechanism:

  • Energy efficiency and renewable energy projects are listed as eligible under the definition of LIC “work”.
  • If a municipality undertakes a work as a local improvement, a special charge imposed with respect to the work has priority lien status. 
  • A municipality may raise the cost of undertaking works as local improvements on private property by imposing special charges on the lots of the consenting property owners.
  • Projects can be authorized through either a bylaw to a specific work or through a bylaw to authorize a municipal program for a series of works after public notice is provided. 
AMO and its members strongly support policies and programs that enable energy conservation, energy efficiency and renewable energy project development. The energy we stop wasting is the cheapest and most readily available energy source that there is.

Using LICs for energy efficiency and renewable energy works is good public policy as it will enable reductions in residential energy use; allow for the development of small, renewable energy projects; avoid the construction of new, expensive and often unpopular energy supply projects; and it will stimulate local job creation.

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