10/31/2012
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: