Municipal Boundary Change - Annexation

Under The Cities Act (CA) there is no reference that the land needs to be coterminous (sharing a common boundary) for annexation; however, the growth of cities is dependent upon the provision of services, which are typically a logical outward extension.

For towns and villages, The Municipalities Act (MA) and The Northern Municipalities Act, 2010(NMA) apply and indicate the land being annexed or restructured needs to be coterminous (see subsection 53(1)(a) of the MA and 74(1)(a) of the NMA); however, both Acts also provide an exemption if the two municipalities come to an agreement (subsection 53(2) of the MA and 74(2) of the NMA).

While not required by legislation, involved municipalities may enter into a restructuring agreement to facilitate an annexation. Additionally, municipalities undertaking annexation may wish to negotiate annexation compensation agreements or other details in order for the annexation to proceed.

Please note that agreements that are not required by legislation are up to the involved municipalities to negotiate and are not discussed here.

Section 54 of the MA and 75 of the NMA permit voters of a municipality to petition their municipal council to apply for annexation. For more information on petitions, please see the MA and the NMA.

Once a municipal council has passed a resolution to pursue annexation or has been sufficiently petitioned to apply for annexation, the council must prepare a notice to the public outlining its intention to apply for annexation.

The Notice to the Public

The notice must be:

• published once a week for two consecutive weeks in a locally circulated newspaper; and
• personally delivered or sent by ordinary mail to:
  • each person assessed on the last revised assessment roll with respect to land or improvements located in the area affected by the proposed application;
  • the council of all involved municipalities affected by the proposal; and
  • the board of all school divisions affected by the proposal.

The notice must contain:

• a map and description of the proposed boundary alteration;
• a brief explanation of the reasons for the proposal;
• a statement saying where the proposal may be examined;
• a statement saying that anyone who objects to the proposal may file a written objection, clearly explaining their reasons for objecting to the proposal, with the council within four weeks of the last publication of notice; and
• the date, time and place of a public meeting that will be held by council to discuss the proposal. The meeting must be held at least one week after the day on which the notice was last published, delivered or sent.

The Public Meeting

Pursuant to section 57 of the MA and 78 of the NMA, council must conduct a public meeting. For cities, it is optional unless an objection is received from members of the public (pursuant to subjection 43(3) of the CA). The meeting must be held one or more weeks after the final publication of the notice. All of the material required to be included with the submission pursuant to section 59 of the MA and 80 of the NMA must be available for public review. Please see "3. When Agreement is Reached without Dispute" section below for further details.

Municipalities may mutually agree to the terms and areas proposed for annexation (complementary resolution passed). If both municipalities agree to the boundary alteration, the proposal must be submitted by the municipality seeking the boundary alteration to the Community Planning Branch of the Ministry of Government Relations. The application can be submitted using the online Land Planning and Development Application or by mail to the branch.

Generally, the application must include:

• a map of the proposed alteration of boundaries;
• a brief explanation of the reason for the proposal;
• certified copies of the council resolutions that support the boundary alteration;
• a summary of public meetings; and
• a copy of each submission received by council.

After a review of the submission, if the municipalities affected by the boundary alteration will be viable entities, the boundary alteration may proceed. The Ministry of Government Relations' Community Planning Branch is responsible for describing the new limit of the municipality, although an acceptable description of the lands to be annexed is requested from the applicant municipality.

The Minister may make an order if a municipal boundary application is submitted with a complementary resolution from an affected municipality or if the SMB approves an application submitted without a complementary resolution.

Through a Minister's Order under section 44 of the CA, 61 of the MA and 82 of the NMA, the Minister may:

• approve an application, subject to any terms and conditions that the Minister considers appropriate;
• approve parts of the application and reject other parts, subject to any terms and conditions that the Minister considers appropriate; or
• reject the application.

Upon the effective date of an approving order, the lands will transfer from the administrative jurisdiction of one municipality to another. From the effective date of the order, all previous boundary description orders are repealed and the new boundary description of the annexed area is conclusively deemed to be the legal description of the municipality.

It is important to note that under subsection 63(3) of the MA and 84(3) of the NMA, all bylaws and resolutions in force in the former municipality continue in force as bylaws and resolutions of the new municipality for the period of one year, unless they are repealed or others are made in their place. There is no similar provision in the CA. In the case of planning and land use bylaws, those made by the former municipality will follow the land until the annexing municipality amends its planning bylaws to ensure they appropriately cover the newly annexed area.

Additionally, pursuant to section 63(6) of the MA and 84(6) of the NMA, when part of a municipality is annexed to another municipality, as soon as possible after the date of the boundary alteration, the administrator of the municipality from which the land is taken must provide to the administrator of the other municipality that is gaining the land:

• a copy of the assessment and tax roll for the part of the municipality that is added to the other municipality; or
• a statement setting out the pertinent details of the information reflected in the assessment and tax roll for that part of the municipality.

Under subsection 43.1(10) of the CA, 59(1)(1.1) of the MA and 80(1)(1.1) of the NMA, after a municipality has notified another municipality of a proposed boundary alteration, a response is required to be provided within 30 business-days of the request. If a response is not received within 30 business-days, the request is deemed to be in dispute and the applicant municipality can proceed on that basis (i.e. third party mediation, application to the Saskatchewan Municipal Board or SMB).

A set of Principles for Financial Settlements Between Municipalities for Boundary Alterations was developed jointly by the Saskatchewan Association of Rural Municipalities (SARM), the Saskatchewan Urban Municipalities Association (SUMA) and the ministry. They are overarching principles intended for use both by municipalities for determining annexation compensation, and by the SMB if municipalities cannot settle the matter. The principles also offer transparency, predictability, and advance understanding for municipalities about how the SMB will review disputes pertaining to annexation compensation, if referred to the SMB for resolution. The principles will be used as guidelines by the SMB, leaving it with sufficient flexibility to consider cases on their own merits, as required by legislation.

For cases in dispute over financial compensation, the SMB will consider each principle, as a guideline, in addition to the specific facts and arguments brought forward by each party. More specifically:

• in the absence of a complementary resolution, the principles provide an opportunity to identify the various areas where they have agreement and the items they would identify for mediation;
• if through mediation, they are unable to obtain a complementary resolution, the municipalities should clearly identify which principle or principles are still outstanding; and
• their submitted boundary alteration application should focus on the outstanding principle and their argument and evidence to support their position as it relates to financial compensation.

The principles can also be used by municipalities to guide their negotiations to a mutually agreeable settlement without need for the SMB, if they choose.

If one of the involved municipalities does not consent or respond to the proposal, under subsection 43.1(4) of the CA, 60(3) of the MA and 81(3) of the NMA, before an application is submitted to the SMB for review pursuant to subsection 18(1) of The Municipal Board Act, the SMB must appoint a mediator to assist the municipalities in resolving the matter in dispute unless there has been an attempt at mediation within the previous year. Municipalities are encouraged to attempt mediation prior to applying to the SMB. If none is attempted, the SMB will appoint a mediator. All costs of any mediation must be borne by the affected municipalities.

When Agreement is Reached through Mediation

If mediation successfully resolves a dispute, the municipality seeking the boundary alteration can submit their application to the Ministry of Government Relations either using the online Land Planning and Development Application or by mail.

When Agreement is NOT Reached through Mediation

If one of the involved municipalities does not consent to the proposal and the mediation fails to resolve a dispute, an application must be submitted to the Municipal Boundary Committee of the SMB which will review the proposal, hold a meeting and make a decision regarding the proposal.

Under subsection 18(1)(1.1) of The Municipal Board Act, before an application is reviewed by the committee, the secretary of the board must review sufficiency of an application and information. If an application is complete, the secretary of the board will refer the application to the committee. If an application is not complete, the secretary of the board will notify the applicant municipality in writing of deficiencies and specify a period within which the deficiencies must be remedied.  If the deficiencies are remedied within the period specified, the application will be forwarded to the committee for review. If the deficiencies are not remedied within the period, the application is deemed to have been withdrawn.

After receiving a sufficient application, the SMB committee will review the proposal and may hold a formal hearing with the public. An application can be withdrawn at any time prior to the committee completing its review. Once the committee's review is complete, its decision on the application applies even if an attempt to withdraw the application is made by the municipality. The SMB Committee may approve all or a portion of an application, subject to any terms and conditions it feels are appropriate.

Under subsection 18(11) of The Municipal Board Act, the SMB is required to report its decision to the Minister within four months after the day on which an application is referred to it by the secretary of the board. The Minister will issue the Order pursuant to the SMB Committee's ruling.

Please note an application to the Municipal Boundary Committee varies from the application to the Minister. Please ensure you follow the correct application process and requirements.

If an application to the Minister or the SMB is approved, the ministry will cause notice of the decision to be published in a newspaper circulated in the area of the proposal and the boundaries of the affected municipalities must be adjusted as per Ministerial Order. If an application or portion of an application is rejected, no subsequent application that is substantially similar may be made for one year. This applies to all municipalities.

The Saskatchewan Plan for Growth pledged to accelerate the annexation process by developing new policies and a common framework to provide consistency and fairness in municipal land annexation decisions.

One of the key issues that can block annexation agreements between municipalities is the question of what financial compensation should be paid by one municipality to the other. The Ministry of Government Relations, in collaboration with SUMA and SARM, has developed a set of Principles for Financial Settlements Between Municipalities for Boundary Alterations (i.e. annexations). They are overarching principles intended for use both by municipalities for determining annexation compensation, and by the Saskatchewan Municipal Board (SMB) if municipalities cannot settle the matter. The principles can represent a significant step toward reducing conflicts and delays with respect to deciding municipal boundary alterations.

The principles are the result of several months of consultation, collaboration and compromise with SARM and SUMA – who have each endorsed and committed to their use by municipalities. Both municipal associations agree the process of developing them has served to strengthen trust and improve the relationship between the municipal associations.

The principles also offer transparency, predictability, and advance understanding for municipalities about how the SMB will review disputes pertaining to annexation compensation, if referred to the SMB for resolution. The principles will be used as guidelines by the SMB, leaving it with sufficient flexibility to consider cases on their own merits, as required by legislation.

Municipalities will continue to be encouraged to voluntarily reach their own mutually acceptable annexation agreements.

In summary, the key points imbedded in the eight principles are:

• more regional planning by urbans and bordering RMs to determine locations for growth and to inform each other about their respective plans;
• boundary alterations to be based on substantiated need for land, aligned with plans;
• financial settlements based on evidence and negotiated in good faith;
• acknowledgement of net financial benefits for both municipalities and of infrastructure investments that have been made; 
• the settlement is not to jeopardize the financial ability of either municipality to meet its responsibilities;
• respect that the property tax from properties annexed is to fund municipal services to those properties;
• the settlement is to be based on present land use and circumstances, not what might be developed in the future; and
• future developments are only to be considered if the boundary alteration inhibits or transfers an imminent development.

If municipalities can adhere to these eight fundamentals, not only can the negotiation process be more respectful, but also the financial settlement can be based on clear rationale, taking into account both municipalities' needs and situations.

The Province has also made some other improvements to the annexation process to support growth. These efforts to expedite the annexation process include legislative changes to streamline the process and SMB procedural policies to reduce the time frame for making a decision.

The principles have been incorporated into the online document "A Guide for Municipal Boundary Alterations (Annexation)". Each principle also includes a set of related questions to give municipalities guidance in their use and to help explain how each principle should be interpreted by rural and urban municipalities.