Land use contracts

Land Use Contracts were a tool regularly used in the 1970’s before they were eliminated on November 15th 1978. The purpose of the tool was to allow local governments to arrive at agreements with specific developers to grant development rights over and above what was allowed under current zoning. This was typically done in exchange for commitments by developers to help finance the infrastructure costs of development.

Generally, Land Use Contracts ‘locked’ in the zoning unless the language within the contract stated “zoning regulations as amended and replaced from time to time.” This has the effect of continuing the zoning regulations that were in place in the 1970s. Kelowna had three zoning bylaws over the Land Use Contract era with the current Zoning Bylaw #8000.

Issues have arisen, specifically with the continued application of land use contracts as they supersede any subsequent bylaw dealing with land use and development including: Zoning Bylaws, Development Cost Charge Bylaws, Subdivision, Development and Servicing Bylaw No. 7900, and Development Permits. From 1978 to 2014, municipalities or the owners of the land could not unilaterally discharge, cancel, or modify the land use contract without the other party’s consent.

Since, 1997, there have been a limited number of LUCs that have been discharged. Most notably the Dilworth Mountain Residential Land Use Contract. However, the City had largely been unsuccessful with discharging any LUC that required the owner’s consent unless the owner was seeking new land uses not authorized within the LUC.

The Local Government Act was amended in 2014 to address the LUC issue. Municipalities were provided a second method of rescinding LUC’s through termination. LUC terminations provide the ability for municipalities to rescind LUC’s unilaterally, without owner(s) consent, as stated in Section 548 of the Local Government Act. Discharging and terminating both have the same process except that Land Use Contract terminations (unlike LUC discharges) do not apply when Council adopts the bylaw. Terminations require a one-year grace period as outlined by the Local Government Act. Further, the municipality must send additional letters after the one-year grace period is complete informing the property owners of which land use regulations apply to their properties.

With LUC terminations the owner, during this grace year, will be allowed to appeal the termination in order to extend the length of time the LUC is in force (greater than a year). The owner would approach the Board of Variance and explain that there is a hardship by terminating the LUC in a year after the termination was adopted by Council. The Board of Variance will decide whether or not to grant the extension. If the extension is granted the LUC will be terminated after the extended period with no opportunity to extend again.

According to the Local Government Act, as of June 30th 2024 all land use contracts will be terminated. Therefore, land use contracts will remain in force until that date unless terminated early by the municipality. However, by June 20th 2022, local governments must have appropriate zoning regulations to replace land use contracts upon their termination (termination enactment cannot occur after June 30th 2022) as not all properties have the appropriate underlying zoning.

Bylaws authorizing a land use contract termination must have a public hearing and standard notification requirements. Additionally, a bylaw terminating a land use contract cannot be “in force” earlier than one year following the date of its adoption or no later than June 30th 2024. Further, appropriate zoning regulations for the land must be in place by the time the land use contract termination is adopted or may be enacted concurrently. Appropriate zoning regulations means land must be zoned according to the existing zoning bylaw (Bylaw #8000).

Within the City of Kelowna, there were originally 140 Land Use Contracts however, only 73 are still in force. Occasionally, a land use contract may apply to a single parcel but more commonly, a Land Use Contract applies to an area and includes multiple land owners.

Notification

According to Council Notification Policy #367 and to the Development Application Procedures Bylaw #10540, when a LUC termination, that does not require a rezoning is processed, notices, such as mail outs, will only be sent to affected properties. However, when a rezoning is required properties within 50m of the LUC termination and rezoning will receive notices. In addition, all LUC terminations will require notification signage as per Section 9.14 Notice of Termination in the Local Government Act:

Local governments must provide notice to each owner that the termination of land use contract is occurring and must provide notice of what the new zoning regulations apply to the land. The notice must state the bylaw becomes “in force” one year following the date of the bylaw adoption and inform the owner of their right to apply to the Board of Variance for an extension of the “in force” date.

Strategy for Eliminating Land Use Contracts

The City will be terminating as many land use contracts as possible before 2022 because performing all the public hearings related to zoning changes and notifications at once would be overwhelming. There are currently 73 Land Use Contracts still active that effect 702 properties (See Table No. 2). Therefore, Staff will be bringing a bundle of approximately 4 Land Use Contracts to Council each quarter starting in 2017. By 2022, Staff should have completed termination of all remaining Land Use Contracts.

Council approved the Strategy for Eliminating Land Use Contracts on September 12, 2016. To view the full report click here.