Canada: The Réseau Électrique Métropolitain: Theory And Practice

On September 27, 2017 the National Assembly adopted the Act respecting the Réseau électrique métropolitain, SQ 2017, c. 17 (the "REM Act").

The purpose of the Act is to facilitate the carrying out of a shared transportation infrastructure project with a view to establishing and operating a shared transportation system publicly announced as the Réseau électrique métropolitain (the "REM")1.

On February 8, 2018 the REM project was officially launched, with the announcement of the selection of Groupe NouvLR and Groupe des Partenaires pour la Mobilité des Montréalais (PMM) as the consortiums that will carry out the construction work scheduled to begin in April 2018.

This project comes as part of the mission of the Autorité régionale de transport métropolitain (the "Authority")2 to ensure the mobility of persons in its area of jurisdiction through modes of shared transportation, and to ensure the integration of shared transportation services that serve this area3.

To that end, the REM Act provides for the financing of the REM through joint contributions by the Caisse de dépôt et placement du Québec (the "CDPQ") and the Authority4.

I –Transportation dues

The REM Act provides that the CDPQ and the Authority may enter into an agreement determining the amount of the Authority's contribution towards the construction of the REM5, including through transportation dues6. To that end, the REM Act amends the Act respecting the Autorité régionale de transport métropolitain, CQLR c A-33.3 (the "ARTM Act") by adding Chapter V.1 entitled "Transportation Dues"7 which, in accordance with a bylaw yet to be adopted8, will determine the amount of the dues and how they are to be applied.

The aforementioned agreement will only be binding if approved by the Minister9, with or without any modifications. If no such agreement between the CDPQ and the Authority is concluded within the timeframe specified by the Minister, the Minister may determine the terms and conditions of such an agreement, which will then be deemed to have been entered into by CDPQ and the Authority.10

The Authority's contribution may be as high as $1,112,000,000, consisting of $512,000,000 in lieu of land value capture and a maximum of $600,000,000 to be financed by transportation dues.11

Under Chapter V.1 of the ARTM Act, the Authority must identify the zones in its area of jurisdiction that lend themselves to the coordination of urbanization and the shared transportation services it finances, even in part, through the imposition of transportation dues.12 These dues may be imposed on a shared transportation service other than the REM, subject to certain conditions. This subject will be further discussed below.

The zones thus identified must be located within a radius of one kilometre from each REM station13. It is interesting to point out that the taxation radius of TOD areas provided for in the Metropolitan Land Use and Development Plan is also one kilometre. This does not necessarily mean however that the zones identified by the Authority will be the same as the TOD areas.

The ARTM Act, as amended by the REM Act, identifies the types of work that may, by way of by-law, be made subject to the payment of transportation dues14. Any work exceeding $750,00015 (subject to annual indexation16) in value and carried out in order to (1) erect a building, (2) modify a building, including redeveloping or rebuilding it, or increasing its floor area, or (3) change the use of a building17 may be made subject to the payment of transportation dues. However, any work covering a floor area of less than 186 m² is excluded from such payment18.

The dues correspond to the product obtained by multiplying the rate prescribed by the by-law adopted by the Authority, by the floor area covered by the work, which in turn is determined according to the method prescribed by the by-law19. The by-law provides, amongst other things, for the zones within which work is subject to transportation dues, for the rate of the dues and the factors that may make it vary, for the method for determining the floor area covered by the work subject to the dues, for the elements considered in determining the value of the work, and for the terms and conditions governing the collection and reimbursement of dues20.

The rate of the dues may vary according to the distance between the work or buildings subject to the dues and a shared transportation service, the classes of work and buildings prescribed by the by-law, and the different zones and locations inside zones, in particular to promote densification and revitalization21.

The REM Act provides for a three-year transition period for the introduction of the transportation dues. During this period, there will be a progressive increase in the amount of the dues, in the following stages22:

  • for the period ending December 31, 2018, the rate of the dues will correspond to 50% of the rate specified in the by-law adopted by the Authority pursuant to section 97.2 of the ARTM Act;
  • for the period ending December 31, 2019, the rate of the dues will correspond to 65% of the rate specified in the by-law;
  • for the period ending December 31, 2020, the rate of the dues will correspond to 80% of the rate specified in the by-law.

It should be noted that work may be made subject to the payment of transportation dues even if it is carried out on an immovable only partly situated in a zone within which work is made subject to dues by way of the by-law23.

The Authority may adopt as many by-laws as there are transportation dues to impose, provided that a zone determined by a by-law is not made subject to more than one set of transportation dues. Thus, the first by-law that makes work inside a zone subject to such dues prevails over any of the Authority's subsequent by-laws24. To date, no by-law contemplated in Chapter V.1 of the ARTM Act has been adopted25.

The REM Act introduces section 84.1 to the ARTM Act; this new section provides that the Authority may finance the cost of new shared transportation services, other than the REM, resulting from agreements entered into under section 8 of the ARTM Act, through transportation dues provided for in Chapter V.1 and specific to each agreement26.

However, the Authority may not, before January 1st, 2021, make work subject to the payment of transportation dues other than those charged specifically to finance the REM27. It is only as of 2021 that transportation dues may be imposed for the financing of new shared transportation services other than the REM.

II – Expropriation

In order for the REM project to be carried out, the acquisition of several real estate properties has been planned. For that purpose, the REM Act introduces several specific new expropriation rules that are different from the standard expropriation procedure.

First, notwithstanding what is provided for in the Expropriation Act, CQLR c. E-24 (the "EA")28, an expropriation for the purposes of the REM, which is done pursuant to a decision of the Minister, does require the Quebec government's prior authorization29.

A second notable difference is that the expropriating party's right to expropriate may not be contested,30 contrary to what is provided for in section 44 of the EA. In addition, the 60-day period for the filing of the declaration indicating the amount that the expropriating party, expropriated party, lessee or occupant offers or claims, as the case may be,31 is reduced to 30 days under the REM Act32. This period begins to run as of the date of service of the notice of expropriation33. Under usual expropriation rules, failure to meet this deadline allows the other party to proceed by default34.

The REM Act also provides that the provisional indemnity, in the case of an agricultural operation, a business or an industrial concern, is determined by the Minister and not by the Administrative Tribunal of Québec, contrary to EA stipulations35. This provisional indemnity includes the indemnity the Minister considers reasonable for the injury directly caused by the expropriation, to the extent that the documents justifying the indemnity, and required under the notice of expropriation, were provided within 30 days after the date of service of the notice36. As such, the expropriated party has the exceptional obligation to provide the Minister, in a very short timeframe, with information that is generally privileged and confidential, such as financial statements, statements of revenue and expense, income tax returns, leases, etc. This apparent intention on the part of the legislature to accelerate the expropriation process in connection with the REM seems to be prompted by an objective to start construction in the summer of 2018, considering that a number of expropriation notices already served have set this upcoming July as the date for taking possession of expropriated immovables.

Pursuant to section 53.1 of the EA, the expropriating party becomes the owner of the expropriated property upon registering a notice of transfer of title on the Land Registry. The notice must be served on the expropriated party37. Under the REM Act, this notice of transfer of title is replaced by a Minister's notice of transfer, the content of which is specified in section 9 of the REM Act. The Minister's notice does not have to be served, but merely sent to the expropriated party38.

It should be noted that the Minister may not register the notice of transfer:

  • before the expiration of a period of 12 months following registration of a notice of expropriation on the Land Registry, if the property includes all or part of a residential building, or
  • before the expiration of a period of 18 months, if the building is used, even in part, for agricultural, commercial or industrial purposes39.

However, in all cases, the expropriated party may consent to the Minister's notice of transfer being registered within a shorter period40.

As a considerable number of expropriation notices indicate that the change in possession of the expropriated properties will occur in July 2018, prior consent of the expropriated owners will be required in order to allow for the registration of the Minister's notice of transfer on the Land Registry before the 12 or 18 month delay set out in section 10 of the REM Act is reached, as may be the case. In practice, the expropriated party may consent to such an early registration of the Minister's notice of transfer, subject to compensation.

Finally, it should be noted that despite the fact that REM expropriations are carried out by the Minister, it is the CDPQ that will ultimately take possession of the expropriated immovables41.

It remains to be determined what the expropriated parties' rights and recourses are in the event the provisional indemnity determined by the Minister is insufficient. The Act respecting Administrative Justice, CQLR c. J-3 may provide some guidance in this regard, particularly in the general rules applicable to individual decisions made in respect of a citizen42; other recourses may also be possible.

Footnotes

1 Section 1 of the Act respecting the Réseau électrique métropolitain, SQ 2017, c. 17. (the "REM Act")

2 Section 5 of the Act respecting the Autorité régionale de transport métropolitain, CQLR c A-33.3 (the "ARTM Act")

3 Section 36 REM Act

4 Ibid., section 38, par. 1

5 Ibid., section 38, par. 2

6 Ibid., section 38, par. 3

7 Ibid., section 54

8 Section 97.2 of the ARTM Act (section 54 REM Act)

9 Under the REM Act, "Minister" means the Quebec Minister of Transport who, pursuant to section 87, is responsible for the administration of the statute.

10 Section 38, paras. 4 and 5 REM Act

11 Ibid., section 38, paras. 2 and 3

12 Section 97.1 of the ARTM Act (section 54 REM Act)

13 Section 43 REM Act

14 Section 97.2 ARTM Act (section 54 REM Act)

15 Ibid., section 97.2 par. 1

16 Ibid., section 97.2 par. 5

17 Ibid., section 97.2 par. 1, paras. (1) to (3)

18 Ibid., article 97.2 par. 4, par. (1)

19 Ibid., section 97.2 par. 2

20 Ibid., section 97.3 par.1

21 Ibid., section 97.3, par. 1, par. 2, (a) to (c)

22 Section 85 REM Act

23 Section 97.3, par. 2 ARTM Act (section 54 REM Act)

24 Ibid., section 97.3, par. 4

25 Under section 84, par. 1, the Authority had until November 26, 2017 to adopt this by-law. As this has not yet been done, the Minister may now enact the by-law (section 84, par. 2 of the REM Act).

26 Section 84.1, par. 1 ARTM Act (section 53 REM Act)

27 Section 130.1 ARTM Act (section 56 REM Act)

28 Section 36 par. 1 EA

29 Section 8 par. 1 REM Act

30 Ibid., section 8 par. 2

31 Section 46 EA

32 Section 8, par. 2 REM Act

33 Ibid.

34 Section 46 EA

35 Ibid., section 53.13

36 Section 8, par. 2 REM Act

37 Section 53.2 EA

38 Section 8 par.2 REM Act

39 Ibid., section 10 par. 1

40 Ibid., section 10 par. 2

41 Ibid., section 9, par. 1

42 Act respecting Administrative Justice, CQLR c. J-3, section 1 and following

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