Canada: Will Work Related To Your Building Be Financing The REM?

Property owners located near the route of the future Réseau Express Métropolitain (the "REM"), be aware! Last April 4, the Minister of Transport, Sustainable Mobility and Transport Electrification enacted the By-law respecting transportation dues regarding the Réseau express métropolitain (the "By-law"), which was adopted under the Act respecting the Autorité régionale de transport métropolitain (the "Act").

The main purpose of the By-law, which will be applicable as of May 1, 2018, is to finance the REM. It imposes transportation dues for certain work performed in the zones identified along the route of the REM.

This is an overview of the main procedures for application of the dues, as outlined in the By-law and the Act.

Will your property be targeted?

The By-law applies to the zones identified in Order no. 2018-03 dated March 22, 2018, which appear with the stations as well as the delineations in Schedules A and B of the By-law.

Subject to certain exceptions, the By-law will primarily apply to buildings located, in whole or in part, within a radius of 1 kilometre from each station, except for the Édouard-Montpetit, Gare Centrale and McGill stations in Montréal, where it will apply to buildings located within a radius of 500 metres from those stations.

The zone delineation is adjusted to exclude any immovable in an agricultural area within the meaning of the Act Respecting the Preservation of Agricultural Land and Agricultural Activities, as well as any lot for which access to the REM station concerned, on foot or by vehicle, would be blocked year-round by a watercourse.

Which work is subject to payment of dues?

Dues will be collected for work meeting the following conditions and performed with respect to a building located, in whole or in part, in one of the targeted zones:

  1. the value exceeds $750,000 excluding taxes (the By-law provides for annual adjustment of this value, on January 1st of each year, based on the variation in the overall average Quebec consumer price index without alcoholic beverages and tobacco products for the 12-month period ending on September 30 of the year preceding that for which the amount is to be adjusted);
  2. the floor area is of at least 186 square metres (approximately 2,002 square feet); and
  3. the purpose is:

    1. erection of a building;
    2. rebuilding of a building, except for the reconstruction floor area following a fire that occurred in the preceding 24 months;
    3. increasing the floor area of a building; or
    4. redevelopment of a building in connection with a change in use, even partial (as it relates to the change from one of the eight categories described in the By-law to another).

How to calculate the dues?

Schedule C of the By-law stipulates that the rate of the transport dues is $107.64 per square metre of area of work subject to payment of dues for each of the targeted zones (approximately $10.00 per square foot).

The By-law stipulates that, for the purpose of determining the transportation dues, the floor area of work subject to payment of the dues will be equal to the sum of the each of floor area covered by the work, including mezzanine and basement work. The floor area will be measured from the outside surface of the external walls.

What are the collection procedures?

The dues will be calculated and payable at the time the permit relating to the work subject to payment of dues is delivered.

The dues will be paid by the owner of the immovable that is the object of the work (the By-law refers not only to the holder of the right of ownership of an immovable, but also to an emphyteuta, a usufructuary or superficiary, or even a syndicate of co-owners in certain cases).

The dues will be collected by the local municipality issuing the permit on behalf of the Autorité régionale de transport métropolitain and must be paid in full by bank draft at the time the permit is issued.

When work subject to payment of dues by the provisions of the By-law can be undertaken without prior issuance of a permit by the municipality concerned, the owner of the immovable that is the object of the work must nevertheless obtain a permit issued under the By-law to carry out the work in question. The municipality concerned will therefore be responsible for issuing this permit.

To avoid splitting up the work subject to payment of dues, the By-law further stipulates that the assessment of the thresholds met for application of the dues will take into consideration the value of constructions and works and the movables incorporated as well as the floor areas previously authorized for a building owned by the same owner, within 48 months since the last authorization. The authorities will therefore examine the entire file over a period of four (4) years.

Phased application.

Pursuant to the Act Respecting the Réseau électrique métropolitain, the rate for the transportation dues provided for in the By-law will be subject to a phased application, according to the following schedule:

  1. for the period ending December 31, 2018, 50% of the rate will be applicable;
  2. for the next period ending December 31, 2019, 65% of the rate will be applicable;
  3. for the next period ending December 31, 2020, 80% of the rate will be applicable;

to achieve full application of the rate from January 1, 2021.

* * *

This is a quick overview of the main application procedures for the transportation dues. It will be essential for the owners of immovables located, in whole or in part, in the targeted zones to familiarize themselves with the applicable regulation to understand the extent to which they could be impacted.

We would be pleased to discuss this further with you if necessary. We can also help you determine whether your property is located in a targeted zone.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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