Land donation program for new residents in Quebec's Val-Alain region ruled illegal

According to Quebec's municipal commision, two transfers of land have been made so far in Val-Alain, and one person is in the process of obtaining theirs to build on, free of charge.  (Vincent Pichard/Radio-Canada - image credit)
According to Quebec's municipal commision, two transfers of land have been made so far in Val-Alain, and one person is in the process of obtaining theirs to build on, free of charge. (Vincent Pichard/Radio-Canada - image credit)

A land donation program set up by the municipality of Val-Alain to attract young families is illegal, as are its subsidies to promote new residential and commercial construction, a Quebec municipal commission (CMQ) investigation has found.

In its report made public Thursday, the CMQ concluded that the municipality, located in Quebec's Chaudière-Appalaches region, is violating several provincial laws by using municipal resources to stimulate residential and commercial development through its Economic Development Corporation (EDC).

The Val-Alain EDC has been offering a residential and commercial construction assistance program since April 20, 2021.

Residential grants vary depending on the type of construction, ranging from $5,000 to $15,000. Commercial grants can be as high as $45,000.

In April 2022, the EDC launched a program to donate land to new residents in order to encourage newcomers, particularly young families, to settle in Val-Alain. The value of the land, which is approximately 1,400 square meters, is estimated at $12,000 per lot.

The only condition imposed on the recipients is that they must build a single-family residence worth at least $175,000 within 18 months of the transfer of land and live there for at least one year.

Donating property prohibited

In its ruling, CMQ cites Quebec's municipal code, which prohibits a municipality — subject to the exceptions provided for in the law — from donating its property. "Unless otherwise provided for, the alienation of any property of any municipality must be made for valuable consideration," reads section 6.1 of the code.

This means that a municipality is not legally permitted to provide financial assistance, whether it be a donation of land, cash rebate or tax credit, to encourage the construction of new homes or the arrival of new residents on its territory.

Nor does a municipality have the right to provide subsidies to businesses for new commercial construction. Such subsidies are contrary to the Municipal Aid Prohibition Act.

In its report, the CMQ said in the eyes of Val-Alain's mayor, Daniel Turcotte, the EDC is an organization independent of the municipality, located outside its financial scope.

But according to the commission, the structure of the EDC, the composition of its board of directors, its sources of revenue and its policies demonstrate that it is an executive body of the municipality.

The municipality is doing indirectly what it cannot do directly - Quebec municipal commission report

The CMQ adds that, from the reading of certain resolutions adopted by the municipality since 2020, it is clear that the financing granted to the EDC is used to promote the residential and commercial development of Val-Alain.

"Through the EDC, the municipality is doing indirectly what it cannot do directly," the commission report reads.

"Although it is understandable that a municipality wants to promote residential and commercial development on its territory, it must do so while respecting the guidelines provided for by the law, which was not done in this case."

Recommendations

The commission recommends that the municipality of Val-Alain stop donating land and granting subsidies for new commercial and residential construction through the EDC.

It also recommends that the municipality ensure that the EDC becomes an independent entity, both in terms of its financing and its management, and that it only subsidizes mandates that it is legally entitled to subsidize.

Unless Val-Alain is able to ensure the independence of the EDC, the CMQ directs it to stop subsidizing an organization that indirectly uses municipal public funds for purposes not permitted by law.

Radio-Canada was unable to reach Val-Alain officials for comment.