Navigating the “Towns Act”: Key changes and transition considerations for towns in Newfoundland and Labrador

March 10, 2025

By Stephen Penney and Danielle Harris

Introduction

On January 1, 2025, the Towns and Local Service Districts Act (the “Towns Act”) came into effect, changing the legislative landscape for towns in Newfoundland and Labrador. The Towns Act grants broader powers to enable towns to govern their affairs as they consider appropriate and enhance towns’ ability to respond to issues.

With these powers, the legislature has outlined multiple mandatory and non-mandatory by-laws (formerly known as regulations) for towns. The legislature has also provided certain general and specific transitional provisions to guide the transition between the Municipalities Act and the Towns Act.

Mandatory by-laws

With the adoption of the Towns Act, towns are now required to have by-laws in place for a number of specific items. While there is overlap with the mandatory regulations prepared under the Municipalities Act, towns should complete an audit of every by-law, and in particular, on arrears sales, which are now mandatory.

Discretionary by-laws

Under the Towns Act, the legislature grants town councils the authority to implement discretionary by-laws which respond to town issues. While the list of discretionary by-laws is quite long, some of the larger categories include:

• safety, health and well-being of people and the protection of people and property;
• public facilities, public works, utilities and improvements;
• businesses and business activities (including whether to impose a business tax);
• management and control of local roadways and sidewalks;
• transport and transportation systems;
• protection of the natural environment; and
• parks and recreation.

So long as these discretionary by-laws meet the minimum standards of related legislation, the town council is free to adopt such by-laws. For example, a town may implement health and safety by-laws, subject to minimum standards set out in the Public Health Protection and Promotion Act.

We would urge caution in adopting novel by-laws that are outside of municipal expertise. Towns should also consider their ability to enforce the novel by-law, as well and any legal obligations flowing from it and its related legislation.

Town council obligations

In addition to granting broad powers to towns, the Towns Act also describes the obligations of town councillors. A councillor is now formally required to:

• consider the welfare and interests of the town as a whole and bring to the town council’s attention anything that would promote the welfare or interests of the town;
• participate generally in developing and evaluating the policies and programs of the town;
• participate in town council meetings, town council committee meetings and meetings of other bodies to which the councilor is appointed by the town council;
• make all reasonable efforts to ensure that the by-laws of the town are executed and obeyed;
• advance the aims of the town council;
• keep confidential any matters discussed in closed meetings of the town council or town council committee meetings until such time as the matter is discussed at a town council meeting held in public; and 
• perform any other duty or function imposed under the Towns Act, or relevant legislation.

Town council procedures

In addition to describing obligations of town councilors, the Towns Act requires town councils to put town council procedures in place. However, it does not provide much in the way of specific procedural requirements (though, the minister retains the right to prescribe rules of procedure for town council meetings).

Good council procedures will address:

• Different types of motions (ex: main motions, subsidiary motions, privileges motions, etc.)
• speaking to motions;
• limiting debate, amending motions, and deferring motions;
• tabling new business; and
• conflicts of interests.

Towns should note that committee meetings are meant to be public under section 40 of the Towns Act.

Change regarding town orders

Instead of limiting categories for which a town council may make an order, section 285 of the Towns Act states that council may issue an order:

Based on this, it appears that a town will need to have a relevant by-law in place before issuing many of the commonly issued orders. Some orders may fit under mandatory by-laws in the Town Plan/Development Regulations, but councils may need to draft discretionary by-laws before being able to issue an order with respect to that subject matter.  Completing a regulatory audit should assist towns identifying whether there are any regulatory gaps which may impact their ability to issue orders.

Mind the gap: Transitioning from the Municipalities Act to the Towns Act

To bridge the gap between the Municipalities Act and the Towns Act, the legislature has provided some general and specific transition periods to keep in mind.

General transition period

The Towns Act contains a general transitional provision that provides as follows:

No transition period for arrears sales

There is no transition provision specific to arrears sales that were commenced under Municipalities Act but will be concluded under the Towns Act. In the situation, where a town decided to set a tax auction pre-2025, but the auction will not occur until 2025, it will be prudent to ensure that the auction complies with the Towns Act, and in particular, the new arrears sales appeal mechanism, and that by-laws in respect of arrears of sales are in place.

Clean up and demolition

Under the Towns Act, costs incurred by the town to carry out a clean-up or demolition order constitute a lien on the property. Given the general transition period in subsection 304(2) noted above, if a clean-up or demolition order was issued under the Municipalities Act and the town incurs costs to complete the clean-up or demolition after the Towns Act came into force, these costs ought to constitute a lien on the property. 

Poll and real property tax

Under the Towns Act, all towns must charge a property tax, and no towns may charge a poll tax. However, section 301 of the Towns Act creates a transitional period for towns to meet these requirements:

• Where a town did not previously charge a property tax, it has three years after the Towns Act comes into force to implement a real property tax.
• Where a town did not previous impose a real property tax, but imposed a poll tax, the town council may continue to impose a poll tax until it imposes a real property tax.

However, this transitional period does not apply to those towns who already have property tax. In other words, if you were are town who charged property tax and poll tax in 2024, it does not appear that the town can charge poll tax in 2025.

Conclusion

These are some of the transitional issues we have been seeing in the first month of the Towns Act being in force. Feel free to contact our municipal team to discuss any of these or any other issues.