Liabilities are generally restricted by Part 12 and Part 24 of the Municipal Act, but section 448 and 819 provide authority to incur certain current year liabilities (i.e., expenditures) and section 451 and 828 provide authority to incur certain future year liabilities. Under these latter two sections, local governments are provided with the authority to incur any liability payable after the end of the current year so long as it is incurred under an agreement (contract), is not a debenture debt, and the period of the liability is not longer than the reasonable life expectancy of the activity, work or service under the agreement. For example, a local government may enter into an agreement to acquire community ice time from a private arena operator in each year of a 50-year agreement.
The provisions authorizing liabilities under agreements restrict the liability to non-debenture debts, since debenture debts are authorized under the loan authorization provisions of sections 455 and 831.
Liabilities that are incurred under agreements may be subject to counter petition or assent requirements. If the term of the contract, including all renewals, is greater than five years, the contract must receive the assent of the electors, or the Council or Board must provide a counter petition opportunity in relation to the liability. A notice of the counter petition or vote would include information such as:
• the length of the term of the contract
• the nature of the liability created
• an estimate of the total potential liability
If a partnering agreement provides for more than one matter requiring counter petition or assent (e.g., a liability and a tax exemption which both exceed five years), then the local government may seek assent to the agreement as a whole, rather than individual matters in the agreement, thus avoiding the possibility that electors accept one component of the agreement while rejecting another.