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Partners for Climate Protection

Special district financing and special levies

Special district financing (SDF), also known as special levies or local improvement levies, is most often used to finance hard-service infrastructure that benefits a specific, identifiable group and avoids imposing costs on the wider community; or to finance a new service not traditionally covered by the general tax base. Levies are attached to the general property tax bill. SDF often involves creating a designated district, which in Canada usually requires municipal or provincial approval, and is typically combined with other mechanisms, such as development cost charges.

Special levies may also subsidize certain existing services, such as public transit or stormwater management. A municipality can use a special levy to increase a level of service, establish a strategic allocation fund for future investment, or extend service to previously uncovered areas. Ideally, special levies are used to achieve a strategic community goal.


Any infrastructure or environmental need, e.g. transit, active transportation infrastructure, water, wastewater, waste management, etc.


  • Finance new infrastructure at better rates over its useful life.
  • Fair taxation, i.e. principal users pay for the infrastructure cost.
  • The public tends to be supportive if the special levies address an identified community need.
  • Larger municipalities can raise significant revenues through special levies.

Barriers and challenges

  • Additional administration costs, e.g. initial public consultation, software upgrades, research and information to set the levy rate, etc.
  • Since the levies apply to a limited number of property owners in a specific geographic area, they may only be able to finance smaller projects with low up-front costs.
  • As a higher-profile funding source, there must be a higher standard of accountability, and the goals must be well communicated to the public.
  • They can be difficult to implement in smaller communities with a smaller tax base.

Resources and notes

Municipal examples

  • Okotoks, AB, has a recapitalization fee on the general property tax bill that is used to fund existing infrastructure replacements.
  • Winnipeg, MB, uses frontage levies to fund upgrades, repair, replacement and maintenance of city streets and sidewalks.
  • In Halifax, NS, a $5 million community solar pilot program encourages individual homeowners to install solar panels for heating domestic hot water.

Page Updated: 18/09/2015