Peguis First Nation will establish an urban reserve in Winnipeg following an agreement with the city in the spirit of reconciliation.

The community is located roughly 150 kilometres northeast of Winnipeg, but its urban reserve, the second of its kind in the city, will be set up at 1075 Portage Ave.

"The parties have participated in a lengthy negotiation spanning several years, and the proposed MDSA (Municipal Development and Services Agreement) is the result of a great deal of discussion, review and analysis of common and best practices across Canada, but more importantly, through the lens of reconciliation," according to the report to be presented to the executive policy committee on Wednesday.

The agreement recommends that the city enter into a five-year MDSA with the First Nation in exchange for a reduced service fee.

The First Nation will pay 80 per cent of municipal taxes, with compensation available from the province for the difference for the first five years of the agreement. The report says the province has formally denied the city's request to provide compensation beyond five years.

Peguis First Nation will pay $58,474.62 in taxes for the property, which will cover animal control, building permits and inspection, fire and emergency response, parks and community services, police, solid waste, transit, wastewater, sewer and water.

The remainder of taxes to be taken on by the province or city amounts to $11,694.92 annually.

Long Plain First Nation opened Winnipeg's first urban reserve in the St. James area. It was designated an urban reserve in 2013, and a Petro-Canada gas station officially opened there in 2015.

In March, Gambler First Nation reached an agreement with the City of Brandon to set up an urban reserve on the city's north hill.