Payments in Lieu of Taxes are governed by the federal statute of the same name < laws-lois.justice.gc.ca/eng/acts/m-13/index.html >. The Act requires that federal bodies like the Port make a PILT to the local municipality. For the purposes of the calculation:
“property value” means the value that, in the opinion of the Minister, would be attributable by an assessment authority to federal property … as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property;
The Port is required by regulation to make the same calculation as the ‘Minister’ would for Crown land.
That definition by a plain reading says that the BC Assessment rate is applicable, and that is what the City relies on, but the Port can apply its’ own “opinion” as to what that value is. So it has hired appraisers that come up with an “opinion” as to the value that is much lower than the BC Assessment value, about 35% of the City’s calculation. It’s a bit of a word game.
The PILT Act creates an Advisory Panel to deal with disputes if the municipality disagrees with the Port’s “opinion” as to property value:
11(2) The advisory panel shall give advice to the Minister in the event that a taxing authority disagrees with the property value, property dimension or effective rate applicable to any federal property, or claims that a payment should be supplemented under subsection 3(1.1).
The City has been successful before the Advisory Panel, but the Panel can only provide “advice” not make an order. The Port appears to be well aware that it is not bound by the Panel’s decision and it conducts itself accordingly, ie they deal with the City as if they were in a negotiation, when really their legal obligation is prepare a calculation that “would be applicable to that property if it were taxable property”.
Municipalities can however ask the federal court to order a Crown Corporation (here the Port) to re-do the calculation. As the Supreme Court of Canada said in a case involving Montreal and its’ Port Authority (and the CBC): “Their calculations cannot be based on a fictitious tax system, but must be based on the system that actually exists at the place where the property in question is located.”
Since the Prince Rupert Port Authority has been coming up with numbers that are so far below the City’s numbers based on BC Assessment numbers, it looks like the Port has been doing what the Courts have said they cannot do, which is basing the PILT on a “fictitious tax system” that is in their favour.
This isn’t, by the way, about whether we support the Port’s business operations or not. Businesses that lease lands from the Port like Maher, PRG, Pinnacle etc pay taxes based on the provincial assessment (although a cap is applied to the mill rate). The dispute is with the Port Authority concerning lands that are not leased out.
What can we do about this? I think that we should support the City council and encourage them to stay the course, not accept low ball offers from the Port and be prepared to take the Port to judicial review. Again, the PILT cannot be based on a “fictitious tax system”.
We should also be skeptical about the Port’s narrative in this dispute, notwithstanding that they dedicate a lot effort to public relations including through their community grant program. They can issue all of the cheery media releases they want and spread some wealth to organizations that they choose to support, but if taxes are going up because they fail to reach an appropriate agreement with the City they’re not nice guys or particularly good corporate citizens.