City council (with our own Mayor absent from the meeting), voted 4-2 to raise taxes by 1.2% this year and increase all user fees (except for those associated with recreation) by 5%.
Councillors Ashley & Kinney voted in opposition of raising taxes and wanted to instead apply across the board user fee increase of 5% and draw $133,000 from the 3.5 Million surplus to prevent a tax increase.
Councillors Thorkelson, Garon, Carlick-Pearson & Cunningham all voted in favour of the tax increase.
Maybe this isnt the right time to ask but I was wondering if you guys might want to increase my internet speed a bit.
LMAO ++
That’s an interesting decision but the modest tax increase is premised on the Port paying the full Property In Lieu of Taxes (PILT) that the City is looking for, and the Port seems to be standing rather aloof from these issues. The City is in a difficult position.
The CFO said at a previous budget meeting that a 100% PILT “… has not been the reality and therefore could be overly optimistic … historically, the port has paid approximately 35 per cent of that value … needless to say the port and the city do not agree on the value of the assessment and as such the city does not receive the amount it bills.” < thenorthernview.com/news/251571991.html >
Meanwhile the Port has launched an information campaign that acknowledges that it has disputes with the City. North Coast Review has a good piece that ‘unpacks’ the Port’s lengthy analysis and commentary about why it pays less than the City thinks it should pay < northcoastreview.blogspot.ca/201 … -port.html >.
A dispute resolution panel ruled that the Port’s commercial appraisals were two low, so the Port “advanced payment” of $4.2 million “in a good faith gesture”. That’s a lot of money to drop as a “gesture”. The Port acknowledges that its’ appraisals were “deficient” but will concede no more than that the values were “likely lower than they should have been”. The discussions with the City will continue. The Port seems to do things very much on its’ own terms and timelines.
An interesting sidebar to the story is that since 2010 the Port has given $1.6 million to “local projects”. The Port is a public body but it runs its’ grant process more like a private foundation.
The City, in contrast, gives Community Enrichment Grants to local organizations in a highly public manner. As hard up as the City has been over the years that program has been ongoing. Local organizations apply; some make oral presentations at council meetings and answer questions. Any citizen can attend or tune in. It is one of the few City processes that is still conducted in an admirably open and transparent manner.
The Port’s grants are no doubt a ‘gesture’ to build good will and support, so they are unlikely to give that up, but if those funds were given to the City that should help bring the protracted dispute over the PILT to a resolution - and some of the funds would no doubt flow through to worthwhile community groups and projects, perhaps in greater amounts. I would rather see grants to local organizations managed by an elected public body like the City council than a non-elected public body like the Port.
It is little wonder that the City council members get exasperated about them at times. I felt that councillor Thorkelson went too far by suggesting some time back that the City should “lay the boots” to the Port. Of course, back then the PILT dispute resolution process was under wraps. For whatever reasons the City has at times protected the Port from negative scrutiny.
Councillor Cunningham’s comments are somewhat rhetorical as well, but I was glad to hear him say as he did at the last meeting “The port is getting richer, but the town is getting poorer … we need to get more out of port operations …”.
Councillor Ashley, I think, captured the bottom line: “Every year we have had a tax increase we would not have had if the port had paid what we thought they should”. Of course, what people think they should get and what they should get are not always the same. It’s important to note that the PILT dispute panel ruled in favour of the City and it is the Port that seems to have trouble accepting the result. Meanwhile taxes go up.
What happens if we don’t pay our bill from The City Of Prince Rupert ?
So what you are saying is that the Port can just do what they want when they want without any repercussions ?
Can the city do anything to enforce this from the Port ?
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.
This is Michael from the Prince Rupert Port Authority. The questions about taxation of port lands are worth discussing, and we appreciate the opinions that are circulating on this topic. Here are some more facts to inform the dialogue.
After the City of Prince Rupert appealed the appraisal of port lands eligible for payments in lieu of taxes (PILT), the Port Authority accepted the ruling of the appeal panel and engaged a new independent appraiser. The appraiser is using a methodology consistent with other federal lands in BC.
By Canadian statute, the valuation of unleased port lands is separate from the BC Assessment Authority. Instead, a third-party appraiser arrives at a value that takes into account the restrictions on port lands. Use of port lands is limited to port and transportation-related activities. By taking these limitations into account, it is to be expected that the valuation by the federally-mandated independent appraiser will be lower than any conducted by the BC Assessment Authority.
However, while the re-assessment of the relevant lands was underway, the Port Authority recognized that the result was likely to be higher than the original valuation. Therefore, an interim payment of over $4 million has been made to the City of Prince Rupert in good faith toward the ultimate balance owing.
The re-assessment is now complete, and revised appraisals of port lands subject to PILT have been provided to the City for comment and feedback.
It should be emphasized that any port lands which are leased, including terminals, are taxed by the City on a property value set by the BC Assessment Authority. Only unleased lands are subject to PILT. Therefore, the Port Authority’s aggressive promotion and facilitation of terminal development has direct benefits for Prince Rupert’s tax base.
We have compiled a page with questions and answers about port property taxation, which you can find at our website: rupertport.com/comment.
Welcome to HTMF, Michael. Thanks for your point of view.
And that is the heart of the valuation problem. Your appraiser values the lands by taking into account that use of port lands is limited to port and transportation-related activities, so the value is lower than a valuation conducted by BC Assessment Authority, which values the land based on ‘highest and best use’. BCAA would not apply the restriction that the Port applies, and a BCAA assessment would consequently be higher.
However, the Crown Corporation Payment Regulation, which the PILT Act applies to federal lands owned or administered by Crown corporations including port authorities, does not require the restriction on use that the Port has been applying. It defines “corporate property value” as follows:
“corporation property value” means the value that a corporation would consider to be attributable by an assessment authority to its corporation property, without regard to any mineral rights or any ornamental, decorative or non-functional features thereof, as the basis for computing the amount of any real property tax that would be applicable to that property if it were taxable property. < laws-lois.justice.gc.ca/eng/regu … 1.html#h-1 >).
So the BCAA assessment does not apply, but the federal body is required to determine “the value that a corporation would consider to be attributable by an assessment authority” to the pertinent lands, ie the value that BCAA would apply.
In making that determination the corporation is required to meet administrative law standards of reasonableness and fairness. A Court will not tell the Port what calculation to make, but it can require that the federal body make a new calculation.
As for the Port’s self-imposed restriction on the potential uses of the lands, guidance can be found in the Supreme Court of Canada decision in City of Montreal v Montreal Port Authority < scc-csc.lexum.com/scc-csc/scc-c … 4/index.do >. The decision reviews the PILT Act, the Crown Corporation Payments Regulation and the applicable administrative law standards of judicial review. All else aside, it provides useful background.
The SCC said at paragraph 40 that “The PILT Act and the Regulations require that the tax rate be calculated as if the federal property were taxable property belonging to a private owner.” Also see paragraph 42: “Parliament intended Crown corporations and managers of federal property to make payments in lieu on the basis of the existing tax system in each municipality, to the extent possible as if they were required to pay tax as owners or occupants.”
The calculation is not to be based on the restrictions on use that apply to port lands owned or administered by a port authority, as the PRPA has been doing, but without restriction as if the federal property belonged “a private owner”, such that the ‘highest and best use’ approach that BCAA uses would apply. That calculation would generate a higher value.
It may well be that these issues need to go to Court to be resolved. I would suggest that if that happens the analysis will turn on the appropriateness of Port’s use of something other than a ‘highest and best use’ calculation. The Port has clearly stated its position, but that does not mean that Port has clearly stated the applicable law.
Seems to me the prudent thing for the city to do would be to plan on receiving from the Port Authority the remaining taxes owed (if any) based on the re-assessment and use that in the budgeting process. Or is that what the financial officer was hinting at when she said the city shouldn’t plan on receiving taxes at the 100% level? This is not to say necessarily that the city does not have a case against the port. I’m curious what the re-assessment is and how far apart the city and the port are on this issue.