Monday, March 7, 2016

Council Members to receive background report on Ridley Island Tax Agreement tonight

The City's Financial Officer has pulled together a fairly comprehensive review for tonight's Council session, providing the background related to a financial agreement between Prince Rupert and Port Edward and the nature of the shared tax revenues from Ridley Island.

Ms. Bomben's report is in response to a request from the last council session by Councillor Blair Mirau, at that time Mr. Mirau raised the issue noting how he believed the issue may be causing some pressure on the City's revenue challenges and cost pressures.

Adding that previous to his time on Council he had not been aware of the arrangement, offering it up as a possible topic of further investigation by City Council during this Budget review period.

The CFO's report will provide some background for Council members on how the Agreement came together and what the split in revenues provides for between the two communities.

The main point of interest related to the Agreement stems from its creation in 1980, when the City of Prince Rupert expanded its boundary, taking in the area that included Ridley Island.

The tax sharing agreement was put in place from that expansion of the Prince Rupert limits, originally calling for an 80/20 split between Prince Rupert and Port Edward.

That was subsequently changed in 1984 to the current ratio of 83 per cent to Prince Rupert, 17 per cent to Port Edward, the three percent shift was at the time considered to be the District of Port Edward's contribution to the operations of the Civic Centre.

The original agreement from 1980 has a provision for the agreement to be reviewed every five years, but since 1984 for each City of Prince Rupert inquiry into the issue, the District of Port Edward has provided a response that for the most part suggests that they are fine with the current arrangement.

The most recent inquiry took place in October of 2014, and from that exchange of correspondences the District of Port Edward provided its interpretation of the agreement, noting that the genesis of the revenue split goes back as far as to when the City expanded its boundaries to take in the land that included Watson Island.

Going further to note that while the City of Prince Rupert benefited by way of taxes from the mill, the District suffered from many of the negative effects of the industrial site.

Those concerns seemed to have provided the guiding principle for the District, which noted for the City of Prince Rupert that with the arrival of industry on Ridley Island, the District did not want a similar situation to occur.

At that time, the District approached to the Province to protect their interests and successfully made their case to the Provincial Government for a share of the Ridley Island tax base.

From the Prince Rupert report a chart outlines the nature of the payments to Port Edward over the last six years.

The City of Prince Rupert chart outlining payments to
Port Edward as part of the Ridley Island Tax Sharing Agreement
(click to enlarge)

You can review her full report from tonight's Council Agenda package starting on page 25.

The report is for the information of Council, though considering the notes included from the District of Port Edward letter, there doesn't seem to be a lot of room for movement for the City if the plan is to try and adjust the current rate of Tax revenue distribution.

On that theme, the District seems fairly content to leave the terms of the agreement as they currently exist.

What Councillor Mirau and the rest of Council will make of that could provide for an interesting part of the local budget conversation, but for now it would seem that the report once read, will most likely be filed for future background reference.

For more items related to taxation issues with the City of Prince Rupert see our taxation archive page here.

While a larger overview of council developments can be found on our Council Discussion page here.

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