Port Property valuations, impact on PILT and Civic vexation from it all, make for bulk of discussion at Monday City Council Session

The frustration for Prince Rupert City Council members with the Prince Rupert Port Authority reached a bit of a boiling point at Monday's first City Council session for 2023.  

That as the Council members received and reacted to a report on Prince Rupert Port Authority Property valuations and executive bonuses from the City's Chief Financial Officer.

CFO Corinne Bomben did not stray much from the written report, which is available for review as part of the City's Agenda package from Monday (item f), providing some background on the city's concerns in particular towards three years of Port assessments. 

The report was requested by Council back in August of 2022, of note, Ms. Bomben observed that the City has used the data towards an appeal on port valuations through a Dispute process, that is hosted by the Dispute Advisory Panel.

The City taking the valuations to the panel owing to the large drop in Port valuations which come to close to 50 million dollars for the period in question.

"The report provides the values originally used for interim PILT payment to the city and the final determination of value provided by PRPA. 

Years 2018 through 2021 final values were provided by the PRPA at the end of April 2022, which started the ninety day clock for applying to the Dispute Advisory Panel.

The city applied to the Dispute Advisory Panel to challenge the final values for those years within that ninety day timeframe, given the significant difference." -- City of Prince Rupert CFO Corinne Bomben

Ms. Bomben also observed to some potential challenges for the city from the Dispute process, should a ruling not go in favour of the City.

"Dependant on the outcome of the Dispute Advisory Panel proceedings, any advice provided to the PRPA could impact the PILT already received for those years. If any amount is found to be owing to the PRPA on the basis of land values, those amounts could or, would negatively impact future budgets of the city through further reduction of PILT."

The CFO also noted of the inclusion of data on Port salaries requested by Council in August.

"As an addendum, added to the report is information staff was asked to request from PRPA on the Port's compensation policy and payments made under that policy  in the same years that the city is disputing the PILT"

While Ms. Bomben noted that the report was for information purposes, the Council membership used it as the basis of a twenty five minute conversation and airing of their growing list of grievances with the Prince Rupert Port Authority.

Councillor Wade Niesh was the first  to take on the topic, noting of his disgust at the situation facing the city as a result of the Port's valuation of property.

"It's a very bleak, bleak numbers when I look at this, the number showing the complete loss of value that they've somehow come up with on their properties. 

You know when I look at the assessments,  BC assessments this year and some of the ones that people have contacted me about and obviously that's not our department, but they still feel that its a tax impact to them and they reach out, and even my own property assessment.  

It just kind of disgusts me in the fact that you know for how many years here ... we had a value of close to give or take 70 million dollars and then with their new valuation you know losing forty five, forty eight million dollars down.

Which is going obviously going to have a huge impact for our community if we have to pay back three or four years worth of money, because all of a sudden their values have gone down drastically.

So to me ... you know, I just want the community to be very prepared for what's coming in our budget season because of these valuations on port land"

Mr. Niesh also spoke to who at the port may have been responsible for the land valuation on port property along with further notes on the impact to the community.

"I would be curious to know, who in the Port Authority actually comes up with the final valuation being that they kind of don't apply to the same subscription that we apply to as property owners.

You know, this is going to be a huge impact to our town, to all property owners, whether its residential, commercial, or light industry, basically everyone but the Port Authority.

You know If this goes through, the way as far as their values and we do not win at the Dispute Advisory Panel, you know people are going to be disgusted with their property taxes and I want people to be quite aware of that"

Mr. Niesh also spoke to information compiled on  the bonuses paid to the Port during the period in question.

"If you look at this other information. ... about the bonuses paid to port employees, basically the bonuses paid in the last four years are equivalent to the taxes that we are going to have to pay them back, so just be aware of that.

The compensation, it would be nice to know who's making the decisions down there and how much this impacts their compensation for bonuses and being that it's most likely based on how much money the Port Authority is making.

So I guess, you know we've tried to play nice for many years and I guess now it's not time to play nice anymore."

Councillor Cunningham offered up a few thoughts to the discussion, first seeking some guidance from the City Manager when it comes to the bonus payments for Port officials and how much they pay on taxes in PILT.

City Manager Rob Buchan, who like the Mayor was participating remotely at the council session, outlined the current situation  between the City and the Port.

"I can answer that in two ways. We have an interim agreement with the PRPA which allows us to go off of pervious valuations until the such time as we go through the Dispute Advisory process. 

So that's keeping their payments higher for the interim, but we have to pay them back if we lose.

So even with the elevated price which is consistent with historic numbers, there is approximately 200,000 dollars more in bonuses than there is PILT payments.

If we lose, if their final valuations stick after the dispute advisory process, the bonuses would be approximately 1 million dollars more than they pay in PILT"

Mr. Cunningham noted of the difference between property assessments in the community and the disparity between those values compared to the Port valuations. 

"Our housing assessments on an average have gone up fourteen percent, but Ridley Island has gone up 1.4 percent. Housing values are going up ten times more than that ....  how is this? 

This is the engine that's driving this town, but pretty soon the engines going to be going down the street with just four wheels. if this keeps up. 

You know, like we talk about fair value, but fair value should be a little bit more than what we're getting assessed at this. I don't know what's going to happens when it goes to dispute but we'll see"

Also speaking to the topic was Councillor Teri Forster who sought out some clarification from the City Manager to the topic.

"What we can say, from what we understand from the policy that's attached to the package, is that the bonuses are determined  in significant part from profitability, so the less that is paid out, the more that is retained, is more profit"-- City Manager Rob Buchan

From that the Councillor observed how the situation a concerning one for the community.

"I think I would like to echo what everybody else has said, this is really terrible for our community and it's unfortunate that some of the people that are going to potentially  have a financial gain from this don't even live here"

Councillor Adey joined into the discussion choosing not to speak further to what he called the sense of objection that those around the room were feeling and the reasons for it; instead noting how the information was on the Agenda and now is public, urging residents to review the report from the CFO.

He also posed a question for the City Manager on the criteria of the change in the valuations.

In response, Mr. Buchan outlined how the city views how the change was made

"We understand that that was the function of an appeal to the BC Assessment numbers that was launched by the PRPA and I would note that the City was advised that it wasn't a significant appeal, so we didn't;t involved ourselves at that time. But it did turn out to be a very significant appeal"

Councillor Adey followed up seeking guidance on a connection between Port bonuses and port property values.

"Based on my reading of the bonus package, if part of the bonus comes from Net Profit and if the people who are conducting the request for an appeal, or conducting the appeal . Tben getting this change in the numbers, it would seem to me that there must be a connection between the bonus packages and the successful reduction of those values because the. money becomes profit for the Port Corporation, is that a fair speculation"

The City Manager observed as to that is how they have determined the situation.

"That's I think our read of it, unless we can be shown otherwise, profitability is based on how much money you make and part of that is based on how much money you don't have to pay out, so I think that's our understanding"

Mr. Adey then commented, that with the document now in the public, he had hopes that the public will take a look at the information and form their own opinions towards it, noting how he had concerns over how incentive packages have an affect upon the community, holding out some optimism that it could serve as a step towards better relations.

"So I hope that this will become fodder for a broader public discussion and that it may prove in the end to be one step further towards what I think that various players on all sides of this would like, and that is to reach a place where the community and port have reached a more comfortable way of relating to each other in a way that benefits the community in a fair way"

Councillor Randhawa recounted the recent State Of Local Ernergency related to the city's water issues and noted how if the town fails, everyone fails, calling for the delivery of the message of  tax fairness for all in the community.

Councillor Cunningham picked up on that theme of fairness as well.

"I believe that everyone should pay their fair share, I think that the Port when we sit down and discuss will be in the same boat Im hoping. 

You know like they're a very intricate part of this community if the community fails, they're going to fail too, so it's in their best interest the this community thrives.

For a final comment, Mr. Cunningham also noted of the difference in the property assessments for the community and those for the port, advising the public to review the report, particularly the area related to performance bonuses. 

"They get a bonus even if they're below expectations. There's three ways of getting their performance bonuses, one's below expectations, meets expectations and exceeds expectations. You know I've never heard of anyone getting a bonus for being below the expectation of what your supposed to be doing"

Mayor Pond did not participate in the conversation related to the report and Councillor Skelton-Morven was not in attendance at Monday's Council session.

You can review the full back and forth of the discussion from the City's Video archive starting at the 18 minute mark.

More on the topic can be examined through our Council Timeline Feature.

A wider overview of past Council Budget planning and taxation themes is available through our archive pages.