And with the discussion taking a bit of a strident tone at the Council Session towards relations between the Port and the City, the North Coast Review contacted the Port to seek out their thoughts on the latest commentary from City Hall related to ongoing relations and the current PILT related situation.
At the January 9, 2023 Prince Rupert City Council meeting, Council discussed a report from staff regarding Payments In Lieu of Taxes (PILTs) and the Prince Rupert Port Authority’s employee compensation structure, and made statements implying that PRPA employees have a financial incentive to avoid municipal taxation payments.
The reply to our request for comment, came by way of a statement, emailed to the North Coast Review by Katherine Voigt, the Manager of Corporate Communications.
The document addresses the City Council charges of the Port employees having a financial incentive to avoid municipal taxation payments and returned to a familiar theme when it comes to the discussion of the PILT process, outlining as it has in the past, how those properties are assessed.
Property owners in Prince Rupert are required by law to pay property taxes. Technically, government bodies are exempt from property taxes, which includes PRPA in its role as a manager of federal crown land. Despite being exempt from taxation, through Payments In Lieu of Taxes (PILTs), PRPA pays to the City of Prince Rupert the same property tax as other property owners would pay for any property.
It is troubling that Prince Rupert City Council has drawn conclusions that suggest that PRPA and its employees are working against the best interests of its local community. PRPA and its 90 employees are proud members of their community.
PRPA properties subject to PILT are largely comprised of vacant, undeveloped crown land on Ridley Island and Lelu Island. Municipal property tax rates set by the City of Prince Rupert and District of Port Edward (and other property tax authorities) are applied to their assessed value to determine the appropriate payments. Once a property is leased to a tenant, it is not subject to PILTs and pays property tax directly to the taxing authority.
The Port observes in their statement that they were using the same appeal process available to every property owner, noting that The City was aware of the appeal being filed and the ensuing process. As a result of the appeals, the assessment methodology and the resulting assessments of those properties were recognized as being incorrect, and the Property Assessment Appeal Board issued orders that reduced the assessed values.
The PRPA also outlined that they have offered to enter into a collaborative process with local municpualties to review the value of the lands, however they note that both the City of Prince Rupert and the District of Port Edward chose to dispute those values through the federal and provincial processes established for such.
In the statement, the Port observers that any suggestion that the PRPA employees have a financial incentive to avoid municipal tax payments is based on a misunderstanding.
The Port's two page response outlines some of the projects that have driven growth and revenues for the region and also expresses concern over the conclusions that the City of Prince Rupert has taken through their report.
PRPA and its employees want to see the City of Prince Rupert and District of Port Edward succeed in funding and delivering dependable local services.
Our work to attract investment and development has more than doubled industrial tax revenues in the last ten years, providing the City of Prince Rupert with the distinction of having one of the strongest industrial tax bases and receiving one of the highest levels of tax dollars per capita in BC.
This information is readily available in the City’s financial statements and comparative local government data found on the BC Government website.
Prince Rupert Port Authority 2021 Economic Impact Assessment
The full document can be reviewed below.
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Also included in their information release are the links note above towards more information on the PILT Act, an Economic Study by the Port and notes on Municipal Tax Rates and Burdens in the province.
The PRPA Statement has also been posted to the corporate website and social media feed.
More background on City Council's Budget preparation and impact of PILT and other elements can be reviewed through our Budget Planning archive page.
Themes related to the Prince Rupert Port Authority can be explored through our archive here.
The Property Assessment Appeal Board site does indeed show that PRPA appealed its assessments in 2018, 2019, 2020, and 2021, that numerous adjustments were made, including a very large one on Ridley Island (about $43 million), and that appeals are in progress for 2022.
ReplyDeleteIt's puzzling that the city's staff report did not mention that the assessments had been reviewed through the Provincial appeal process. It gives the impression that someone at the port office decides what the values are then they pay themselves bonuses.Values are are set by BC Assessment subject to appeal. Mention was made of the Appeal Board decisions, but that was at the meeting in answer to a question from councillor Adey.
By going to the federal Dispute Advisory Panel the city appears to be challenging assessments that have resulted from successful appeals by PRPA. It could be tough.
It's good that NCR followed up with PRPA to get some clarification. Hopefully some council members will read the port's reply and ask more questions before jumping to conclusions or becoming emotional.
As for Mr Buchan's observation in the previous article that the port's bonus payments are greater than the PILT that's a red herring. The city is in no position to comment on another organization's internal employment arrangements.
I'm also glad NCR followed up with the PRPA because their statement was the embodiement of "just keep digging"
Deleteits clear from the ports own formulas that the CEO and VPs all stand to make tens of thousands more in bonuses if they are successful in getting their PILT payments reduced by over $1 million
"no position to comment on another organization's internal employment arrangements" ---> there's a direct link between net income, cash flow, PILT, and bonuses. This is certainly a matter of public interest and I'm glad this has spilled over from behind closed doors so people can form their own judgements
DeleteWell at least we can see the port’s payroll / bonuses.
ReplyDeleteIn the interest of transparency the city might want to publish CityWest’s compensation packages for management.
What good for the goose is good for the gander.
this is classic what-about-ism .... convenient way to ignore the actual problem here
DeleteThe bonuses are for meeting thresholds and are subject to maximums, they are not % profit shares. Where is the evidence that the CEO and VPs "stand to make tens of thousands more in bonuses if they are successful in getting their PILT payments reduced".
ReplyDeletePage 5 of 10 of the Port's own executive compensation policy.
DeleteCEO bonus is 90% corporate performance (vs. individual performance). And 50% of that is net income and cash flow.
VP bonus is 70% corporate performance (vs. individual performance). And 50% of that is net income and cash flow.
It literally says "Corporate performance is focused on PRPA’s financial health"
That's pretty clear evidence from their own documents.
How do you know their bonuses are subjects to maximums? Quite the opposite actually. They have a threshold for giving a bonus for being "below expectations"
DeleteIn answer to the question, the bottom of page 7 says that there is a maximum above which there are no incremental awards. Bonuses are a % of salary, not a % of profit. There is a point where it doesn't matter what the profit is, the bonuses are unchanged.
DeleteTo make sense of the policy, one would have to know what the performance targets were for a specified period, how they were measured, and the results against which performance was measured. That information is not known, and as business information disclosure of which could harm the port's competitive position, it is unlikely to be disclosed.
All of that aside, where does the narrative of 'they're paying less in PILTs and themselves more in bonuses' lead? Is it relevant to proceedings before the Property Assessment Appeal Board or the Dispute Advisory Panel? No, the city needs to present appraisal information. Basically, the narrative is a dog-whistle that stirs up populist sentiment, but it doesn't change the assessments or the PILT calculation.