Will City's Path on PILT, become a Civic Pandora's box by Budget time?

Councillor Wade Niesh speaking on PILT issues at Monday's
City of Prince Rupert Council session

This first public council session for 2023, appears to have set the tone for the narrative through to the upcoming City Budget period.  

That as Council received delivery of a report from their Chief Financial Officer at the Monday session,  a document which highlighted the city's view on the issue of land valuations at the Prince Rupert Port Authority.

CFO Corinne Bomben's report (link available here) explored the impact of Port land valuation declines on the city's tax revenues, the disclosure of a city led appeal that may see the City having to reimburse the Port and for good measure some research on Port executive salaries that the city tied to those land valuations.

The discussion that followed involved all five of the Council members present (Councillor Skelton-Morven was absent on the night) with varying approaches to the debate.  

Though Mayor Herb Pond, participating remotely for the night, was rather quiet on the issue. The Mayor not providing for any thoughts, or interjections during the twenty five minutes of of review.

One of those who did participate in the discussion,  Councillor Nick Adey noted in his thoughts from Monday, how tying the PILT issues to bonuses was a case of some fair speculation on the part of the City, a description that was concurred with by City Manager Rob Buchan.

"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 . Then 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" -- Prince Rupert councillor Nick Adey

"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" -- City of Prince Rupert Manager Dr. Rob Buchan

As we outlined on Wednesday afternoon, the Report generated a response from the Port Authority, which probably not surprising to the Council members or anyone else, challenged a number of the City's findings and talking points.

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 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.  --  From the PRPA Statement on PILT from January 11

The issue of PILT is a long running one, it goes back more than a few years as part of the annual Budget preparation period, with the CFO noting each year of the inequities that the City finds from the current system.

Added to the financial review of late is the issue of Port Tax Caps, which gained some increased visibility during the recent municipal election campaign, when a Scrap the Tax petition drive dominated the election narrative and for the most part took away from any other discussion of issues during the campaign period.

In both cases, it's become quite clear that there is a large chasm between the City and Port, as to the facts of the situation.

Resolving the percolating issues between Port and City is something that perhaps that North Coast MLA Jennifer Rice can lend a hand towards, Ms. Rice has indicated she will be presenting the recent Scrap the Tax petition to the Legislature when it resumes session in February.

While she's in the Legislature Chamber next month, Ms. Rice may also want to take to a Question Period session to bring the issue to the attention to MLA's in Victoria.   

As well as to ask both the Minister of Finance and Minister of Industry to provide some guidance for the community as to how the provincial legislation works and if they understand the impact that it seemingly is having on the city's finances.

Better yet, she could offer to host a Town Hall Forum much like her successful forum on health care dialogue of the summer 0f 2022. 

The MLA could invite the Ministers to come visit this northern political outback, as well as to invite the local stakeholders to come come together to explore the issue further. 

Collectively perhaps, they could provide some kind of final declaration as to whether the instrument from the province will change, or if other provincial revenues can be delivered to the City to cushion any lost revenue opportunities that are of current concern. 

Short of being a Tax lawyer or holding a finance degree, for most of us the details in play here are eye glazing and it's not easy to determine if there's a right or wrong party, or who to point the fingers at. 

At this point, the ongoing PILT discussion is mostly turning into a chorus of "they say, they said," for the community, complimented lately by increasingly amplified rhetoric that may damage relations far into the future.

While we wait for some independent guidance on the PILT issue, there is the matter of a civic budget ahead and this year's drafting seems destined to be a challenging one for the council membership.

Since the Municipal election results came in on October 15th, the successfully elected Council members have spoken more than a few times towards the path ahead, bracing the public for what they believe will be some financial hard times. 

The topic most recently noted when Council awarded the latest round of municipal grants for community enhancement.  

Financial Clouds for 2023 shape decision making for 2023 Prince Rupert community Enhancement Grant program

The issue came up once again on Monday evening, when Councillor Wade Niesh noted of how the PILT issue will impact on the City's budget making and taxation requirements. 

"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" -- Prince Rupert councillor Wade Niesh

However, there probably is more to consider than just the PILT situation,  as the Mayor and Council prepare for the three or four months of preparation towards the final budget document.

And with the City using their research skills towards highlighting Port executive bonuses at the request of the Council in August ... Ms. Bomben and the Council membership may have now set a bar towards further disclosure.  

That, one which explores how the city has conducted its own affairs over the last decade and offer up the same thorough review as the report from Monday.

There are many areas which the public and those who will be paying the tax bills come July may want to see included in the Budget preparation period and included for discussion by the Council members.

So if the City council members can engage in speculation on Port compensation themes; they should not be too surprised if the public begins to speculate on civic issues as well.

Towards some of those elements, the City has developed a growing executive branch in recent years, so it might be helpful to provide guidance as to what if any bonus structure may be in place with Senior City Staff and how many of the newly created staff positions in recent years have impacted on finances. 

As well with the City developing its own growing range of commercial enterprises of late, what if any, financial compensation may be included towards those endeavours.

The most prominent one of course is City of Prince Rupert owned CityWest, which has one President and five Vice Presidents on the management listings, as well as six members on the Board of Directors. 

What level of compensation they receive should be part of any budget notes and if there is a bonus plan in place for those executives. Not to mention some kind of financial update from the communication company towards loan repayment from the past and ongoing financial return to the city.

Councillor Forster observed on Monday as to how she believes  some of the Port executives receive financial gain and they don't live here; the same amount of scrutiny and information sharing should be in place for both Senior Civic Staff and those on the CityWest payroll, or other civic enterprises.

The Watson Island Logistics Park must have some form of management in place, is there additional salary in place for those requirements and are bonuses part of the operation there as well?

Same for the Legacy Corp., the financial instrument that the city uses towards management of the Exxon funds of a decade ago and reinvestment of any civic revenues towards civic use.

Beyond those financial areas, there is the need for a review of how the previous City Council's made their decisions on public spending and the lack of information that Council shares with the pubic on how that spending is done.

As we've recounted through the years,  Council members don't often ask hard questions in public session of staff when they receive reports or proposals on projects and initiatives.

And even when they do, we don't always get the information we may need.

An example of such came up on Monday, when Councillor Adey inquired about how much the City is paying to lease the MacCarthy building, that while it considers its option towards a purchase.

That request was deferred until a later date and for staff to determine if that is considered confidential information. 

Though if spending public money on a building lease is considered confidential; it's not a surprise that we don't ever hear details on how the City has spent its money on much, much larger projects and initiatives.

Late last year a financial arrangement was of some note, that when Councillor Cunningham offered up a curious comment towards the arrangement with Canfisco towards the Rushbrook area Warehouse. 

The facility is one that the city has put to use for community groups and businesses, though there has been no follow up in public session since towards his reference, nor an explanation as to why the City had to lease that facility in the first place.  

The topic of taking on the Canfisco Warehose was one that was never discussed in public session prior to the announcement of the arrangement in January of 2020.

Far too often, issues and situations such as that, which need further explanation, just seem to drop off the municipal radar.

Monday's Council session had three participants engaged
by remote communication with the council chamber

City Council members don't  even provide a list of when Council members or Senior staff members are out of town on civic business and why, or any kind of an archive of the expenses incurred on that civic business.  

A practice that some other municpualties often provide as part of a commitment towards information sharing and transparency.

So the financial picture could be more complete as they provide their financial review for the public.

Also something that should become part of the Budget preparation discussion is how the various City Council's determined the past priorities on projects and seeking of grants towards them.  

The current waterline emergency situation, which resulted in a Local State of Emergency prior to Christmas,  is one that has been kicked down the road for probably a few decades and now as it nears failure, the city clearly has to reprioritize their decisions to best address the most glaring issues.

Why they chose to pursue the projects they did in recent years, while letting what should have been among one of the key priorities continue to go unattended, should be of some note for discussion,  as they prepare to address what they are telegraphing will be a very rough financial period ahead.

Clearly this spring will not be an easy one for the elected officials, with decisions ahead that will be much more difficult than determining which community group may, or may not make the cut for Community Enhancement Grants.

Everything probably should be up for discussion and up for disclosure, before they settle on what they are preparing us for; that which seems likely to be a significant tax hike for the year, or years ahead. 

The PILT issue is an important one that needs some finality to it, but that shouldn't be an area that gives Council a pass on reflection towards how they have spent the money that they have had in the past.

If they follow their past efforts on Budget making, City Council will at some point be hosting public sessions for comment on how they are approaching their budget making, though in the past the attendance at those opportunities has been significantly low as it seems has been the public interest.

Considering the warning shots of the last few months as to how this may be a tough year, this may be one year of Budget preparation that residents and taxpayers will want to take note of and participate in.

So as to ensure that City Council is gaining the full guidance from the public that they will need.

You can review some of the Budget work of the past from our archive page here.

Taxation related themes are included in this archive,

More notes of interest from City Council can be reviewed through our Council Discussion page.