Wednesday, December 13, 2023

Port explores choppy economic waters of today, plans for future and relationship with City as part of Council Presentation Monday

Shaun Stevenson and Ken Veldman from the Prince Rupert 
Port Authority had an extensive exchange with members of
Prince Rupert Council on Monday evening

A fulsome discussion of port related issues provided Prince Rupert council members and residents watching from home with a snapshot of this moment in time for the Prince Rupert Port Authority.

The presentation and subsequent wide ranging discussion somewhat familiar to the theme each year of the Port's Annual General Meetings, with President and CEO Shaun Stevenson and Ken Veldman, the Vice President of Public Affairs and Sustainability offering up the overview of the good and the challenging elements for the PRPA over the last year.

The snapshot for Council highlighted the volume of jobs and amount of annual trade that comes through the Port facilities that are on the regional waterfront.

"That trade spins off a lot of economic and employment benefit both here in Prince Rupert and across Northern BC. In Prince Rupert there is about 1,700 jobs that are represented, representing over half a billion dollars in labour and wages.

And more from a local government perspective that represents about 12 million dollars in a variety of revenues that come to the two local governments in this specific region  -- PRPA's Ken Veldman

Towards the Port's future, there was much noted towards the commitment that the PRPA has to Sustainable Operations.

"It's not just our growth but how we grow, that's important to us and certainly something that we have a lot of focus on within our environmental sustainability portfolio is decarbonization. 

And certainly there are other priorities within it, but  I think that all of you certainly recognize the climate crisis that we are in on a global level and certainly we have a role to play in terms of a port and decarbonizing of our operations.

We have a goal of decarbonizing total port emissions by thirty percent by 2030, it's a very aggressive goal and it's a milestone towards on the way to becoming a net zero port by 2050.   -- PRPA's Ken Veldman

Towards that goal, Veldman  highlighted the Connector Road to Ridley and the ongoing electrification of shore power port facilities as key towards their efforts.

A review of some of the investment through the Community Investment Fund and the partnerships that have been built through it also made for the review.

At the top of the challenges list, the current statue of the Container shipping industry, the DP World facility not immune from the economic headwinds that have seen throughput decline significantly, with the volume of goods transiting through the container facility down by 33 percent to date.

 "All of that being said, it has been a bit of a tough year when it comes to Port Operations. You know, certainly I think that most of you are aware that in particular our container volumes are down to probably under 800,000 TEU's this year.

And to put that into context, just in 2020 we were almost at 1.2 million TEUs.

And of course volume is very associated with employment, economic benefit, obviously profit from the private sector perspective and so this represents a very significant downturn. 

And to keep it in context, going back to the earlier slide ... we've made a concerted effort to ensure that development here in the port has been diversified over the years.

This year as marked as it's been by a tough year in the intermodal space. 

You know, Trigon, PRG,  AltaGas, Drax, the Cruise Terminal have all done extremely well this year so there are bright spots within the mix.

And that's the value of diversification that even in a very difficult year you still have stabilizing lines of business and there's been many years where that's been flipped where those kind of terminals have had very difficult years and it's been intermodal that has floated the boat so that's certainly something to keep in mind  " -- PRPA's Ken Veldman

The Port however understand the importance of the Container space to its operations and Mr. Veldman noted of their work ahead.

"We've got some work to do to re-establish that reputation, that brand, that value proposition and gain some market share back. This have been a tough year right across the coast, but there's no denying the fact that we have lost market share as a Gateway and we need to make it back as Team Prince Rupert."

Looking beyond the current situations, the presentation then pivoted to the future and the ongoing expansion and diversification plans 

The plans for the 750 million dollar Export Logistics Terminal (RIEL) and the opportunities that export of energy options through the recently announced joint venture for AltaGas and VOPAK through their 1 billion dollar REEF project made for some extensive overview.

Mr. Veldman noted how a final investment for the latter was anticipated in 2024.

A quick overview of the 2023 Cruise Season and the new partnership with Global Ports Holding brought the presentation to a close, the 80,000 visitors of this season a sample of what the Port believes could be seasons of 400,000 visitors in the years ahead as the Port builds on its work this year.

He highlighted how that volume could help with rebuilding the commercial sector and add to the hospitality and tourism partners in the region.

Some of the work that the Port and City have taken on together in recent years also gained some overview, with the Port VP noting of areas where the two organizations are aligned.

Key to the future is how the Port can attract new investment and create more jobs for the region to benefit the communities of the North Coast.

Council members had forty minutes of questions and observations to share with the Port officials,  a list that covered a range of themes and issues.

For Councillor Teri Forster, the port's community investment was of note, seeking some background on how the Port compares to other industrial groups in the region.   

Port CEO and President Shaun Stevenson provided a snapshot of how the Port allocates its Community Fund and other investment vehicles in the region.

"I think it's important to point out, as Ken mentioned,  that's not the investments we're making on port infrastructure, businesses and so forth. 

That is actually just a dedicated portion of our annual  net income that's approved by our Board of Directors  every year to be made available for community driven projects. 

And I'm not sure, I'm not familiar with any organization, company in Northern BC that has equivalent program or on a proportional basis given the size of our  operation that would have anything close to that"

Ms. Forster also had comments towards the cruise industry footprint and anticipations of growth for it, asking if there was any kind of a  tax on passengers that comes back to the community.  

"I've been on cruises and I have to pay a tax each time I go to a port and I assume that money is paying for additional services, you've mentioned infrastructure needs, garbage clean up, things like that.  

For me the taxpayer how does having more people come to our city as a small business owner yes I can see how that will help small businesses.   

How will that impact me, like are we going to see more people and taxes is a big topic right now. Having more people come to our community how is that going to impact on what I have to pay to the city.

Mr. Veldman noted how it was difficult to compare port to port, observing how the Alaska ports were among those that charge a tax, observing that there are no ports in BC at this moment that have a similar tax regimen in place.

"We have had initial discussions with the city, you know and I think were very allied to if there are additional costs to the City, you know that's going to be a discussion were open to having. 

But that also comes down to making sure that everybody is clear on what roles and responsibilities are actually there and what's associated with that"

Port President and CEO Shaun Stevenson also  noted of the economic impact that the cruise industry could bring to Prince Rupert.

"And I think what we're really looking at is the economic impact of a thriving Cruise Tourism Sector. 

You know, as a source of diversification for the local economy, it's a catalyst for small and medium business community in Prince Rupert, an expansion of retail and so forth.

And also we talk often around challenges of residential development, but when was the last time you saw a commercial building developed. 

Well, you're only going to see new commercial buildings with a thriving retail sector that drives that and I think this could be a real catalyst for a lot of the vision that was crystallized in the 2030 plan"

For Councillor Nick Adey his opening remarks noted of where the Port has been of assistance for the City with its ongoing quest for assistant from other levels of government.

"I think as complex as the port operations are, equally complex is the relationship it has with the community, I don't think we should dance around that.  

I think that there's a number of ways in which we've really appreciated the degree to which the Port has stepped up to help us, particularly in conversations with senior governments.

Also the community investment fund and some of the projects that you articulated are obviously appreciated and well used  by the community So I want to acknowledge both those sides of where we are."  

Also among his observations locked in, was on the projection of community growth that called for a population base of 25,000 by 2030, the Councillor noting of elements such as automation and other work based initiatives, along with how the economic downturn in recent years could impact on that prediction. 

"One of the foundations of that conversation of the 2030 Vision Plan was a population projection, the number I think that was floated around t that time  was around 25,000 people as a possibility towards the end of the decade. 

I'm not sure how solid that number is still, I think that it fluctuates.  

I think there are a number of things that have maybe emerged since then that might impact that.  

I think that you guys are aware of the element of automation in the conversations that you've had with the labour force and my own take on that which is that to me it's completely understandable that port operations would  seek to operate in as efficient a manner as they possibly can, that's the point of doing business so I get both sides of that ...

What do you think those numbers are going to be towards population growth and  how then does that influence what we have to do in terms of planning, what we do"

Towards where the Port believes the population growth may move, Mr. Veldman outlined some of the modelling that the Port has used towards its own development plans and how those numbers could be realized by an increase to the city's population.  

He noted as to how the range of events over the last year has put that timeline a bit behind, suggesting that with current and future investment another five years past 2030 could be where the increased population totals could be realized.

"We had an estimate of about 19,000 people, and I think that ended up  sort of  rounded into about 20,000 through the process and so that's where that number came from. 

I think that generally speaking, what we've seen through the pandemic and  what we've seen even just in terms of through our volumes through that period, is obviously we haven't seen the trajectory of growth through those five years.

And we've also seen, you know some investments that we thought would come quicker are now happening in the year 2023 and 2024. 

So are we going to get there on those levels?

Yeah probably, we haven't done the modelling since then in terms of what timing might look like. But it's probably longer in terms of by the end of the decade, tack another five years onto that"

Councillor Cunningham had list of questions as well, but his key focus was the topic of the Tax Cap on the Port Tax,  a topic which Mr. Veldman took note of by way of an explanation of its origins.

"The Province introduced the Port Property Tax Act as part of a larger, what they called at  the time the Ports Competitive initiative in 2005. 

And you know to be really specific, it was an initiative by the province to introduce certainty and stability in terms of property taxation to potential investors that were looking at significant capital intensive projects.

As a way to secure that investment not just in terms of very local economies but also understanding that the provincial export industries that they serve, that investment was  improving their market access for their supply chains and improving competitiveness of those industries as they looked at global markets.

And certainly I don't want to speak on behalf of the province, because that was their initiative but I think it's pretty common knowledge in terms of their goals in behind that legislation"

 The Councillor's follow up contribution was more of a statement over a question towards the issue of the PILT, an area that has marked much of Council's focus over the last decade.

"The Port Tax, initially when these investors came in, they understood it was only going to be for five years, that was the initial provincial way of putting it a tax break for the first five years . 

So any of these investors that came here in the beginning, weren't expecting that after five years. 

But then it was put on for another five years and then in perpetuality, so it's basically became a very advantageous thing for people that have already been doing business and didn't expect that cap to be more than five years in existence. 

So they didn't really move here ...  I think that legislation was very successful, you know it was a beautiful piece of legislation, it  encouraged people to come here to begin with.

But as it perpetuated itself, it encouraged them to be here and that's the one damaging thing if that cap wasn't in place after five years, a lot of the infrastructure problem sin the city an that, fifteen years ago ten years would have started to been started to be fixed up a little bit sooner I think.

Right now our local businesses mill rate is higher than the Cap rate, so there's this handicap to local businesses that their supply chain is being affected, COVID everything else they're struggling and on top of it they have higher taxes ... 

The way I understand it is it was an incentive to get people started here, I don't think the first words out of Don Krusel's mouth when he was over in Japan and China was you now you're going to get a tax break for five years, it was the shorter distance shipping here, the time saved ...

I don't think in the future those caps should stay in place, that's just my feeling I think that would be a big thing to help the city. 

And I don't think the Port would be hurt by removing those caps that's just my feeling on it personally"

Both Councillors Forster and Skelton-Morven turned to themes of Reconciliation and how they could better reflect the territory that we reside on, their questions providing for an opportunity for the port officials to note of some of their initiatives with area First Nations.

Mr. Veldman turned to the work of the community investment fund for his focus.

"Our most significant tool is the Community Investment Fund we're certainly not limited to that but, yeah that fund was created specifically for those kind of projects and to develop those kind of partnerships going forward"

Mr. Stevenson expanded on the nature of the Port's relationship with area First Nations and prospects for a cultural centre .

"I think that the Indigenous culture and history of this area needs to be front and centre and I think we're always interested in exploring how we can strengthen that profile,  that presence and frankly the economic opportunity available to surrounding indigenous communities and indigenous members of the city of Prince Rupert proper. 
It's always a question of capital investment versus how is it operationally sustaining and I think we're more than interested in exploring that, if there's an opportunity for partnership we'd be all ears"

To wrap the presentation up, Mayor Pond spoke to the ongoing relationship between the City and the Port.

"I want to pull back the veil a little bit, sometime ago there was report written about the change of tone between the City of Prince Rupert and the Port of Prince Rupert.

I'd like people to understand what's happening when they're not able to be in the room and just put that in front of everybody.

First of all its my core belief and I think that anybody who doesn't see it is blind, is that without the City of Prince Rupert there's simply no Port of Prince Rupert and without the Port of Prince Rupert there's not much of the City of Prince Rupert.

You know if you've gone back in the eighties and said that statement you'd be wrong, in the eighties we had the pulp mill  and we had the fishing plants and all kinds of other things.

Today, the city of Prince Rupert and the Port of Prince Rupert absolutely are critical to each other's existence and I think we operate that way.

I can tell you that in every major initiative where we are pushing on government, the Port of Prince Rupert has been beside us whether that's federally or provincially and we are singing from the same song sheet where we absolutely can.

There are a few places where we can't and I say to people all the time, that's a mature relationship, that's the relationship I have with my wife.

We work on a lot of things together and there's a few things that we acknowledge ... that were not 100 percent aligned, and I would like to be crystal clear about that tonight, just so there's no doubt in anybody's mind"

To themes of making the city whole on Taxation, the Mayor recounted a recent exchange with the provincial government, where the Port was speaking to the same themes as the city.

"I was in a room with the Premier, with our staff and others where Mr. Stevenson was present and he said to the Premier as clear as a bell, the City of Prince Rupert needs to be made whole around Port Taxes.

Now he has a different view on the range of options that that might include from us, but we are absolutely aligned that the City of Prince Rupert needs to be made whole around taxes on terminals. 

That can happen in a number of ways, it could be by the province upping the grant and then we'd  go on our  merry way.

The tone may have changed, it may have changed, I don't know that  it's changed, I'll let you decide whether  it's changed,  but the objectives are just the same as they've always been"

The one ongoing irritant of the PILT element also made for some thoughts from the Mayor on Monday evening.

"We disagree on PILT, there's a big announcement we disagree on PILT, Port thinks they should pay less tax, we think they should pay more.

But one of the beautiful things that happens every time they announce a project, is there's less land left in the PILT, the three quarter of a billion dollar expansion of the Export logistic park means that land is moving out of the PILT and into the tax side and we're 100 percent aligned on that.

And were going through the process of coming to an answer where somebody will tell us what the right number is on PILT"

The Mayor continued to put the focus on where the Port and the city are aligned on so many issue and how that relationship continues to move forward, noting of how members on both sides continue to work together through working relationships.

Towards the Mayor's overview of their shared relationship Mr. Stevenson returned to the theme of Teamwork form their presentation.

"I would go further and say that the only time that we've ever accomplished something in this community, certainly I've been here for 26 years of what is a long history, is where we have been aligned and we've both put our shoulder against the same priorities and both benefited from them.  

So you know I echo your comments, we're aligned in much more ways than we're not" 

The discussion on the Port presentation carried over into the Public comment period with two participants taking up some of the elements that made for the Port's overview. 

The first participant raised a few concerns over some of the themes presented. 

The key focus for those comments related to the cruise industry elements and the salaries that are paid through it.  

Also of note, the impact of development on the wolf and other wildlife population, the loss of jobs at the Port amidst the current downturn, as well as what was described as green washing of the Port's Carbon Tax Agenda.

The second member of the public to come forward explored themes of Indigenous engagement between Port and local First Nations both through cultural and economic elements.

The full presentation can be reviewed through the City's Video from Monday's Council session, the Port officials open up the Monday session.

More items of note on Port Themes can be reviewed through our archive page here.

A review of some of the other elements from Monday's Council Session is available here.

A wider overview of past Council Discussions can be reviewed here

1 comment:

  1. "Having more people come to our community how is that going to impact on what I have to pay to the city."

    Businesses and services will grow, expand, and reinvest in their operations. Which in turn will grow/diversify the commercial tax base and reduce the burden on the residential tax base.