Updated March 24, 2014
The following information is intended to clarify information regarding how the Prince Rupert Port Authority is subject to municipal property taxation.
Does the Prince Rupert Port Authority own the land within its jurisdiction?
PRPA does own specific parcels of land in its own name, like the old J.S McMillan site at Fairview Bay.
However, most of the land administered by PRPA is owned by the Government of Canada, including examples like Atlin Terminal, Fairview Container Terminal, Ridley Island, and Lelu Island. PPRA administers the land on the federal government���s behalf, much like a property manager. PRPA is mandated to support Canadian trade by developing these lands itself or leasing lands to private sector developers, in order to build relevant transportation services and facilities.
PRPA does not own or administer all lands surrounding Prince Rupert Harbour. PRPA regulates navigation within all areas of the Prince Rupert harbour, but in many cases the waterfront lands are owned by others including the BC government, City of Prince Rupert, CN Rail, BC Ferries and Small Craft Harbours.
Are property taxes paid on port lands?
Yes. When PRPA or federal property is occupied by a third party (such as a terminal operator under lease) the occupier is subject to the BC Assessment Act much like any other privately-held property in a BC municipality. The tenant takes over the duty to pay property taxes on the federal land they are leasing.
In 2013, local municipalities received almost $6 million in revenue from the property administered by PRPA, including amounts paid by PRPA and its tenants. Many other port-related industries (including the railway) also pay property taxes, but are not located on property associated with PRPA.
What port lands are taxed by the City of Prince Rupert?
If PRPA or federal land is occupied by a third party tenant, it is added to the municipal tax roll, and taxed as if owned by the tenant. The terminals and tenants of PRPA property are subject to the BC Assessment Act, assessed by the BC Assessment Authority, charged a mill rate (amount of tax payable per $1,000 of property value), and are required to submit taxes directly to the municipality.
In 2013, tenants collectively paid $3.7 million in direct property taxes, a sum which includes Ridley Terminals Inc., Prince Rupert Grain, and Fairview Terminals among others. In 2013, Pinnacle���s Westview Terminal was also added to the municipal tax roll.
What mill rate is applied to taxable port lands?
The BC Government introduced the Port Property Tax Act in 2004, which legislated a maximum municipal tax rate for major shipping terminals in the province. The mill rate is ���capped��� at $27.50 per $1000 of assessed value for terminals in operation prior to 2004. In return, the BC government annually compensates the affected local government for the shortfall, at a rate indexed to inflation. The Act also stipulates that new terminal investments after 2004 are capped at $22.50 per $1000 of assessed value.
In Prince Rupert, Ridley Terminals Inc. and Prince Rupert Grain are assessed at a mill rate of $27.50, and Fairview Terminal and Pinnacle���s Westview Terminal are assessed at a mill rate of $22.50. In 2013, the City of Prince Rupert received $1.578 million from the BC Government to supplement its direct port property taxation.
All tenants that are not subject to the Port Property Tax Act (i.e. tenants that are not one of the four terminals) are subject to mill rates as determined by the municipality.
What is a Payment In Lieu of Taxes (PILT)?
Federal and provincial crown lands are specifically exempt from local taxation under the Constitution Act of 1867. However, the Government of Canada recognizes the services received from municipal governments, and that it needs to pay its fair share of the costs. A Payments In Lieu of Taxes (PILT) program has been in effect since 1950, ensuring that payments are made to local taxation authorities based on rates which would apply to federal property if it were taxable.
The PILT program applies to all federal properties throughout Canada, including those owned or administered by federal departments, post offices, and Port Authorities.
How do PILTs apply to the Prince Rupert Port Authority?
Since properties occupied by tenants are subject to regular property taxation, PILTs are primarily applicable to vacant and unimproved federal port lands that are not yet supporting operations. Many of these properties do not require municipal services such as road maintenance, snow clearing or water and sewer utilities. When a property is leased and developed, the land ceases to be eligible for PILT, and is added to the municipal tax roll.
PRPA makes full PILT payments to local municipalities on an annual basis.
Who decides the annual PILT amounts required to be paid?
The process followed by PRPA to establish the annual payment level is well-defined within the PILT Act. PRPA engages an accredited third-party appraiser to determine value and taxation class for every relevant property on an annual basis. These appraisers are highly qualified, independent valuation experts.
The determined value reflects both the advantages and the limitations of each individual property. The use of properties administered by PRPA are restricted to port-related purposes by the Canada Marine Act, which tends to lower their assessed value because they cannot be used for their ���highest and best use���.
The independent appraisal is then applied to the full municipal taxation rate to determine the full payment required.
How are disputes about PILT addressed?
The PILT Act includes a dispute resolution system that enables municipalities to appeal PILT determinations and request that a dispute advisory panel provide advice on the property valuations.
Are the City of Prince Rupert and Prince Rupert Port Authority disputing PILT valuations?
Yes. PRPA and the City of Prince Rupert have engaged in the dispute advisory panel process, and the panel has provided advice to PRPA as a result of that process. In effect, PRPA has accepted the panel���s advice that the original commercial appraisals relied upon by the PRPA were deficient. PRPA is seeking a second opinion on PILT valuations for the relevant vacant federal lands.
Currently, the PRPA and the City are in ongoing discussions regarding the appropriate PILT valuations and payments. The conclusion of that review will ensure that vacant federal land is appraised appropriately, and that the municipality receives an equitable PILT payment.
In the interim, PRPA has advanced $4.2 million to the City of Prince Rupert as recognition that the values of previous appraisals were likely lower than they should have been. The advanced payment is a good faith gesture to ensure that the time required resolving this issue does not cause the City and its taxpayers undue financial stress.