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Port Property Taxation

Frequently-Asked Questions About Port Property Taxation

How much tax revenue does the Port contribute to local municipalities?

Local municipalities (City of Prince Rupert and District of Port Edward) received $6.8 Million in tax revenues from Port land in 2014. 

How much tax revenue does the Port contribute to the City of Prince Rupert?

The City of Prince Rupert received $6.1 Million in net tax revenues from Port land in 2014.  This represents an increase of 65% over the last 10 years.

$6.1 Million represents 32% of the City’s net tax revenues.  

On a per capita basis, the City receives approximately $495 per person in tax revenues from Port land.  

The City receives this revenue through a combination of property taxes, ‘Payments In Lieu of Taxes’ (PILT), and a Port Competitiveness Tax Grant from the BC Government.

How does that compare to other BC municipalities’ tax bases?

The City of Prince Rupert has one of the stronger industry tax bases in British Columbia.

 

Local Govt Tax Revenues from Major Industry

Major Industry Tax Burden
(% of Tax Revenues)

Major Industry Tax Revenue per Person
($/Capita)

BC Average

$153,619,054

4%

$38

Prince Rupert

$6,105,942

32%

$495

Terrace

$295,425

2%

$26

Kitimat

$13,399,090

60%

$1,602

Smithers

$585,592

10%

$112

Prince George

$11,099,521

12%

$150

Sources: City of Prince Rupert 2014 Annual Report; BC Ministry of Community, Sport & Cultural Development (http://www.cscd.gov.bc.ca/lgd/infra/tax_rates/tax_rates2014.htm); BC Stats Population Estimates (Dec. 2014)

How much tax revenue does the Port contribute to the District of Port Edward?

The District of Port Edward received $0.7 Million in net tax revenues from Port land in 2014.  

The District receives this revenue through a combination port tax revenues received from the City of Prince Rupert (a revenue sharing agreement provides the District with 17% of Ridley Island tax revenues) and PILT from other Port land within its municipal boundaries (including Lelu Island).

Does the Prince Rupert Port Authority own the land within its jurisdiction?

Most of PRPA’s land is owned by the Government of Canada, but control of those federal lands has been transferred to PRPA.  In turn, PRPA is mandated by legislation 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.  Examples of these federal properties include Atlin Terminal, Fairview Terminal, Ridley Island, and Lelu Island.  

PRPA does own specific parcels of land in its own name, like the old J.S McMillan site at Fairview Bay.

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, Small Craft Harbours (DFO) and private land owners.  

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 2014, local municipalities received over $6.8 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 2014, PRPA terminals and tenants collectively paid $4.1 million in total property taxes to local municipalities, school board and the variety of other recipients of property taxes.  (PRPA terminals and tenants include Ridley Terminals Inc., Prince Rupert Grain, Fairview Terminal, Westview Terminal and many non-terminal tenants.)

What mill rate is applied to taxable port lands?

The BC Government introduced the Port Property Tax Act in 2004 (renewed in 2011 and 2014), 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 2011.  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 2011 are capped at $22.50 per $1000 of assessed value.  

In Prince Rupert, Ridley Terminals Inc., Prince Rupert Grain and Fairview Container Terminal are assessed at a mill rate of $27.50, and Pinnacle’s Westview Terminal is assessed at a mill rate of $22.50.  In 2014, 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.  In 2014, total PILT payments made were $2.4 million.

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.  In particular, appraisals recognize that the use of properties administered by PRPA are restricted to port-related purposes by the Canada Marine Act.   

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.  

In October, 2014, a dispute was concluded between the City of Prince Rupert and the Prince Rupert Port Authority about the valuation of vacant federal lands administered by PRPA and PILT associated with them.  

After following the advice from the Dispute Advisory Panel, a revised appraisal of several vacant port properties was accepted by the City of Prince Rupert and the Prince Rupert Port Authority as being a fair reflection of value, resulting in an equitable payment to the City of Prince Rupert.

The City of Prince Rupert received a one-time payment of $2.6 million to reflect new valuations retroactive to 2007.  In addition to the PILT amount corresponding to the amended valuations, PRPA also agreed to contribute to the expenses incurred by the City through its participation in the dispute resolution process.

2014 By The Numbers: Port of Prince Rupert & City of Prince Rupert (Source: 

Total Net Tax Revenue:

$6.1 Million

Percent of Net Tax Revenue:

32%

Per Capita Net Tax Revenue:

$495

Source: City of Prince Rupert, BC Stats Population Est.