A Fair History

By Trent Ernst

Fred Banham, Chief Administrative Officer, Peace River Regional District, was in town to provide Council with an overview of the Fair Share Memorandum of Understanding. Banham says the ‘Fair Share’

Memorandum of Understanding is an agreement between the Provincial Government represented by the Ministry of Community, Sport & Cultural Development, and the eight Peace region local governments which are shown on the slide—Chetwynd, Dawson Creek, Fort St. John, Hudson’s Hope, Pouce Coupe, Taylor, Tumbler Ridge and the Peace River Regional District.

The purpose of the Fair Share MOU is to bridge the gap between the economic benefits of having access to the industrial tax base and the legal authority to access that industrial tax base when it is located outside of municipal boundaries. Says Banham, “In the Peace region we were able to prove to both the Province and industry that the municipalities in the Peace River region provide housing, services and infrastructure that directly benefits the regional industrial development (mostly oil & gas), and these municipalities were struggling to provide services without benefit of industrial taxation.”

Industry, says Banham, which lies outside the boundaries of the seven incorporated communities in the PRRD, was not contributing tax dollars to pay for services that the workforce, their families and supporting business sector require. “Property taxation is the backbone of our local government economy. Fair Share had become an absolute necessity if we were to become a region that was attractive to companies and their employees. Industry recognized the problem and were supportive of our efforts as long as it didn’t result in another level of government.”

In 2013 there is $3.3 billion dollars in industrial assessment that is not contributing to local government services reinforcing how important it is for “Fair Share” to continue.

Fair Share was originally a five year agreement, from 1994 – 1999 and was worth $4M per year. Banham said the new liberal government recognized the value of Fair Share and signed a new Fair Share agreement, which not only gave local government an increase in dollars, it gave the region’s municipality some comfort, with a ten-year time frame and an increase to $12 million dollars.

Fair Share, version 3, is a 15 year agreement that went into effect in 2005. It is worth a base $20M per year plus and indexed to growth with the condition that if assessments decreased, so did Fair Share.

In 2013 Fair Share is worth $39.4M in industrial tax transfer dollars which calculates to a 97.2% increase in indexed growth from the 2005 benchmark.

“The prediction for 2013 of $40 million is right on target with this year actual calculated at $39.4 million,” he says. “If this estimation continues to be correct the amount will climb steadily to the end of the agreement.” By 2019 it is predicted Fair Share to be worth $75 million dollars, Says Banham. “It is our desire to have a permanent agreement in place prior to 2019.”

Funding comes from the Province as a lump sum grant to the Regional District, no conditions attached. The Regional District in turn distributes the funds among the seven member municipalities based upon a very unique and adaptable distribution formula.

In its simplest form the distribution formula considers, on an annual basis, population, municipal assessment in Classes 2, 4 and 5 and unincorporated assessment in Classes 2, 4 & 5. The effect is that those municipalities with high population and servicing requirements, with little or no industrial tax assessment get the largest share of the funding and those municipalities with a large industrial assessment and relatively small populations get the smallest share. For example, he says, Pouce Coupe has a population of 800 and no Class 4 assessment, gets the greatest amount of money per resident, at $854,000. Fort St. John, on the other hand has 18,000 population but only one industrial Class 4 assessment, so it gets the biggest cheque, at $19.6 million. Hudson’s Hope has the smallest cut of the pie, getting just over half a million. The District of Tumbler Ridge is receiving $1.1 million.

“The unique formula allows for economic flexibility year to year as population changes and industrial activity changes. For example, year 2000 Tumbler Ridge got a small portion of Fair Share because they had industrial assessment within their boundaries. In 2000/2001 the two coal mines shut down which entitled Tumbler Ridge to receive a greater percentage of Fair Share because the industrial assessment was gone.”

Says Banham, as the new mines developed in 05/06 and the population again increased, Tumbler Ridge’s share of Fair Share shifted back to being one of those municipalities with access to industrial assessment and therefore less need for Fair Share dollars.

Of course, says Banham, the Memorandum of Understanding is just that, a memorandum. It isn’t a contract, it isn’t written in any bylaw. With an election coming up and a possible new government in power, Banham says there’s a chance that the MOU won’t be honoured. But the first Fair Share agreement was made with an NDP government, the next two with the Liberals, so he is hopeful that if either of those two parties forms the next government, the agreement will continue.