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Castlegar and Celgar Reach an Agreement

The City of Castlegar is in a tight position, perhaps that’s why they penned a pretty slick media release a week ago week encouraging residents to participate in a survey and inviting them to the two public input sessions being held on the budget and financial plan. The public has been eerily quite on the issue of taxes since the Celgar dispute over taxes erupted last year, while the Mayor and Council have been working on multiple fronts to solve the industrial tax dilemma. Things have finally come to a juncture, with Celgar presenting their position at an open council meeting tonight, and the City issuing this most recent media release:

Council will also announce a ‘Made-in-Castlegar’ Memorandum of Understanding between the City and its primary employer. The MOU outlines the following agreements:
– Celgar will withdraw its court challenge to the city’s tax bylaws.
– Celgar will pay all outstanding 2009 taxes, penalties and interest on the outstanding amount.
– The City will reduce Major Industry taxes by $350,000 in 2010; $55,000 in 2011 and $50,000 in 2012 and analyze potential for further reductions of $190,000 for 2013 to 2015.
– The City will bring forward a Tax Revitalization Bylaw to increase outlay in Castlegar by exempting new industrial investment for a limited period.

The MOU between the municipality and major industry is the first of its kind in British Columbia and highlights the city’s intentions in maintaining a positive relationship with its primary employer. In addition, council hopes the reduction in Major Industry taxes will encourage Interfor to consider reopening their mill and providing additional local employment.

Council and Celgar seem to have resolved some of their differences, at least for the moment. How this plays out in the public during the public meetings on the budget, we’ll find out next week. The proposed budget outlines spending cuts of over 4.5% with a tax increase to residential properties of about 7%. Considering that without Celgar’s taxes, the City would be searching for funding for over a third of their budget, these administrative cuts and tax increases are a fairly predictable and balanced response to the issue.

Some questions that remain unanswered:

  • What was the value of special projects in 2009 – (such as the Sustainability Planning process, the City rebranding and any capital works)?
  • What special projects are being considered for 2010?
  • Does the perreduction in administrative costs include

Financial Sustainability

No one wants to see services cut, or funding reduced to community facilities, but the fundamental question must be raised – is it sustainable? Can the community, including Celgar (or not), continue to expect the high level of service that has been a way of life for the past 20 years? Is the funding model sustainable? Are the costs sustainable? What are the external drivers that will influence the future prosperity of this region, and what are we doing to embrace (or protect ourselves from) them?

The sigh of relief that Council is feeling right now over the Celgar agreement does not reach the systemic problems with the industrial tax situation across the province – that battle is still being fought. The efforts thus far are necessary to remedy the historical situation, but do not tackle the changes that are likely in our future –  changing demographics, climate change, peak oil and higher gas prices, and a changed economy.

Winners and Losers

I can’t see that there will be too many “winners” out of any changes to the budget in 2010 – but it is certainly too much to say that raising residential taxes makes us all “losers”. In the big scheme of things, the additional $118 a year in taxes on the average house may be exactly the small push that  residents need to take a greater interest in how their community is run and the challenges we all face.

Mike Thomas

Mike Thomas P.Eng. ENV SP, is the author of UrbanWorkbench.com and Director of Engineering at the City of Revelstoke in the Interior of British Columbia, Canada. If I post something here that you find helpful as you navigate the world of engineering, planning and building communities, that’s wonderful. But when push comes to shove: This is my personal blog. The views expressed on these pages are mine alone and not those of my employer.

4 thoughts on “Castlegar and Celgar Reach an Agreement

  1. Well summarized, Mike.

    Let’s hope that lots of folks make it out to the Special Council meeting tonight … and line up at the microphone with their questions suggestions.

    Faced with a series of ‘no win’ decsions, Council (always with an eye to relecdtion) has taken the unusual (for them) step of asking the Residents what they think.

    Time will tell to what degree the Public Imput will affect the Final Version of the proposed Budget.

    It will be informative to look at the Line Items that are adjusted and the Dollar Values involved,

    Remember, the “official” Public Budget Consultation Meetings are Monday, March 29th and Tuesday, March 30th at the Community Forum and Blueberry School, respectively.

    Council says they need our help. Let’s give it to them.

    Raymond Koehler
    619 – 9th Avenue,
    Casltegar, BC V1N 1M5

    250.304.2157

  2. Written Questions submitted to the City of Casltegar – 2010 Budget Consukltation Process
    ***
    Attention: Mayor & Councillors,
    Chief Administrative Officer,
    Director of Finance
    City of Castlegar

    Thank you for your kind invitation to participate in the 2010 City Budget Consultation.
    Below are my written questions.

    As I am unable to attend the Public Budget Meetings, for medical
    reasons, I would appreciate your written responses to my questions
    below.
    ***
    INCREASING REVENUES

    1 – According to the Business & Marketing Plan, for the City’s past
    investment of more than $165,000.00 in fibre optic hardware and
    technology; and the City’s proposed IT Investments for 2010, what
    are the projected REVENUES expected from the Taxpayer-Funded Fibre Optic Cable and IT Hardware investments?

    2 – What are the projected Property Tax REVENUES from Subdivision Developments in Grandview Height (now & on completion of the build-out), Twin River Estates(now & on completion of the build-out),and Emerald Green if and when that development is completed? What is the City doing with these revenues?

    3 – According to the Strategic Marketing Plan for the Castlegar Industrial Park, what are the projected REVENUES and Subdivision Development COSTS/EXPENSES for the City? And how is the City planning on recovering those costs?

    4 – According the Strategic Plan relating to the Proposed Gaming Centre at the Airport, what are the anticipated REVENUES over the next three years? (Taxes and Revenue sharing) What are the projected EXPENSES for the City anticipated over the next three Years? And, do those EXPENSES include COSTS of replacing Policing resources that will need to be drawn from the West side of the Columbia River to cover issues arising from the Gaming Centre on the East side of the River?

    5- What are the City’s projected REVENUES from the portion of the AIRPORT LANDS that has been sold to Maglio’s.? What are the expense obligations to the City as a result of this purchase?

    6 – What will be the Development Charges and Servicing Requirements incurred by the City with respect to the rest of the Airport Lands if and when they are sold and subdivided? What will developers pay, and how will the City recover any amount it incurs.

    REDUCING EXPENSES

    1 – What are some examples of REDUCTIONS in Services that Council has considered and what would be the financial impact on the Budget? (Items and cost implications).

    2- What would be the over-all impact on the Budget and Service Levels if rather than cutting City Expenses by 4.7%, and increasing Residential Property Taxes by 6.9 % — The Proposal was to Cut City Expenditures by 6.9% and raise Residential Property Taxes by 4.7%?

    3- What would be the impact to Services of a 10% cut to Administration?

    4 – Given the Social Impact of Current Economic Conditions, what guidelines will Council implement to guide decision-making around Grants to Community Organizations. For examples should non-profit agencies that are serving the human health & survival needs of the Citizens have priority over grants for arts, crafts, recreation & sport?
    ***
    Thank you for this opportunity to ask written questions. I look forward to the written answers.

    Sincerely,

    Raymond Koehler
    619 – 9th Avenue.
    Castlegar, BC V1N 1M5
    250.304.2157

  3. Re: Letter to City of Castlegar – 2010 Budget Questions – SUPPLEMENTARY – Memorandum of Understanding with Celgar
    ***
    Attention: Mayor & Councillors,
    Chief Administrative Officer,
    Director of Finance
    City of Castlegar

    Thank you, again, for your kind invitations to participate in the 2010 City
    Budget Consultation. Below are my written, supplementary questions.

    As I am unable to attend the Public Budget Meetings, for medical
    reasons, I would appreciate your written responses to my questions
    below.
    ***
    My supplementary questions are regarding the Memorandum of Understanding with Celgar, and are made with reference to the Community Charter of British Columbia, excerpted below:

    http://www.bclaws.ca/Recon/document/freeside/–%20c%20–/community%20charter%20%20sbc%202003%20%20c.%2026/00_act/03026_03.xml#part3_division2

    More than once in the last 5 years Castlegar City Council backed away from making binding future-oriented financial/planning decisions, based on the ‘rationale’ that Council had no authority to make policies that would bind future Councils, after the current Council’s term was completed.

    1) So was Council ‘wrong’ then, when it was ‘convenient’ to apply a term limitation on Council actions, or is Council ‘wrong’ now, when they have signed a multi-year Memorandum of Understanding with Celgar?

    2) What are the consequences for Celgar. if the multi-national parent company decides that the municipal tax concessions ( which are really just ‘nickels & dimes’ as far as their multi-billion dollars international budgets go) … are still not enough to keep the Pulp Mill viable? … and pull the plug on the operation anyway?

    3) Will the City be guaranteed to get the back taxes from the previous tax rates as a ‘Lovely Parting Gift’ from the Corporation?

    4) Since we are discussing the adjustments to the Heavy Industry Tax Rates as they apply to ‘multi-year concessions’ proposed for Celgar, do the terms of the ‘deal’ apply only to the Pulp Mill, or do they also apply to Interfor’s Lumber Mill (formerly Pope & Talbot ), the Dams, and whatever other local operations fall into the Heavy Industrial Classification?

    5) Given that the Memorandum of Understanding includes an agreement to offer concessions if Celgar ceases legal action, why would the ‘deal’ not appear to be represent some form of a partnering agreement, or even something possibly legally questionable along the lines of collusion.

    6) Given that the Memorandum of Understanding includes a ‘preferential tax rate provision’, how is the City complying with the requirements of giving Official Notice and conducting Hearings on the matter?

    Thank you for this opportunity to ask supplementary written questions.

    I look forward to receiving the written answers.

    Sincerely,

    Raymond Koehler
    619 – 9th Avenue.
    Castlegar, BC V1N 1M5
    250.304.2157

  4. City of Castlegar Responds to Budget Questions from Raymond Koehler

    Dear Raymond,
    Please find our responses to your 2 letters below:

    >1 – According to the Business & Marketing Plan, for the City’s past
    investment of more than $165,000.00 in fibre optic hardware and
    technology; and the City’s proposed IT Investments for 2010, what
    are the projected REVENUES expected from the Taxpayer-Funded Fibre Optic Cable and IT Hardware investments?

    The City is exploring options either through the provision of ‘hot-spots’ or by providing ‘multi-tab’ links to partner with a private sector Internet Service Provider to make high speed band width available to the City’s business areas. The unrelated purchase of new computer servers for the City is to replace 8 year old servers that hold the City’s financial data and enable terminals for the City Hall employees to do their work. The servers have a recommended service life of approximately 5 years. Due to their age, the servers have begun to fail.

    >2 – What are the projected Property Tax REVENUES from Subdivision Developments in Grandview Height (now & on completion of the build-out), Twin River Estates (now & on completion of the build-out), and Emerald Green, if and when that development is completed? What is the City proposing to do with these revenues?

    Tax revenues from the build out of new houses in these subdivisions are dependent on how B.C. Assessment values the properties which has not occurred as of yet. When the City receives any new revenues, Council decides each budget year how to allocate those revenues depending on the needs of the City that year.

    >3 – According to the Strategic Marketing Plan for the Castlegar Industrial Park, what are the projected REVENUES and Subdivision Development COSTS/EXPENSES for the City? And how is the City planning on recovering those costs?

    Unfortunately the City has files on the Industrial Park that date from 1981 to 2004 and so the information is not easily retrievable. A review of DCCs and current assessed values would require each parcel to be searched individually.

    >4 – According the Strategic Plan relating to the Proposed Gaming Centre at the Airport, what are the anticipated REVENUES over the next three years? (Taxes and Revenue sharing) What are the projected EXPENSES for the City anticipated over the next three Years? And, do those EXPENSES include COSTS of replacing Policing resources that will need to be drawn from the West side of the Columbia River to cover issues arising from the Gaming Centre on the East side of the River?

    Tax revenues from the new gaming centre are dependent on how B.C. Assessment values the project which will not occur until the project is built. When the City receives any new revenues, Council decides each budget year how to allocate those revenues depending on the needs of the City that year.
    There are not expected to be any significant new policing expenses to the City arising from the gaming centre. Experience of other municipalities show that gaming centres have a very low demand on police services due to B.C. Lotto’s extensive security requirements that are placed on the owner.

    >5- What are the City’s projected REVENUES from the portion of the AIRPORT LANDS that has been sold to Maglio’s.? What are the expense obligations to the City as a result of this purchase?

    The land was sold to Maglio for market value at $405,000. There are no expense obligations to the City from the sale of this property.

    >6 – What will be the Development Charges and Servicing Requirements incurred by the City with respect to the rest of the Airport Lands if and when they are sold and subdivided? What will developers pay, and how will the City recover any amount it incurs.

    There is no agreement in place on the rest of the Airport Lands consequently there are no servicing requirements or service cost allocation.

    >REDUCING EXPENSES

    >1 – What are some examples of REDUCTIONS in Services that Council has considered and what would be the financial impact on the Budget? (Items and cost implications).

    These are some examples where Council has proposed budget reductions for the 2010 Budget: Council Travel, Casual Relief, Grants, Fire Protective Clothing, Inservice Training, Professional Development, Legal Fees, Consulting Fees and Strategy/Branding Program.

    >2- What would be the over-all impact on the Budget and Service Levels if, rather than cutting City Expenses by 4.7%, and increasing Residential Property Taxes by 6.9 %, — The Proposal was to Cut City Expenditures by 6.9% and raise Residential Property Taxes by 4.7%?

    That would depend on where Council decided to make expenditure cuts.

    >3- What would be the impact to Services of a 10% cut to Administration?

    That would depend on where Council decided to make expenditure cuts.

    >4 – Given the Social Impact of Current Economic Conditions, what guidelines will Council implement to guide decision-making around Grants to Community Organizations. For example, should non-profit agencies that are serving the human health & survival needs of the Citizens have priority over grants for arts, crafts, recreation & sport?

    Council has an approved grants policy by which it evaluates grant requests. Council has not indicated that it wishes to change that policy at this time. Council has reduced the grants budget by 50 % in the proposed 2010 Budget.

    ***

    >Memorandum of Understanding with Celgar

    >More than once in the last 5 years Castlegar City Council backed away from making binding future-oriented financial/planning decisions, based on the ‘rationale’ that Council had no authority to make policies that would bind future Councils, after the current Council’s term was completed.

    >1) So was Council ‘wrong’ then, when it was ‘convenient’ to apply a term limitation on Council actions, or is Council ‘wrong’ now, when they have signed a multi-year Memorandum of Understanding with Celgar?

    Council was right in both instances. Unfortunately it is your understanding of the Celgar Memorandum of Understanding that is mistaken. Council has an “understanding” with Celgar in the treatment of Major Industry tax. It is not a binding agreement. The Understanding clearly states in different sections throughout the document that any decision to adjust tax rates remains entirely at the approval of Council.

    >2) What are the consequences for Celgar. if the multi-national parent company decides that the municipal tax concessions ( which are really just ‘nickels & dimes’ as far as their multi-billion dollars international budgets go) … are still not enough to keep the Pulp Mill viable? … and pull the plug on the operation anyway?

    Then the mill closes, 400 direct jobs are lost and the City will have to either find 45% of its current tax revenues elsewhere, reduce expenditures or a combination when the mill is re-assessed as being vacant by B.C. Assessment Authority.

    >3) Will the City be guaranteed to get the back taxes from the previous tax rates as a ‘Lovely Parting Gift’ from the Corporation?

    Celgar has agreed to pay all outstanding taxes, penalties and interest owing to the City.

    >4) Since we are discussing the adjustments to the Heavy Industry Tax Rates as they apply to ‘multi-year concessions’ proposed for Celgar, do the terms of the ‘deal’ apply only to the Pulp Mill, or do they also apply to Interfor’s Lumber Mill (formerly Pope & Talbot ), the Dams, and whatever other local operations fall into the Heavy Industrial Classification?

    Council has the authority to adjust taxes only by assessment class and not to specific firms so it applies to the two industries classified as Major Industry which are Celgar and the Interfor saw mill.

    >5) Given that the Memorandum of Understanding includes an agreement to offer concessions if Celgar ceases legal action, why would the ‘deal’ not appear to be represent some form of a partnering agreement, or even something possibly legally questionable along the lines of collusion.

    Unfortunately your understanding of the Celgar Memorandum of Understanding is mistaken. The Memorandum of Understanding commits Celgar to withdraw its legal action which it has done already. It does not offer an “if you do that, we’ll do this” deal.

    >6) Given that the Memorandum of Understanding includes a ‘preferential tax rate provision’, how is the City complying with the requirements of giving Official Notice and conducting Hearings on the matter?

    Every year, Council adjusts tax rates for all assessment classes as part of its budget decisions. Major Industry (Celgar and Interfor) still pay the largest share of City tax revenues. Every year the City holds public meetings for public comment. The City is fully compliant with legislative requirements.

    John Malcolm

    Chief Administrative Officer

    City of Castlegar

    460 Columbia Ave.Castlegar, B.C. V1N 1G7

    Direct: 250-365-8951

    Fax: 250-365-4810 Office: 250-365-7227

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