Peace River Agreement (formerly Fair Share)

In March 19, 2015 the Province began a 'renegotiation' of the Fair Share agreement which was not scheduled to expire until 2020. A new agreement called the Peace River Agreement was signed by all nine regional members on May 29, 2015.

What is Fair Share?

  • The Fair Share Memorandum of Understanding was an agreement between the Provincial Government and eight Peace Region municipal governments. The agreement was signed in 2005 and was set to expire in 2020.
  • The local governments who shared in Fair Share were: Fort St. John, Dawson Creek, Chetwynd, Hudson Hope, Pouce Coupe, Tumbler Ridge, Taylor and the Peace River Regional District.
  • The purpose of the agreement was 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. Simply put: municipalities provide infrastructure in the form of policing, water, sewer, roads and hospitals to industries outside city borders without the benefit of being able to tax them.
  • The Peace River Regional District is different from municipalities in that it can only levy a tax for the purpose of funding for a specific function (like water or sewer services). The PRRD has access to the industrial tax base which is the richest in B.C. 
  • The oil and gas sector experienced tremendous growth (40 per cent) from 2001 to 2006, and is in 2015 represented 30 per cent of the regional economy.
  • The indexing formula used in determining the amount of the grant aligns the amount paid to the region in Fair Share funding with Industrial property assessments. When assessments in the region go up so did the allocation of Fair Share funds. 

Fort St. John's Fair Share

  • Fair Share funding was estimated to be $21,029,000 for the City 2015 budget. For budget purposes this number is an estimate and the actual amount received can be slightly different. This amount represents 22.5% of total revenue for the City in 2015.
  • By comparison, property tax revenue is 29.9% of the total budget for 2015.
  • Since the inception of Fair Share in 1992 the City policy has been to utilize the Fair Share funds for infrastructure only.
  • For 2015 the capital projects include $23 million on road upgrades, $2.9 million on facility maintenance (such as a boat launch replacement at Charlie Lake, a new spray park, work on the arena and the Pomeroy Sports Centre), $3.4 million on water and sewer upgrades and $4 million on equipment purchases. The total capital budget is $33.6 million..

The Current Situation

  • The Provincial Government has opened the agreement to renegotiate it in March 19, 2015 (though the agreement did not expire until 2020). The deadline for completion of negotiations was April 30, 2015. The City position was to honour the existing agreement.
  • On April 8, 2014 the City of Fort St. John and the District of Taylor wrote to the Premier asking her to halt the negotiations.
  • Over the next 10 years demand by industry on City infrastructure will increase due to the increase in industrial projects in the region such as Site C and oil and gas projects.
  • Under the Fair Share agreement, if property values in the industrial property tax base around the city goes up then the amount received goes up. This is referred to as ‘indexing’. If there was no indexing in the agreement there would be a significant loss to Fort St. John and the region.
  • The position put forward by the Ministry reducesindexing to “a rate more affordable to all taxpayers.”

  • Without this funding property taxes could go from an average of $ 1,685.79  per year to $3,270.48 per year or future projects such as road work, sewer line maintenance, park maintenance and building replacements could be eliminated. This funding is extremely important to the citizens of Fort St. John.
  • A new agreement called the Peace River Agreement was signed on May 29, 2015. The new agreement does not have ties to the industrial tax base but it will provide consistent funding for 25 years. It also contains a significant audit and reporting function requiring communities to be accountable for the funds received. This is welcome by Fort St. John. 

The History

  • In the early 1990s, the region started a campaign, including commissioning a series of reports to gather information on the oil and gas sector and the impacts on the area, to tackle the fiscal imbalance and negotiate a greater share of provincial revenue. The conclusion of the studies was that there was a disconnect between industry and the communities that provide services to industry.
  • In 1993, the Province recognized the fiscal imbalance facing the region and began negotiations for what would become the Fair Share Agreement.
  • The first version of the Fair Share Agreement was in place in 1994 and provided $4 million to the region ($2 million from a tax on industry and a $2-million Provincial grant).
  • In signing the 1994 MOU, the local governments also served notice that it was a good first step but insufficient to meet their long-term needs.
  • In 1997 the region pressed for a revised agreement. After much pressure the Province finally responded with a $12-million agreement in 1998.
  • Given considerable increases in the region’s oil and gas activity, discussions opened with the Province in 2002/03 to establish a formal process to examine the oil and gas industrial property tax issue in northeastern BC, with the agreed objective to identify a permanent solution to the oil and gas property tax base issue in North Eastern BC.
  • Negotiations took place in 2004 and on February 1, 2005, the Province offered the Peace Region municipalities what is now known as the Fair Share Agreement 3, effective from 2005 to 2020.

Northeast B.C. Rresource Municipalities Coalition (NEBCMC)

In 2014 the City of Fort St. John joined the NEBCMC. The single mandate of the coalition is to represent municipal interests in Resource Development issues. This includes advocating for a permanent arrangement with the Province in order that a predictable and permanent source of industrial tax base revenue is available to ensure we have the capacity to support the needs of the Province and industry in developing the vast resources of Northeastern BC.

http://nebccoalition.com/