LATE DISTRIBUTION
FOR CS&B SEPT. 26, 1996 SUPPORTS ITEM NO. 4
CS&B COMMITTEE AGENDA
SEPTEMBER 26, 1996
POLICY REPORT
OTHER
Dated: September 24, 1996
Dept. File No.
TO: Standing Committee on City Services and Budgets
FROM: City Manager
SUBJECT: Bill C-44, The Canada Marine Act
RECOMMENDATIONS
A. Council urge the Federal Government to provide a legislative
framework for national ports that is flexible and robust so
that ports can respond to the realities of the world in which
they operate. If there is a need to limit the activities of
port authorities, then those limitations should be part of the
Letters Patent which are much more easily adjusted to local
and changing circumstance.
B. Council advise the Federal Government that a direct financial
return on federal land through a charge on gross revenues or
other formula is inappropriate, given the financial
constraints under which the ports will operate, the
competitive environment, and the absence of an obligation to
pay full taxes to municipalities.
C. Council request that the Minister include a representative
from the City of Vancouver and the Port of Vancouver in any
group advising on the development of letters patent and the
implementation of the legislation in the Port of Vancouver.
D. Council advise the Federal Government that provision of crown
agency status through the legislation is appropriate, subject
to the maintenance of the required financial separation and
appropriate arrangements to manage issues of land use and
municipal regulation.
E. Council urge the Federal Government to provide for a director
appointed by the City of Vancouver and a director appointed by
the other municipalities in the Port of Vancouver.
F. Council urge the Federal Government to amend the legislation
to provide that the Chair of the Board of a port authority be
elected by the directors. Alternatively, the letters patent
for Vancouver should state this requirement.
G. Council urge the Federal Government to relax the criteria for
directors to permit a broader range of expertise.
H. Council urge the Federal Government to ensure that the
legislation sets high standards for the avoidance of a real or
perceived conflict of interest.
I. Council urge the Minister of Transport, the Solicitor-General,
and the Attorney-General to convene discussions with
representatives of the municipalities to examine how policing
responsibilities in British Columbia ports can best be met,
with the clear understanding that municipalities will not be
required to fund additional police services without full
compensation.
J. Council urge the Federal Government to provide a mechanism and
sufficient time for a smooth transition between the present
Ports Canada Police jurisdiction and the establishment of
replacement policing
K. Council reiterate its position that the new port authorities
be subject to the same payment-in-lieu of taxes rules that
apply to other federal property, or that they become taxable,
and urge the Federal Government to ensure that the new
legislation does not result in a net increase in costs to
municipalities through any combination of additional
responsibilities for municipalities and changes in the payment
of grants-in-lieu.
L. Council urge the Federal Government that if grants-in-lieu are
to be retained rather than implementing full taxation, the
process be revised to provide for year by year finalization of
grants and an appeal mechanism to ensure certainty for both
municipalities and ports.
M. Council urge the Federal Government to permit broader land
uses within the Port, so long as they comply with municipal
zoning or joint port-municipal land use agreements, and to
enable port authorities to enter into binding land use
agreements with municipalities, subject to an override by the
Governor-in-Council.
COUNCIL POLICY
There is no Council policy related directly to this matter. Council has
previously considered the issues discussed in this report and passed
resolutions which are described in the Background section below.
SUMMARY
This report sets out issues arising from Bill C-44 and its impact on the
City and the Port of Vancouver. The legislation would eliminate the
Canada Ports Corporation and replace the Vancouver Port Corporation with
a semi-autonomous port authority. As the legislation is written, port
authorities would not be agents of the Crown.
The legislation provides port authorities with greater autonomy in some
areas, but introduces restrictions on the activities the port
authorities can carry on, which may limit their effectiveness. The
structure provides some representation for municipalities, but this is
considered inadequate. Recommendations for presentation to the
Transport Committee are advanced to address these concerns.
Elimination of the Canada Ports Corporation means elimination of the
Ports Canada Police. Their policing role must be absorbed by other
agencies. This report supports a joint review by the Minister of
Transport, Solicitor-General and Attorney-General to examine policing
needs and develop a solution that will not increase policing costs to
municipalities.
In response to municipal concerns, the legislation does not provide for
a negotiated fee for municipal services, but neither does not it provide
for grants-in-lieu of taxes. Port Authorities should pay grants-in-lieu
of taxes or normal taxes, and recommendations for submission to the
Transport Committee are presented in that regard.
The legislation places inappropriate restrictions on land use in the
Port. There is no provision in the legislation for development of
joint, binding land use plans with municipalities. Recommendations for
submission to the Transport Committee which would address these issues
are presented.
PURPOSE
The purpose of this report is to bring Council up to date on
developments arising from Bill C-44, the Canada Marine Act, which will
provide a fundamental change in the way the Port of Vancouver is
managed, and to seek Council direction for the City to address several
issues of importance before the House of Commons Committee reviewing the
draft legislation.
BACKGROUND
In December 1995, the Minister of Transport (Douglas Young) released a
proposal to alter the structure of the port and harbour system in Canada
extensively. For the City of Vancouver, the most
significant component of the proposal is the replacement of the Canada
Ports Corporation and the Vancouver Port Corporation with a local port
authority. While the Crown is to retain ownership of all lands at port
sites in Canada, they will be placed in the care and management of a
semi-autonomous, not-for-profit corporation.
On February 27, 1996, Council considered a report from the City Manager
dealing with the new national marine policy and the Port of Vancouver.
Council approved recommendations which reflected the City's position on
four significant areas of concern: policing of port lands;
payments-in-lieu of taxes; local representation on the port authority
board of directors and the accountability of that board; and land use
and development.
In June 1996, the Federal Government introduced Bill C-44 (the Canada
Marine Act) into the House of Commons and referred it for review by the
Commons Transport Committee.
DISCUSSION
Bill C-44 provides the legislative framework within which the port and
harbour system in Canada will be transformed to conform to the new
marine policy. Statements by federal ministers have helped to clarify
the intent of some aspects of the legislation. The basic thrust of the
policy proposed in 1995 is largely unchanged, and the issues raised by
Council earlier this year are still relevant.
The City's interest in this legislation is mainly related to the new
operating environment for major ports. Staff have reviewed the draft
legislation and have identified several significant areas which may be
of continuing concern. We are commenting from two perspectives: issues
which will directly affect the City, and issues which will affect the
operation of the Port as a commercial entity.
As a general comment, the legislation does not address some issues which
are important to the City. In addition, we believe the legislation is
overly rigid in its definition of the activities in which a port
authority can engage and inconclusive with regard to several issues
important to the operation of an effective port system. The legislation
is very clear that the financial obligations of a port are not financial
obligations of the Federal Government, and that the port is to stand on
its own feet. Having said that, the legislation then restricts the Port
significantly in the activities it may carry on and ties the Port back
to Ottawa for approvals for some basic aspects of its business.
1. Powers and Capacities
The intention of the new National Marine Policy was to make it easier
for national ports to operate. The preamble to the legislation speaks
of "... making the system of Canadian ports competitive, efficient and
commercially oriented..." yet many provisions of the legislation will
work against that objective.
General Authorities
Bill C-44 defines the activities of the new port authorities in a very
narrow and restrictive way, limiting their ability to undertake many of
the activities now available to the national ports, including the Port
of Vancouver. Section 24 of the legislation limits the powers of the
organization to
"engage in activities within the port related directly to
shipping, navigation, the transportation of passengers and
goods and the handling and storage of goods."
(emphasis added)
Rather than being enabled, port authorities are being severely limited
to the extent that many current activities of national ports may not be
permitted. These might include:
- Operating trade promotion offices in foreign countries;
- Operating "duty-free" zones for the processing (rather than
handling) of goods;
- Entering into partnerships with local governments or other agencies
for enhancing access to Ports, for creating parks and recreational
areas, for tourism promotion, or for coordination of emergency
planning and response;
- Using real property not currently needed for port development for
purposes other than the handling and storage of goods. For
example, parking, restaurant, and other short term uses will not be
allowed, even though they are in the commercial or other interests
of the port;
- Holding a port conference outside the specific boundaries of the
port; and
- Providing consulting or development services to developing ports or
selling information or software.
Land Holdings
Section 6 of the legislation provides that the Minister may issue
letters patent which will identify the federal and other property
managed and owned by the port, set out the makeup of the Board, and
other matters consistent with the Act. Section 36(5) states that a port
may "manage, occupy, or hold only the real property set out in its
letters patent". In Section 38(2), the port is authorized to dispose of
real property that it owns, subject to the issuance of supplementary
letters patent.
It appears that in order to enter into a property transaction, however
trivial, within the port, the port will be required to obtain
supplementary letters patent. An arrangement between the City of
Vancouver and the Port to consolidate and exchange certain holdings for
the convenience and mutual advantage of both, not involving federal
lands, would require approval in Ottawa. A property arrangement with the
City which requires that the Port purchase land outside the Port may not
be possible.
Financial Issues
Section 27(3) provides that a port authority may not "mortgage,
hypothecate, or pledge or otherwise create a security interest in the
property it manages or holds". While the Port can dispose of property
it owns, albeit with the issuance of supplementary letters patent, it is
legislatively precluded from mortgaging the same property for financial
purposes
Section 6(h) requires that the letters patent include the formula for
annual payments by the Port to the Federal Government. The major ports
will now be required to stand on their own financial feet; they do not
pay full taxes to municipalities; they must function in a competitive
environment; and the benefit from their effective operation extends
across the country. The Federal Government should be content to see the
benefit from effective port operation as sufficient return on the
federal lands that ports manage, and not require a financial
contribution. So long as the Federal Government is not authorizing
payment of full taxes to municipalities, a requirement that the ports
pay the federal government is effectively downloading directly to
municipal governments.
Development of Letters Patent
The Minister has indicated that users will be asked to advise on the
development of the letters patent for a port. It may be noteworthy that
the Minister has not said that the Port of Vancouver will be represented
in the group giving advice on letters
patent. Given the significance of the letters patent in the operation
of the Port, Council should ask the Minister to include a municipal and
a Port of Vancouver representative on the advisory group.
It is recommended that:
Council urge the Federal Government to provide a legislative
framework for national ports that is flexible and robust so
that ports can respond to the realities of the world in which
they operate. If there is a need to limit the activities of
port authorities, then those limitations should be part of the
Letters Patent which are much more easily adjusted to local
and changing circumstances.
Council advise the Federal Government that the a direct
financial return on federal land through a charge on gross
revenues or other formula is inappropriate, given the
financial constraints under which the ports will operate, the
competitive environment, and the absence of an obligation to
pay full taxes to municipalities.
Council request that the Minister include a representative
from the City of Vancouver and the Port of Vancouver in any
group advising on the development of letters patent and the
implementation of the legislation in the Port of Vancouver.
2. Relationship to the Federal Government
Staff have been advised by the Port that the legislation appears to
remove the Port's status as an agent of the Crown. This change could
make it subject to the provincial corporation capital tax and municipal
regulations for the lands it owns directly. To some degree, it may also
impact on the Port's status and marketing efforts in other countries
where these activities are typically conducted by governments.
From a federal perspective, granting crown agency status presumably
might reduce the financial "firewall" between ports and the government
it is creating through this legislation. There may also be a concern
about federal agency status for a corporation which is not directly
controlled by the government.
From a municipal policy perspective, the ability to apply zoning
controls to a subset of the lands controlled by the Port has some
limited value. From an administrative perspective, it is undesirable to
have a mix of regulated and unregulated lands. It is certainly
undesirable to have the Port subject to taxation by any other level of
government when the Port is not paying full municipal taxes to
compensate for the expenditures municipalities make in the delivery of
services.
The Federal Government is imposing significant restrictions on the Port,
and retaining substantial control through the letters patent. On
balance, staff believe it would be desirable for the Port to retain its
status as an agent of the crown if issues of the makeup of the Port
Board and the management of land use are appropriately dealt with.
Council advise the Federal Government that provision of crown
agency status through the legislation is appropriate, subject
to the maintenance of the required financial separation and
appropriate arrangements to manage issues of land use and
municipal regulation.
3. Governance and Accountability
Section 6(f) and Section 12 deal with the appointment of a board for the
Port of Vancouver of between nine and eleven members: one nominated by
the Minister, one appointed by British Columbia, one appointed jointly
by Alberta, Manitoba, and Saskatchewan, one appointed by the
municipalities named in the letters patent, the CEO, and the remainder
nominated by the Minister in consultation with users. The Chair may, but
apparently not necessarily, be elected by the directors.
This formula would provide four community representatives, the CEO, and
four to six user representatives. It would be desirable to have an
additional municipal representative, for a total of five community
representatives, five user representatives, and the CEO. This would
provide an appropriate balance and enhance municipal representation.
Council previously approved this position. It is recommended:
Council urge the Federal Government to provide for a director
appointed by the City of Vancouver and a director appointed by
the other municipalities in the Port of Vancouver.
It is appropriate in Vancouver that the Chair be elected by the
directors so there is local input to the selection. Either the
legislation should be adjusted to state that the directors shall elect
the Chair, or if for some reason this is not appropriate nationally, the
letters patent for the Vancouver Port Authority should reflect that
requirement. It is recommended:
Council urge the Federal Government to amend the legislation
to provide that the Chair of the Board of a port authority be
elected by the directors. Alternatively, the letters patent
for Vancouver should state this requirement.
Section 13 requires that "Directors of a port authority shall have
generally acknowledged and accepted stature within the transportation
industry or the business community and relevant knowledge and extensive
experience related to the management of a business, to the operation of
a port or to maritime trade". This requirement is much more restrictive
than that in the present legislation, and inappropriate. It would
preclude directors with specialized expertise valuable to be Board.
Specifically, from the perspective of municipalities it would eliminate
potential directors whose expertise is in local or regional government
or community affairs.
It is recommended:
Council urge the Federal Government to relax the criteria for
directors to permit a broader range of expertise.
Section 14 excludes certain individuals from being directors, including
elected officials, employees of a government, and anyone who in the
opinion of the Minister is an officer or employee of a user. However,
this would still permit directors who have an interest in businesses
which are users of Port services, or could stand to benefit from Port
activities. It is recommended:
Council urge the Federal Government to ensure that the
legislation sets high standards for the avoidance of a real or
perceived conflict of interest.
4. Port Policing
With the restructuring of the port system, the Canada Port Corporation,
the umbrella organization in the Canadian port system, will be disbanded
and along with it the Ports Canada Police. Under the current system,
the Ports Canada Police provide policing and security services to the
Vancouver Port Corporation, for which the corporation pays about $3.0
million annually. These are in addition to the services provided
individually or collectively by the RCMP, Canada Customs and the
municipal police departments.
With the dismantling of the Ports Canada Police, responsibility for port
policing remains uncertain and the issues identified by Council in
February 1996 remain valid. Responsibility for policing will have to be
transferred to other jurisdictions and/or agencies following an
assessment and arrangements for compensation. There are a variety of
levels on which security and policing is necessary in the port:
- the owner's responsibility for the security of the property and
buildings
In February, 1996, Council took the position that the new port
authority should take responsibility for this level of security
should the Ports Canada Police be disbanded. Bill C-44 does not
address this issue directly, however, the Minister of Transport has
indicated that the responsibility for these services will fall to
the new port authority. As the City does not supply services at
this level to its taxpayers, it should be clear to the government
that this is not a role the City will play on port lands. Equally,
however, it should be clear that police agencies will require full
access to port facilities, and security services must be developed
on this basis.
- the "normal standard" of policing that is provided by the local
police department to all taxpayers
The City already provides policing services to the port related to
certain types of criminal investigations. As long as the port
authority continues to make payments-in-lieu of taxes for the
property it occupies, the City should continue to do so whether or
not the Ports Canada Police are disbanded. It should be noted,
however, that this level of service is far from adequate for a port
environment.
- police services falling under the realm of federal responsibility
which arise because of the unique nature of the port operation but
which do not require involvement of federal enforcement
There may be enforcement areas where the City may be required to
provide services beyond the normal level to the port authority.
However, in these cases, the federal government should provide full
funding, or the port should be required to pay user fees in
addition to payments-in-lieu of taxes.
- police services falling under the realm of federal responsibility
because of the need for federal enforcement
These services arise from need to deal with drugs, organized crime,
illicit alcohol or arms trade, immigration, national security or
emergency planning. It is beyond the mandate and role of the
Vancouver Police Department or other municipal police forces to
provide for enforcement at this level and Council took that
position in February. Transport Minister David Anderson has
acknowledged in a letter to the B.C. Attorney General that the lead
role in these areas has always been played by federal enforcement
agencies, including Canada Customs and the RCMP, and these agencies
will continue to carry that responsibility under the new port
regime. It is essential that these agencies have adequate
resources for these tasks.
Elimination of the Ports Canada Police will require the assumption of
additional policing duties by local municipalities and the RCMP. Bill
C-44 leaves in question the issue of how these responsibilities for
policing will be divided among the agencies and how any transition
necessary as a result of the disbanding of the Ports Canada Police would
be handled. However, the Transport Minister indicates he has initiated
discussions at the federal level concerning the establishment of a
broad, multi-jurisdictional review of policing issues in Canadian ports.
Council should support this initiative, so long as municipalities and
the Attorney-General are fully involved and the discussions are
predicated on the Federal Government assuming its full responsibilities
for the unique policing problems associated with ports, including drug
enforcement, organized crime, immigration, alcohol and arms trade,
customs, maritime terrorism, and peacetime emergency planning. In many
cases, these responsibilities will best be carried out by cross agency
task forces, or handled through the existing Coordinated Law Enforcement
Unit, but funding must be provided from the Federal Government.
The Chief Constable believes that the Port is not adequately policed
under current circumstances due to resource limitations, and that the
City would have to expand its police department if port policing
responsibilities were to be transferred. Municipalities should not be
required to accept additional costs as a result of the elimination of
the Ports Canada Police. Where municipal forces have to be enlarged to
meet policing responsibilities on port lands, these costs must be met
either through direct payments from the ports, or enlarged
grants-in-lieu of taxes through the elimination of some or all of the
present exemptions.
It is recommended:
Council urge the Minister of Transport, the Solicitor-General,
and the Attorney-General to convene discussions with
representatives of the municipalities to examine how policing
responsibilities in British Columbia ports can best be met,
with the clear understanding that municipalities will not be
required to fund additional police services without full
compensation.
Council urge the Federal Government to provide a mechanism and
sufficient time for a smooth transition between the present
Ports Canada Police jurisdiction and the establishment of
replacement policing functions.
5. Payments-in-lieu of taxes
When the proposed National Marine Policy was made public in 1995, it
included a provision by which federal ports remaining part of the
national port system would be offered a unilateral federal exemption
from payments-in-lieu of taxes. In their place, each local port
authority would have been expected to negotiate user fees for municipal
services with neighboring municipal governments.
Payment-in-lieu of taxes is only an issue in cases where federal
property is held by the government or its agencies. Port land and
facilities leased to private operators (such as Vanterm in Vancouver)
are fully taxable.
City Council and the FCM took the position that this was an unacceptable
way for the port authorities to exist in a municipal setting. The
proposal also ran contrary to a consensus position on payments-in-lieu
of taxes that had been negotiated among FCM, Public Works Canada and the
Federal Treasury Board that requires the federal government and its
agencies to respect the local assessment and taxation regimes as part of
fulfilling their responsibilities as property owners.
Pressures brought by municipal governments and the FCM convinced the
Transport Minister to withdraw these proposals. While Bill C-44 is
silent on the exact tax status of the restructured national ports, both
the Transport Minister and the President of the Treasury Board have
indicated that the current provisions of the Municipal Grants Act will
apply to the new port authorities and that municipalities should not
expect to be worse off financially than under the current system.
It is important to note that the Port does not pay the equivalent of
full property taxes through grants-in-lieu. There are significant
exemptions from grants-in-lieu of taxes. Elimination of these
exemptions or applying normal taxation would increase revenue to
municipalities. Further, the present grants-in-lieu process is flawed.
As Council has been advised, the Port of Vancouver and federal Municipal
Grants staff have recently reviewed the basis for past grants estimates
over a period of more than ten years, and concluded that the City has
been overpaid by in excess of $3 million. The Port is unilaterally
recovering that overpayment over time; the 1996 payment to the City has
been reduced by $.5 million. The recovery of alleged overpayments
dating back ten years is questionable in the context of normal
commercial practice. The grants-in-lieu system should be revised to
eliminate this possibility and to provide an appeal mechanism. This
problem would of course not arise if the Port were taxed normally on an
annual basis.
The Port has argued that full taxation would impact heavily on its
competitive position. It is vitally important to the region, the
province and the country that the Port of Vancouver remain competitive,
however, this should not be achieved at the expense of property owners
and taxpayers in Vancouver and other neighboring municipalities. This
is particularly true, as previously noted, when the Federal Government
is requiring Ports to contribute a share of revenue.
It is recommended:
Council reiterate its position that the new port authorities
be subject to the same payment-in-lieu of taxes rules that
apply to other federal property, or that they become taxable,
and urge the federal government to ensure that the new
legislation does not result in a net increase in costs to
municipalities through any combination of additional
responsibilities for municipalities and changes in the payment
of grants-in-lieu.
Council urge the Federal Government that if grants-in-lieu are
to be retained rather than implementing full taxation, the
process be revised to provide for year by year finalization of
grants and an appeal mechanism to ensure certainty for both
municipalities and ports.
6. Land Use and Development
At present, the Federal Government relies on its constitutional
prerogative to avoid compliance with local planning authority. While
this prerogative extends to the Vancouver Port Corporation, the VPC and
the City have established a good working relationship with respect to
the development of port lands. Council is aware of the joint planning
initiatives undertaken with respect to port lands west of Main Street
and of the agreement that development east of Main Street will be follow
a review process not dissimilar to the development application process
that applies to development on private lands.
The working relationship, however, is a function of the personnel and
Board presently in place at the Port. There is no certainty that it
would survive a change in staff or the Board.
Bill C-44 does not require port authorities to adhere to municipal
zoning and development processes. However, the legislation does limit
the type of development that can occur on port land in two ways. First,
the legislation limits the activities of port authorities to those
directly related to marine transport and commerce and the conditions
under which port lands can be leased. This limitation will provide some
protection against inappropriate land use. However, it also precludes
the Port providing non-port facilities sought by municipalities. In
particular, facilities and parks for the public to access the waterfront
might be precluded. Since the Port controls the majority of the Burrard
waterfront in Vancouver, this is unacceptable.
Second, the legislation requires port authorities to develop and publish
a land use plan, and to hold a public meeting to solicit input from the
public, within six months of its incorporation. This presumably
provides some opportunity for municipal input. However, it puts the
municipality in the same category as public individuals. There is no
explicit provision for the Port and adjacent municipalities to reach
agreement on a land use plan for the Port.
While federal land is exempt from municipal zoning control, this
exemption is not extended to land purchased directly by a port
authority. This could lead to a situation in which a patchwork of
properties having to meet different standards could develop. In
addition, developments might end up being structured based on who
controls development, as opposed to the most sensible land use plan. The
City has a strong interest in seeing port lands developed for port
purposes and subjecting all properties, whether owned by the port
authority or the Crown, to land use control is the best way to ensure
that development occurs in a way that is sensitive to the surrounding
area.
The FCM position seeks mandatory compliance with municipal planning
authority and specific political authorization from the Minister for any
action by port authorities which is at variance with official municipal
plans and bylaws. Council has endorsed this position, and it remains
appropriate.
Finally, the Bill C-44 provides significant restrictions on the ability
of port authorities to utilize federal land. For example, leases may be
only for purposes of operating the port, thereby eliminating the
possibility that property may be developed for non port uses. In areas
where industrial port uses are inappropriate (such as Vancouver's
central waterfront) there would be no possibility of a waterfront park,
convention centre, or hotel.
These provisions place unnecessary limitations on the utilization of
port lands, while at the same time avoiding legitimate municipal
involvement in land use decisions. It is recommended:
Council urge the Federal Government to permit broader land
uses within the Port, so long as they comply with municipal
zoning or joint port municipal land use agreements, and to
enable port authorities to enter into binding land use
agreements with municipalities, subject to an override by the
Governor in Council.
CONCLUSION
Many of the changes proposed in Bill C-44 will benefit the Port on an
operational basis. However, there are significant limitations on the
authority of the Port which will directly effect the Port's ability to
function; preclude municipalities achieving objectives related to
waterfront uses; and potentially increase municipal costs for policing.
Payments of grants-in-lieu of taxes is not addressed in the legislation
as it currently stands.
Changes in the legislation to address these issues and provide for
improved municipal representation on the Board of Directors could
resolve these concerns. Recommendations for such changes are provided
in this report for Council to communicate to the Transport Committee.
* * *