POLICY REPORT
(OTHER)
Date: February 19, 1996
Dept. File No.
TO: Vancouver City Council
FROM: City Manager
SUBJECT: The New National Marine Policy and the
Port of Vancouver
RECOMMENDATION
A. THAT Council notify the Minister of Transport that it
opposed to proposed local port authorities paying fees for
service rather than grants-in-lieu of taxes of property
taxes, and further that Council endorse the Federation of
Canadian Municipalities position on this matter.
B. THAT the Council urge the Solicitor General of Canada to
acknowledge the historical position that substantive federal
policing interests including illegal immigration, drug
importation and gun importation are inherent in the
operations of the Port of Vancouver, the third busiest port
on the continent, and further acknowledge the Federal
Government's constitutional obligation to provide for the
safety and security of the people of Canada by ensuring
adequate policing in this gateway of the nation.
C. THAT Council advise the Minister of Transport that the
proposed shift from each major port being a federal agency,
to each being a local authority with an appointed board,
results in a management structure that lacks accountability
regarding Port management to any level of government, and
further lacks formal public accountability.
D. THAT Council urge the Minister of Transport to include
greater local representation on the board of directors of
the proposed local port authorities, and as well, to consult
with local governments regarding the composition of each of
the eight major local port authority's board of directors.
E. THAT Council endorse the Federation of Canadian
Municipalities position on land use of federal port
properties.
COUNCIL POLICY
There is no Council Policy directly related to this matter.
SUMMARY
This report summarizes the anticipated impacts of the new national
marine policy, proposed by the Minister of Transport in December 1995.
The proposed policy calls for the elimination of Canada Ports
Corporation, and the replacement of the Vancouver Port Corporation
with a local port authority, to operate independently of the Crown.
There are four main issues discussed in this report.
The Minister of Transport has proposed to disband the Ports Canada
Police, raising questions such as who provides and who pays for
policing services at the Port. The report categorises police services
into those for which the City is responsible and those that are the
responsibility of other jurisdictions, and makes a recommendation the
Federal Government acknowledge responsibility for those policing
matters that fall under their domain.
The Minister of Transport has proposed that each local port authority
will be exempt from paying municipal property taxes, and rather will
be required to negotiate fees for service with each neighbouring
municipality. The report makes a case against this proposal, and
recommends that Council notify the Minister of this position.
The Minister of Transport has proposed that there be one municipal
representative on the proposed local port authority board of
directors, to be chosen from among all the municipalities bordering
the Port. A recommendation is made that the Minister consult with
local governments on the matter of the board s composition. It is
proposed in this report that there be two municipal representatives on
the board, and that one of these be a standing appointment by the City
of Vancouver.
Finally, with regard to land use and development, the report indicates
that there is currently a good working relationship between the City
of Vancouver and the Vancouver Port Corporation, and emphasises that
this should remain through any operational or managerial changes to
the Port of Vancouver. The position of the Federation of Canadian
Municipalities on this matter -- that federal ports be required to
obtain specific political authority for action taken in variance with
official municipal plans or by-laws -- is endorsed.
The phase-out of the Canada Ports Corporation is expected to begin
mid-1996, and Council can expect another report on these matters as
the implications of the proposed operational and structural changes
are clarified.
PURPOSE
This report provides City Council with an overview of the issues
related to the Minister of Transport's proposed new national marine
policy. It is intended to outline the main issues for City Council,
and will be followed at a later date with more detailed reports on
specific issues as they arise.
BACKGROUND
In December 1995, Douglas Young, then Minister of Transport, released
his new national marine policy. The proposed policy involves
extensive alteration to the structure of the entire ports and harbour
system, and there are several areas in which the City of Vancouver
will potentially be affected by changes concerning the Port of
Vancouver. It is noted that in January 1996, Mr. Young was replaced
by local MP David Anderson as the new Minister of Transport, and
further changes may be under consideration.
The change currently proposed in the new national marine policy that
is most relevant to the City of Vancouver is the replacement of the
Vancouver Port Corporation (VPC) with a local port authority.
Currently, the Port of Vancouver is administered by the
semi-autonomous Vancouver Port Corporation, which is accountable to
Parliament through the Minister of Transport. The present VPC board
is comprised of seven individuals, appointed by the Federal
Government.
It is proposed that the Canada Ports Corporation (CPC), which
currently oversees all Local Port Corporations including the VPC, will
be phased out. Responsibilities that currently belong to the CPC,
such as policing and security, will become the responsibility of each
new local port authority. The Crown will retain ownership of the
federal lands at each port site; the Port will in effect be converted
from an agency of the Crown to an autonomous or semi-autonomous entity
conducting business on Crown land.
DISCUSSION
There are four main areas which are potential issues for City Council,
each addressed below.
1. TRANSFER OF SERVICES AND INFRASTRUCTURE BETWEEN THE VANCOUVER
PORT CORPORATION AND THE CITY OF VANCOUVER
The relationship between the Port and the City in terms of services
provided will have to be assessed, and in some cases, renegotiated.
One important service area is policing, as the new policy proposes to
shift responsibility for this to the new local port authorities.
Policing and security is currently provided by the Ports Canada
Police, a federal police force under the authority of the Canada Ports
Corporation. The Port of Vancouver detachment has a strength of
approximately 30 sworn officers, plus roughly seven civilian and eight
seasonal security employees. The annual budget of approximately $3
million is paid by the VPC to the Federal Canada Ports Corporation.
In addition to the Ports Canada Police, the RCMP, Canada Customs and
the VPD all have policing roles at the Port.
There are several important issues to be resolved: What policing and
security services are required in the Port of Vancouver? Who should
deliver these services? Who should pay for them? The other
municipalities neighbouring the Port, the provincial
Attorney-General's Office, and federal agencies such as the RCMP and
Canada Customs are also involved in this matter. Key issues include:
™ With the phase-out of the Canada Ports Corporation,
responsibility for policing the Port will have to be reassigned
to another jurisdiction, or more likely, multiple jurisdictions.
™ Ports, by their nature, generate policing issues that fall under
federal responsibility, such as organised crime, immigration,
illicit drug, alcohol and arms trade, customs, national security,
maritime terrorism, peacetime emergency planning, and enforcement
of laws such as the new Maritime Security Act. Due to limited
resources, these responsibilities are not being adequately met
under present circumstances.
™ There are in effect four tiers of policing responsibility on Port
lands:
i. security services (the equivalent of private security guards
at businesses and warehouses),
ii. regular municipal police services (such as is provided to
all municipal taxpayers),
iii. police services falling under realm of federal
responsibility not requiring enforcement by federal forces
(that is, extraordinary municipal/local police services
required due to the unique nature of the port operations),
and
iv. police services falling under realm of federal
responsibility requiring enforcement by federal forces (for
example, policing related to organised crime, immigration,
illicit drug, alcohol and arms trade, customs, national
security, maritime terrorism, peacetime emergency planning,
and enforcement of laws such as the new Maritime Security
Act).
™ Given the role of the Port as a national gateway, and the nature
of the policing problems it generates, funds to meet policing
responsibilities should come from federal government, perhaps
from the land rent the local port authority will be paying to the
Federal Government.
™ Both the level of service and the funding for Port policing will
need to be negotiated between the local port authority,
neighbouring municipalities and the Attorney-General's office.
™ There needs to be a transition period for the hand-over of Port
policing, long enough for the municipalities and the RCMP to add
and adequately train additional staff members. This may require
some kind of legislative authority for the Canada Port Police to
remain in existence for a period as part of a joint force
operation.
It is the opinion of the Vancouver Chief of Police that the level of
policing undertaken by the Ports Canada Police has in some ways been
inadequate, due to limited resources, in dealing with the problems
generated at the Port of Vancouver. The answer to the question of the
future of policing at the Port of Vancouver must therefore go beyond
simply maintaining the level of service currently provided.
The City of Vancouver should continue to offer regular municipal
police services to the Port of Vancouver, should the Ports Canada
Police be disbanded. However, police services that were previously
undertaken by the Ports Canada Police force, or services/service
levels that are required but not at present being provided should not
be funded by Vancouver taxpayers. This is a federal responsibility.
City staff have entered into preliminary discussions about policing
with the VPC, and will be reporting to Council for more specific
direction, once these questions have been answered. While policing is
an important service delivery issue, there are other areas where the
City and the Port may have to explore and possibly redefine their
relationship, such as maintenance and ownership of infrastructure.
The VPC has indicated that the Port intends to continue with its
existing responsibilities in this area.
2. TAXATION REVENUES
Ministry of Transport officials have confirmed to the Federation of
Canadian Municipalities that federal ports remaining part of the
national ports system will be offered a unilateral federal exemption
from payments-in-lieu of property taxes, and that in their place, each
Canadian Port Authority (CPA) will be expected to negotiate user fees
with its neighbouring municipalities.
Grants-in-lieu of tax revenues from the VPC to the City of Vancouver
totalled approximately $5 million in 1995 (includes the cruise ship
facility), about 35% of which was collected on behalf of other taxing
authorities. It is essential that these municipal revenues not be
eroded. Lessees on Port lands (such as terminal operators) currently
pay full property taxes, and these revenues will not be affected by
any changes made to the VPC.
Under a negotiated user fee arrangement, it may well be the case that
Vancouver will suffer significant revenue losses, which will have to
be compensated for through taxes from local homeowners and businesses.
This directly contradicts the commitment made by Minister Young, that
municipalities with Canadian Port Authorities would be no worse off
financially as a result of the marine policy reforms, stated at a
meeting with the FCM on October 23, 1995.
Further, the municipal costs associated with the Port of Vancouver
lands and operations are not readily quantifiable; negotiations would
likely be cumbersome and time-consuming, and outcomes will not
necessarily be predictable and consistent from year-to-year.
It should be noted here that the proposal to exempt CPAs from
payments-in-lieu of taxes directly contradicts the conclusions reached
recently by a joint committee comprised of representatives of the FCM,
Public Works and Government Services Canada and Treasury Board Canada:
that payments-in-lieu of taxes on both departmental and Crown
corporation properties be based on commonly accepted principles of
property taxation.
That the Port of Vancouver remain competitive is vitally important,
not just to Vancouver but to all Lower Mainland municipalities, to all
of the western provinces, and to all of Canada. However, this should
by no means be achieved at the expense of the property taxpayers of
Vancouver and its other neighbouring municipalities.
The local port authority should be required to continue to pay
municipal property taxes or grants-in-lieu of taxes, as the VPC does
currently. As stated recently by the President of the Federation of
Canadian Municipalities: "If every citizen or corporation were able to
negotiate their tax bill, chaos would result. Taxes at any level of
government are non-negotiable."
Grants-in-Lieu of Taxes: VPC's Recent Payment History
The related issue of the VPC's payment history regarding its
grants-in-lieu of taxes should be noted here. The VPC last settled
its property tax bill with the City of Vancouver in 1984. In each
year subsequent to 1984, the Port has paid an interim amount to the
City, very approximately equal to 90% of the estimated amount owed,
according to the Port.
Settlement of the tax bills since 1985 has been pending the VPC's
concurrence with the amounts billed by the City in each of these
years. There are four areas of potential disagreement: (a)
classification of property, as determined by the BC Assessment
Authority, (b) valuation of property, as determined by the BC
Assessment Authority, (c) grantability of property included in the
City's tax bill, as indicated in the Federal Municipal Grants Act and
(d) actual billing errors. The work of assessing the property tax
grants-in-lieu of tax bills is undertaken by the Municipal Grants
Office of Public Works & Government Services Canada on behalf of the
VPC.
The Chief Executive Officer of the Port, Captain Norman Stark, has
acknowledged that the finalization of grants-in-lieu has been
unreasonably delayed, for a variety of administrative reasons not
wholly under the Port's control. He has committed to make every
effort to bring the grants-in-lieu up to date as of 1994 by the middle
of this year.
Appendix A compares the amount billed by the City versus the amount
paid by the VPC in each year.
Federation of Canadian Municipalities
The Federation of Canadian Municipalities (FCM) has an ad hoc
committee on port issues in place and has been communicating with the
Minister of Transport on many of the issues surrounding the new marine
policy. Appendix B contains a letter from the President of the FCM to
the Minister of Transport, stating their position on key marine policy
issues.
It is noted that the municipalities represented by the FCM have in
some cases very different concerns with the proposed new marine
policies. For example, while municipalities with a major port are
concerned with topics such as the ones raised in this report, others
with regional ports slotted to be divested have a very different set
of concerns. For this reason, there are certain issues best dealt
with through direct communication between the City and the Federal
Government, rather than via the FCM.
3. LOCAL REPRESENTATION ON AND ACCOUNTABILITY OF THE PORT'S BOARD OF
DIRECTORS
The new policy proposes that operational control of all Local Port
Corporations, such as the VPC, be transferred to local authorities,
each made up of nine or ten representatives. These new Canadian Port
Authorities would be accountable to the federal government through an
operating agreement.
It is proposed that members of the Port board of directors will be
structured as follows:
™ one federal representative,
™ one provincial representative, to be selected on a rotating basis
from the four western provinces,
™ one municipal representative, to be selected on a rotating basis
from all the municipalities neighbouring the Port, and
™ six or seven nominees representing user and carrier groups.
The government representatives are to be neither government employees
nor politicians, and the majority of the board is to be comprised of
private-sector representatives.
There are serious concerns about the public accountability of such a
structure. Regardless of its ownership structure, a major port is in
many ways different than a private corporation. It is part of our
national infrastructure, and as such its board of directors has two
distinct responsibilities: its fiduciary responsibility to the
corporation, and its responsibility to act in the best interests of
the public.
If the Port ceases to be a federal agency, appointed board members
will no longer be accountable to any level of government. With the
current structure (the VPC as a federal agency, and
federally-appointed board members), municipalities have indirect input
into the Port's management via the Minister of Transport. With the
proposed structure, municipalities who feel their concerns are being
overlooked by the board will have no available recourse.
In his recent letter to the Minister of Transport (Appendix C), Mayor
Owen has made the following suggestions about the structure of the
Vancouver CPA board of directors:
™ given the large number of municipalities bordering the Port of
Vancouver lands, there should two municipal representatives on
the board, and that further one of these should be a standing
appointment by the City of Vancouver,
™ similarly, there should be two provincial representatives on the
board, and further that British Columbia, as the Province in
which the Port of Vancouver is located, should have a standing
appointment to the board, and
™ that strict conflict-of-interest guidelines be established, given
that a significant portion of the board will be comprised of
appointees from private industry who deal with the Port.
This alternate structure would bring the total number of government
representatives on the Vancouver CPA board to five, which would be a
significant improvement over the structure that has been proposed by
Minister Young in terms of public accountability. It would also
improve the process by which local interests were given adequate
consideration in the management of the Port over the one that is
currently in place. The Minister of Transport should be urged to
consult with municipalities on this matter, both through the FCM, and
in the case of the eight major ports, directly with City Councils.
4. LAND USE AND DEVELOPMENT
The City of Vancouver has in place a good working relationship with
the VPC regarding non-port use development of Port lands west of Main
Street. East of Main Street, the VPC has agreed to adhere to a
development review process, not dissimilar to the development
application process for private development, in which the City issues
a statement of its support or non-support for a proposal, rather than
a permit. This process has worked well in recent years, and it is
hoped that the agreement in place would hold through any changes to
VPC management and operational structure.
In his letter to the Minister (Appendix B), the President of the FCM
makes two recommendations regarding land use that would enhance the
relationship between federal ports and bordering municipalities:
™ that federal ports should require specific political authority
from the Government of Canada for any action that is taken that
is in variance with official municipal plans or by-laws, and
™ that CPAs should be enabled to enter into binding land use
agreements with municipalities, recognising federal
constitutional prerogative.
CONCLUSION
In summary, many of the changes proposed for the Canadian marine
system are laudable in their intent to reduce inefficiency and
modernise management and operational structures. However, the
proposed new management structure for the Port of Vancouver removes
any public accountability regarding the impacts of decisions made by
the Port's board of directors. The Minister proposes to replace the
current structure with a board that is not formally accountable to any
level of government. Further, the proposal that the Port negotiate
fees for municipal services rather than pay property taxes or
grants-in-lieu of taxes is unacceptable to the City of Vancouver.
The phase-out of the Canada Ports Corporation is likely to begin in
mid-1996, and staff will report to Council for direction on the
implications of the operational and structural changes as they are
clarified.
* * * APPENDIX A
HISTORY GRANTS-IN-LIEU OF TAXES BILLED VERSUS PAID
BY THE VANCOUVER PORT CORPORATION
GROSS TAXES: ALL TAXING AUTHORITIES
TOTAL TOTAL AMOUNT
BILLED RECEIVED OUTSTANDING
1985 $ 2,679,320 $ 2,160,000 $ 519,320
1986 $ 2,965,190 $ 2,340,000 $ 625,190
1987 $ 3,055,704 $ 2,476,800 $ 578,904
1988 $ 3,345,403 $ 2,625,000 $ 720,403
1989 $ 3,162,906 $ 2,790,000 $ 372,906
1990 $ 3,215,400 $ 2,922,283 $ 293,117
1991 $ 3,748,869 $ 3,374,000 $ 374,869
1992 $ 3,963,299 $ 3,544,614 $ 418,685
1993 $ 3,824,491 $ 2,752,794 $1,071,697
1994 $ 3,800,000 $ 2,972,340 $ 827,660
1995 $ 5,379,813 $ 4,463,260 $ 916,553
Total $ 39,140,395 $ 32,421,091 $6,719,304
NOTES
1. Total billed is based upon the BC Assessment Authority's valuation
of grantable property. Total received is an interim payment, very
roughly equal to 90% of the anticipated settlement for each year.
- 2 -
2. Amount outstanding is subject to settlement by the Vancouver Port
Corporation, dating back to 1985. There are four areas of
potential disagreement: (a) classification of property, as
determined by the BCAA, (b) valuation of property, as determined
by the BCAA, (c) grantability of property included in the City's
tax bill, as indicated in the Municipal Grants Act and (d) actual
billing errors. The total amount ultimately collected may
therefore be less than the $6.7 million indicated above.
3. Amount billed for 1994 is an estimate.
4. Figures in this table from 1992 onward include payment for the
cruise ship facility. The cruise ship facility has been grantable
since 1986, but prior to 1992, amounts were recorded separately.