December 11, 2009
PROPERTY TAXATION BRANCH – MINISTRY OF FINANCE
1802 Douglas Street, Main Floor
Victoria, BC V8T 4K6
Attention: Mr. Arthur Chambers
RE: Application for Review to DAP for 2008 Federal Payments in Lieu of Taxes
Gulf Islands National Park Reserve
DAP File #: 21368-10007
This communication is in response to your request dated May 5, 2009 to the Federal Dispute Advisory Panel (DAP) for review of 2008 Payments in Lieu of Taxes (PILT) for the above mentioned properties. We also confirm the DAP’s acceptance, dated July 8, 2009, to hear the review.
The intention of this correspondence is to provide you with some insight into our department’s philosophy regarding the PILT payments. As you are aware we have a difference in opinion with BC Assessment as to the approach in valuing a National Park.
National Parks present a complex valuation assignment. The intention of land held by Canada for the purpose of a National Park is to protect and reserve those lands for the enjoyment of all Canadians and visitors alike. It is difficult if not impossible to make a presumption that any part of these lands would be removed from the “Park” and sold for another use. Nonetheless, the prediction of a probable selling price is the main driver for appraisers in determining market value.
Documentation such as the PMHL (Pacific Marine Heritage Legacy) outlines the shared vision between Canada and British Columbia in acquiring lands for the establishment of the Gulf Islands National Park Reserve. In the agreement the parties recognize these lands should be conserved and protected as a legacy for present and future generations. The agreement refers to public consultations that provided strong support for the establishment of a national park reserve in the Canadian Gulf Islands.
It has been agreed that the lands acquired for the park reserve would be subject to the Islands Trust Act. The object of this legislation is to preserve and protect the unique amenities and the environment of the Gulf Islands for the benefit of the residents of the Gulf Islands and the Province of British Columbia generally, in cooperation with local governments, other persons and the government of the Province of British Columbia.
Canada has agreed to manage and make use of the lands within the National Park Reserve so as to as to leave it unimpaired for future generations with the first priority being maintenance of ecological integrity.
As stated, the purpose of the Gulf Islands National Park Reserve is to protect for all time a representative natural area of Canadian significance in the Strait of Georgia Lowlands Natural Region and to encourage public understanding, appreciation and enjoyment of the area so as to leave it unimpaired for future generations.
The purpose of the economically -nullifying restrictions placed upon national parklands is to conserve the ecological integrity of the park for generations. These restrictions are not imposed to prop-up the economic value of parklands, rather they are intended to preserve the lands in their natural state in perpetuity.
It should be acknowledged that the Gulf Island National Park Reserve Lands are subject to park restrictions so severe the land cannot render any economic return. Parks are not for sale, nor are they marketable as a park due to the liability to operate them. Costs of operation cannot be recovered. Parks carry no marketable value in exchange, only intangible intrinsic value. Parks have no marketable value to quantify due to the fact that all economically viable uses have been extinguished by their intended preservation and conservation for the public good. No individual or corporate uses are possible, nor can it be logged, occupied, farmed or grazed,
The mandate of PILT is fairness and equity in administering the PILT Program. In comparison to the nil tax revenues generated by Provincial or Municipal Parks our payment seems fair and goes beyond being equitable with Provincial and Municipal Parks in British Columbia.
Our PILT payments have been calculated using the municipal tax rates against the Federal Values. The Federal Values have used Gulf Island acreage rates as established by BC Assessment with the applicable size adjustments. To partially recognize the severe use restrictions associated with a Park the values were then factored back by 25%. The federal position does not acknowledge that a national park has any economic or market value, rather it has adopted a methodology that provides reasonable payment to the host taxing authority.
We are available to discuss this situation further at your convenience.
Peter Mowat AACI
Senior Valuation Analyst
Pubic Works and Government Services Canada