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Grants wished

Impact of Site C not an isolated issue

When the Site C hydroelectric dam project's environmental assessment hearings begin in December, the District of Hudson's Hope plans to bring forward its concern over financial compensation of the project and how it is delegated to affected communities.

"It might be outside their terms of reference, but they have to be aware of the context of all of this stuff and what it means," said Hudson's Hope Mayor Gwen Johansson.

"Hudson's Hope has two dams - two of the largest, including one that is the most important, the Bennett Dam, which I think is one of the largest assets that B.C. owns. If we were able to tax the two dams that are there, when I first came onto council in 1990, at that time we would have raised about $28 million per year."

BC Hydro projects, such as Site C, are exempt from traditional taxes. As a result, a payment called a "grant in lieu" is given to the districts in which that revenue from taxation is lost.

A grant in lieu associated with Site C has yet to be determined, as the project is still awaiting certification, said Dave Conway, community relations manager for Site C. He said until the project is underway and moving towards power generation, that grant would not be finalized.

"The grant in lieu, it's something that is normal for the facilities that we operate in the province of British Columbia," said Conway. "We have over 30 dams, plus all of the infrastructure ... as a result of that, the Ministry of Finance looks at what that regional district might tax it at and provides a grant in lieu of taxes."

In 2007, the Ministry implemented a formula for determining the grant in lieu on BC Hydro projects, based on the project's generating capacity.

"Essentially the grants in lieu are payments to the local government, that are intended to recognize the presence of government facilities, Crown corporation facilities in local communities as well as local governments impacted by those facilities," said Ministry of Finance communications manager Jamie Edwardson. "They are exempt from property tax, but they do obviously use services provided by the local communities. So under our grants in lieu policy, we pay these grants to local governments, both from the province and a variety of Crown corporations."

Looking at the formula and the expected megawatts produced by the facility, Conway said they have estimated the grant in lieu for Site C to be around $2 million annually, including payments to cover school taxes. However, he stressed that at the end of the day, it is the Ministry of Finance that determines the amount of the grant and how it is allocated.

From the total amount determined by the province's formula, 40 per cent goes towards the host municipality - where the facility is constructed - and 60 per cent is divided among the other affected municipalities or regional districts.

However, this formula was not applied to Hudson's Hope's existing dam projects, either the W.A.C. Bennett Dam and the Peace Canyon Dam. A separate policy was put in place for the district, which the Ministry noted allocates more money per capita to Hudson's Hope than any other region.

Johansson clarified the Ministry's side of the story, saying that when the provincial formula was first introduced, it actually saw Hudson's Hope receiving less money than it had the year before.

As a result of communication between the district and the Ministry, an additional $229,000 was added to the district's base amount, which increases every year along with province-wide municipal property tax revenue.

A report given to the Dawson Creek Daily News by the district said if the formula determined by the Ministry in 2006 were applied to the projects, the grant in lieu towards Hudson's Hope would total just over $2.2 million per year in 2013.

Under the separate policy determined by the ministry, Hudson's Hope received $1.2 million or so in grants, just under $1 million less than the provincial formula would dictate.

Read's report noted that, "The restricted tax base has resulted in a significant infrastructure deficit in [Hudson's Hope]. Current challenges include water supply and treatment, asphalt rehabilitation and other infrastructure deficiencies affecting health and lifestyle."

The deficit in the community is estimated at around $25 million related to infrastructure needs. Johansson said sewer and water line replacements were a particular concern.

"If the Site C project proceeds, we lose a great deal of land." She said that approximately 100 lots would be lost, many of which BC Hydro has been purchasing gradually. Within the district, about 2,500 acres would be placed under statutory right of way, rendering significant amounts unusable. Johansson said the issue is compounded by the limited amount of industrially taxed land in the region - the Bennett and Peace Canyon comprise virtually all of it.

"These are the "flagship" facilities of the provincial hydroelectric system, and collectively provide one third of the province's electricity, as well as most of the hydroelectric storage which leverages the efficiency of the entire system," said a report prepared for the District of Hudson's Hope by David Read of Aspen Communications Limited. The report will be presented to the Joint Review Panel at the Local and Socio-Economic Environment panel held from Jan. 20 to 21.

Having two dams built already along the town of 1,000 people's stretch of the Peace River, Johansson said the joint review panel will offer a forum bring forward the district's on-going concern.

"We need to get the information out to the panel as to the pattern of treatment that Hudson's Hope has had over this period of time that we've had BC Hydro facilities in this area, and just make sure that there is an understanding of this is how the dams have affected Hudson's Hope and this is the pattern of how Hudson's Hope has been treated," said Johansson.

Under it's separate regulation, the District's grant is no longer tied to the generating capacity of BC Hydro's facilities. This is a point of concern for Johansson, as to whether this suggests the grant in lieu associated with the Site C project will exclude the District of Hudson's Hope as an impacted municipality.

Edwardson said that the Ministry has not determined a grant policy for Site C so no speculations could be made one what would come of it.

"What you've got right now is the way the program works based on what is in place," said Edwardson. "It's really far too soon to speculate on what future decisions might be."

According to the report, "Hudson's Hope would propose that as a condition for Site C to proceed, a new policy for Grants-in-Lieu should be developed for the District that adequately reflects the impacts on the municipality from the two existing hydroelectric facilities and the addition of Site C and related reservoir."