ELK VALLEY PROPERTY TAX SHARING AGREEMENT
THIS AGREEMENT dated for Reference this 315‘day of March, 2008.
BETWEEN:
THE DISTRICTOF ELKFORD a municipalityincorporated pursuant to Letters Patent (hereinafter referred to as "E|kford”)
AND THE CORPORATION OF THE CITY OF FERNIE a municipality incorporated pursuant to Letters Patent (hereinafter referred to as “Fernie”)
AND THE DISTRICT OF SPARWOOD a municipalityincorporated pursuant to Letters Patent (hereinafter referred to as “SpanNood”)
AND THE REGIONAL DISTRICT OF EAST KOOTENAY aRegional District incorporated pursuant to Letters Patent (hereinafter referred to as “RDEK")
Collectively, hereinafter referred to as the “Parties”
WHEREAS on March 21, 1982 the Parties, excepting the RDEK, entered into an agreement to tax coal mines and coal processing works within theboundaries of Elkford and Sparwood a common property tax rate and to distribute the tax revenuegenerated amongst the Parties, excepting RDEK, pursuant to Letters Patent issued under authority of S. 14(6) of the Municipal Act, RSBC, 1979, and as amended pursuant to Regulation 232/84 made under authority of the Property Tax Reform Act (No. 1), 1983, on the 18”‘day of April, 1984 (the “1982 Elk Valley Tax Sharing Agreement”);
AND WHEREAS the taxation of the Properties has not been increased subsequent to the year 1995;
AND WHEREAS the Parties each acknowledge that the 1982 Elk Valley Tax Sharing Agreement no longer represents an equitable distribution of tax revenues generated from the Properties; AND WHEREAS each of the Parties acknowledge that it is in their mutual interests to support the provision and enhancement of local government services by each of the Parties, ensuring sustainable economic and social development in the Elk Valley Region of British Columbia, which may only be achieved if major industrial enterprises within the Elk Valley Region of British Columbia carrying on business on the Properties are economically viable and competitive;
AND WHEREAS the coal mining industry is of significant economic benefit to the Elk Valley Region of British Columbia;
AND WHEREAS the coal mining industry should be taxed, between different coal mines in the Elk Valley Region, on a fair and equitable basis;
AND WHEREAS the Parties wish to enter into an agreement regarding the taxation of, and distribution of tax revenues derived from, the Properties and other lands that is stable, predictable, equitable, fair and adaptable to changing circumstances;
AND WHEREAS the Parties wish to specify the amount of annual property tax that willbe levied on the assessment of the Class 4 portion of the Properties listed in Schedule “A” to this agreement, and how those funds willbe distributed between the Parties;
AND WHEREAS pursuant to S. 232 of the Community Charter, SBC 2003, a Council may, by bylaw, enter into an agreement with any other authority having taxing powers in respect of land, or land and improvements, located in the municipality respecting the exercise of the powers of the municipality and of the other authority‘ in relation to the collection of taxes, recovery of unpaid taxes and related matters;
AND WHEREAS the Province of British Columbia may enable the Parties to implement the terms of this Agreement;
THEREFORE in consideration of the mutual promises, covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
Final Agreement January 2008 DEFINITIONS:
in this Agreement “Administrator” means the person that has been designated by the Parties to administer this Agreement; “Area” means the geographic area of RDEK Electoral Area “A” and the incorporated municipalities of Elkford, Fernie, and Spanrvood; “Class 4” means land used in conjunction with the operation of industrial improvements, and industrial improvements as specified in the PRESCRIBED CLASSES OF PROPERTY REGULATION B.C. Reg. 438/81; “Minister” means the Minister of Community Services, or such other Minister that may have responsibility for municipalities within British Columbia; “Municipality”means Span/vood, Elkford or Fernie; “Parties" means Elkford,Fernie, Sparwood and the RDEK; “Party” means any of the parties; “Property” and “Properties” means all Class 4 Industrial Properties comprised of coal mines, coal processing works and coal related infrastructure that are taxed according to this agreement; “Property Tax Levy” means the annual amount of property taxes levied in a particular year on the Properties listed in Schedule “A”to this agreement; “Property Tax Requisition” means the total amount of taxes requisitionedannually on the Properties listed in Schedule “A”to this agreement, including any adjustments for prior year assessment appeals; “Property Tax Rate” means the tax rate determined under this agreement that must be established by a bylaw of a municipality pursuant to S. 197 of the Community Charter; “Revised Roll" means the Revised Assessment Roll as issued by BC Assessment Authority;
APPOINTMENTOF ADMINISTRATOR
1. The Parties hereby designate the Financial Officer of the District of Sparwood as the initial Administrator of this Agreement, until such time as a minimum of three of the
Final Agreement January 2008 parties shall designate the Financial Officer of Elkford or Fernie as the Administrator of this Agreement.
PROPERTIES SUBJECT TO THIS AGREEMENT
2. The Class 4 portion of the Properties described in Schedule ”A”hereto will be subject to this Agreement, and such other Class 4 Properties as may be utilized or included within the boundaries of any of the Parties from time to time, and as may be included within Schedule “A”pursuant to Article 5 hereof.
3. The Administrator will provide to each of the Parties prior to August 15‘each year the following information: i. The current assessed values of the Properties; ii. A list of Class 4 coal mines, coal processing works and coal related infrastructure in the Area that are not included in Schedule “A”,with the current assessed values for these properties, indicating which properties, if any, are outside of the boundaries of a Municipality; iii. A list of the Properties that will be subject to a closure allowance and a reduction in the assessed value in the following taxation year, pursuant to Assessment Act Regulation 379/88.
4. IfClass 4 coal mines, coal processing works and coal related infrastructure are identified pursuant to 3(ii) outside the boundaries of Fernie, Elkford or Span/vood, the Municipality that is in the closest geographic proximity to such property shall apply for an expansion of their boundary to encompass such property by December 31 of that year.
5. if Class 4 coal mines, coal processing works and coal related infrastructure are identified pursuant to 3(ii) within the boundary of a Municipality and are not included within Schedule “A”,or are included by a boundary extension within a Municipality pursuant to clause 4, such property shall be included within Schedule “A”.
PROPERTY TAX REQUISITION,LEVY,ALLOCATION AND PAYMENT
6. The annual Property Tax Levy, Property Tax Requisition,and Property Tax Rate, shall be calculated in accordance with Schedule 4 Final Agreement January 2008 The collected Property Tax Requisition shall be allocated to each of the Parties in accordance with Schedule “B”.
The Parties collecting the Property Tax Requisition, or portion thereof, shall pay to the other Parties their proportionate allocation of the Property Tax Requisition collected, within five (5) business days from the tax due date, or such later date in the event that any portion of the Property Tax Requisition is not paid by the tax due date.
In the event that any portion of the Property Tax Requisition is not paid by the tax due date, the Municipalitythat such taxes should have been paid to shall immediately advise the Administrator of such, and the Administrator will advise each Party of the amount of such unpaid taxes, and re—adjusteach Party's allocation of the Property Tax Requisition.
10. Upon receipt of unpaid taxes, or portion thereof, the collecting Municipalityshall remit to the other Partiestheir proportionate allocation of the previously unpaid taxes, penalties and interest, ifapplicable.
ADMINISTRATION
11. The Administrator will provide the following information to each of the Parties prior to February 28”‘of each year: i. A list of all Properties in Schedule “A” and their assessed values for the current taxation year, identifying any Properties that were added for the current year. ii. A list of any Properties that were deleted from Schedule “A”from the prior year. iii. A calculation of the Property Tax Levy, the Property Tax Requisition, and the Property Tax Rate as specified in Schedule “B”. 4 iv. A calculation of the Property Tax Requisition to be collected by each Municipality containing Properties listed in Schedule “A” (the “Collecting Municipality”), the allocation of the Property Tax Requisition between the Parties, and the estimated amount to be paid by the Collecting Municipalityto the other Parties. (the “PreliminaryAnnual Calculation”)
Final Agreement January 2008 12. Upon receipt of the Revised Roll, and prior to April 15"‘of each year, the Administrator will prepare a final calculation of matters set forth in Article 11 and provide to each of the Parties such information (the “Annual Calculation”).
13. Each Party shall notify the Administrator in writing of any corrections requested or dispute with the Annual Calculation by April 30”‘of each year. in the event that there is no correction requested or dispute made by any of the Parties to the Administrator by April 30”‘of any year, then the Annual Calculation shall be deemed binding and conclusive on each Party. In the event that a correction is requested, and the Administrator agrees with such request for correction, the Administrator shall correct the Annual Calculation, and provide the revised Annual Calculation to each of the Parties. In the event that the Administrator disagrees with the request for correction, or there is a dispute with the Annual Calculation, the Administrator shall inform all other Parties of the nature of the requested correction, or dispute, and as soon as is practicable, a representative of each of the Parties shall meet to attempt resolution of the dispute or correction, and if the Parties unanimously agree on a resolution of the dispute or correction, such resolution shall be the Annual Calculation. in the event that the Parties are unable to reach agreement, then any Party may invoke the Dispute Resolution Protocol set forth in Articles 20 through 23.
14. The Municipality who employs the Administrator shall receive an annual administration fee as specified in Schedule
ANNUAL CONSULTATION PROCESS
15. The Parties acknowledge and agree that on or before the 30”‘day of August in each year during the term of thisAgreement, the Parties shall meet and review the economic circumstances of the Elk Valley Region, and shall invite the owners of the Properties to attend such meeting.
PROPERTY ASSESSMENT APPEALS
16. If the assessment for one or more parcels comprising the Properties is successfully appealed pursuant to the Assessment Act (the “Reassessment”) resulting in the
Final Agreement January 2008 collection of additional property taxes or the refund of property taxes including overpayment interest, penalties or arrears interest of an amount equal to or less than $1,000.00, the affected Municipality will make the necessary adjustments to its tax notice(s) and issue refunds or receive additional taxes, as applicable, and there will be noallocation of the tax adjustments to the other Parties, and there willbe no adjustment to the Annual Tax Requisition in the following year. If the Reassessment results in the collection of additional property taxes or the refund of property taxes including overpayment interest, penalties or arrears interest of an amount greaterthan $1,000.00, then in such an event: The Municipality in which such parcel(s) are situate (the “Reassessed Municipality”) shall prepare a calculation detailing the change to taxes resulting from the Reassessment and the increase or decrease to the Property Tax Levy that was collected pursuant to this Agreement for the tax year of the Reassessment, including any related overpayment interest, penalties or arrears interest. ii. The Reassessed Municipality will allocate the change to the Property Tax Levy between the Parties pro rata, including any related overpayment interest, penalties or arrears interest, as applicable. Within 30 days of issuing a refund or receiving payment pursuant to the Reassessment, the Reassessed Municipality will invoice or pay to the other Parties their allocated pro-rata share of the change to the Property Tax Levy including any related overpayment interest, penalties or arrears interest, as applicable. The other Parties shall reimburse the Reassessed Municipality within 30 days of receipt of the invoice. In the year following the Reassessment, the Annual Tax Requisition shall be adjusted as set forth in Schedule “B”.
TERM OF AGREEMENT
17. The Term of this Agreement shall be deemed to commencelonthe 1st day of January, 2008, and shall continue in fullforce and effect until such time as: one or more of the Parties being dissolved or amalgamated with another Municipality; the 31st day of December, 2032.
Final Agreement January 2008 AMENDMENTSTO AGREEMENT
18. This Agreement may only be amended as follows: Schedule “A”may only be Amended: a. pursuant to Article 5 hereof; b. to remove Properties that are no longer assessed as Class 4 ; c. to update property descriptions for changes resulting from subdivisions, consolidations, Land Title Office title corrections and amendments, and for folio number changes made by the B. C Assessment Authority. only be Amended: Schedule “B”may 9 a. if the Amendment results in a change of theProperty Tax Levy, plus inflation factor, after consultation with the owner(s) of the Properties, with the approval of the Inspector of Municipalities, and with the written consent of all of the Parties; b. if the Amendment results in a change to the allocation of the Property Tax Requisition, only after consultation with the owner(s) of the Properties, and with the written consent of all of the Parties. . Amendments to this Agreement, excepting Schedules “A”and “B”may be made with the written Agreement of the Parties and the approval of the Minister.
RDEK UTILIZATIONOF FUNDS
19. RDEK acknowledges and agrees that any funds received by it pursuant to this Agreement willonly be expended: i. for services for the benefit of Electoral Area “A”;or for services provided in a Municipality within the Elk Valley or in partnership with a Municipality within the Elk Valley; or iii. in relation to lands owned by the RDEKwithin a Municipality within the Elk Valley.
DISPUTE RESOLUTIONPROTOCOL
20. The Parties acknowledge and agree that the following provisions of this Agreement (the “Dispute Protocol”) only apply to disputes between the Parties regarding: The interpretation, application, implementation or administration of this Agreement, or
Final Agreement January 2008 A breach or anticipated breach of this Agreement.
21. The Parties acknowledge that they will initially attempt resolution of disputes through informal discussions between the Parties.
22. Any Party may, in the event that informal discussions do not result in resolution of a dispute, give a Notice of Dispute, (the “lnitiator") setting forth in particular the matter in dispute and the lnitiator’s position with respect to the resolution of the dispute. Any Notice of Dispute must be in writing and provided to all other Parties to this Agreement: Within 30 days of the Notice of Dispute being received by the Parties other than the Initiator, the Parties will convene a formal, unassisted negotiation to attempt resolution of the matters set forth in the Notice of Dispute and any other matters arising from the Notice of Dispute (“Stage 1"); If a dispute is not resolved by negotiation within 10 days of commencing negotiations, the Parties will forthwith submit the dispute to a mediator who is acceptable to the Parties and whose expenses will be shared equally by them. If they cannot agree on a mediator, a mediator will be appointed by the British Columbia international Arbitration Centre (“Stage 2”); If mediation pursuant to paragraph 23(ii) does not result in a resolution of the dispute within 10 days of the commencement of mediation, the Parties will forthwith submit the dispute to arbitration by a single arbitrator who is acceptable to the Parties and whose expenses will be shared equally by them. If they cannot agree on an arbitrator, an arbitrator will be appointed by the British Columbia international Arbitration Centre. The determination of the arbitrator willbe conclusive and binding on the Parties. The Commercial Arbitration Act of British Columbia or successor legislation willapply to the arbitration (“Stage 3”).
23. Any resolution of a dispute shall be : i. recorded in writing, ii. signed by authorized representatives of the Parties, and iii. considered to be binding on the Parties.
NOTICE
Final Agreement January 2008 24. Any notice required to be given pursuant to this Agreement if delivered by hand or facsimile transmission, shall deemed to be received on the next business day following such delivery, or if by mail, on the seventh (7”‘)day after posting in any Post Office in British Columbia. Notice shall not be deemed effective if given by email or other electronic means other than facsimile transmission. Any notice shall be addressed as follows, or to any other address given by a Party from time to time specify inwriting:
if to Elkford: Corporate Administrator District of Elkford Box 340 Elkford BC VOB 1H0 Facsimile: (250) 865-2429
Ifto Fernie: Corporate Administrator City of Fernie Box 190 Fernie BC VOB 1M0 Facsimile: (250) 423-3034
Ifto Sparwood: Corporate Administrator District of Sparwood Box 520 Sparwood BC VOB2G0 Facsimile: (250) 425-7277
Ifto RDEK: Chief Administrative Officer Regional District of East Kootenay
19 — 24"‘Avenue South Cranbrook BC V1C 3H8 Facsimile (250) 489-3498
ENTIRE AGREEMENT
25. This Agreement shall be deemed to constitute the entire agreement between the Parties with respect to the sharing of property tax revenues from Class 4 Properties subject to this Agreement and shall supersede all previous agreements, negotiations, representations, and documents with respect thereto. 10 Final Agreement January 2008 HEADINGS
26. Notes appearing as a heading in this Agreement have been inserted for convenience and reference only and of itself cannot define, limit or expand the scope of meaning of the present Agreement or any of its provisions.
GOVERNINGLAW
27. This Agreement shall be construed and governed by the laws of the Province of British Columbia.
SEVERABILITY
28. Should any provision of this agreement be illegal or non-enforceable, they shall be considered separate and several from the Agreement and its remaining provisions shall remain in force and be binding upon the Parties hereto as though the illegal or non- enforceable provision had never been included.
AGREEMENT BINDINGON CORPORATE HEIRS,SUCCESSORS,ETC
29. This Agreement or any renewal thereof, shall enure to the benefitof and be binding upon the Parties hereto and their respective Corporate heirs, agents, successors, and assigns.
AUTHORITYTO ENTERAGREEMENT
30. This Agreement shall have no force or effect until such time as: i. Each Municipalityshall pass a bylaw authorizing the entering into of this Agreement; and ii. The Province of British Columbia enacting legislation authorizing the entering into of this Agreement by each Municipalityand the RDEK, and the RDEK passing a bylaw subsequent to such legislation being enacted authorizing the entering into of this Agreement.
11 Final Agreement January 2008 Dated this ZNQ day of QA3 2008.
The District of Elkford Dean McKerracher, Ma
The City of Fernie Randal Macnair, Mayor
The istrict of Span/vood D id Wilks, Mayor
The Region Distr' tof East Kootenay Gregory Deck, air
The egional District of ast Kootenay Mike Sosnowski, Director
12 Final Agreement January 2008 Elk Valley Property Tax Sharing Agreement Schedule “A”
Properties subject to this Agreement
The land and improvements for the following properties shall be subject to this agreement, including any resultant properties arising from subdivision or consolidation of the following properties:
1. Properties within the Municipal Boundaries of Elkford.
1.1 Folio 517-00802.000
Block A, Land District 26, District lot 3454 — 16964, as shown on survey plan NEP 19593 Fording Mine Road Fording Coal Ltd. (Fording River Operation)
1.2 Folio 517-O0810.000 , Lot 1, Plan 11279, District Lot 4588, an unsurveyed portion used for Greenhills
— Project (approx 2800 acres) A Fording Mine Road Fording Coal Ltd. (Greenhills Mine Operation)
2. Properties within the Municipal Boundaries of Span/vood.
2.1 Folio 337-0319.000 Lot 1 Plan 1358 DL4588 ex RW12403 MichelCreek Rd 6069789 Canada Inc. (Elkview Operations)
2.2 Folio 337-0319.001 Rail Lines located partly on Lot 1 Plan 1358 et al Michel Creek Rd Elkview Coal Corp
2.3 Folio 337—0320.000 Block 3 Plan 1358 exc SRW 18351 Michel Creek Rd . 6069789 Canada Inc. (Elkview Operations)
2.4 Folio 337—O321.000 Parcel A (980701l) Blk4 DL 4588 Plan 1358 Michel Creek Rd 6069789 Canada Inc (Elkview Operations)
2.5 Folio 337—O321.05O 13 Final Agreement January 2008 Lot 12 & 14, Plan 1358 DL4588 Michel Creek Rd 6069789 Canada Inc. (Elkview Operations)
2.6 Folio 337-0807.000 Lot 2 DL4588 Plan 1358 exc Plan 6070 Michel Creek Rd 6069789 Canada Inc. (Elkview Operations)
2.7 Folio 337—0818.001 Lot 1 Plan 9330 and Lot 1 Plan 7590 exc 9591 10218 et al Highway No 3 6069789 Canada Inc. (Elkview Operations)
2.8 Folio 337—0834.000 Part of exhibit J (plan 223401| &38638i) exc part at al Highway No 3 6069789 Canada Inc. (Elkview Operations)
2.9 Folio 337-4250.000 DL6997 6999 Corbin Rd Fording Coal Ltd. (Coal Mountain Operations)
2.10 Folio 337-4255.000 DL 6765 6766 6767 6768 6770 6771 et al Highway No 43 Luscar Ltd (Line Creek Operations)
2.11 Folio 337—4255.010 Lot 1 Plan NEP21818 DL7989 4588 Highway No 43 Elk Valley Coal Corporation (Line Creek Operations)
2.12 Folio 337-4257.000 Lot 1 Plan 9330 DL4588 exc pl 9591 10218 et al Michel Creek Rd 6069789 Canada Inc. (Elkview Operations)
2.13 Folio 337—4258.000 . Parcel A DL4588 exp plan DFJ16956 et al 500 Industrial Rd 2 6069789 Canada Inc. (Elkview Operations)
14 Final Agreement January 2008 Elk Valley Property Tax Sharing Agreement Schedule “B”
Calculation of Property Tax Levy and Requisition, Property Tax Rate, and the Allocation of Taxes
1. Annual Tax Reguisition
The Annual Tax Requisition shall be calculated as follows:
Property Tax Levy as determined annually
Property Assessment Appeal Adjustment
A +/- B Annual Tax Requisition
A PropertygTax Levy
In 2008 and future years, the minimum amount of the Property Tax Levy shall be $8,900,000.
For taxation years after 2008 the Property Tax Levy will be the amount of the Property Tax Levy in the prior year plus an inflation factor adjustment:
a) Inflation factor: The amount of the Property Tax Levy in the prioryear times the lesser of: i. The British Columbia Consumer Price Index % change from the previous year for all items excluding food as determined at December 315‘of the preceding year, or ii. The average of the three municipalities percentage change applied to the Class 1 residential taxes for municipal purposes in the preceding year, excluding the increase in municipal taxes from residential non—market changes as reported by BC Assessment Authority.
15 Final Agreement January 2008 b) Calculation The Average of the three Municipalities % residential tax change in the prior year excluding the non-market changes is calculated as: D N 2""Prior Year Residential Taxes for Municipal Purposes E Prior Year Residential Assessment Non-Market Changes
F | Prior Year Residential Tax Rate for Municipal Purposes G IPriorYear Residential Taxes for Municipal Purposes
E/1000 x G Prior Year Residential MunicipalTaxes on Non-Market Changes G minus H Prior Year Residential Municipal Taxes without Non-Market Changes l-D Prior Year $ Increase from 2"“prior year - excluding non-
_:_::___market changes Kl J/ % Increase from prior year - excluding non-market change
Example: The calculation of the average residential tax increase in the prior year (2007) that would be applied to the 2008 Property Tax Levy if the levy was subject to an adjustment in 2008: Formula Year Elkford ] Fernie Sparvvood Residential Taxes for 2006 648,004 2,251,620 [7783,091 Municipal Purposes Residential Assessment Non— 1,533,100 26,836,900 5,547,900 Market Chan es Residential Tax Rate for Municipal 4.56965 J_4.39157 Purposes $783305 Residential Taxes for 2007 676,689 2,435,514 854,546 Municipal Purposes Residential Municipal 2007 Taxes on Non-Market 101,532 24,364 Chan es Residential Municipal 2007 Taxes without Non- 669,683 2,333,982 830,182 Market Chan es I $ Increase from prior year - excluding non- 21,679 82,362 47,091 market changes L % Increase from 9"” yea’ ' 3.346% 3.658% 6.013% excluding non- market change
16 Final Agreement January 2008
ml oi Example Average: 3.346% + 3.658% + 6.013% = 13.017 13.017 / 3 = 4.339%
B. Property Assessment Appeal Adjustment
In the year following a Reassessment,the Annual Tax Requisition shall be increased, or decreased, as the case may be, by the amount of the property tax adjustment(s) for a prior year Property Tax Levy including any overpayment interest, penalties or arrears interest, ifin excess of $1,000.00.
2. Annual Property Tax Rate
The Municipalities with Properties listed in Schedule “A” within their municipal boundaries must establish annually by bylaw the Tax Rate for these properties. All Municipalities levying taxes under this agreement must apply the following tax rate on the Class 4 portion of the assessments for all properties listed in Schedule The Tax Rate is calculated as: C Annual Tax Requisition L —_?'otalRevised Taxable Assessment of all Properties M |C/L/1000Annual Property Tax Rate
3. Allocation of the Pro ert Tax Lev
The Property Tax Levy willbe allocated as follows: 2008 2009 and thereafter Property Tax Levy § 8,900,000 100 %
Administration Fee: Administrator $ 5,000 0.05618% Property Taxes: Elkford 2,998,315 33.68893% Fernle 2,598,539 29.19707% SpanNood 2,798,427 31 .44300% RDEK 499,719 5.61482% 5 8,900,000 100 %
17 Final Agreement January 2008