By Scott Simpson
B.C.'s
new anti-red tape legislation is expected to end what some stakeholders in the
province's growing independent power sector regard as "blackmail"
zoning practices by local governments.
The Squamish Lillooet regional
district in particular has been successful at leveraging substantial, long-term
payouts from independent power producers -- in exchange for granting routine
land zoning amendments to project developers.
The
district's own records show that "community benefits agreements" with
several IPPs will put millions of dollars into
district coffers -- and regional documents advocate the withholding of zoning
changes as leverage toward the agreements.
A
spokesman in the construction industry on Thursday called it "banana
republic" politics and said it was a disincentive to development that was
scaring away potential investors.
Miller
Creek Power, a 26-megawatt project that was one of the first successful modern
private-sector power developments in B.C., had to agree to a $175,000 one-time
payment, plus payments of $40,000 per year for 40 years in order to gain the
zoning it needed to proceed.
Operators
of the 32-megawatt
Furry
Creek Power, a 10-megawatt run-of-river project, is paying $70,000 up front
plus $16,000 a year for an unspecified time.
These
payments are in addition to annual property tax levies that the district's own
documents acknowledge as "significant."
"One
of the barriers to growth, particularly in non-urban areas, is that you had
some districts essentially holding projects up for blackmail," said Mike Geoghegan, president of the B.C. Construction Association.
"When
it comes to IPPs in the Sea-to-Sky corridor you've
got half a billion dollars worth of construction. Then you have situations
where someone says, 'Provide funding for our rec
centre and we will green-light your project'."
With
legislation called the Significant Projects Streamlining Act introduced this
week by Minister of State for Deregulation Kevin Falcon, the B.C. government
hopes to put a halt to the extra-payment practice.
The act
empowers cabinet to "impose discipline" on local governments or
provincial ministries in cases where, for example, a delay in granting local
zoning would be deemed subordinate to the interests of the provincial economy
at large.
The
Ministry of Competition, Science and
The Squamish Lillooet district
elected Thursday to address the issue through the Union of B.C. Municipalities,
which expects to release today a formal statement on the province's action.
UBCM
president Frank Leonard said local governments had no input into the act, which
he described as reaching far beyond a constraint on zoning delays for IPPs.
"If
these agreements were an issue, we would have been happy to meet with [Falcon]
or the minister responsible to discuss them, and remedies," Leonard said.
"Instead,
we've been delivered this extremely broad, all-encompassing legislation that
overrides local government rights -- indeed citizens' rights -- to having a
public process in their communities."
Steve
Davis, president of the Independent Power Producers of B.C., wasn't as blunt as
Geoghegan, but agreed that the zoning payments were a
disincentive to investment.
He said IPPs were worried that the practice, which politicians from
the Squamish Lillooet were
touting at the recent UBCM annual convention, was going to spread to other areas
of the province.
"I'm
not uncomfortable with you mentioning that the focused area that was of concern
to us was the Squamish Lillooet
regional district.
"It
was the run of river projects in the Sea-to-Sky corridor that were having these
amenities agreements imposed upon them."
District
documents acknowledge that independent power projects "tend to be low
impact and are often located outside the main population areas."
Moreover,
the district says the biggest controversy is associated with an issue outside
of its mandate -- unsightly power lines carrying electricity from small private
power stations to B.C. Hydro's grid.
The
district acknowledges that it "can benefit significantly" from IPPs "through increased property tax revenue."
It notes
that while Miller Creek will pay property taxes of $15,000 to $20,000 per year,
the B.C. government will be collecting $400,000 in property taxes and crown
land rentals, plus a share of a projected $1.2 million in income tax payments.
It says
there are few tangible local benefits to IPPs and
that "there is little incentive for local government to support a rezoning
application unless there are tangible local benefits associated with it."
"I
don't think anyone has a problem with reasonable development cost charges that
may benefit a local community or region," Geoghegan
said.
"What
they have problems with is, basically, capriciousness, where people are being
charged in an ad hoc manner, which is reminiscent of what you'd expect in a
banana republic in the
Last
month's annual convention of the Independent Power Producers of B.C. drew a
record number of delegates, and
"We're
pleased with the new legislation. It's a comforting signal to investors that
when they are pursuing projects in our sector that they will be less exposed to
arbitrary surprises from other government agencies and other levels of
government," Davis said.
"Despite
the positive signals in the energy plan and in the IPP sector, many of our
members were concerned at being surprised and held up by unnecessary delays and
costs being imposed upon them, which resulted in them being more worried their
investment in developing a project -- and so, it was a deterrent."
Falcon,
who introduced the act on Monday, was unavailable for comment.
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