BC hydro payments-in-lieu-of-taxes for regional districts
BC Hydro is a Crown corporation that is exempt from all property taxes other than those levied to schools. To compensate regional districts for the loss of this taxation revenue, BC Hydro pays grants to regional districts and municipalities when there are generating facilities located within their electoral boundaries.
The formula for determining the amount that regional district and municipalities receive in-lieu-of-taxes is established by Orders in Council on a periodic basis, under the authority of the Hydro and Power Authority Act.
Financial reporting of payments-in-lieu-of-taxes
- Are received for each electricity-generating facility and should be managed separately in the context of its specific location
- Must be shown as revenue in the appropriate regional district service budgets, and must be marked as revenue for only the service area which includes the specific facility for which the payment is received
Financial reporting of grants-in-lieu
It's recommended that the regional district board make a specific decision on which of the following options to choose, if that has not been done previously. As a financial matter, the weighted voting rule will apply for the decision.
Option 1 - Apply payment to general administration service
Regional districts can apply the entire payment-in-lieu-of-taxes to the general administration service for which the service area is the entire regional district.
This option provides for the benefit of the payment to be region-wide, since it effectively reduces the amount of the general administration requisition. The general administration service can only be used to fund administration costs that cannot be attributed to other services.
Option 2 - Apply payment to a region-wide service
Regional districts can apply the entire payment-in-lieu-of-taxes to another service for which the service area is the entire regional district.
This option also provides for the benefit of the payment to be region-wide, but allows the regional district board to direct the funding to another specific region-wide service, as an alternative to the general administration service.
Option 3 - Apply payment to group of region-wide services
Regional districts can apply the payment-in-lieu-of-taxes to a group of services for which each of the service areas is the entire regional district.
This option also provides for the benefit of the payment to be region-wide. However, the regional district board can determine a particular distribution of the payment among the other region-wide services. A possible basis of the distribution would be to pro-rate the payment among those services according to the relative requisition for each service. However, the board could determine any basis of distribution that it wishes.
Option 4 - Apply payment to a specific facility
Regional districts can apply the payment-in-lieu-of-taxes for the specific facility to the group of services for which each of the service areas includes the location of the specific facility. That is, no amount of the payment should be applied to services that do not include the specific facility.
This option is more complex, since the benefit of the payment will be variable. A specific facility will, in addition to being in the service area for general administration and other region-wide services, be in the service area of services that includes:
- All electoral areas, for example, electoral area administration
- The single electoral area, for example, grants-in-aid
- Potentially, a local or sub-regional area, for example, fire protection, recreation
For this option, the regional district board will need to determine how the payment-in-lieu-of-taxes is to be distributed among the group of services. As a default, the payment-in-lieu-of-taxes should be pro-rated according to the amount of the requisition for each of the services (from region-wide to local). The board could determine an alternative basis of distribution as it wishes.