Reconciliation Grant: The Real Numbers and the Rationale

This past week, the Grumpy Taxpayer$ published a blog post and sent out a newsletter with inaccurate information about the proposed reconciliation grant to the Songhees and Esquimalt Nations that Council is considering as part of our 2022 budget process. The Grumpys are calling the grant a “reconciliation tax” which it is not. But more troubling, they printed an inaccurate and misleading financial analysis of how the grant program would work.

When we pointed this out, instead of issuing a correction themselves and saying that they had made a mistake in their analysis of the amount of new assessed revenue that would go to the nations, they simply issued a follow up statement noting that the City had “clarified” the potential costs. They suggested that the City had only just released a report with the potential impact of the annual grant. In fact, this information has been public since December 9th as part of the budget report at the public Committee of the Whole meeting (Item F2).

Their follow up statement did not ensure that everyone who received the original newsletter knew their analysis was flawed. Their misrepresentation and inaccurate statement is continuing to cause confusion among media and their readers. This is unfortunate for a group that claims to be champions of transparency and accuracy.

This blog post shares the real numbers and the reason for the proposed reconciliation grant.

What is “new assessed revenue”?

New assessed revenue is the amount of new tax dollars that a local government receives in a year from new development. Let’s take for example a downtown property that used to be a parking lot but is now a new office building. BC Assessment – which assesses property values – would assess a new commercial building at a much higher rate than a parking lot. What this means, is that the year the new building is built, the City will receive additional tax dollars for the new building.

The next year, and every year after – and for the whole time the building is standing – the City will continue to receive property taxes from that building. Every year, new buildings are built in the city. In the year they are built, the City receives the money from the new buildings that were constructed, as well as tax dollars from the buildings that were new the year before. And so on, year after year.

The idea behind the reconciliation grant to the Songhees and Esquimalt Nations is that as the city grows, the nations on whose lands the city was built should also benefit from that growth. This Times Colonist article from November lays the proposal out clearly.

In order to understand the potential impact of the grant over a 20 year period, in November, Council asked staff to report back on the amount of new assessed revenue the City had taken in over the past 20 years. In other words how much had the city grown in that time and what were the financial benefits of that growth?

I’m not going to share the Grumpys original analysis because that will definitely confuse matters. I am going to share the spread sheet with staff’s calculations and explain what it means.

Between 2002 and 2021, the City generated $30,646,375 of new assessed revenue. This number is not the cumulative financial impact of the new revenue to the City over that 20 year period.

If we had started a reconciliation grant 20 years ago, and given 15% of new assessed revenue to the Songhees and Esquimalt Nations, in 2002, they would have received a grant of $161,799. In 2021, they would have received $4,596,956.

The last two columns of the chart show the cumulative impact of new assessed revenue and the cumulative impact of the grant. This means, between 2002 and 2021, the total new revenue to the City as a result of development in that 20 year period was $271,549,247. If 15% of that had been granted to the Nations over a 20 year period, the total grant amount they would have received over a 20 year period is $40,732,381.

How will the reconciliation grant work?

Public input from those who filled out the budget survey indicated low support for the proposed reconciliation grant. Some people said that we will be putting the City in financial dire straits if we create such a grant program. Others said that reconciliation is a provincial and federal, not a municipal issue. And others objected because it is a lot of money over time.

In response to public feedback, I am not proposing to drop the idea all together, and I hope Council won’t either. But I am sensitive to the fact that in order to succeed for the long term, big ideas like this need to be implemented carefully.

For that reason, when we get to this item in our budget discussions, I will propose to Council – in response to public feedback – that the reconciliation grant start at 10% of new assessed revenue; if a future Council wishes to raise the percentage, they can do so.

Since 2000, Council has had a general policy of putting some new assessed revenue into the Building and Infrastructure Reserves to ensure we are saving to invest in the City’s infrastructure for the future. In 2015, we amended the Financial Sustainability Policy so that the first $500,000 of new assessed revenue must go into reserves, taking an even more aggressive approach to saving for the future.

When I propose the reconciliation grant during the budget deliberations, I will clarify through a proposed amendment to Council’s Financial Sustainability Policy that the 10% reconciliation grant be given to the nations after the first $500,000 of new assessed revenue is added to the City’s Building and Infrastructure Reserve so we continue with our fiscally responsible approach to infrastructure maintenance and repair for the long term.

Each year we put far more into the City’s reserves than would be given out in any year through the reconciliation grant. In 2022 alone we are adding over $24 million into reserves. For details on the City’s reserve fund balances head to pg 17 of this staff report.

Why is a reconciliation grant important?

Over the past five years, we have developed a close relationship with the Chiefs and Councils of the Songhees and Esquimalt Nations and with their community members. We’ve witnessed up close their tenacity and resilience. We’ve seen their respect and care for their elders. We’ve seen how they hold up and honour their youth. We’re struck continuously by their generosity, how they invite us in, share their culture and stories with us, how they stand shoulder to shoulder with us, despite everything that has happened through our colonization of their homelands.

Forty million dollars over 20 years could do a lot of good, especially if leveraged to secure matching funds from other levels of government, or invested in economic development initiatives. If City Council in 2002 had started the grant, perhaps housing conditions on reserve would be a little bit better than they are today. Maybe there would be less Indigenous homelessness in Victoria. Perhaps there would be more youth who could speak Lekwungen. Perhaps the Songhees and Esquimalt Nations could have opened more businesses in downtown Victoria. Maybe more action items in the Songhees Nation 10 Year Strategic Plan would have been accomplished. And maybe our whole community would be a little bit better off because of all of this.

It is 2022. Victoria was incorporated 160 years ago this year, and has grown substantially since its incorporation. The Songhees and Esquimalt Nations have not benefited from this growth, in fact they were pushed out to make room for it. In an era of reconciliation where actions need to speak as loud as land acknowledgements, it is time to ensure that going forward, the nations benefit as the city continues to grow and change. We will all be better for it.






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