greater vancouver regional district ......commenced on the kelowna rapidbus phase 2/3 project and...

GREATER VANCOUVER REGIONAL DISTRICT INTERGOVERNMENT AND FINANCE COMMITTEE

FEDERAL GAS TAX TASK FORCE

REGULAR MEETING

Friday, May 29, 2015 9:00 a.m.

2nd Floor Boardroom, 4330 Kingsway, Burnaby, British Columbia

R E V I S E D A G E N D A1 1. ADOPTION OF THE AGENDA

1.1 May 29, 2015 Regular Meeting Agenda That the Intergovernment and Finance Committee Federal Gas Tax Task Force adopt the agenda for its regular meeting scheduled for May 29, 2015 as circulated.

2. ADOPTION OF THE MINUTES 3. DELEGATIONS

3.1 Councillor Colleen Jordan, City of Burnaby 4. INVITED PRESENTATIONS 5. REPORTS FROM COMMITTEE OR STAFF

5.1 Overview of Gas Tax Funding Verbal Update Designated Speaker: Allan Neilson, General Manager, Planning, Policy and Environment

5.2 Process and Criteria for Approving TransLink Proposals for Funding

Verbal Update Designated Speaker: Elisa Campbell, Director, Regional Planning, Planning, Policy and Environment

1 Note: Recommendation is shown under each item, where applicable. May 29, 2015

Added

Intergovernment and Finance Committee Federal Gas Tax Task Force Regular Agenda May 29, 2015

Agenda Page 2 of 2

5.3 BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) – Overview and Analysis That the GVRD Board receive for information the report dated May 24, 2015, titled “BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) – Overview and Analysis”.

5.4 Ownership and Oversight of Regional Transportation Assets Funded through the Greater Vancouver Regional Fund That the GVRD Board:

a) Receive for information the report dated May 20, 2015, titled “Ownership and Oversight of Regional Transportation Assets Funded through the Greater Vancouver Regional Fund”; and

b) Direct staff to work with UBCM on structuring the Greater Vancouver Regional Fund Agreement to include a ten-year provision on the reinvestment of proceeds that are generated from the disposal of gas tax-funded assets.

6. INFORMATION ITEMS

6.1 Intergovernment and Finance Committee - Federal Gas Tax Task Force Terms of Reference

6.2 Correspondence re Bill 2 – BC Transportation and Financing Authority Transit Assets

and Liabilities Act 7. OTHER BUSINESS 8. BUSINESS ARISING FROM DELEGATIONS 9. RESOLUTION TO CLOSE MEETING

Note: The Committee must state by resolution the basis under section 90 of the Community Charter on which the meeting is being closed. If a member wishes to add an item, the basis must be included below.

10. ADJOURNMENT/CONCLUSION

That the Intergovernment and Finance Committee Federal Gas Tax Task Force adjourn/conclude its regular meeting of May 29, 2015.

Membership: Louie, Raymond (C) – Vancouver

Corrigan, Derek (VC) – Burnaby

Brodie, Malcolm – Richmond

Clay, Mike – Port Moody

Walton, Richard – North Vancouver District

On Table

BC TRANSIT ANNUAL REPORT 2013/14 45

Message from

the ChairThe Year’s

Accomplishm

entsPerform

ance Summ

aryFinancial Report

Performance Report

AppendicesM

anagement Discussion

and AnalysisOrganization Overview

and increasing costs associated with employee future benefits. Other cost drivers are regulatory, including compliance with increasing environmental, procurement, accounting and legal standards. Regardless of these cost pressures, BC Transit’s cost efficiency benchmarks well below national averages, primarily due to the shared services business model which achieves significant economies of scale.

BC Transit will continue to leverage the strength of the shared services model and achieve greater operational, capital and financial efficiencies as it continues to experience significant demand for both public transit and shared services expertise.

Capital ExpendituresThe capital program and its related financing is a major Consolidated Statement of Financial Position driver. Under the British Columbia Transit Act, the Province provides deferred capital contributions based on the cost sharing percentages identified in the British Columbia Transit Regulation and the local government’s share is funded through debt obtained by BC Transit. The Minister of Finance, as BC Transit’s fiscal agent, arranges financing at BC Transit’s request. Debt service costs are recovered from local government partners through annual lease fees.

Significant expenditures in 2013/14 included:

($)

Facilities Projects 2,930

Vehicle Projects 39,386

Rapid Transit Projects 10,979

Other (farebox, equipment, IT) 3,590

Vancouver Assets 22,528

Total Capital Expenditures 79,413

Rapid Transit Projects

14%

Other (farebox,

equipment, IT)4%

Facilities Projects

4%

Vehicle Projects

50%

VancouverAssets

28%

2013/14Capital Expenditures

The 2013/14 capital program focused primarily on the replacement of rolling stock, with the acquisition of 108 buses (25 heavy duty, 15 medium duty, and 68 light duty); however, implementation work was also conducted on other major projects related to rapid transit and technology. For instance, major construction commenced on the Kelowna RapidBus Phase 2/3 project and will continue into 2014/15. Work continues on BC Transit’s major technology project – the Online Communication Upgrade project, which will see the public website as well as the company’s extranet and intranet launched by 2014/15. Implementation commenced on core scheduling software upgrades, and substantial planning was completed on an enterprise resource program replacement.

The 2014/15 Capital Plan aligns with the 2014/15 – 2016/17 Service Plan. The 2014/15 Capital Plan includes projects that are directly managed by BC Transit (“BC Transit Managed Capital Plan”) and expenditures related to Vancouver Assets that will be managed by TransLink but capitalized by BC Transit, at the request of the Province.

The three year capital plan as presented in the 2014/15 Service Plan is summarized below:

(figures in thousands) 2013/14 2014/15 2015/16 Total

($) ($) ($) ($)Province – Capital Grants 60,485 41,526 24,707 126,718

Municipalities – Fiscal Agency Loans

36,055 46,300 37,202 119,557

Other 15,827 882 153 16,862

Subtotal BCT Managed Capital Plan

112,367 88,708 62,062 263,137

Vancouver Assets 23,916 48,211 31,476 103,603Total Capital Plan 136,283 136,919 93,538 366,740

The BC Transit Managed Capital Plan includes forecast expenditures of $112.4 million in 2014/15. The Managed Capital Plan is primarily focused on the replacement of core assets required to maintain the existing transit system. Over the next five years, 37 per cent of the fleet will be at the end of useful life and require replacement. Technical infrastructure investment is also necessary, especially with regards to core financial systems, data collection methodologies, and fleet management capabilities. Replacement is identified as the primary driver for 64 per cent of proposed spending over the next five years. Expansion will be limited, with projects such as Kelowna RapidBus Phase 2/3 and a modest expansion bus program driving the majority of expenditures.

Federal Gas Tax Task Force - On Table Item 3.1

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BC TRANSIT ANNUAL REPORT 2013/1476

BRITISH COLUMBIA TRANSITNotes to Consolidated Financial Statements(in thousands of dollars)

Year ended March 31, 2014

20

9. Tangible capital assets under lease (continued):

Balance, Balance,March 31, March 31,

Net book value 2013 2014

SkyTrain $ 611,868 $ 604,946West Coast Express 54,050 49,755Capital projects in progress 6,758 25,493Total $ 672,676 $ 680,194


Cost 2012 Additions Disposals 2013

SkyTrain $ 1,204,098 $ - $ (50) $ 1,204,048West Coast Express 128,848 - - 128,848Capital projects in progress - 6,758 - 6,758Total $ 1,332,946 $ 6,758 $ (50) $ 1,339,654

Balance, Balance,March 31, Amortization March 31,

Accumulated amortization 2012 Disposals expense 2013

SkyTrain $ 581,708 $ - $ 10,472 $ 592,180West Coast Express 70,501 - 4,297 74,798Capital projects in progress - - - -Total $ 652,209 $ - $ 14,769 $ 666,978


Net book value 2012 2013

SkyTrain $ 622,390 $ 611,868West Coast Express 58,347 54,050Capital projects in progress - 6,758Total $ 680,737 $ 672,676

10. Victoria Regional Transit Commission:

BC Transit holds funds in trust on behalf of the Victoria Regional Transit Commission. These funds are not included in the consolidated statement of financial position. The cash held in trust and transactions during the year are as follows:

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To: Intergovernment and Finance Committee - Federal Gas Tax Task Force From: Allan Neilson, General Manager, Planning, Policy and Environment Date: May 24, 2015 Meeting Date: May 29, 2015 Subject: BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2)

– Overview and Analysis

RECOMMENDATION That the GVRD Board receive for information the report dated May 24, 2015, titled “BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) – Overview and Analysis”.

PURPOSE This report provides an overview and analysis of the BC Transportation and Financing Authority Transit Assets and Liabilities Act (Attachment), a provincial law that came into force on May 21, 2015. The report explores the implications of the Act for TransLink assets, including those that were acquired in whole or in part using regional gas tax funds. BACKGROUND At the April 15, 2015 meeting of the Metro Vancouver Performance and Procurement Committee, discussion occurred on the BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) and its implications related to the ownership of TransLink assets, in particular assets that were purchased in whole or in part by TransLink using regional gas tax funds. As a result of the discussion, the Committee passed the following resolution:

“That the Performance and Procurement Committee direct staff to report back to the appropriate standing committee with an analysis of the BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2).”

Metro Vancouver’s Federal Gas Tax Task Force is the appropriate standing committee to examine any questions or concerns related to the legislation. OVERVIEW OF THE LEGISLATION On February 11, 2015, the Minister of Transportation and Infrastructure introduced the BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) into the Legislative Assembly for First Reading. Bill 2 received Royal Assent on May 14, 2015 and came into force seven days later on May 21, 2015. Purpose of the Act The Act is characterized by the Province as a streamlining tool to consolidate provincially-owned public transit assets within Metro Vancouver – that is, within TransLink’s service area – under the BC Transportation Financing Authority (BCTFA), a provincial crown corporation that exists for the purposes of acquiring, building and holding transportation infrastructure on behalf of the Province.

5.3

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BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) – Overview and Analysis Federal Gas Tax Task Force Meeting Date: May 29, 2015

Page 2 of 5

At present, the provincially-owned transit assets in Metro Vancouver are held by two other provincial crown corporations, namely Rapid Transit Project 2000 (RTP 2000) and BC Transit. According to the Minister, the impetus for the new legislation was the recent core services review undertaken by the provincial government. In that exercise the Province identified an opportunity to dissolve RPT 2000 and consolidate its holdings under the BCTFA. RPT 2000 was incorporated specifically to study, design and construct the Millennium Line, a project that was fully completed in early 2006. In the same review the Province identified the opportunity to align BC Transit’s holdings with its service responsibilities. When the Greater Vancouver Transportation Authority (later TransLink) began operations in 1999, responsibility for the planning, development and operation of public transit services in Metro Vancouver was transferred from BC Transit to the new Authority. The BC Transportation and Financing Authority Transit Assets and Liabilities Act will transfer all of BC Transit’s assets within Metro Vancouver to the BCTFA to align BC Transit’s asset ownership with its service jurisdiction. The consolidation of assets under one corporation – BCTFA – is expected to result in some limited administration savings, both in the management of assets and in the negotiation and oversight of operating leases. Savings are not anticipated, however, to be significant. Transfer of Assets The Province currently holds significant parts of the Metro Vancouver regional transit system in RPT 2000 and BC Transit. The division of existing assets between the corporations is set out in general terms as follows:

RPT 2000 holds the Province’s Millennium Line assets, including all tracks and bridges, all 11 stations and related station equipment, 40 skytrain cars, and all property and property rights (i.e., leases, licenses, access agreements and rights-of-way) required for the line. The total book value of the RPT 2000 assets at the 2014 fiscal year-end was $805 million. Ownership of the assets has always rested with RPT 2000.

BC Transit holds the Province’s Expo Line assets, including all guideways, tracks, tunnels and bridges, an operations and maintenance centre, all 20 stations and related equipment, and all associated property and property rights. BC Transit also holds the Province’s assets on the West Coast Express, including all eight stations and related equipment, five locomotives, and all property and property rights required to operate the service. The total book value of the BC Transit assets within Metro Vancouver at the 2014 fiscal year-end was $680 million.

Under the new Act, all of these assets will be transferred to the BCTFA. Assets Not Affected The Act neither mentions nor applies to assets associated with the Evergreen Extension, the Canada Line, the Seabus service or the region’s bus network. Provincially-owned assets along the Evergreen Line are being developed through, and are held already by, the BCTFA. The Canada Line, the Seabus service and the bus network are owned by TransLink. The assets associated with these components of the regional system, along with portions of the Evergreen Extension that are also owned by TransLink, will remain under the ownership of TransLink.

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Page 3 of 5

ANALYSIS OF THE LEGISLATION The BC Transportation and Financing Authority Transit Assets and Liabilities Act, as explained, is characterized as a streamlining tool to consolidate provincially-owned public transit assets within Metro Vancouver under the BCTFA. The Act, as noted, does not apply to assets associated with the key components of the regional system that are not held by RPT 2000 or BC Transit. TransLink’s ownership of assets in these other parts of the system is, therefore, not affected by the Act. But what about the investments made to date by TransLink in the rapid transit and rail lines held by RPT 2000 and BC Transit – that is, the Millennium and Expo Lines, and the West Coast Express? TransLink Investments The Province paid 100% of the initial planning and construction for both the Expo and Millennium Lines. The Province cost-shared with the federal government in the initial development of the West Coast Express. The Province participates in funding major upgrades to these parts of the regional system on an ongoing basis; TransLink also, however, contributes to the cost of new improvements to these lines in its capacity as the operator of the entire integrated system. In past years, TransLink has made various investments to replace infrastructure components, enhance operations, or meet other system goals. Included in these improvements were the purchase of 20 skytrain cars in the early 2000s, and a contribution of $81.6 million to the cost of Millennium Line upgrades in 2008. All of TransLink’s investments in the Millennium and Expo Lines, as well as those in the West Coast Express, are structured in a way that provides TransLink with whole assets (e.g., an entire skytrain car, a discrete section of track, an entire facility) that can be owned separately from the provincial infrastructure. This approach allows TransLink to capitalize its improvements and record them in its financial statements as TransLink’s own assets from which the organization generates revenue. Recording them in this way is critical as it enables TransLink to borrow funds for capital projects in the market (TransLink is responsible for its own capital financing). TransLink’s approach to capitalizing its improvements to the provincially-owned parts of the system applies irrespective of the crown corporation that holds the provincial lines. The transfer of provincial assets from one crown corporation to another – that is, from RPT 2000 and BC Transit to the BCTFA – will not, in and of itself, affect TransLink’s ownership over its improvements to the assets. TransLink’s ownership would only change if the organization lost control over the operation and maintenance of the provincially-owned lines. Control has been assigned to TransLink through operating agreements with the Province for the Millennium Line, Expo Line and West Coast Express. TransLink would only lose control over operations and maintenance if the Province chose to not renew the operating leases upon their expiration. In such an event, however, the Province would be required to reimburse TransLink the depreciated value of all improvements made in past years by the TransLink. This requirement is identified in the capitalized improvement agreements between the Province and TransLink that were developed pursuant to the operating agreements. Implications for Regional Gas Tax Funds Past investments by TransLink in provincially-held components of the transit system have been made, in part, using TransLink’s own revenues. TransLink has also, however, made use of monies provided by Metro Vancouver under the former 2005-2014 federal gas tax agreement. All of the regional gas

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tax funds spent by TransLink towards the improvement of provincial assets are reflected in TransLink’s financial statements in the same fashion as TransLink’s own revenues, namely as capitalized improvements. The ownership status of TransLink’s capitalized improvements will remain unchanged, regardless of how they were funded, as a result of the BC Transportation and Financing Authority Transit Assets and Liabilities Act. It should be noted that the current operating leases with TransLink for the Expo Line and West Coast Express expire in January, 2018; the lease for the Millennium Line expires in 2017. Negotiations are underway between the Province and TransLink to renew the leases; the negotiations are expected to conclude without significant changes in terms. There may be an effort by the Province to consolidate the different leases in some way in the hope of realizing savings in the management of the leases (the prospect for administrative savings was identified by the Province as part of the rationale behind the new legislation). In the event that the leases were not renewed, the Province would be required, as set out in the separate capitalized improvement agreements, to pay TransLink the depreciated value of TransLink’s improvements. The reimbursements to TransLink would include in some cases gas tax funds that were used originally to help pay for the improvements. Under the (anticipated) terms of the Greater Vancouver Regional Fund Agreement between TransLink and the UBCM, gas tax funds that are reimbursed to TransLink within five years of being used would need to be reinvested by TransLink into regional transportation projects that have been approved by the GVRD Board. The same constraint would not apply to reimbursed gas tax funds that were invested by TransLink prior to the five year period. It needs to be remembered that the reimbursement of depreciated capitalized improvements, with or without a gas tax funding component, would only occur in the event that the Province chose not to renew the operating leases for the Millennium Line, Expo Line and West Coast Express. While not impossible, it is considered unlikely that the Province would take this course of action. Any decision to not renew the lease agreements would change the fundamental purpose of TransLink as the special-purpose agency created to operate and maintain the regional transit system. ALTERNATIVES 1. That the GVRD Board receive for information the report dated May 24, 2015, titled “BC

Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2) – Overview and Analysis”.

2. That the Board provide alternative direction. FINANCIAL IMPLICATIONS There are no costs associated directly with the report; it is provided to the Task Force as an information item. Based on the analysis in the report, there are no expected financial implications associated with the Province’s new legislation for the regional gas tax funds that have been used by TransLink, along with its own revenues, to improve the provincially-owned lines in the regional transit system. Implications for depreciated gas tax funds, reimbursed to TransLink, would arise only in the event that the Province chose to not renew its operating leases with TransLink. This scenario is considered unlikely.

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Page 5 of 5

SUMMARY / CONCLUSION At its April 15, 2015 meeting, the Performance and Procurement Committee directed staff to report back to the appropriate standing committee with an analysis of the BC Transportation and Financing Authority Transit Assets and Liabilities Act (Bill 2). Metro Vancouver’s Federal Gas Tax Task Force is the appropriate standing committee to examine any questions or concerns related to the legislation. The Act sets out to consolidate provincially-owned public transit assets within Metro Vancouver under the BC Transportation Financing Authority. At present, the provincially-owned transit assets are held by two other provincial crown corporations, namely Rapid Transit Project 2000 (RTP 2000) and BC Transit. RPT 2000 holds the Province’s Millennium Line assets, with a total book value of $805 million. BC Transit holds the Province’s Expo Line assets, as well as the Province’s assets on the West Coast Express. The total book value for these BC Transit assets is $680 million. The Act neither mentions nor applies to assets associated with the Evergreen Extension, the Canada Line, the Seabus service or the region’s bus network. In its capacity as operator of the regional transit system, TransLink has contributed in past years to the cost of improvements to the Millennium Line, Expo Line and West Coast Express. TransLink’s approach to capitalizing its improvements, however, effectively ensures that the improvements will remain on TransLink’s books as TransLink assets after the implementation of the Province’s new legislation. The transfer under the new legislation of provincial assets from one crown corporation to another – that is, from RPT 2000 and BC Transit to the BCTFA – does not affect TransLink’s ownership over its improvements, as long as TransLink retains control over the operation and maintenance of the provincially-owned lines. Control has been assigned to TransLink through operating agreements with the Province. In the event that Province chose to not renew the operating leases upon their expiration, the Province would be required to reimburse TransLink the depreciated value of the TransLink-funded improvements. The investments by TransLink in provincially-held components of the transit system in past years have been made, in part, using monies provided by Metro Vancouver under the former 2005-2014 federal gas tax agreement. All of the regional gas tax funds spent by TransLink towards the improvement of provincial assets are reflected in TransLink’s financial statements in the same fashion as TransLink’s own revenues – that is, as capitalized improvements. The status of TransLink’s capitalized improvements as assets of TransLink will remain unchanged, regardless of the source of funding, as a result of the BC Transportation and Financing Authority Transit Assets and Liabilities Act. Attachments: BC Transportation and Financing Authority Transit Assets and Liabilities Act 11409777

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Home > Documents and Proceedings > 4th Session, 40th Parliament > Bills > Bill 2 – 2015: BC Transportation Financing Authority Transit Assets and Liabilities Act

2015 Legislative Session: 4th Session, 40th ParliamentTHIRD READING

The following electronic version is for informational purposes only.The printed version remains the official version.

Certified correct as passed Third Reading on the 14th day of April, 2015Craig James, Clerk of the House

HONOURABLE TODD STONEMINISTER OF TRANSPORTATION AND INFRASTRUCTURE

BILL 2 – 2015BC TRANSPORTATION FINANCING AUTHORITY TRANSIT

ASSETS AND LIABILITIES ACT

Contents1 Definitions

2 Transfer from RTP

3 Transfer from BC Transit

4 Vesting and assumption

5 Special lease continued

6 Effect of transfer

7 References in records

8 Dealing with transferred assets and liabilities

9 Delivery of BC Transit records

10 Power to make regulations

11 Later transfers

12-19 Consequential Amendments

20 Commencement

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Definitions

1 In this Act:"asset" includes a right and property;

"BC Transit" means British Columbia Transit continued under section 2 (1) of the British Columbia Transit Act;

ATTACHMENT

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"liability" includes an obligation;

"record" includes an authorization or other instrument issued by a regulatory body;

"regional transportation system" has the same meaning as in the South Coast British Columbia Transportation Authority Act;

"RTP" means Rapid Transit Project 2000 Ltd., a company under the Business Corporations Act;

"TFA" means the BC Transportation Financing Authority continued under section 25 (1) of the Transportation Act;

"transportation service region" has the same meaning as in the South Coast British Columbia Transportation Authority Act.

Transfer from RTP

2 All the assets and liabilities of RTP are transferred to the TFA.Transfer from BC Transit

3 (1) The following assets and liabilities of BC Transit are transferred to the TFA:

(a) assets that are located in the transportation service region;

(b) assets that form part of or are held for the purposes of the regional transportation system;

(c) assets that are used by the South Coast British Columbia Transportation Authority or its subsidiaries as defined in the South Coast British Columbia Transportation Authority Act;

(d) liabilities that are related to the assets that are transferred under this subsection to the TFA.

(2) The assets and liabilities transferred under subsection (1) do not include any asset or liability excluded

(a) by an order made under subsection (4) of this section, or

(b) by a regulation made under section 10 (4).

(3) The assets and liabilities transferred under subsection (1) include any asset or liability included by a regulation made under section 10 (4).

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(4) The minister may, by order made after this Act receives Royal Assent and before this Act comes into force, exclude from the transfer under subsection (1) any asset or liability of BC Transit.

Vesting and assumption

4 (1) An asset that is transferred under this Act to the TFA is also vested in the TFA, and a liability that is transferred under this Act to the TFA is also assumed by the TFA.

(2) Any reference in this Act or the regulations to a transfer of an asset is also a reference to the vesting of the asset, and any reference in this Act or the regulations to a transfer of a liability is also a reference to the assumption of the liability.

Special lease continued

5 The lease granted under Order in Council 399/99, as amended by Orders in Council 1358/99 and 107/2003, to the Greater Vancouver Transportation Authority, now known as the South Coast British Columbia Transportation Authority,

(a) is continued, despite the repeal of section 38 (8) of the South Coast British Columbia Transportation Authority Act, as a lease between the TFA and the South Coast British Columbia Transportation Authority, and

(b) may be amended, renewed or terminated without the approval of the Lieutenant Governor in Council.

Effect of transfer

6 (1) Despite any other enactment, the transfer under this Act of assets and liabilities takes effect

(a) without the execution or issue of any record,

(b) without any registration or filing of this Act or any other record in or with any registry, office or court,

(c) despite any prohibition on all or any part of the transfer,

(d) whether or not a duplicate certificate of indefeasible title has been issued by the registrar under the Land Title Act, and

(e) despite any condition, including the absence of any consent or approval, that is or may be required for all or any part of the transfer.

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(2) Despite any provision to the contrary in a record, the transfer under this Act to the TFA of an asset or liability does not constitute a breach or contravention of, or an event of default under, the record and, without limiting this, does not entitle any person who has an interest in the asset or liability to claim any damages, compensation, penalty, indemnity or other remedy.

References in records

7 (1) A reference to RTP in any record that creates, evidences or otherwise relates to an asset or liability that is transferred under this Act to the TFA is deemed to be a reference to the TFA.

(2) A reference to BC Transit in any record that creates, evidences or otherwise relates to an asset or liability that is transferred under this Act to the TFA is,

(a) if the whole of the asset or liability is transferred, deemed to be a reference to the TFA, and

(b) if part of the asset or liability is transferred, deemed to be a reference to the TFA in respect of the part transferred.

Dealing with transferred assets and liabilities

8 (1) In any record that deals with an asset or liability transferred under this Act, it is sufficient for all purposes to cite this Act as having effected the transfer to the TFA.

(2) If an asset or liability transferred under this Act to the TFA is registered or recorded in the name of RTP or BC Transit, the TFA may, in its own name,

(a) effect a transfer, charge, encumbrance or dealing with the asset or liability, and

(b) execute any record required to give effect to the transfer, charge, encumbrance or dealing.

(3) An official

(a) who has authority over a registry or other office, including, without limitation, the personal property registry and a land title office, in which title to or an interest in an asset or liability is registered or recorded, and

(b) who receives a record, referred to in subsection (2), executed by the TFA

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must give the record the same effect as if it had been executed by RTP or BC Transit, as the case may be.

Delivery of BC Transit records

9 (1) This section applies to records in the custody or under the control of BC Transit that relate to

(a) the assets and liabilities transferred under this Act to the TFA, or

(b) the operation and maintenance of a rail transportation system, as defined in the South Coast British Columbia Transportation Authority Act, in the transportation service region.

(2) BC Transit must deliver its records or a copy of them to the TFA in accordance with the terms established by the TFA.

Power to make regulations

10 (1) The Lieutenant Governor in Council may make regulations referred to in section 41 of the Interpretation Act.

(2) Without limiting subsection (1), the Lieutenant Governor in Council may make regulations as follows:

(a) remedying any difficulty encountered in the transfer under this Act of assets or liabilities;

(b) respecting any other matter or thing that the Lieutenant Governor in Council considers necessary or advisable to carry out the intent of this Act.

(3) For 3 years after the date this Act comes into force, a regulation made under subsection (2) may be made retroactive to a date not earlier than the date this Act comes into force and, if made retroactive, is deemed to have come into force on the date specified in the regulation.

(4) Without limiting subsection (1), the Lieutenant Governor in Council may, for 3 years after the date this Act comes into force, make regulations excluding from or including in the transfer under section 3 (1) any asset or liability of BC Transit.

(5) A regulation made under subsection (4) is retroactive to and is deemed to have come into force on the date this Act comes into force.

(6) Despite the retroactive effect referred to in subsection (5), an asset or liability that is excluded or included by a regulation made under

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subsection (4) is subject to any rights acquired by a person after the date this Act comes into force.

(7) In making a regulation under this section, the Lieutenant Governor in Council may make different regulations for different assets and liabilities or for different classes of assets and liabilities.

Later transfers

11 (1) After the date this Act comes into force, if the minister considers it necessary or advisable for transportation purposes, the minister may, by order, transfer, with or without conditions,

(a) from the TFA to BC Transit any asset or liability that was transferred under this Act from BC Transit to the TFA, or

(b) from BC Transit to the TFA any asset or liability.

(2) The provisions of this Act that apply to an asset or liability that is transferred under section 3 apply, with the necessary modifications, to a transfer under subsection (1) of this section.

(3) The authority to make an order under subsection (1) ends 3 years after the date this Act comes into force.

Consequential Amendments

British Columbia Transit Act

12 Section 1 (1) of the British Columbia Transit Act, R.S.B.C. 1996, c. 38, is amended by repealing the definitions of "ancillary Rapid Transit Project works" and "Rapid Transit Project".

13 Section 8 (9) is repealed and the following substituted:

(9) Despite any provision of this Act or any other enactment, the authority may own, acquire and dispose of property that is located in, or is being employed in, the transportation service region as defined in the South Coast British Columbia Transportation Authority Act.

14 Sections 8.1 and 9 are repealed and the following substituted:

Expropriation of property

9 Subject to the Expropriation Act, the authority may expropriate any land that the authority considers necessary for its purposes.

Financial Information Act

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15 Schedule 2 of the Financial Information Act, R.S.B.C. 1996, c. 140, is amended by striking out "Rapid Transit Project 2000 Ltd."

South Coast British Columbia Transportation Authority Act

16 Section 38 of the South Coast British Columbia Transportation Authority Act, S.B.C. 1998, c. 30, is amended

(a) by repealing subsection (8), and

(b) in subsection (10) by adding "and" at the end of paragraph (b) and by repealing paragraphs (c) and (d).

Transportation Act

17 Section 1 of the Transportation Act, S.B.C. 2004, c. 44, is amended

(a) in the definition of "provincial public undertaking" by adding the following paragraph:

(a.2) transit systems, , and

(b) by adding the following definition:

"transit system" means a system for the transportation of passengers and goods and any works or undertakings ancillary to the system, including, without limiting the ancillary works or undertakings,

(a) links to private or public transportation services, including stops, stands, lanes, loops and parking for buses and taxis,

(b) parking facilities,

(c) areas in stations for the provision of services and amenities to passengers,

(d) employee facilities,

(e) walkways, overpasses and other means of ingress to and egress from stations and vehicles,

(f) undertakings for the relocation, enhancement and upgrading of utility services and related poles, wires, pipes and apparatus,

(g) adjacent roadway enhancements,

(h) power distribution systems, and

(i) operating facilities and facilities for storage, maintenance and repair of vehicles, parts, signage and related items; .

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18 Section 27 is amended

(a) in subsection (3) by adding the following paragraph:

(g.1) exercise within a municipality in or through which a transit system is acquired, constructed, held, improved or operated, or caused to be constructed, improved or operated, all the powers that a municipality authorized to lay out, construct and maintain highways may exercise in carrying out that authorization; , and

(b) by adding the following subsections:

(3.1) The authority has, for the purposes of acquiring, constructing, holding, improving or operating a transit system on a highway in a municipality, or causing the transit system to be constructed, improved or operated,

(a) all the rights, powers and advantages conferred by any enactment on the municipality with respect to the highway, and

(b) the right to enjoy and exercise any right of way, easement or licence owned, enjoyed or exercised by the municipality in connection with or for the purposes of its operation of the highway,

and the authority may exercise those rights, powers and advantages and enjoy and exercise that right of way, easement or licence in the same manner and to the same extent as the municipality might have done if the highway had not become part of a transit system.

(3.2) If a municipality or proposed operator fails or refuses to enter into an agreement that the authority considers necessary for the purposes of a transit system, the Lieutenant Governor in Council may, on the recommendation of the authority, establish the contents of the agreement and order that the agreement be binding on the parties named in it.

(3.3) Despite any other Act, on the making of an order under subsection (3.2), the persons named in the agreement as parties are bound by that agreement.

19 The following section is added:

Power to exempt

39.1 (1) For the purpose of the construction, acquisition or operation of a transit system, the Lieutenant Governor in Council may, by order,

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establish tax exemptions under any or all of the Acts referred to in subsection (5) in respect of land or improvements, or both, or a portion of land or improvements, or both.

(2) A tax exemption under subsection (1) may be made with respect to land or improvements, or both, or a portion of land or improvements, or both, that is

(a) described in the order, or

(b) within a category described in the order.

(3) Subject to subsection (4), a tax exemption under subsection (1) applies to the extent, for the period and subject to the terms and conditions specified by the Lieutenant Governor in Council.

(4) A tax exemption under subsection (1) applies only to the extent that the land or improvements, or both, or the portion of land or improvements, or both, is held, used or occupied for the purpose set out in that subsection.

(5) A tax exemption under subsection (1) may be provided under any or all of the following Acts:

(a) the Assessment Authority Act;

(b) the Community Charter;

(c) the Hospital District Act;

(d) the Local Government Act;

(e) the Municipal Finance Authority Act;

(f) the Police Act;

(g) the School Act;

(h) the South Coast British Columbia Transportation Authority Act;

(i) the Vancouver Charter.

Commencement

20 This Act comes into force on the date that is 7 days after the date of Royal Assent.

Copyright (c) Queen’s Printer, Victoria, British Columbia, Canada

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To: Intergovernment and Finance Committee – Federal Gas Tax Task Force From: Allan Neilson, General Manager

Elisa Campbell, Director of Regional Planning Planning, Policy and Environment Department Date: May 25, 2015 Meeting Date: May 29, 2015 Subject: Ownership and Oversight of Regional Transportation Assets Funded through the

Greater Vancouver Regional Fund

RECOMMENDATION That the GVRD Board:



PURPOSE This report provides information on the feasibility and advisability of Metro Vancouver assuming ownership of assets purchased using regional gas tax funds, through the Greater Vancouver Regional Fund. The report also explores other mechanisms for the GVRD Board to consider in addressing its concerns related to the treatment of gas tax-funded assets. BACKGROUND At its meeting of June 27, 2014, the GVRD Board made the following resolution:

“WHEREAS almost one billion dollars have flowed through Metro Vancouver to TransLink over the past 10 years, via the transfer of Gas Tax Funds; and WHEREAS the capital assets purchased or constructed over that time are now the property of an entity over which Metro Vancouver has no decision making authority; and WHEREAS TransLink could, after a certain time, sell or transfer those assets, (purchased with money designated for municipal infrastructure), without the consent of Metro Vancouver; and WHEREAS the ownership of these transit assets, could be considered to belong to Metro Vancouver; THEREFORE BE IT RESOLVED, that the Board direct staff to report to the Board, through the Transportation Committee, on the advisability and feasibility of maintaining ownership of all assets purchased via the gas tax funds, or its alternative, as a part of the next agreement on the use of the funding.”

The Transportation Committee mentioned in the resolution did not meet in the second half of 2014 to address the GVRD Board resolution, and was subsequently dissolved prior to the end of the year.

5.4

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Ownership and Oversight of Regional Transportation Assets Funded by the Greater Vancouver Regional Fund Federal Gas Tax Task Force Meeting Date: May 29, 2015

Page 2 of 7

In January 2015, the Chair of the GVRD Board established the Federal Gas Tax Task Force as a standing committee with responsibility over the administration of the Greater Vancouver Regional Fund (GVRF). This report is presented to the GVRD Board through the Federal Gas Tax Task Force. FEDERAL GAS TAX FUND Since 2005 the Government of Canada has transferred funds derived from federal gas taxes to Canadian municipalities as a source of predictable, long-term funding for local infrastructure. The original ten-year agreement on the transfer of federal gas tax funds to British Columbia, the Agreement on the Transfer of Federal Gas Tax Revenues Under the New Deal for Cities and Communities, 2005-2015 (First Agreement), was signed in that year by Canada, British Columbia and the Union of British Columbia Municipalities (UBCM) on behalf of local government. At the time, the GVRD Board requested that 100% of the applicable allocation be made available for regional transportation investments. This allocation of federal gas tax funds to transportation also occurred in other large metropolitan areas across the country. Indeed, over the term of the First Agreement, over 90% of gas tax funding for Canada’s six largest cities was directed toward regional transportation investments, including public transit. A renewed ten-year gas tax agreement, the Administrative Agreement on Federal Gas Tax Fund in British Columbia (2014 Agreement), replaced the First Agreement in April, 2014. The new 2014 Agreement extends the Gas Tax Fund to 2023, and provides the framework for the delivery of federal funding to BC municipalities to help build and revitalize public infrastructure. There are three programs identified in the 2014 Agreement: the Community Works Fund, the Strategic Priorities Fund, and the Greater Vancouver Regional Fund. Greater Vancouver Regional Fund The Greater Vancouver Regional Fund (GVRF) pools 95% of Metro Vancouver member municipalities’ per capita allocation of gas tax funds to support eligible regional transportation projects proposed and delivered by TransLink. The GVRF is anticipated to deliver $652 million over its first five years to these projects, and a slightly larger amount over the subsequent five year period (the fund is indexed at 2% per annum). The 2014 Agreement identifies how the funds are to be delivered, and provides high-level criteria to identify eligible projects and expenditures. The implementation of the agreement is monitored in BC by a Partnership Committee co-chaired by at least three members representing the Governments of Canada and British Columbia, and the Union of BC Municipalities. The Partnership Committee is responsible, among other tasks, for resolving disputes, developing a methodology for measuring incremental spending, and developing a methodology for reporting on performance. A significant feature of the 2014 Agreement that differentiates it from the First Agreement concerns the role of the GVRD Board in approving eligible projects for GVRF funding. Under the new agreement it is the GVRD Board, rather than the previously structured UBCM Management Committee, that must approve all eligible projects proposed by TransLink for funding. Under the new agreement, UBCM may not transfer monies to TransLink for eligible projects until it has received an approved list from the GVRD Board of projects that are eligible for funding through the GVRF.

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Page 3 of 7 A detailed process and specific criteria for evaluating projects proposed for funding, and for approving expenditures from the GVRF, will be presented separately to the Federal Gas Tax Task Force for consideration. METRO VANCOUVER’S CONCERNS Since the inception of the Gas Tax Fund, the vast majority of funds earmarked for the Metro Vancouver region have been dedicated to regional transportation projects. In 2005, when the GVRD Board agreed to direct the bulk of the region’s funds to regional transportation projects under TransLink, the Board enjoyed direct authority and control over TransLink’s strategic and financial programs. Upon the enactment of the South Coast British Columbia Transportation Authority Act in 2008, however, the Board lost this control and, as a result, effectively lost the authority to directly approve gas tax-funded projects. The 2014 Agreement, as noted, restores the earlier balance of power to some degree by giving explicit authority to approve funding for eligible regional transportation projects that are proposed by TransLink. The new agreement, however, does not restore to Metro Vancouver the decision-making authority it formerly had over TransLink itself. It is in this context that the GVRD Board resolution of June 27, 2014 was made. Of specific importance in the resolution are the following two concerns:

- The assets acquired using gas tax funds are owned by an entity over which Metro Vancouver has no decision-making authority; and

- The assets acquired using regional gas tax funds could potentially be sold or transferred without the consent of Metro Vancouver.

MECHANISMS FOR ADDRESSING METRO VANCOUVER’S CONCERNS Ownership of Assets As identified in the June 27, 2014 Board resolution, one option to consider in addressing the Board’s concerns is for Metro Vancouver to take ownership of the transportation assets purchased using regional gas tax funding. The idea of assuming ownership is not anticipated in the new 2014 Agreement; nor, however, is the idea dismissed. Indeed, it would appear that ownership as a condition of funding could be negotiated in the development of the GVRF Agreement that must be created between UBCM and TransLink in order to implement the 2014 Agreement in Metro Vancouver. UBCM staff are working closely with staff from Metro Vancouver in the development of this agreement. Ownership by Metro Vancouver of regional gas tax-funded assets may be feasible under the terms of GVRF Agreement; but is it advisable? In staff’s view, ownership is not advisable either for Metro Vancouver or the regional transit system. Consider the following points:

First, gas tax funds are generally used in combination with other sources of funding to offset the cost of a package of improvements. Other funding sources include TransLink’s own operating revenues, provincial government contributions and funds borrowed by TransLink. To enable Metro Vancouver to assume ownership of specific assets, the existing method of combining funds from different sources would need to be changed. Public Sector Accounting Principles do not allow ownership of a tangible capital asset to be divided among different parties; ownership must instead rest with one body. Regional gas tax funds would need to be directed, therefore, toward the purchase of separate, discrete assets, rather than against a broader capital program.

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Page 4 of 7

To be sure, this new approach to the application of gas tax funds could be taken. The change, however, could negatively impact TransLink’s ability to leverage contributions from other sources. The change could also limit TransLink’s flexibility in its planning of improvements to the regional transportation system.

Second, TransLink’s ownership of assets, including those acquired using regional gas tax funds, is what enables the organization to borrow for its infrastructure needs in the open market. TransLink’s strong borrowing power gives the agency access to the funds it requires, over and above regional gas tax funding, to fulfill its mandate as the operator of Metro Vancouver’s extensive regional transit system. A funding condition that resulted in ownership resting with Metro Vancouver would dilute TransLink’s borrowing power.

Third, as owner of gas tax-funded assets, Metro Vancouver would take on added responsibilities, including the responsibility to maintain the assets. Metro Vancouver would almost certainly fulfill its new responsibility using operating contracts with TransLink – it is TransLink, not Metro Vancouver, after all that has the expertise and experience necessary for the task. As owner, however, Metro Vancouver would also be forced to investigate other infrastructure needs ranging from insurance and risk management, to asset disposal and replacement. Even with strong contracts in place to make use of others’ expertise, Metro Vancouver would face new challenges – anticipated and unforeseen – in its role as owner. Metro Vancouver would also be drawn into a new line of non-core business.

Reliance on Mayors’ Council Amendments to South Coast British Columbia Transportation Authority Act in 2014 resulted in changes to the role and responsibilities of the Mayors’ Council on Regional Transportation. These changes served to strengthen the role of the region’s mayors in the decision-making process that deals with TransLink’s assets and investments. As a result of the changes, the Mayors’ Council must approve TransLink’s ten-year investment plan. This plan, which is updated every three years, sets out all of the assets and projects that are identified for acquisition and disposal. The Mayors’ Council differs in composition and size from the Metro Vancouver Board. The two bodies, however, may be considered to share similar perspectives on the value of the regional transit system, and the important role of local government, through the GVRF, in helping to fund improvements to the system. Metro Vancouver may choose to rely on the Mayors’ Council to represent local government’s concerns in the use of regional gas tax funds. GVRF Agreement In the First Agreement, recipients of gas tax funds were expected to retain ownership of infrastructure resulting from gas tax funds for at least ten years beyond the projects’ completion dates. If at any time during the ten-year period the recipient disposed of the asset, in whole or in part, to a party other than the federal government, provincial government or a municipality, the recipient was required to repay the gas tax contribution to the UBCM in an amount proportionate to the timeframe of the disposal of the asset. In the 2014 Agreement, the ten-year protection has been replaced with a new five-year provision. This five-year provision attaches conditions to the use of revenues generated from the sale, lease, encumbrance, or other form of disposal of gas tax-funded projects that are disposed within five years of their completion dates. All such revenues must be

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Page 5 of 7 invested by the recipient into approved eligible projects. In the Metro Vancouver context, approved eligible projects are regional transportation projects that have been endorsed by the GVRD Board for GVRF funding. The five-year provision in the 2014 Agreement is intended to provide some assurance to the local government (Metro Vancouver) that the gas tax funds it provides to the recipient (TransLink) will be used to support the local-government approved project, and will not be redirected from the project before a reasonable amount of time has elapsed. The provision is also intended, however, to provide the recipient with sufficient flexibility to fulfill its mandate. The need for some degree of flexibility in the treatment of assets may be particularly important in the case of TransLink, given the agency’s mandate to operate and maintain the entire integrated regional transit system. In its efforts to deliver a system that achieves a variety of financial, transportation, environmental and social goals, TransLink, it may be argued, needs adequate freedom to assign and re-assign resources across its broad pool of assets. Metro Vancouver may be able to accept the principle that some degree of flexibility for TransLink in the treatment of assets is necessary and, indeed, important to the effectiveness of the regional transit system. The question to address, however, concerns the amount of flexibility required. Put simply, how much flexibility in the treatment of assets does TransLink need in order to do its job? The former ten-year provision under the First Agreement, with its requirement to refund monies in the event of disposal of an asset, may not provide enough flexibility. Conversely, the five-year provision in the 2014 Agreement, with its requirement to reinvest proceeds from asset sales into other approved eligible expenses, may provide too much. A third option would marry the ten-year period from the First Agreement with the reinvestment requirement from the 2014 Agreement. Under this option, TransLink would be entitled to dispose of gas tax-funded assets, but would be required to reinvest the funds into approved eligible projects if the assets were disposed of within ten years of their completion. This third option could be implemented through the GVRF Agreement between UBCM and TransLink. This Agreement is being drafted now to implement the 2014 Agreement within Metro Vancouver. As noted, Metro Vancouver has a role in setting out the terms of the document. ALTERNATIVES 1. That the GVRD Board



2. That the Intergovernment and Finance Committee Federal Gas Tax Task Force provide alternative direction to staff.

FINANCIAL IMPLICATIONS Financial implications associated with Alternative 1 would be limited to staff time, all of which would be funded out of existing GVRD service budgets. If the Board elected to assume ownership of regional transportation assets, significant financial costs could be expected. Costs would be incurred in the areas of asset management and contract administration, but would also arise in response to other

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Page 6 of 7

challenges – anticipated and unforeseen – that Metro Vancouver would almost certainly face in its capacity as owner, particularly given the organization’s lack of expertise and experience in the transit field. SUMMARY / CONCLUSION Since 2005 the Government of Canada has transferred funds derived from federal gas taxes to Canadian municipalities as a source of predictable, long-term funding for local infrastructure. The original ten-year Agreement (First Agreement) on the transfer of federal gas tax funds to British Columbia was signed in that year. A renewed ten-year agreement, the Administrative Agreement on the Federal Gas Tax Fund in British Columbia (2014 Agreement), replaced the First Agreement in April, 2014. There are three programs identified in the 2014 Agreement: the Community Works Fund, the Strategic Priorities Fund, and the Greater Vancouver Regional Fund. The Greater Vancouver Regional Fund pools 95% of Metro Vancouver member municipalities’ per capita allocation of gas tax funds to support eligible regional transportation projects proposed and delivered by TransLink. Under the new agreement it is the GVRD Board that must approve all eligible projects proposed by TransLink for funding. The new agreement, however, does not restore to Metro Vancouver the decision-making authority it once had over TransLink itself. It is in this context that the GVRD Board resolution of June 27, 2014 was made. Of specific importance in the resolution are the following two concerns:

- The assets acquired using gas tax funds are owned by an entity over which Metro Vancouver has no decision-making authority; and

- The assets acquired using regional gas tax funds could potentially be sold or transferred without the consent of Metro Vancouver.

One option to consider in addressing the Board’s concerns is for Metro Vancouver to take ownership of the transportation assets purchased using regional gas tax funding. Ownership may be feasible under the terms of GVRF Agreement; but is it advisable? In staff’s view, ownership is not advisable either for Metro Vancouver or the regional transit system. A second option is for Metro Vancouver to rely on the Mayors’ Council to represent local government’s concerns in the use of regional gas tax funds. Amendments to South Coast British Columbia Transportation Authority Act in 2014 resulted in changes to the role and responsibilities of the Mayors’ Council on Regional Transportation. As a result of the changes, the Mayors’ Council must approve TransLink’s ten-year investment plan. This plan, which is updated every three years, sets out all of the assets and projects that are identified for acquisition and disposal. A third option is for Metro Vancouver to work with the UBCM to include, in the GVRF Agreement currently being drafted, a specific provision on the use of funds from disposed assets. Under this option, TransLink would be entitled to dispose of gas tax-funded assets, but would be required to reinvest the funds into approved eligible projects if the assets were disposed of within ten years of their completion. This provision is stronger than the one found in the main 2014 Agreement, and for that reason would provide greater assurance to Metro Vancouver regarding the use of regional gas tax funds. The provision would not, however, unnecessarily limit the flexibility needed by TransLink to operate the regional transit system. This third option, presented as Alternative 1 in the report, is recommended to the GVRD Board.

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Page 7 of 7 Attachments Administrative Agreement on the Federal Gas Tax Fund in British Columbia 11411605

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ADMINISTRATIVE AGREEMENT

ON THE FEDERAL GAS TAX FUND IN BRITISH COLUMBIA

This Agreement effective as of the 151 day of April, 2014,

BETWEEN: HER MAJESTY THE QUEEN IN RIGHT OF CANADA, as represented by the President of the Queen's Privy Council for Canada, Minister of Infrastructure, Communities and Intergovernmental Affairs ("Canada")

AND: HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF BRITISH COLUMBIA, as represented by the Minister of Community, Sport and Cultural Development ("British Columbia"),

AND: THE UNION OF BRITISH COLUMBIA MUNICIPALITIES, as continued by section 2 of the Union of British Columbia Municipalities Act, RSBC 2006, c.1, represented by the President ("UBCM")

1. PURPOSE

This Administrative Agreement (Agreement) sets out the roles and responsibilities of the Parties for the administration of the Federal Gas Tax Fund (GTF).

2. CONTEXT

With this Agreement, the Parties wish to help communities build and revitalize their public infrastructure that supports national objectives of productivity and economic growth, a clean environment and strong cities and communities, building on:

• The success of the First Agreement;

• Section 161 of the Keeping Canada's Economy and Jobs Growing Act, S.C. 2011, c. 24, under which the Government of Canada makes up to $2 billion per year available for allocation by the Government of Canada for the purpose of municipal, regional and First Nations infrastructure starting in 2014-2015;

• Economic Action Plan 2013, through which the Government of Canada announced a renewed GTF which included the indexation of the gas tax funding at two percent per year, with increases to be applied in $100 million increments (confirmed through section 161 of the Keeping Canada's Economy and Jobs Growing Act, S.C. 2011, c. 24 as amended by section 233 ofthe Economic Action Plan 2013 Act, No. 1, S.C. 2013, c. 33);

• Economic Action Plan 2013 which encouraged provinces, territories, cities and communities to support the use of apprentices in infrastructure projects receiving federal funding. Canada recognizes that British Columbia has developed and implemented its own initiatives with regards to the use of apprentices in infrastructure projects;

• Economic Action Plan 2013, through which the Government of Canada announced an expanded list of GTF eligible project categories and encouragement for asset management planning.

1

ATTACHMENT

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3. PRINCIPLES

The Parties acknowledge that this Agreement is based on the following principles:

a. Principle 1 - Respect for jurisdiction: The GTF was designed to leverage the strengths of each level of government and is based on the principle that each has areas of jurisdiction and is accountable to its population. Canada respects the jurisdiction of provinces and territories over municipal institutions.

b. Principle 2- A flexible approach: In recognition of the diversity of Canadian provinces, territories, regions and communities, the GTF recognizes the need for a flexible approach to program delivery. Wherever possible, the GTF aims to employ regionally adapted delivery mechanisms, including the leveraging of existing delivery mechanisms and reporting structures.

c. Principle 3- Equity between jurisdictions: The GTF recognizes the importance of ensuring that the inter-provincial/territorial allocation is equitable while supporting meaningful infrastructure investments within the least populated jurisdictions.

d. Principle 4- Long-term solutions: The GTF provides predictable, long-term funding for communities, for infrastructure priorities that meet community needs, while respecting the principle of incremental spending and not displacing current infrastructure investments.

e. Principle 5- Transparency: The GTF is administered via an open and transparent governance process which recognizes and communicates Canada's contribution to communities' infrastructure priorities and includes regular program evaluations and progress reporting to Canadians.

4. ANNEXES AND SCHEDULES

The following annexes and schedules are attached to and form part of this Agreement:

• AnnexA: Definitions • Annex B: Terms and conditions, including:

• Schedule A: • Schedule B: • Schedule C: • Schedule D: • Schedule E: • Schedule F:

• Annex C: Partnership Committee

5. DEFINITIONS

Ultimate Recipient Requirements Eligible Project Categories Eligible and Ineligible Expenditures Reporting Communications Protocol Asset Management

Unless defined elsewhere in this Agreement, capitalized words used throughout this Agreement are defined in Annex A (Definitions).

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6. FEDERAL GAS TAX FUND

6.1 Any GTF funding that may be transferred by Canada to UBCM, when transferred, will be administered by UBCM in accordance with this Agreement, including the terms and conditions set out in Annex B (Terms and Conditions).

7. GOVERNANCE

7.1 This Agreement will be governed by a partnership committee which is hereby established.

7.2 The partnership committee will monitor the strategic implementation of this Agreement, and will serve as the principal forum to address and resolve issues arising from the implementation ofthis Agreement. Responsibilities, membership, appointments, and terms of reference for the partnership committee will be in accordance with Annex C (Partnership Committee).

8. DISPUTE RESOLUTION

8.1 The Parties will work together to resolve any issues which may arise in relation to this Agreement.

8.2 It is understood that failure to meet the following requirements are of particular interest and will be addressed as a priority:

a) ensuring that Ultimate Recipients comply with Schedule B (Eligible Project Categories) and Schedule C (Eligible and Ineligible Expenditures) of Annex B (Terms and Conditions);

b) submitting an Annual Report to Canada and British Columbia by September 30th of each year and an Outcomes Report, as outlined in ScheduleD (Reporting) of Annex B (Terms and Conditions);

c) conducting communications activities in accordance with the requirements outlined in Schedule E (Communications Protocol) of Annex B (Terms and Conditions).

8.3 An escalating dispute resolution approach would begin with a partnership committee discussion followed by senior official-level discussions and ultimately with discussions among the Federal and Provincial Ministers and the President of UBCM for resolution, within a reasonable timeframe, to the satisfaction of the Parties.

8.4 In the event of any unresolved issue, if the above resolution mechanisms fail to achieve a resolution, it is understood that the final decision with respect to such issue will rest solely with Canada.

9. AUDITS AND EVALUATION

9.1 Canada may, at its expense, carry out any audit in relation to this Agreement, and for this purpose, reasonable and timely access to all documentation, records and accounts that are related to this Agreement and the use of GTF funding, and any interest earned thereon, and to all other relevant information and documentation requested by Canada or its designated representatives, will be provided to Canada or its designated representatives by:

3

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• British Columbia and UBCM, as applicable, where these are held by British Columbia, UBCM, or their respective agents or Third Parties; and

• Ultimate Recipients where these are held by the Ultimate Recipient or a Third Party or their respective agents.

9.2 Canada may, at its expense, complete a periodic evaluation of the GTF to review the relevance and performance (i.e. effectiveness, efficiency and economy) of the GTF. British Columbia and UBCM will provide Canada with information on program performance and may be asked to participate in the evaluation process. The results of the evaluation will be made publicly available.

9.3 UBCM will keep proper and accurate accounts and records in respect of all Eligible Projects for at least six (6) years after completion of the Eligible Project and will, upon reasonable notice, make them available to Canada.

9.4 Sections 9.1 to 9.3 will remain in effect for 7 years beyond the expiration or termination of this Agreement unless otherwise agreed to by the Parties.

10. DURATION, TERMINATION, REVIEW AND AMENDMENT

10.1 This Agreement will be effective as of April 1, 2014 and will be in effect until March 31, 2024 unless the Parties agree to renew it. In the event where this Agreement is not renewed, any GTF funding and Unspent Funds, and any interest earned thereon held by UBCM or Ultimate Recipients, that have not been expended on Eligible Projects or other expenditures authorized by this Agreement as of March 31, 2024 will nevertheless continue to be subject to this Agreement until such time as may be determined by the Parties.

10.2 This Agreement will be reviewed by the Parties by March 31, 2018 and may be amended to incorporate changes, if any, agreed to by the Parties.

10.3 This Agreement may be amended at any time in writing as agreed to by the Parties.

10.4 If Canada concludes an agreement with respect to the GTF for similar purposes with any other province or territory of Canada, and that agreement taken as a whole is materially different from this Agreement, British Columbia or UBCM may ask Canada to agree to amend this Agreement so that, taken as a whole, it affords similar treatment to British Columbia and its Local Governments as the other agreement affords to the other province or territory and its municipalities. In the event of any such request, Canada, British Columbia and UBCM agree to discuss the request and any agreement reached between them to amend this Agreement will be effected in accordance with Section 10.3 (Duration, Termination, Review and Amendment).

10.5 This Agreement may be terminated at any time and for any reason by Canada, British Columbia or UBCM on two (2) years written notice. In the event where this Agreement is so terminated, any GTF funding and Unspent Funds and any interest earned thereon held by UBCM or Ultimate Recipients, that have not been expended on Eligible Projects or other expenditures authorized by this Agreement as of the date of termination will nevertheless continue to be subject to this Agreement until such time as may be determined by the Parties. In the event that any Party gives notice of its intent to terminate this Agreement, the Parties agree they will work collaboratively to develop a

4

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strategy during the 2 year notice period to address transitional issues including, but not limited to, ongoing administration of any GTF funding and Unspent Funds and any interest earned thereon, and determining how long any GTF funding and Unspent Funds and any interest earned thereon held by UBCM or Ultimate Recipients that have not been expended on Eligible Projects will remain subject to this Agreement.

11. TRANSITION FROM, AND TERMINATION OF, THE FIRST AGREEMENT

11.1 As of the effective date of this Agreement, the First Agreement is terminated.

11.2 Notwithstanding Section 11.1 (Transition), the Parties agree that prior to its termination, the First Agreement is amended to add to Section 11.2 (Survival) of the First Agreement: Section 11.3 (Governing Law), Schedule A (Eligible Project Categories and Sub-Categories by Community Tier), Schedule B (Eligible Costs for Eligible Recipients) and Schedule E (Reporting and Audits).

11.3 Notwithstanding Section 11.1 (Transition), the Parties agree that the survival rights and obligations in Section 11.2 (Survival) of the First Agreement (including those added to that section by virtue of Section 11.2 (Transition From, and Termination of, The First Agreement) of this Agreement, and any other section of the First Agreement that is required to give effect to that survival section, will continue to apply beyond the termination of the First Agreement subject to the following:

a) Regardless of any wording in the First Agreement with another effect (including Section 1.1) of Schedule C (Eligible Recipient Accountability Framework) of the First Agreement), Unspent Funds, including interest earned thereon, will, as of the effective date of this Agreement, be subject to this Agreement, including the terms and conditions set out in Annex B (Terms and Conditions);

b) Notwithstanding Section 11.2 (Transition From, and Termination of, The First Agreement):

i. Unspent Funds that fall within the reporting period of the 2013 Annual Expenditure Report (as defined in the First Agreement) will be reported by UBCM to Canada in accordance with the First Agreement; and,

ii. Unspent Funds that fall within the reporting period that includes January 1, 2014 to the effective date of this Agreement will be reported by UBCM to Canada in accordance with this Agreement.

c) If an Eligible Recipient (as defined under the First Agreement) wishes to amend a project approved for funding under the General Strategic Priorities Fund or the Innovations Fund by the Management Committee established under Section 4.2 (Management Committee) of the First Agreement, the change to the project must be approved by the management committee established under Section 3.3 (Strategic Priorities Fund) of Annex B (Terms and Conditions) of this Agreement;

d) If the Greater Vancouver Regional District Board (GVRD) wishes to amend the scope of a project approved by the Management Committee established under Section 4.2 (Management Committee) of the First Agreement for funding under the Tier 3 Strategic Priorities Fund under the First Agreement, or substitute another Eligible Project (as defined in this Agreement) in its place, the GVRD may approve the change as though it were a project under the Greater Vancouver Regional Fund under section 3.2 of this Agreement, and must notify the UBCM of that change;

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e) If a Regional District Board wishes to amend the scope of a project approved by the Management Committee established under Section 4.2 (Management Committee) of the First Agreement for funding under that Regional District's Regionally Significant Projects Fund reservation under the First Agreement, or substitute another Eligible Project (as defined in this Agreement) in its place, the Regional District Board may approve the change, and must notify UBCM of that change;

f) If all or part of the funding reserved for a Regional District under the Regionally Significant Projects Fund under the First Agreement has not been committed to fund projects approved by the Management Committee established under Section 4.2 (Management Committee) of the First Agreement, the Regional District Board may approve Eligible Projects (as defined in this Agreement) to be funded with the remaining reservation for the Regional District, and must notify UBCM of the approvals;

g) With respect to Section 5.5 (Disposal of Eligible Projects) of the First Agreement, any repayment received by UBCM pursuant to the operation of Section 4 of Schedule C of the First Agreement will be considered included in the definition of Unspent Funds and must be used by UBCM and Ultimate Recipients in accordance with the terms and conditions of this Agreement;

h) The survival of the reporting obligations under Sections 7.1 (Reporting), Section 1 m) of Schedule C (Eligible Recipient Accountability Framework), and Section 1.1 (Annual Expenditure Report) of Schedule E (Reporting and Audits) of the First Agreement extends only until these obligations are fulfilled by Eligible Recipients (as defined in the First Agreement) and UBCM, as applicable, for the 2013 reporting year, after which, the reporting obligations under Section 8 (Reporting) of Annex B (Terms and Conditions), Section 9 of Schedule A and Schedule D (Reporting) ofthis Agreement will apply;

i) Any matters that Section 8.1 (Dispute Resolution) of the First Agreement would have applied to will be dealt with under Section 8 (Dispute Resolution) of this Agreement;

j) Any matters that Section 10 (Communications) and Schedule G (Communications Protocol) of the First Agreement would have applied to will be dealt with under Section 6 (Communications) of Annex B (Terms and Conditions) and Schedule E (Communications Protocol) of this Agreement; and

k) If an Ultimate Recipient under this Agreement is not in compliance with a Funding Agreement under the First Agreement, Section 4.3 (Payments to Ultimate Recipients by UBCM) of Annex B (Terms and Conditions) of this Agreement applies to payments to that Ultimate Recipient as though the Funding Agreement under the First Agreement were a Funding Agreement under this Agreement.

12. COUNTERPART SIGNATURE

This Agreement may be signed in counterpart and the signed copies will, when attached, constitute an original agreement.

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13. CORRESPONDENCE

Any correspondence under this Agreement may be delivered in person, sent by electronic mail, sent by facsimile, or sent by mail addressed to:

Canada:

Assistant Deputy Minister, Program Operations Branch 180 Kent Street, Suite 11 00 Ottawa, Ontario K1P OB6

Email address: [email protected] Fax Number: 613 960-9423

or to such other address, e-mail or facsimile number or addressed to such other person as Canada may, from time to time, designate in writing to British Columbia and UBCM:

British Columbia:

Assistant Deputy Minister, Local Government Division Ministry of Community, Sport and Cultural Development PO Box 9490 Stn Prov Gov Victoria, British Columbia V8W9N7


or such other address, e-mail or facsimile number or addressed to such other person as British Columbia may, from time to time, designate in writing to Canada and UBCM; and

UBCM:

Executive Director Union of British Columbia Municipalities 525 Government Street Victoria, British Columbia V8VOA8


or such other address, e-mail or facsimile number or addressed to such other person as UBCM may, from time to time, designate in writing to Canada and British Columbia.

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Signatures

CANADA BRiTISH COLUMBIA

The Honourable Denis Lebel The Honourable Coralee Oakes

s!l:l~~~11'!'1i~rii·tl!·elland Minister of Community, Sport and Cultural Development

Date Date

NAY 0 8 2014

UNION OF BRITISH COLUMBIA MUNICIPALITIES

Director Rhona Martin President Union of British Columbia Municipalities

Date

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Signatures

CANADA BRITISH COLUMBIA

The Honourable Denis Lebel The Honourable Coralee Oakes

Minister of Infrastructure, Communities and Minister of Community, Sport and Cultural Intergovernmental Affairs Development

Date



Date

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Signatures

CANADA

The Honourable Denis Lebel

Minister of Infrastructure, Communities and Intergovernmental Affairs

Date

BRITISH COLUMBIA

The Honourable Coralee Oakes

Minister of Community, Sport and Cultural Development

Date



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ANNEXA DEFINITIONS

"Agreement" means this Administrative Agreement on the Federal Gas Tax Fund in British Columbia.

"Annual Report" means the duly completed annual report to be prepared and delivered by the UBCM to Canada and British Columbia, as described in Schedule D (Reporting).

·Asset Management" (AM) includes planning processes, approaches or plans that support integrated, lifecycle approaches to effective stewardship of infrastructure assets in order to maximize benefits and manage risk. AM is further described in Schedule F (Asset Management), and can include:

• an inventory of assets; • the condition of assets; • level of service; • risk assessment; • a cost analysis;

community priority setting; • long-term financial planning.

"Base Amount" means an amount established over a time-period, reflecting non-federal investments in Infrastructure and against which GTF investments will be measured to ensure that GTF investments are incremental.

"Contract" means an agreement between an Ultimate Recipient and a Third Party whereby the latter agrees to supply a product or service to an Eligible Project in return for financial consideration.

"Eligible Expenditures• means those expenditures described as eligible in Schedule C (Eligible and Ineligible Expenditures).

"Eligible Projects" means projects as described in Schedule B (Eligible Project Categories).

"First Agreement" means the agreement for the transfer of federal gas tax revenues entered into on September 19, 2005 by the Government of Canada, British Columbia and UBCM, with an expiry date of March 31,2019, as amended.

"Funding Agreement" means an agreement between UBCM and an Ultimate Recipient setting out the terms and conditions of the GTF funding to be provided to the Ultimate Recipient, containing, at a minimum, the elements in Schedule A (Ultimate Recipient Requirements}.

"GTF" means the Gas Tax Fund, a program established by the Government of Canada setting out the terms and conditions for the administration of funding that may be provided by Canada to recipients under section 161 of the Keeping Canada's Economy and Jobs Growing Act, S.C. 2011, c. 24 as amended by section 233 of the Economic Action Plan 2013 Act, No. 1, S.C. 2013, c. 33, or any other source of funding as determined by Canada.

"Ineligible Expenditures" means those expenditures described as ineligible in Schedule C (Eligible and Ineligible Expenditures).

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"Infrastructure" means municipal or regional, publicly or privately owned tangible capital assets in British Columbia primarily for public use or benefit.

"Local Govemmenf' means a municipality as defined in the Community Chatter [SBC 2003) Chapter 26, a regional district as defined in the Local Government Act [RSBC 1996) Chapter 323, and the City of Vancouver as continued under the Vancouver Chatter [SBC 1953] Chapter 55.

"Outcomes Reporf' means the report to be delivered by March 31, 2018 and again by March 31, 2023 by UBCM to Canada and British Columbia which reports on how GTF investments are supporting progress towards achieving the program benefits, more specifically described in Schedule D (Reporting).

"Party" means Canada, British Columbia or UBCM when referred to individually and collectively referred to as "Parties".

"Third Party" means any person or legal entity, other than Canada, British Columbia, UBCM or an Ultimate Recipient, who participates in the implementation of an Eligible Project by means of a Contract.

"Ultimate Recipienf' means: (i) a Local Government or its agent (including its wholly owned corporation); (ii) a non-municipal entity, including for-profit, non-governmental and not-for-profit

organizations, on the condition that (a) the Local Government(s) where the Eligible Project would be located, if applicable, has (have) indicated support for the project through a formal resolution of its (their) council{s) or board{s).

(iii) the South Coast British Columbia Transportation Authority, the Greater Vancouver Water District and the Greater Vancouver Sewerage and Drainage District; a trust council, a local trust committee and the trust fund board, all within the meaning of the Islands Trost Act, and any other entity that delivers core local government services agreed to, in advance, by the Parties; and,

(iv) BC Transit subject to the agreement of the appropriate Local Government, through its council or board. In the case of transit Eligible Projects within the Capital Regional District, the appropriate Local Government is the Capital Regional District.

"Unspent Funds" means Funds {as defined by the First Agreement) that have not been spent towards an Eligible Project {as defined under the First Agreement) or on administration costs in accordance with the First Agreement prior to the effective date of this Agreement.

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ANNEXB TERMS AND CONDITIONS

1. ELIGIBLE PROJECT CATEGORIES

Eligible Project categories under the GTF will continue to include: public transit, local roads and bridges, active transportation infrastructure, wastewater, water, solid waste and community energy infrastructure and non-capital investments in capacity building initiatives. As announced in E