When LNG Canada announced a positive final investment decision for its $40 billion liquefied natural gas facility in Kitimat last fall, neighbouring Terrace reacted at first with optimism of what it would mean for economic growth.
But when the dust settled, the question of how the city with a population of 12,500 could support a sudden influx of new residents, came into focus.
And now local leaders are grappling with how they can prepare for having what’s called Canada’s largest-ever private sector investment just a 40-minute drive away.
While Kitimat and neighbouring First Nations communities have secured benefit agreements from LNG Canada and the province, Terrace has no plans to negotiate one of its own and risks being left behind despite its reputation as the regional hub for goods and services.
“The city will bear the majority of the burden and impact from LNG Canada, yet is unable to generate the revenues to address these impending issues,” a city report from July on impacts indicated.
“Kitimat provides a lot of employment to Terrace; however, they rely heavily on Terrace for services and retail. Kitimat will benefit greatly from LNG Canada taxation. Terrace should not be overlooked.”
The impacts of LNG Canada and other major developments are already being felt here. Terrace’s population is expected to double in the next 10 years, according to the city.
Northwest Regional Airport passenger traffic is on track to break records, and Onec Logistics Inc. in conjunction with Haisla Logistic Solutions is currently renovating a hangar into a flight facility dedicated to accommodating incoming LNG Canada project workers.
Construction in the city has also picked up. So far in 2019, 150 construction permits worth $15 million have been issued by the city, including 25 single residential and 13 commercial renovations. There have also been several new housing developments up on the Bench area in the northwest corner of the city to accommodate population growth.
Social impacts can also be felt on a higher scale in Terrace than in Kitimat as a result of increased development. In 2018, the Terrace homeless count was 96, compared to four in Kitimat.
City council believes the services provided in Terrace are already attracting people experiencing homelessness in other areas of northwest B.C.
The mayor and chief administrative officer reaffirmed their commitment to travel to Victoria this fall to lobby provincial legislators for financial support to mitigate social issues.
Dealing with higher demands for services will be tough because of a tight budget, the city says. The City of Terrace receives approximately $13 million in property tax revenues per year and around $809,647 annually in industrial taxes. In comparison, Rio Tinto’s aluminium smelter generates $19.5 million per year in taxes alone for the District of Kitimat.
The city struggled to even apply for a $10 million joint-federal and provincial infrastructure grant for an extensive rebuild of the Lanfear Hill road because it could not afford to the $1 million required as its contribution.
The project has been labelled as an “immediate need” because Lanfear Hill is one of just three routes to the Bench area where the vast majority of land suitable for more housing is located.
The approval of the application has been halted until after this October’s federal election.
One initiative that could help is a formal sharing of resource revenue from the province as lobbied for by the Northwest BC Resource Benefits Alliance (RBA), a group of 21 local governments from Masset to Vanderhoof.
Last February, Terrace received $8.2 million from the province’s announced $100 million Northern Capital Planning Grant for Northwest municipalities and regional districts through RBA negotiations, but the amount is not enough for immediate and future infrastructure upgrades.
“If we were to take the $8.2 million we still wouldn’t have enough money to develop that one particular road that needs to go up to the Bench,” says mayor Carol Leclerc, referring to the Lanfear Hill project. “There’s another road [Skeenaview] on the other side that’s just as much money as Lanfear Hill. Those are two of the transportation challenges for infrastructure when we don’t have a regional tax base like what Kitimat has.”
As more LNG projects look to northwest B.C., the city is pushing energy corporations to help them lobby the province to establish the RBA and consider the positive and negative impacts multi-billion dollar projects will have on the municipality.
Revenue sharing agreements have occurred between the province and local governments before when major industry developments lie outside local tax assessment areas.
In May 2015, Christy Clark’s B.C. liberal government signed a 20-year, $1.1 billion Peace River Agreement with local governments in the northeast – including a $3 million signing bonus.
Each year, local governments including Chetwynd, Hudson’s Hope, Taylor, Tumbler Ridge, Dawson Creek, Fort St. John and Pouce Coupe share $50 million from provincial oil and gas industry tax revenues. Towns like Dawson Creek, with a population of around 12,978, receive around $12 million annually. The 2015 agreement was a renegotiation of a series of agreements dating back years.
During an update meeting on Chevron Canada and Woodside Energy Ltd.’s Kitimat LNG project Sept. 4, city council asked Chevron representatives — ‘What’s in it for Terrace?’
“Twenty-five per cent of Rio Tinto Alcan employees live in Terrace, so I think it’s fair to assume 25 per cent of LNG Canada employees are going to live in Terrace,” says Sean Bujtas, city councillor and vice-chair of the RBA. “That’s our struggle and why we push for the RBA because we think it’s going to help.”
Chevron Canada representatives spoke about local hiring opportunities and economic growth, but city councillors want industry leaders to prioritize funding for adequate infrastructure.
“Being an ignored community for decades, the government is slowly starting to turn its view this way, it’s more focussed on Kitimat right now,” Leclerc says.
“If you want to have a workforce that’s going to live in this area, we need some lobbying support as well.”