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Seeing the forest for the trees

Some notes on my views on the Powell River Community Forest (PRCF) dividend allocation (shared in advance of Council discussions on March 20)

Edited since publishing to correct year of December 17 motion to 2024, and to add $ amounts to 10% rolling vs 40% in the quick facts section.

Current topic of conversation: the following motion passed on Feb 27 as part of our budget deliberations

Moved and seconded that the total Powell River Community Forest (PRCF) grants to non-profit organizations be limited to 10% of a 3-year rolling average of the PRCF’s yearly dividends.

(This came after a December 17, 2024 vote that was similar, so this specific topic has been live for a while, and generally for much longer).

Quick notes/fact checks:

  • All previously-approved grants, even if not spent yet, are still valid. The conversation at Council is for the future.
  • Any money that the City uses is not put into general revenue, but is for special community projects that will benefit the community as a whole (see bylaw text further down).
  • The Regional District has no involvement in PRCF governance or ownership and is not a shareholder.
  • Council has not voted to change the bylaw (which establishes what types of expenses the community forest reserve fund can be spent on), just to establish clarity on the breakdown of how dividends are distributed from reserves to City vs. nonprofit community projects, which currently is based on “how things have been done” and not on any specific policy.
  • In an interesting twist, the current motion that has passed would actually result in MORE money going to nonprofits this year than usual, as the planned dividend from the community forest is on the lower end. A 10% rolling average would include much higher dividend years (and would lead to ~$425K in donations in current financial plan draft). 40% of this year’s dividend would be smaller—while the 40% is just an average as the % has changed every year, 40% of this year’s dividend is $240K.

My personal message that I get to by the end of this post is: This is not a simple decision that I take lightly. There are so many ways to consider this issue, and the types of information that inform my decision are broad. I’m open to changing my mind about amounts provided to community organizations, but I also think that reform is necessary.  I look forward to discussions.

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I’ve numbered these bullets for readability and reference.

  1. I know that all members of Council have been deeply involved with local community organizations in different ways over time, and believe they are an important part of what makes this community special. We are a better community because of the value nonprofit organizations provide, and the volunteers that make them tick. Nonprofit organizations take on work that wouldn’t happen otherwise. They are necessary to fill gaps not filled by other sectors of society like business and government. This decision is not whether or not nonprofit organizations are great and good. They are. 
  1. This decision is different from, but related to, the strained relationship between City Council and PRCF board. I believe that the relationship needs to be tended to, and this decision impacts that relationship. But here we are, so now what? No matter how this decision goes, the relationship needs work. A threat of a mass resignation is not part of my decision-making.
  1. For me, this decision is a big picture decision. How, and to what extent, should the City support nonprofit organizations? How do we balance that support with strain and pressure on tax levies? What level of taxes is the community willing to pay? How can the City support its aging recreation infrastructure when no Councils have saved for it for the past 5 decades? What is the role of the community forest dividends during a time of local economic transition and global economic pressures? In addition to community forest funding, the largest other tax-funded transfer of support is through permissive tax exemptions (PTEs), which is when the City forgoes property taxes (and also pays for the non-City taxes like RD and Schools). There are some organizations on that list who, if they came to the City or the Community Forest for a grant in the amount of the property taxes, I wouldn’t support. PTEs are grants in another form, and it’s another area that needs more consideration. 
  1. I expect community organizations to be upset with the prospect of less money being available for nonprofits. That’s a reasonable reaction. But every action that Council takes has a consequence. Knowing that we could use more dividends for community-benefit projects by the City (e.g. seating in Evergreen Theatre, pool roof, trail networks) for which grant funding has not been found, are people OK with paying more taxes in order to keep the more money available for nonprofits projects? That’s the reality for City residents. We can pay more taxes, and more money can go to nonprofits. Or we pay less taxes and more money covers City projects of community benefit. For residents who don’t live in the City, it’s all a loss. Loss of financial support to nonprofits. But they will not feel any resulting tax implications. (People have thoughts on other ideas to cut in our budget, I address that below).

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  1. I feel my role is to take the broad view. What do I feel is the best stewardship of City resources?
  1. Some benefits of giving more to nonprofits:
    • PRCF grants help attract grants from other donors (e.g. governments, foundations) by showing there is local support for a project
    • Much work is done by volunteers, so labour costs are lower
    • Projects are often smaller and can more easily involve local contractors
    • Volunteers can focus more of their time on the work of their organization, and less on fundraising
    • Having funds for projects increases excitement and interest and support for community organizations and volunteering
    • Having insecure funding leads to organizational stress and burnout, so community forest grants help with security
  1. Some benefits of spending more on City projects:
    • Improve City-owned infrastructure of broad community benefits (e.g. recreation, culture, environment, active transportation)
    • Reduced taxation, or can redirect taxation to saving for the future
    • Support unionized jobs
    • Increase the number of projects that can attract grants from other levels of government
    • Staff can spend more of their time getting work done, and less on grant writing
  1. In my view, both are valid. The question is the balance, or the scale of contributions. 10% rolling average of dividends to nonprofits? 30%? 60%? Should we set aside $100,000 per year? $400,000? $2million? The answer is not zero, but again, what is the balance?
  1. Or to throw in a whole other idea, what if all the money generated was held by a foundation (kind of like a sovereign wealth fund) and the interest was paid out yearly? If we had done that from the start (painful at first because less money would be available to be paid out as grants, but benefits us later as interest is earned), we could be sharing over $1.5 million per year (based on 5% as suggested by the Canadian foundation sector) and still have $31 million in the bank. But this idea has no bearing on the current decision and is not being proposed at this time. Just offering a new way of thinking about wealth generated by local logging.

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  1. Some people question the underlying premise of my argument, that PRCF dividends are City money. They are. That’s just a fact. It may not feel correct, as though you understand things differently, but PRCF is wholly owned by the City of Powell River. The City invested in its creation in the mid 2000s. PRCF pays out dividends to the City, which are held in reserve for projects that align with the PRCF reserve fund bylaw (see below). There is a board of directors (which the Mayor has been appointed by Council to sit on) and the only shareholder of the company is the City. It is not owned in part by the Regional District. The RD could have participated in the original call to participate in Community Forests in the mid 2000s, but didn’t.
  1. I think there are some tangential connections to the RD. The forests logged are in the RD. So there is benefit to getting “social license” from RD residents by giving to some organizations that operate in the RD. But, the money that could be used for City projects could similarly benefit RD users, in that RD residents currently pay $0 towards capital costs at the Rec complex, even though many benefit from the Rec Complex existing (going to the pool, enjoying performances at the theatre). As you see the web is complex and wide, and all of these things are on my mind as I consider what I think is the best path forward.

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  1. PRCF has been an incredible asset for our community. Nonprofit organizations and the City have benefitted greatly by the investments of monies raised by the sale of timber. The board has done great work since its formation with respect to understanding community needs and knowing the community groups asking for funding. 
  1. PRCF (through its board and contractor) harvests timber and sells logs. A proportion of that revenue goes into a reserve fund at the City as a dividend. The PRCF makes recommendations to the City on how to spend that dividend. There is a bylaw that sets rules on how that dividend can be spent.

“Monies in the “Powell River Community Forest Reserve Fund” will be used for a special community project that will benefit the community as a whole. The money in the reserve fund is not to be used for City operations or for capital expenditures of a regular nature. Before any money is used from this reserve fund, the City will seek input from the Board of Directors for the Powell River Community Forest Ltd.”

  1. That bylaw is clearly open to interpretation depending on your interests. Historically the PRCF board has made recommendations on what nonprofit projects should be funded, and which City capital expenditures should be funded, and Council has accepted their recommendations. It’s awkward to challenge “the way things have always been done” but I believe that’s the important work of being on Council. 
  1. In my first year on Council, I moved that we wouldn’t approve a few of the projects recommended by PRCF, and in my second year, I moved that we approve a few City projects that PRCF didn’t recommend. My ideas didn’t pass, but I’m willing to try amendments that I think are in the interest of stewarding City resources.
  1. I still remember distinctly that first year receiving a number of emails from people I didn’t know thanking me for challenging some of the PRCF recommendations, and expressing their concerns about how the PRCF operates. Since then, and in this current community debate, I’ve heard from multiple people who don’t want to publicly be seen as going against the grain, all of whom also are a part of local nonprofits, but also see that it’s complicated, and see me as someone ‘safe’ to share their concerns with. Some of the issues that I’ve heard include:
    • Some nonprofits focus on activities that are not accessible to the broader community: there is a high cost to participate in their organization, or there is limited room for membership, or they don’t prioritize or do any public outreach/engagement in the course of their work.
    • Some of the nonprofits are not in the City, or are not intended to serve City residents [though I think this one is a difficult one to delineate as some nonprofits that aren’t in within the City do positively benefit the City or its residents, but still…]
    • Some of the nonprofits compete with small businesses, who are ineligible for any support from the City (PRCF money, grants, permissive tax exemptions – we are bound by provincial legislation to not support business) but who also benefit the community greatly, contribute to community causes, make it special, and from a profit perspective basically operate on nonprofit basis, and who have a high tax burden.
    • The eligible projects leave out large portions of our local nonprofit community: groups that provide crucial services to our community are not eligible for funding for those services (as opposed to groups that have/build physical infrastructure); groups that are too young to have been able to buy property decades ago have less opportunities for eligibility. These groups also make the community special, do work that wouldn’t otherwise be done, involve volunteers, etc.
    • Some nonprofits have become reliant on going to the PRCF, and haven’t brought in matching or other funding from outside the community via other grants.
    • Frustration from recreational users and environmental advocates on the lack of community input on PRCF logging decisions.
    • Perceived lack of transparency in how recommendations get made by the board.
    • Perceived conflict of interest between board/staff members of PRCF and board/staff of grant recipients. [I’ll note that the right approach is for board/staff members to recuse themselves from conversations that would benefit organizations they are staff/board for, and I expect that they do that.] 

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  1. There have been a number of concerns that the City is greedily taking community money for itself. I don’t share that view. Based on the current bylaw, the City must spend those monies on projects that benefit the community as a whole, not into general operations or regular capital projects like sewer and water. The money DOES NOT go into general revenue. The City has spent PRCF funds usually on recreation and active transportation projects that we haven’t found enough grant funding for. Examples of City projects have included or could include fixing the seats at the Evergreen Theatre, fixing the pool roof, completing the multi-use trail between the Complex and Brooks, etc. 
  1. If we spend dividend money on City projects, we don’t have to raise taxes to cover those City projects.

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  1. I also wanted to address a number of concerns expressed that the City wouldn’t have to raise taxes if we cut other things. A lot of these concerns have spoken about staffing/consultant costs at the City (I’ve seen some wild misinformation – no we haven’t added 12 new management positions since 2024). That if we just “tightened our belts” then the community organizations wouldn’t suffer. I generally disagree but my answer is complicated. 
  1. Good staff are expensive. If you followed our CAO recruitment in 2022/2023 you’ll know that we went through it twice. The second time we increased the salary in order to recruit the type of candidate we wanted. Cities around the province are having a hard time recruiting skilled management roles, and it’s especially hard to recruit here in today’s housing environment. You may think a role is overpaid, but that’s the market for good staff right now. Having lower salaries would just mean those roles don’t get filled by the people we want. Managers are crucial. They carry the responsibility of driving all change and projects forward, and are the interface with Council. 
  1. Consultants and contractors are people/companies who do jobs that it doesn’t make sense to have full time staff hired to do. For example, it doesn’t make sense to employ a street paving crew, so we contract that work out when we do major paving. It doesn’t make sense to employ an economist on staff, so we hire that work out when we need economic analysis of city land. Consultants (and contractors) do work that we don’t have existing staff capacity for – either they don’t have the time, the special expertise, or the special equipment (or we haven’t been able to recruit people for the role in question).
  2. In special cases we’ve had (and currently have) interim staff on contract for key leadership roles that are so hard to recruit for. I believe we’ve been lucky to recruit the skilled people we have been able to recruit. I’m very concerned about the public attacks on staff as part of the budgeting process and PRCF dividend discussion, it doesn’t help with recruitment to our city, and I believe costs us even more (ie we have to pay even higher amounts to attract people here because the public sentiment towards management is so toxic, or we have to delay projects until leadership is recruited–in the future when projects get more expensive, or people go on leave and we have to backfill, or we have to pay recruitment firms to help with turnover).
  1. Tightening our belts is a whole other question. I have proposed a number of cuts that Council has not supported, and I have been the only one who has suggested substantive cuts beyond staff options so far in this year’s process. I expect other Councillors may have other cuts to propose on Thursday. We have a variety of opinions on what is least painful to cut. If you think a specific cut is just common sense, I can guarantee you that there are others in the community who disagree. 
  1. Some of the big changes I’d like to see that would reduce taxation needs and enhance City assets are multi-year projects. Community-owned energy projects. Leasing/building out City-owned land in industrial areas. Developing a Housing Authority or similar. Multi-year projects take investment of money and management time. We are in a crunch. What is worth investing in, with an eye to the long view? But again, not opportunities to consider tomorrow and which impact the realities of our current financial situation.

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  1. So you see, this is not a simple decision that I take lightly. There are so many ways to consider this issue, and the types of information that inform my decision are broad. I’m open to changing my mind about amounts provided to community organizations, but I also think that reform is necessary.  I look forward to discussions.

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  1. Links:
    1. Information sheet from City about the Community Forest: https://powellriver.civicweb.net/document/146270/  
    2. Reserve Fund Bylaw: https://powellriver.civicweb.net/document/613/