Two First Nations in British Columbia, Tsawout First Nation and Tk’emlύps te Secwépemc (TteS), have taken bold steps in addressing their capital infrastructure needs by becoming the first communities to develop a property tax borrowing law and development cost charges (DCC) law under the First Nations Fiscal Management Act (FMA).
Situated on Vancouver Island, near the City of Victoria, Tsawout First Nation first established its property tax system in 1994. In October 2013, Tsawout’s long term capital borrowing law was approved by the First Nations Tax Commission (FNTC). The law enables Tsawout to borrow $2.15M through the First Nations Finance Authority (FNFA), allowing for the completion of much needed upgrades to Tsawout’s sewage treatment plant.
According to Tsawout First Nation’s Finance/Comptroller Russell Harder, “using local revenues to support long term borrowing will help establish capacity in our system to meet the requirements of current, as well as future, economic development plans. This is a very important step in helping Tsawout expand the tax base for local revenues, which will create opportunities to complete other infrastructure projects needed by the First Nation.” Under the FMA, First Nations can use a portion of their annual property tax revenue to repay amounts borrowed through the First Nations Finance Authority. The term of the loan to Tsawout First Nation is for 30 years.
While borrowing addresses immediate needs, development cost charges are designed to meet future needs. Tk’emlύps te Secwépemc (formerly the Kamloops Indian Band) is located adjacent to the City of Kamloops. In January 2014, the First Nations Tax Commission approved the Tk’emlύps te Secwépemc Development Cost Charges Law. The Tk’emlύps te Secwépemc law is expected to play an important part in funding capital infrastructure enhancements over the long term. Capital projects include a highway traffic interchange and a water reservoir. Development cost charges laws made under the FMA charge a one-time tax on new developments, and revenue is used for specific projects identified in the community’s long term capital plan. Established in 2005, the FMA offers First Nations access to a greater array of fiscal tools to help spur economic growth through improved capital infrastructure. The laws enacted by Tsawout First Nation and Tk’emlύps te Secwépemc provide concrete examples of how the legislation supports First Nation innovation.