SLEMON PARK

COR P ORATION

June 5, 2009

The Commission on the Land and Local Governance P.O. Box 2000 Charlottetown, PE CIA 7N8

Dear Commissioner:

Submission for Consideration by the Commission

P.O. Box 90 SIemon Park, PE COB 2AO

Ph: (902) 432-1704 Fax: (902) 436-1854

Email : smccarvi li@slemonpark.com

Firstly, we would like to congratulate the Province for establishing this commission on our system of local governance and land use practices. This is a major and complex undertaking, but in the end, should identify a number of important changes to ensure our governance and practices are more equitable, efficient and focused on the long term needs of all residents of PEl.

By way of background, SIemon Park Corporation is a private corporation established in 1991. It is dedicated to providing location sol utions for some of the world's finest companies in aviation, aerospace, training and other industries. SIemon Park Corporation owns approximately 1400 acres of land and close to a million square feet of commercial space. Siemon Park Corporation also operates the SIemon Park Hotel and Conference Centre and the Summerside Airport, and is one of the largest residential landlords in Summerside, with 253 residential units. So, we own a lot of property and pay a lot of property tax.

SIemon Park Corporation has the following two primary areas of interest in making this submission:

I) Siemon Park is a unique property on Prince Edward Island; SIemon Park Corporation owns much of the infrastructure normally owned by govenunents, including its roads, water and sewer system and airport; also, our property is partially inside the City of Summerside (the residential area) and partially outside the city (the commercial area, including the waste-water treatment plant and the airport).

2) Siemon Park is in the economic development business and is the home of the Aerospace industry on PEl. As such, we have a significant interest that local governance and taxation policy is structured to promote long term economic prosperity for the people of Prince Edward Island.

This submission is structured to address a number of the specific issues which are identified on

the commission website and uses the reference numbers as provided thereon. The issues for which we have comments are as follows:

3. What steps, if any, are required in order to better protect:

a) Our water resources;

The province should promote and subsidize the cost of water and sewer systems to protect our water supply. These systems are expensive to maintain and are a fundamentally important service for the provincial government to support. Infrastructure and operating cost support should be provided to the greatest extent possible to encourage expansion and proper maintenance of these systems.

4. When it comes to land use planning:

a) Is the current approach to land use planning adequate, and, if not, how should it be changed?

Prince Edward Island has been called a "million acre farm" - we are a small homogeneous parcel of land with only 140,000 people - smaller than most good-sized cities. We should have one provincial land use plan, administered provincially and with municipal autonomy to work within that plan.

5. Are Special Planning Areas a fair and effective means of controlling development around municipalities and other areas on which they impact?

Not particularly - There should be one provincial plan which contains provisions for controlling development around municipalities and in other areas.

6. Should development in unincorporated areas adjacent to municipalities be permitted to continue without requiring that such areas first be annexed to the municipality?

The provincial land use plan, and its regulations and administration, should address and manage development restrictions and limitations in areas adjacent to municipalities - high density development should generally be restricted in areas adjacent to municipalities unless there are existing infrastructure services such as water and sewer.

7. Should municipalities be permitted to expand in order to encompass developments and proposed developments adjacent to their borders?

There needs to be a process for municipal growth to occur within a provincial plan and with provincial approval. This should generally be based on the mutual interest and approval of the municipality and the related land-owners.

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10. Is the current system oftaxation and grants within which the Province and the municipalities operate fair to all concerned, and if not, what alternative approaches should be considered?

Commercial property tax rates (or the relationship of these rates to residential and non­commercial tax rates) should be established provincially to ensure consistency across the province and to ensure that commercial property does not bear a disproportionate share of the overall tax burden. Over-taxation of business property will have long-term detrimental impact on the economy and future prosperity of the province. Below is a schedule of the 2009 non­commercial (residential) and commercial tax rates for Charlottetown and Summerside as compared to the provincial rate.

Summerside Charlottetown Provincial Provincial Non-Resident

Non-Commercial (Residential) $0.74 $0.67 $1.00 $1.50

Commercial $1.92 $2.36 $1.50 $1.50

Commercial Multiple 259% 352% 50% 0%

For both cities, commercial rates are significantly higher than residential rates, and the differential is much higher than the provincial tax differential, which ranges from 50% to zero. The only reason for this exorbitant commercial tax premium appears to be historical precedence and that commercial enterprises "do not vote". There are many more municipal services that are directly related to residents than to commercial enterprises. If anything, commercial tax rates should be significantly less than residential tax rates - such as is the case for farm property. This over-burdening of commercial enterprises is seriously detrimental to long term prosperity on PEl as it yields an uncompetitive tax environment for Island businesses.

Many of the services provided by municipalities are focused on residents rather than industrial/commercial enterprises. Many major industries such as food processing (McCains and Cavendish Farms) and Aerospace (at SIemon Park) are strategically located in low-taxation, low­serviced rural areas - to avoid the unjustifiably high tax rates as identified above. These major industries would be significantly adversely affected by being included in one of these municipalities and having this second major level of property taxation. These industries compete nationally and internationally, rather than locally on PEL It is beneficial to PEl to have areas on the Island that are not subject to high (and especially unjustifiably high) municipal taxes - for those industries (and major employers) competing with other economies of the world who chose to locate in these much lower taxed / and somewhat lower serviced areas.

The City of Charlottetown has a reduced tax rate for mobile home parks. For 2009, the comparative rates are as follows:

Non-Commercial (Mobile Home Parks) $0.42 Non-Commercial (Residential) $0.67

The City of Summers ide and other municipalities should have a similar structure for areas such as SIemon Park for which the City otherwise provides no services for roads, sidewalks or sanitary or storm sewers.

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12. Assuming local communities' identities can be protected, should all areas ofthe Province be incorporated with a view to providing better service to residents on a local or regional basis?

No, it is not necessary to incorporate all areas of PEl. Incorporating the commercial area of Siemon Park into the City of Summerside would be particularly detrimental to the long term success of the Aerospace and other businesses located here. In this scenario and under the current taxation regime, Siemon Park and its tenants would incur a major new level of taxation with fire protection services and street lighting as the only incremental costs being assumed by the City from SIemon Park.

If it is deemed necessary to incorporate all areas, it would be better to transfer all of Siemon Park, including the residential area, into Miscouche, its other adjacent municipality. The lower tax structure in Miscouche more fairly reflects the lower level of municipal services which Siemon Park receives.

13. Are residents of unincorporated areas which border on municipalities deriving an unfair benefit from municipal services, and, if so, what remedies are available?

Siemon Park is not deriving an unfair benefit from municipal services and is even significantly currently under-serviced for the portion of the property which is inside the municipality.

The Siemon Park property is partially located inside the City of Summerside (the residential area) and partially outside the city (the commercial area, including the waste-water treatment plant and the airport). Siemon Park Corporation owns much of the infrastructure normally owned by governments including the roads, the water and sewer system and the airport at SIemon Park. The commercial area of SIemon Park, outside the City of Summerside, has no full time residents to take advantage ofthe new investment in recreational facilities made by the City.

Currently, the City of Summers ide takes no responsibility for any aspect of road maintenance or snow removal, sidewalk maintenance or snow removal, storm sewer maintenance or water and sanitary sewer operation or maintenance for the 253 Siemon Park residences and the Holland College property now located within the City.

Consistent with the residential area, the City of Summerside would likely take no responsibility for road maintenance or snow removal, sidewalk maintenance or snow removal, storm sewer maintenance or water and sanitary sewer operation or maintenance for the commercial and airport property of Siemon Park if it was included, resulting in an extreme level of unfair taxation and minimal service provision.

14. Should Regional Services Divisions be created to provide services such as land use planning on a local or regional basis?

Considering our small population and land base and the consistency of the challenges across PEl, the Province should take primary responsibility for land use planning, and possibly for other services such as it has done for waste removal.

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16. In which of the foregoing areas is maintenance of the status quo the best option?

SIemon Park Corporation has not identified any significant advantage to being further included in the City of Summerside and has otherwise identified inclusion within Summerside as a major new and significantly unjustifiable tax burden which will have a negative impact on the Aerospace industry of Prince Edward Island and the long term viability of SIemon Park Corporation.

Our Aerospace tenants have expressed concerns about a possible additional level of property taxation to SIemon Park Corporation on a number of occasions. One of the long term Aerospace companies at SIemon Park, Honeywell International Inc. , closed its Montreal plant in February 2008 and moved some of those jobs to SIemon Park. Honeywell closed another plant in Phoenix at the same time and moved those jobs to Indonesia and Malaysia. At the time of the closures, a company spokesperson said "As a global growth company, Honeywell continuously evaluates operations to manage costs."

Major industries such as farming, food processing (McCains and Cavendish Farms) and Aerospace (at SIemon Park) require low-taxation areas of the Province - such that they can remain competitive with the other economies of the world. With the current economic turndown, there is a lot of idle manufacturing capacity available all across North America.

The residential area of SIemon Park is already included in the City. The commercial area of SIemon Park should remain outside the City.

We trust this submission is helpful and would like to wish the commission much success in your deliberations on this important matter.

Yours very truly,

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