Recently, the Rural Municipality of Corman Park (RM) and English River First Nation (ERFN), through its business and investment arm, Des Nedhe Group, entered into an Indigenous Public Partnership, where the RM would receive wastewater treatment service from a treatment facility built on ERFN lands. ERFN built a multimillion-dollar wastewater facility using favourable financing rates obtained from the federal government and will be serving the RM’s wastewater needs, providing development opportunities for the growing RM.[1]
Indigenous Public Partnerships present opportunities for municipalities to consider placing certain public infrastructure, like water treatment plants, landfills and recreational facilities, into the hands of First Nations looking for reliable investment opportunities.
There are many benefits to Indigenous Public Partnerships, such as providing a municipality with a cost-effective way of replacing aging infrastructure. A large percentage of public infrastructure in Canada is in need of replacement. For example, the 2019 Canadian Infrastructure Report Card, produced by the Federation of Canadian Municipalities, reported that 41% of solid waste assets are in poor condition.[2] Partnering with First Nations, such as ERFN, could potentially aid in the development of new infrastructure and facilitate sustainable growth in municipalities across Canada.
An immediate benefit of an Indigenous Public Partnership for a municipality is the cost savings and risk mitigation with respect to municipal procurement. Municipal governments must follow procurement policies prescribed by the Canadian Free Trade Agreement and the New West Trade Partnership Agreement; however, both agreements contain exceptions for any measure adopted or maintained relating to Aboriginal peoples.[3]
Additionally, municipalities often struggle to fund capital-intensive infrastructure projects without raising taxes. In contrast, with ongoing settlements between the federal government and First Nations, many First Nations in Canada have healthy and growing economic development arms looking to invest in reliable industries and businesses.
Furthermore, First Nations’ economic development arms often have access to favourable financing opportunities as compared to municipalities or private businesses. Additionally, municipalities and most First Nations can capitalize on certain tax exemptions that are available under the Income Tax Act. For instance, subsection 149(1)(c) of the Income Tax Act states that “[n]o tax is payable… on the taxable income of a person for a period when that person was… (c) a municipality in Canada, or a municipal or public body performing a function of government in Canada.” The courts have held that many First Nations are eligible for a tax exemption as a “public body performing a function of government in Canada.” These factors present an opportunity for financial benefit to both parties because the income generated by either the municipality or First Nation in connection with the operation of the asset will be tax-exempt. This is in contrast to private businesses that would not be subject to similar tax exemptions on their income.
However, municipalities are not the only party that benefits from these Indigenous Public Partnerships. By partnering with municipalities, First Nations are partnering with dependable parties and can obtain reliable returns in well-established industries. Furthermore, by being active participants in economic development, First Nation economies thrive, creating wealth and jobs and shaping the municipal, provincial and national economies.
Ultimately, there are numerous benefits to consider with an Indigenous Public Partnership for your next municipal public works project. Contact one of the authors to learn more.
[1] “Corman Park partners with English River First Nation on wastewater treatment facility” (6 July 2022), online: Clark’s Crossing Gazette < www.ccgazette.ca/articles/corman-park-partners-with-english-river-first-nation-on-wastewater-treatment-facility/ >.
[2] “Canadian Infrastructure Report Card 2019” (2019), online (pdf): Government of Canada < canadianinfrastructure.ca/downloads/canadian-infrastructure-report-card-2019.pdf >.
[3] Canada Free Trade Agreement Part IV – Exceptions Article 800: Aboriginal Peoples & New West Trade Partnership Agreement Part V – Exceptions A. General Exceptions 1(a) Aboriginal peoples