In 2008 the Penticton Indian Band became a taxation authority, which means they collect property taxes from non-natives living and conducting business within the boundaries of their reserves. In some cases, the PIB then turns around and contracts service provision to the RDOS (e.g., garbage and recycling) or the City of Penticton (fire protection).
Currently there is overlap between RDOS electoral areas and PIB lands. However, since 2008 all decisions about which services are provided to areas like Red Wing, at what level, and at what rate of taxation are made by the PIB Chief and Council, not the RDOS. Since non-native residents of band lands are not band members (and thus cannot vote in band elections), the implication is clear: non-native residents of band land have no democratic representation in any local government. Although Red Wing residents can vote in RDOS elections, the RDOS acts as a service provider to these residents (one of many), not a decision-making body.
The Bish report referred to in the RDOS Corporate Services Committee outlines the history of this situation and makes a few recommendations. The most important recommendation as I see it is to remove reserve lands from municipalities and regional districts in British Columbia. This would simply formalize the current reality and make the governance situation for non-band-members on band lands more transparent.
I have summarized this with a little matrix. Red Wing (and soon Skaha Hills) falls into the shaded area.