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City concerned with proposed changes to oil infrastructure assessments

The City of Airdrie is adding its voice to municipalities concerned with the Alberta government’s proposed changes to the assessment model for oil and gas-related infrastructure. At a regular meeting Sept.

The City of Airdrie is adding its voice to the chorus of municipalities concerned with the Alberta government’s proposed changes to the assessment model for oil and gas-related infrastructure.

At a regular meeting Sept. 8, council unanimously approved a motion to partner with the Alberta Urban Municipalities Association to draft a "strongly-worded letter" expressing disappointment with the proposed assessment model, which would center on the market value of infrastructure rather than asset replacement value.

“The first thing that comes to mind is [this is] more downloading onto municipalities the costs and responsibility for raising taxation to meet the needs,” Coun. Al Jones said. “I would like to see us strongly advocate for an alternative. I don’t know what that looks like, but this is not in the best interest of our citizens.

"I know [councillors] have expressed disappointment, but I'm actually at the point of anger."

According to the Rural Municipalities of Alberta (RMA), the Province is considering reviewing how oil wells, pipelines and related machinery are assessed for taxation in order to improve competitiveness for attracting investment in oil and gas-related projects. The City's Intergovernmental Liaison Leona Esau and assessor Val Cottreau outlined the government’s proposed changes and how they would potentially impact Airdrie.

“Implications include a decrease in assessment value for oil and gas properties and pipelines, a decrease in municipal tax revenue collected from these properties and a significant increase in education property taxes,” their report to council stated.

Many small and rural municipalities have voiced concerns about the proposed changes in recent weeks, including Rocky View County (RVC), which borders Airdrie.

The proposed changes would mainly impact rural municipalities, according to Esau, as most pipeline infrastructure and oil wells are located outside of urban centres. That said, the changes could also have implications for Airdrie, through any revenue-sharing agreements the City has with RVC.

“Rural municipalities could find themselves in a position where they have substantial revenue decreases, meaning they may be looking to renegotiate agreements, such as recreation facilities, libraries, transit, etc.,” she said.

Esau added the amount of property tax revenue the City collects could also be negatively impacted. Since education taxes are based on assessment values, she said the reductions could mean urban municipalities “become responsible for a greater portion of the provincial education taxes.”

According to Cottreau, Airdrie has approximately 40 “linear” and designated industrial properties. The properties have a total assessed value of $76.6 million, she said, and contribute slightly more than $1 million towards the City’s total property tax base.

Out of those 40 properties, Cottreau said the proposed assessment model changes would impact 10. She said the potential loss in assessment value resulting from the review would be approximately $7.3 million.

“The potential tax loss, due to the model review, would be approximately $95,000 to $100,000 in property taxes,” she said. “Or, if we only look at the municipal portion which the City of Airdrie maintains, it’s approximately $68,000 to $72,000 in taxes.”

In a statement, Airdrie-East MLA Angela Pitt said the way assessment values are determined for oil and gas properties is an ongoing debate between municipalities and industry members.

“It is important to find a careful balance to ensure both sides are respected and heard,” she said. “Government has been consulting on this matter and will continue to do so into the fall. No decisions have been made at this time.”

–With files from Jordan Stricker