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Abandoned oil properties affecting M.D tax base

Posted on September 28, 2017 by Vauxhall Advance

By Cole Parkinson

Vauxhall Advance

The economic climate in regard to petroleum has left M.D. of Taber council with a few issues to clean up. But it isn’t as simple as they would like it to be.

There has been a level of confusion within the council surrounding coding issues with 46 abandoned oil and gas properties, all of which have been assessed as exempt from taxation and have not been subject to school requisitions.

No legal owner can be found within the records of Service Alberta due to the businesses entering bankruptcy and vacating the properties.

“Six months ago we asked municipal affairs for information pertaining to 46 gas properties that were owned by corporations which have been struck from corporate record by Service Alberta because they didn’t file for corporate records or because they’ve gone bankrupt up to the month of public record. So we asked six months ago for how we should be dealing with this. There’s no legal record so therefore we can’t send out tax notices because we send a tax notice to the address or corporation that no longer exists. We typically get those letters back in the mail, so our assessor’s exempted these 46 properties from taxation. They’ve not been subject to school requisitions,” said Derrick Krizsan, CAO for the M.D. of Taber.

Due to the properties being abandoned and having no assessable person connected to the properties, the M.D. had to code them exempt under the Municipal Government Act and the Assessment Regulations, but they heard back from Municipal Affairs and were told they were incorrect.

“We got some correspondence back here from Steve White, the director of assessment at Municipal Affairs and he indicated that these properties are quoted incorrectly and has asked that they be re-quoted in order to make them taxable for school requisitions. The problem is this… no assessable person and the properties are abandoned. Both of these issues make it impossible under the Municipal Government Act and the regulations to code them anything other than exempt. The assessment branch is requesting our assessors to not follow the act and regulations and to do so could prescribe specifically within the code of ethics to do,” said Krizsan.

“What they are asking us to do is collect school requisitions, send out the bills, get the bills back, pay the school requisitions and then next year take the amount we paid, add it back to the non- regulated properties to collect the school requisition.”

Another big issue comes from the debt that exists between the abandoned oil and gas properties and the M.D. having to find an answer on how to pay the taxes.

“The non-regulated properties being non-residential assessment class means that every other non residential property owner now shares in the taxes that weren’t paid by those defaulted companies. So that includes the store in Grassy Lake, that includes the store and restaurant in Hays, that includes the store and restaurant in Enchant. All of those property owners now pay a portion of the oil companies (taxes),” said Angel Svennes, assessor for the M.D of Taber. “Your concern is who’s going to pay the tax and my concern is as a regulated accredited professional assessor, I am now being asked to potentially breach my code of ethics and conduct.”

Svennes also noted that the M.D. of Taber wasn’t the only municipality to receive the directive, as one further west had also run into the same type of situation.

The board members voiced their frustration with the lack of communication and co-operation put forth by the Assessment Branch of Municipal Affairs.

Krizsan says that if direction were given on how best to solve the issues, they would have been able to get the job done.

“We wanted an answer to our inquiries six months ago, give us the answer on how you want us to deal with these 46 problems. If we get an indication back from Municipal Affairs saying our legislation doesn’t matter, go ahead and code these as however they want to code it, we’ll do that, but we need authority to exceed the limits of requisition.”

Svennes also echoed her frustrations with the lack of collaboration between the two sides. She also voiced a question on what will happen with the land.

“From this municipality’s perspective, that’s the small fish in this case. The bigger fish is what do we do with these properties that our legal council has advised us what we did is acceptable. The other question we have to ask ourselves is are they even assessable. But we’ve tried to communicate with Municipal Affairs for six months now and there has been zero communication. There has been no effort to collaborate with us to work towards a solution and in five days they’ve directed us to change codes and fix it.”

The group has already moved forward with changing the codes. But they’ve run into another problem that is making it difficult for them to show they’ve done the work.

“Right now our audit hasn’t been finalized because we haven’t changed these yet. We can’t even do that, we can’t even input our revised assessments because they’ve locked us out of the system. On one hand they are saying, here, input your revised assessments, change your coding. But on the other hand they are saying we haven’t finalized your audit so you can’t input it into the system,” said Svennes.

The board was not thrilled with how the process had progressed so far and they felt that things weren’t going to improve any time soon.

“See they don’t care, the province just wants their money, they just want the school taxes,” said Dwight Tolton, deputy reeve for the M.D. of Taber. “It’s a hole in the budget and we’re the hole so they’re not going to fix this.”

The council also considered what consequences would befall them if they decided to not update the codes at all.

“If we don’t change the codes, essentially what happens is they will have to calculate our equalized assessment by hand rather than just pushing a button, and that shortfall we will see next year is on collectibles. They will be accounted for right up front. So rather than us giving them an operating expense or operating income for the year, we just cut it off now, so from our perspective that’s probably better for our operating budget. From the other perspective is we run the potential of not passing our assessment audit which means, grand scheme of things, the minister can say, ‘hey M.D. of Taber you should have never mailed tax forms’,” said Svennes.

“This is the school requisition tax this year but what happens next year when we have DIP (Designated Industrial Property) requisition that is now a requisition under a company that no longer exists. So now we’ve prepared an assessment, we’ve asked the government to reimburse us for the costs of preparing the assessment, but the body that we are supposed to be recovering it from doesn’t exist.”

The board then passed a motion unanimously to send a letter and arrange a meeting with municipal affairs as soon as possible.

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