The City of Cold Lake has won a round in its legal battle with the federal government over Payment In Lieu of Taxes (PILT).
A federal court judge has ruled that the federal government, through the Minister of Public Services and Procurement Canada and the Department of Public Services and Procurement Canada (PSPC), did not afford the City of Cold Lake procedural fairness, nor did it make reasonable decisions when it withheld PILT relating to the golf course on Canadian Forces Base Cold Lake for 2019 and 2020.
The city and the federal government have been at odds over PILT since 2012. Prior to that time, a mutually agreed-upon assessor determined the value of federal property within city limits, and assessed PILT payments on that basis.
In 2012 the federal government appointed its own assessor, who determined substantially lower values for the federal property. The government paid PILT based on these assessments, which the city contends are unreasonably low.
The federal court ruling addresses the federal government’s unilateral decision not to pay any PILT at all on the federal property occupied by Cold Lake Golf and Winter Club. The federal government contended that a service agreement, under which the city operates the facility, means they don’t have to pay PILT on the property.
The service agreement, however, stated that PILT would continue to be paid.
The court found that PSPC did not exercise procedural fairness in its decision-making and that its final decision not to pay PILT for the golf club was unreasonable. The judgment returns the decision back to PSPC to redetermine the matter with the court’s ruling in mind.
“The best outcome, of course, would be that they’ll pay the fair property tax,” said Cold Lake mayor Craig Copeland. “There’s a value of about $300,000 a year on that property, so let’s hope the federal government decides to take that course of action.”
The city announced last September it would withdraw from the service agreement in light of the federal government’s non-payment of PILT for 2019 and 2020. A new agreement was reached this spring to allow the golf course to open.
The court ruling concerning the golf course property does not address the larger PILT dispute over the assessed value of federal property within city limits, primarily CFB Cold Lake.
To date, approximately $13.1 million in PILT is disputed, in addition to about $13.4 million in penalties, for what the city deems a total outstanding bill of roughly $26.5 million.
In 2014, the city won a decision at the PILT Dispute Advisory Panel, but the federal government applied that decision to only the 2012 tax year. The city is seeking a judgment for the remaining tax years (2013-2020).
Other municipalities have also been affected by low PILT assessments. Copeland said Cold Lake is one of just a few who are committed to pursuing their legal options.
“We just want the federal government to pay their fair share of property tax like everybody else does,” he said. “We’re one of the rare municipalities that is taking a legal action against the federal government. A lot of municipalities are just taking it on the chin, and I’m sure in the background cheering us on.
“So the golf course decision is pretty big, and it took a while, but in the end the right decision was made. Now it’s up to the federal government to pay their fair share of property taxes.”
Copeland said the golf and curling operations run at a deficit of 15 to 20 cents on the dollar.
“The facility is a gem,” he said. “It’s a beautiful facility, beautiful golf course, and it complements recreation. Getting the property tax paid helps with that overall deficit in a big way.”