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Councillors cautious about property tax deferral

Lack of consultation on provincial bill has councillors concerned

Some St. Albert city council members are cautious about a new provincial bill that would allow for the deferral of business property taxes – legislation they say was developed without consultation.

St. Albert Coun. Ken MacKay told the Gazette he is intrigued to see how the property tax deferral could play out across the province but added “the devil is in the details.”

On Tuesday, the provincial government announced it was introducing a new bill, the Municipal Government (Property Tax Incentives) Amendment Act, which would hand municipalities the power to pass bylaws to provide tax exemptions, refunds and deferrals to businesses for up to 15 years.

"This will give municipalities the tools they need ... to reduce the regulatory burden on businesses, bring investment back into our communities and restore the Alberta advantage for all," said Municipal Affairs Minister Kaycee Madu on Tuesday.

St. Albert Mayor Cathy Heron said one concern she has with the bill was that it involved a lack of consultation with municipalities.

"If they thought this was something that is worthwhile, I think the first phone call they should have had was to both RMA (Rural Municipalties of Alberta) and AUMA (Alberta Urban Municipalities Association) ... we could have given feedback and helped develop the bill," Heron said.

MacKay noted the bill was not being advocated for by municipalities.

“This wasn't something that I'm aware of that was on anybody's wish list,” MacKay said.

“I think one of the things AUMA has tried to push forward is to have some sort of consultation ... this will impact all of our communities and our municipalities and anything that has that much of an impact we would certainly like to be consulted on.”

Heron said there could be unintended consequences of the bill if it creates competition between muncipalities that are trying to work together to attract business.

MacKay said he isn’t sure how the new legislation would impact the Edmonton Metropolitan Region and the competitiveness between municipalities.

Right now, the region has formed Edmonton Global, a group dedicated to bringing business to the entire metro region. MacKay and Coun. Wes Brodhead worry there is potential to divide the region through this bill.

Brodhead said municipalities will be more successful in attracting businesses if they stick together.

“If we hunt as a pack, I think we'll do better as a pack regionally,” Brodhead said.

“The whole idea of the metro region and Edmonton Global is that we work together to lift the value of the entire region. One of the things that we hear when we study other successful city regions is that they don’t introduce intermunicipal-type competition, they compete as a region to have businesses come.”

Heron said there is potential for a "race to the bottom" when municipalties are pitted against each other.

All three council members agreed regional competition may not necessarily be the outcome of this bill.

“I'm not saying that this does that – I'm just concerned that maybe we want to make sure that we don't create (a situation) where we have perhaps one community going after and being able to offer incentives that other (municipalities) just aren't able to do,” MacKay said.

Another potential issue the bill could impact is a shortfall in revenue for the city while the business tax is being delayed. MacKay said it could be beneficial to use it to attract a big business to the city but noted they would still need to run roads and sewers to the business.

“We will still require money to do that and that money would have to come from somewhere. And so will it will come from the resident then?” MacKay asked.

“You can’t just have all these tax holidays and be able to operate a city."

Brodhead agreed, noting the money needs to come from somewhere.

“That's the challenge for council, because every decision you make impacts somebody, for better for worse,” he added

Both councillors said they would need to use the bill cautiously, if they use it at all, and ensure they were considering the impact on the entire city.

MacKay said the city is facing fiscal challenges right now with its repair, maintain and replace (RMR) budget and said this bill could potentially hold a solution for that.

The councillor noted it is not known if the province would also defer their portion of the revenue collected from the property tax, which makes up around 40 per cent of property taxes.

Heron said she is optimistic but added the bill is unlikely to be that helpful to St. Albert, as she said the tax rate is not what could be deterring businesses from coming to the city right now.

"Right now, the hindrance is serviced land. We need to get the land ready to go. We have one of the lowest business tax rates in the region so we have not gone this road because we don't need to."


Jennifer Henderson

About the Author: Jennifer Henderson

Jennifer Henderson is the editor of the St. Albert Gazette and has been with Great West Media since 2015
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