BARRHEAD-An oil and gas company with assets in the County of Barrhead was hoping to get a pass on a large portion of the property taxes it owes the municipality.
On Feb. 2, councillors unanimously denied the energy's company's request to accept a one-time payment of $139,216, which is about 60 per of the $260,612.23 that it owes the municipality for the 2017 to 2020 tax years.
Instead, the company will be encouraged to take advantage of the municipality's tax instalment payment plan (TIPP) program to help them get current.
The company, which the county did not name due to privacy concerns, asked the municipality in a letter to accept the one-time payment citing economic pressures on the energy industry due to depressed energy prices, tax burdens, operational costs and COVID-19 related disruptions.
"[We] are committed to addressing our financial obligations in a meaningful way. We plan on being an active corporate partner in our area and through direct employment of many third-party contractors in your area, we are providing employment that generates economic activity in your area, which generates economic activity in the community," the company stated.
If the municipality accepted the one-time payment, which did not include late penalties, the company would consider its tax account up to date.
County manager Debbie Oyarzun strongly advised council to reject the request.
"Accepting the company's proposal would set a precedent for all energy companies and further jeopardize tax collection from the oil and gas sector," she said, adding the company made a similar request to at least five other municipalities.
She added under Alberta's Municipal Government Act (MGA) council can cancel forgive all or a portion of property taxes, refund all or part and/or defer collection of taxes if they "consider it equitable”.
Unfortunately, Oyarzun said, municipalities have little recourse when it comes to collecting linear assessment taxes that are in arrears.
"It is not like a residence," she said, adding that with unpaid residential taxes, a municipality can seize the property and sell it.
Oyarzun also noted that the courts have also determined that municipalities are not secured creditors in the oil and gas sector, which also hampers their ability to collect outstanding taxes, at least without incurring significant legal costs.
"An agreement was offered [to the company] in 2019 but it was not honoured," she said, adding the company only made two payments totalling $41,243.
Originally the company only had five tax rolls in the county, but Oyarzun noted in 2020 they added five more from a recently bankrupt energy company.
"In conversations with the company, they said it puts them in a better financial position," Oyarzun said. "I hope that is the case because of the acquisition, the assessed value will have gone up and the amount they owe in taxes will increase."
Deputy reeve Marvin Schatz agreed with Oyarzun's recommendation saying if they accepted the offer they could soon find themselves in a position where the vast majority of energy companies default in their property taxes.
Coun. Darrell Troock interjected he might be more willing to reach some sort of agreement if they had honoured their original agreement.
"They have proven over and over that what they tell you and what they do are two different things, so let's stick to our guns," he said.
For the 2020 tax year, 31 oil and gas companies owed $2,577,808 in linear assessment (property tax).
Nineteen of those companies paid their taxes in full accounting for more than $1.6 million in linear assessment revenue owed.
Two companies are in arrears owing close to $250,000 ($305,589 in 2020 and another $242,551 in previous years including penalties)
Another $398,130 was taken off the books after two companies declared bankruptcy.
That leaves eight companies owing approximately $413,412 ($285,171 in 2020 and $128,241 including penalties for previous years) who have not attempted to make any restitution.
The total value of all unpaid taxes by energy companies in the municipality over multiple years is $961,553.
Barry Kerton, TownandCountryToday.com
