Duane Hicks
The possibility of the town having to foot a mill assessment appeal write-off for the 2009-11 taxation years in the amount of $2.2 million, with an additional annual loss of $800,000 in tax revenue going forward, has councillors worried as they stare down the 2012 budget.
There was considerable talk of the assessment appeal at Monday afternoon’s budget meeting, with the most recent update being that if AbitibiBowater (AbiBow) Canada Inc., now Resolute Forest Products, gets a break on its taxes, the town probably won’t get much help from the province.
Fort Frances treasurer Laurie Witherspoon said she was in touch with the Ministry of Municipal Affairs and Housing (MMAH) and learned that although there is a special circumstances grant municipalities can apply for in emergencies, which the town is free to apply for, the pot is only $500,000 for the entire province.
On top of that, the MMAH currently is redefining exactly what the special circumstances funds can be used for.
“That’s unbelievable,” said Fort Frances CAO Mark McCaig, adding that if there’s no relief anywhere, it’s like playing golf by the rules with no mulligans.
“Every time you’re in a hazard, you pay and you’re heavily-penalized,” he remarked.
“You might as well be on your own.”
While the first teleconference regarding the assessment appeal won’t be held until August, several members of council agreed Monday that they have to keep the potential impact of a totally or partially successful appeal in mind while working on the 2012 budget.
“When I hear all this today, and I am talking from a business sense, I don’t think we can go ahead and not consider this implication in this budget,” said Mayor Roy Avis.
“I’m scared,” he admitted. “If the province is saying to us, ‘It’s up to you. You’re going to have to try and find this [money],’ and if this [decision] comes down in September or October, how can we find it by Jan. 1?”
Mayor Avis stressed the town has to put money in the bank, or at least have a plan of action, in order to prepare for any possible change in the mill assessment.
“I think we have to look at some of that right now,” he remarked.
“I feel how the mayor feels, maybe even stronger,” said Coun. Ken Perry.
“We’re in trouble,” he warned. “It’s not, ‘This might happen’ . . . it’s going to happen and it’s going to be bad.
“Why do we disregard it this year and this budget process? We need to look at it now because otherwise, we’ll really going to be in a pickle next year at this time.
“There will be nothing left,” Coun. Perry stressed.
“I think we have to look at this now,” agreed Coun. Paul Ryan, noting that even if the company gets a 25 percent reduction in its assessment, which would equal a $561,000 rebate for 2009-11, it would be “devastating.”
“And now finding out that there’s only $500,000 in the whole province as a bailout to buy us time—I always thought we could get some time bought with some help by the province, obviously that’s not going to happen—so we [have to] stand on our own two feet,” he added.
“This is all retroactive,” Coun. Ryan continued. “No matter when it happens, it’s all going to come down on us; whether it’s this year, next year, it’s all retroactive and we’re going to have to come up with the dough.
“We can’t just sit here this year and make this budget out, draining our reserves and having to make this huge loan to pay them back.
“We have to act now,” he reiterated.
Coun. John Albanese said every time he sees the mill appeal of assessment come forth, he thinks of the $84.3-million investment of the biomass boiler, which the province helped pay for, and wonders how the mill property can be worth less now than before the boiler was built.
Witherspoon noted the assessment of the biomass boiler is only about $2.2 million.
If the mill’s appeal is successful, it will affect the town’s overall assessment.
This, in turn, will affect the town’s apportionment of levy to the local District Social Services Administration Board.
Witherspoon said the town has written DSSAB a letter informing it that this could happen.
Coun. Rick Wiedenhoeft, meanwhile, said a taxpayer asked him how the company can appeal tax assessment from the past, potentially requiring the town to pay back tax revenues it’s already spent?
Witherspoon noted that under the Assessment Act, taxpayers (industrial, residential, and commercial) are allowed to appeal their tax assessment for the current year, plus the two preceding years.
In this case, the company is appealing 2011, plus 2009 and 2010.
As previously reported, the mill’s owner currently has an appeal before the provincial Assessment Review Board for its mill property in Fort Frances.
The company is looking to have the assessment lowered from $28,260,000 to no more than $15,010,000.
If the mill appeal is 100 percent successful, the town would be looking at giving the company a refund of a little over $3 million ($2.2 million for 2009-11, plus $800,000 in 2012).
If the appeal is 50 percent successful, the refund would be $1.525 million; at 25 percent, it would be $762,720.
As well, in subsequent years, the town would see tax revenues reduced by roughly $800,000 on an annual basis.
The Assessment Review Board is a third-party tribunal run by the Attorney General’s Office at arm’s length to the Municipal Property Assessment Corp.
