The Town of Fort Frances will see a loss of more than $25,000 in revenue due to a market value decrease of the international bridge here.
The town is set to receive just $14,888.84 in tax revenue from the Minnesota, Dakota & Western (MD&W) for 2011, town treasurer Laurie Witherspoon told council at Monday night’s meeting—a decrease of $25,111.16 from 2010.
“Our payment-in-lieu [PIL] for the international bridge is legislated by Ontario legislation that tells us how we calculate the taxes for the international bridge,” Witherspoon explained.
“Part of that is we contact the department of revenue for Minnesota and they give us the market value for the bridge, and that is their assessment.”
For 2010, the assessed value was $1,447,620, noted Witherspoon.
This year’s assessment is just $432,498—a decrease of $1,015,122
“[The devaluation] was caused by a combination of factors that we use to determine the value for the railroad,” Ann Schwiegar, with the Minnesota Department of Revenue’s Property Tax Division, explained in an e-mail to the town.
“First, we calculate a five-year average of net railway operating income,” she noted.
“The five-year average income was lower because of lower operating income in 2009 and 2010.”
As well, Schwiegar said the railroad is entitled to a deduction for personal property—a deduction which “dramatically increased” from the 2010 to 2011 assessment year.
“The increase in the allowable personal property deduction was caused by MD&W reporting their leased equipment as personal property, which the company had not been reporting in the past,” said Schwiegar, noting that leased equipment is exempt from taxation.
“What really concerns me more than anything is that the Americans have the right to tell us how much we can charge for taxation, for the values,” noted Mayor Roy Avis.
When preparing the municipal budget, Mayor Avis said they take into consideration all the taxation money—meaning council and administration will have to try to adjust to the loss of $25,000 by either reducing expenses for the year or increasing assessments in different areas.
“It is a concern—and that size of money,” he remarked. “If you’re looking at the average residential home, you’re looking at eight or nine residential homes that you’d have to have in order to pick up that lost revenue.”
This is the first time this reduction has happened, added Mayor Avis, so council is just “getting our feet wet” in dealing with it.
“We’ve got all the information now about why it has happened,” he said.
“And now we’re able to sit down and logically proceed and see: is it going to happen more? Is it not? What can we do to prevent this in the future?”