Canaport LNG gets first property tax hike since 2006

Saint John's Canaport LNG facility has been given its first property tax increase since 2006 because of the offloading of oil at the site, but the event does not signal a major change in the development's tax status, according to the New Brunswick government.

The provincial government had been looking into Irving Oil Ltd.'s recent use of the Canaport LNG wharf to unload oil tankers and has concluded although the activity does not fit the terms of a multimillion-dollar-property tax deal at the site, it is also not serious enough to sink the entire arrangement.

Instead, the provincial government has removed the wharf — or jetty — from the special LNG tax zone, redrawn the zone to fit just around the LNG terminal and given the jetty a separate assessment and tax bill.

"Government has completed its review of the Canaport LNG property in Saint John. It has been determined that the [oil] pipeline and the multi-purpose jetty do not impact the assessment and taxation of the LNG terminal," said Jennifer Graham, a spokesperson for the Department of Environment and Local Government, in an email to CBC News.

"The pipeline and the multi-purpose jetty can be taxed independently of the LNG terminal and these changes were reflected in the facility's property tax bill," wrote Graham

Let's put it this way. Sharper minds than mine might want to consider an argument that the tax [change] isn't correct.- Peter Hyslop

Provincial property records show assessors have determined the jetty to be worth $2.8 million, less than one per cent of the value of the larger LNG development.

This is generating $76,384.30 in new tax revenue for Saint John. The rest of the LNG site will continue to pay $500,000.

Samantha Robinson, a spokesperson for Irving Oil Ltd., confirmed in an email that the company has paid the provincial government for its taxes

"Service New Brunswick conducted an assessment of our properties near Canaport earlier this year," Robinson wrote.

"We gave full support to the province's assessors, providing information about the construction, location, and operation of the secondary crude pipeline and providing access to our property and facilities as part of Service New Brunswick's assessment work. Subsequent to this, we received our property tax invoices and we have paid these in full."

Change made without amendments

The change was made without amendments to the legislation or regulations that created the LNG tax deal.

Peter Hyslop, a Hartland lawyer, says he cannot see how the provincial government can create two tax zones at the LNG site if the law calls for one.

Hyslop, who is a former legal counsel for the Progressive Conservative Party of New Brunswick and public intervener at the Public Utilities Board, says he's not sure the entire tax deal hasn't been compromised by the offloading of oil and either needs to be amended by government or killed outright.

"If part doesn't meet [the regulation] does this imply the whole thing doesn't meet," said Hyslop 

"Let's put it this way. Sharper minds than mine might want to consider an argument that the tax [change] isn't correct."

Matt Pearn, a former CBC journalist who is now a lawyer in Fredericton, says his reading of the tax deal legislation suggests the provincial government has acted properly in amputating the jetty property but thinks it is significant the province acted at all.

"It's obvious the province is paying attention to the issue and they are alive to it in a new way which is a positive for the City of Saint John," said Pearn

The LNG tax deal was created in 2005, after Irving Oil claimed its proposed LNG development with the Spanish energy company Repsol was in danger of collapsing. 

Irving convinced both Saint John and the provincial government to freeze property taxes at the Canaport LNG development at $500,000 per year for 25 years to revive it. 

That's about $7.5 million per year below current rates.

The deal covered three properties owned by Irving Oil and the arrangement was written up in provincial regulations to apply "solely for the receiving and containment of liquefied natural gas" but then Irving Oil began offloading crude oil at the LNG wharf last summer.