Irving Oil making more money on Canaport lease deal
Low Canadian dollar working in Irving Oil's favour, while city's tax take still frozen
Saint John city councillor Gerry Lowe says there's an even bigger reason the province should consider tearing up a tax agreement with Irving Oil Ltd. over the Canaport LNG property.
Lowe points to the falling Canadian dollar, which is generating increasingly lucrative returns as Irving Oil collects rent on the land in U.S. dollars.
"It has to play into the decision of the province," said Lowe. "This money has only grown over time as the American dollar (has moved). It's an enormous amount of money. It's shocking really."
- Saint John will ask province to repeal Canaport LNG's tax deal
Canaport LNG is built on land leased by Irving Oil Ltd. and even though it is a Canadian-based project, the lease requires Irving be paid rent in U.S. dollars. According to leasing documents obtained by CBC News, the current rate is $12.25 million US a year, payable in 12 equal monthly payments.
At that level, lease payments on the LNG property are worth the equivalent of $1.48 million Cdn per month, an increase of $70,000 from last month and $246,000 since April
In December the City of Saint John sent a request to the New Brunswick government to terminate a special rate given to the LNG property in 2005 that freezes municipal taxes on the land at $500,000 per year for 25 years.
Currently, the property is assessed as being the most valuable in the province and would owe Saint John more than $8 million per year in property tax without the special rate
City wants deal thrown out
Saint John requested the termination following a series of CBC reports last spring that disclosed financial details about the LNG development including the multi-million dollar lease arrangement on the property with Irving Oil.
Jennifer Graham with the Department of Environment and Local Government says the issue is still being reviewed
"We are considering their request and no decision has been made yet," she said in an email.
Lowe said as the sinking Canadian dollar makes the lease on the LNG property more and more valuable, support will build to end its preferred tax treatment.
"I just hope they're looking at it and will do something about it because we are hurting here in the city."