Saint John city council will be asked to begin reconsidering its approval of the 25-year Canaport LNG property tax deal at its next meeting.
Coun. Gerry Lowe says revelations that Irving Oil signed a multimillion dollar deal to collect rent on the land within weeks of telling the city it couldn't afford to pay a full tax bill makes him think the city and province were not provided the facts they needed to make an informed decision on granting the concession.
He says that may open the door to renegotiating the arrangement, if not ending it completely.
"Everybody knows there's something wrong," said Lowe.
"My problem is, who knew what?"
Documents filed with an Alberta tax court in connection with the Canaport LNG development and obtained by CBC News show Repsol and Irving Oil signed financial agreements with each other that guaranteed over $20 million a year in income to Irving from an LNG development — on June 6, 2005.
That's two days before the New Brunswick legislature began debating whether to grant Irving a property tax cut and 25-year rate freeze for the same project.
Deal slashed property taxes
Saint John council had voted in favour of the tax concession in March 2005, but the ultimate decision belonged to the province.
Although key information around the deal was available before the legislature dealt with it — such as the extent of financial benefits Irving was being guaranteed by Repsol — there is uncertainty about whether that information was ever shared with the province.
Opposition Leader Bruce Fitch voted in favour of the tax deal in 2005 as minister of energy in the Bernard Lord government.
He won't say if Irving disclosed the financial guarantees it had already negotiated with Repsol before being granted the tax concession as well.
"I'm not going to break cabinet confidentiality or anything like that," said Fitch.
"That legislation went forth at that point in time with the information we had at the time and it was the right decision because it did move the province forward."
The Canaport development is now assessed to be worth $300 million and at current rates, would owe the city over $8 million per year in property taxes. Instead the deal reached in 2005 reduces that amount to $500,000 per year until 2030.
Irving poised to make millions
Irving Oil did not publicly explain the need for the tax concession in 2005 but former Saint John mayor Norm McFarlane told city council in March that year that then-Irving Oil president Kenneth Irving told him personally the development would not proceed unless the city agreed to the tax cut.
"The economic reality of this project dictates that without a reduction in this tax the proposed LNG terminal will not be constructed in Saint John," said McFarlane.
"I've sat with Kenneth Irving many many times...I asked him very clearly and looked into his eyes and said Kenneth, look in my eyes and tell me if this does not happen will this facility not be here and he very clearly said yes, it is true."
But Lowe says that is hard to understand given the documents newly released by Repsol showing Irving Oil was poised to make millions from the deal and says he can't believe either level of government was told what the Canaport properties were really worth to Irving Oil before agreeing to cut property taxes on them by more than 90 per cent.
"There are a lot of things I don't believe the council or the mayor of the day knew and I also don't believe the province knew and if they did how could they ever agree to $500,000," said Lowe
Lowe says he plans to make a motion at city council on June 22 to formally ask the province what Irving Oil disclosed prior to the tax concession being awarded and says if it turns out key information was not shared, he's prepared to make a subsequent motion requesting the tax deal be undone.