Some Saint John city councillors are questioning provincial tax assessment rules after a $200-million investment in the Irving Oil refinery last fall generated only a marginal increase in city tax revenues.

"You certainly hope for a greater increase than that and certainly the public would,"  said Coun. Shirley McAlary.

"The city doesn't have any control. We have to take whatever the assessment office tells us."

Tax bills issued by the province this week show the oil refinery's assessed property value was increased by assessors from $97.9 million last year to $98.6 million this year, pushing its tax bill up by $33,000.

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Coun. Shirley McAlary says the city has no say in tax assessments, the province controls the rules. (Connell Smith/CBC)

But that's a fraction of what some expected after the company invested $200 million in "substantial upgrades" at the refinery last fall during a project it called Operation Falcon.

Coun. Gerry Lowe says he's surprised the refinery's appraisal and tax bill grew so little given the value of improvements.

"It's not the fault of the company, it's the rules that exist in the province of New Brunswick. That's where I find the fault," said Lowe.

"If an ordinary person put a deck on the back of their house and the assessment people come around and you spent $5,000 on your deck your property would definitely be assessed $5,000 more."

Matt Pearn, a Fredericton lawyer, says New Brunswick's Assessment Act treats industrial properties much differently than commercial and residential properties and spending millions on improvements often does not translate into a property assessment increase.

"Our legislators have made compromises in the way that we tax certain kinds of businesses," said Pearn.

"At some point there was a decision made on a trade off. You decide that the jobs that are there are worth more than the taxes you might collect as a municipality."

Machinery and equipment are exempt from property tax assessment in New Brunswick, as are tanks that hold crude oil and pipelines that connect those tanks to refineries.

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Despite a $200-million investment, the Irving Oil refinery's assessment only went up by $700,000. (CBC)

That's part of the reason significant investments at the refinery do not drive up its assessed value, according to Service New Brunswick spokeswoman Bonnie Doyle Creber.

Service New Brunswick is responsible for conducting assessments province wide.

"A significant investment in a manufacturing and/or improvements to an industrial property may not produce a corresponding change in assessment value,"  she wrote in an email to CBC News.

"If the investment is identified as an upgrade or retrofit of a current process [machinery and equipment], there will be minimal impact on the property valuation as these components are not assessable under the Assessment Act in New Brunswick." 

Samantha Robinson, an Irving Oil spokeswoman, echos that point and said there's nothing unusual with improvements at the refinery not affecting its assessment. 

"Turnarounds, including Operation Falcon, involve routine maintenance to existing assets. These projects take place regularly and unlike net new construction, they do not impact the assessed value of a refinery in a material way as machinery and equipment are not part of the assessment formula," Robinson said in an email to CBC News

"These annual maintenance projects make significant contributions to our regional economy. For example, as one of the largest private sector investments in Atlantic Canada last year, Operation Falcon resulted in $31 million in direct and indirect tax revenues."

The Irving Oil refinery does pay the single-largest property tax bill in Saint John at more than $4.8 million, but it's a fraction of what some other Canadian refineries pay in provinces that do not exempt machinery and equipment from assessment. 

According to property tax records in Alberta, the Suncor oil refinery outside Edmonton, which is half the size of the Irving facility, is assessed at $1.9 billion and pays $17.8 million a year in property taxes. Lowe says he would like to see similar treatment in New Brunswick.

"The problem is the province, not the refinery," said Lowe.