New Brunswick

Mel Norton orders staff to probe Canaport LNG tax deal

Saint John Mayor Mel Norton says the city is investigating the status of the controversial 25-year property tax deal with Canaport LNG.

'Council would want to ensure that we receive the appropriate tax,' Mel Norton says of Canaport LNG tax deal

Saint John Mayor Mel Norton said he has asked city staff to examine whether changes at Canaport LNG affect the property tax deal struck between the city and the company. (CBC)

Saint John Mayor Mel Norton says the city is investigating the status of the controversial 25-year property tax deal with Canaport LNG.

Norton broke his silence on the issue on Tuesday following a CBC investigation that revealed John Nugent, the city solicitor, has advised Saint John administrators that the property tax break given to Canaport LNG in 2005 only applies if the site is used for importing liquefied natural gas.

Norton said his office learned on Tuesday that oil handling is now being performed on the LNG site.

If that change is such that the property is no longer eligible for that tax deal then council would very much want to ensure that we collect the tax that's due and owing at law.- Saint John Mayor Mel Norton

The mayor said that could cause the city to revisit the property tax deal.

"We've asked staff to look into what the change in the use of that property is,” he said.

“If there has been a change and if that change does impact the tax status, impact that tax deal then, of course, council would want to ensure that we receive the appropriate tax, the tax that's payable by law."

Officials with Canaport LNG owners, Spain’s Repsol and Irving Oil Ltd., could not be reached on Tuesday night for comment.

But documents filed with the Energy and Utilities Board show Irving Oil Ltd. has built a crude oil pipeline from Canaport as a backup to the offshore monobuoy, which has long been used by supertankers to offload cargo.

Saint John and the Canaport LNG owners struck a deal in 2005 that saw a significant tax break given to the LNG facility.

Canaport carries the highest property tax assessment in New Brunswick at $299.4 million.

But under the tax deal, its annual property tax bill is frozen at $500,000.

Canaport LNG is located in Saint John and is a joint partnership between Irving Oil Ltd. and Repsol, a Spanish energy company. The city and the company struck a 25-year property tax deal in 2005. (CBC)
That's a 91 per cent discount on the $5.3 million in annual property taxes the facility would owe Saint John without the deal, an arrangement that does not expire until 2030.

When the tax deal was struck in 2005, the provincial legislature had to pass special legislation to allow for the property tax arrangement.

The legislation says it applies to property "solely for receiving" LNG. There are discussions underway at Canaport to convert the facility to manufacture and export LNG instead.

Earlier this week, Norton said in an emailed statement that it would be “imprudent to comment on hypothetical or speculative scenarios that have not and are not before Saint John Common Council.”

On Tuesday, Norton said city managers were instructed to investigate what is happening at the LNG facility and examine the city’s options.

"We're still gathering information at this point," Norton said.

"But we do understand that there was some change and if that change is such that the property is no longer eligible for that tax deal then council would very much want to ensure that we collect the tax that's due and owing at law."

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.