Big bucks at stake as Placentia and Port of Argentia fight over taxation
Court injunction preventing town from discontinuing services to former navy base
A complex legal battle over taxation between the Town of Placentia and operators of the Port of Argentia has intensified, with a court order preventing the town from cutting off water and other municipal services to the bustling port.
The two sides are hundreds of thousands of dollars apart, and have exchanged strongly worded claims and counter-claims in the Supreme Court of Newfoundland and Labrador.
The Argentia Management Authority, the non-profit body that operates the former American navy base, has accused the town of trying to make a cash grab, and calls the increased taxes "unlawful and invalid."
Town cancels long-standing tax agreement
The feud erupted after the town, claiming the port was not paying its fair share, cancelled an agreement that had required the port to pay a $70,000 annual grant to the town in lieu of taxes.
The agreement had been in place since 2002, and had not changed despite significant business and revenue growth at the port, "whereas all other taxpayers in the municipality have seen tax increases on numerous occasions during that time," a court document reads.
Both sides were unable to reach a new agreement, so in 2018 the town began charging property, business occupancy and water/sewer fees under a revised tax structure.
The AMA responded with a lawsuit against the town, alleging its annual tax bill had increased to just under $1 million, though in its statement of defence, the town says the figure is closer to $700,000.
The port authority agrees that its taxes should increase, but says the actual amount should be closer to $134,000.
Disagreement over land subdivision
The port says the town improperly subdivided two large parcels of land into 97 parcels, and separately charged property, water and business occupancy tax, while the town counters that the port subdivided the land and was advertising the lots for sale or lease.
Meanwhile, a subsequent appraisal by the Municipal Assessment Agency determined the value of the port properties had increased from just under $15 million to some $55 million.
The town also says the port is trying to distance itself from the town, and has refused to allow Placentia Mayor Bernie Power to attend board meetings, despite the town agreeing to not participate in any discussions about taxation.
In a court document, the town accused the port of "ostracizing the very party … the AMA was created to serve."
Future talks possible
The feud reached a boiling point when the town threatened to cut off services to the port, but this was averted late last year after the port successfully argued for a court injunction against the town.
Attempts by a judge to settle the dispute outside of a courtroom have so far been unsuccessful, though sources say future talks are likely.
An official with the port declined to comment because of the ongoing legal battle, while Power spoke briefly with CBC News, calling the previous tax arrangement "archaic" and "not a reflection for today's current economic situation or today's current tax structure."
He said the port has changed dramatically over the years.
"Like every town, we're struggling to keep up with basic services, without adding a burden on the residents of Placentia," he said.
A major project hub
Argentia is currently home to the largest major project in the province: construction of a concrete gravity structure for Husky Energy's West White Rose offshore oil project, with some 2,000 employees on site.
It's also a busy marine port, and is home to a growing number of businesses.
In a sign of just how toxic the matter has become, the AMA has accused the town of targeting the port because of its own failure to negotiate a more beneficial tax agreement with Husky.
In lieu of taxes, Husky is paying the town $150,000 annually. The original agreement with Husky included an annual grant of $500,000, but that figure was renegotiated after oil prices tumbled in 2014 and the White Rose project was re-evaluated.
In its statement of claim, the port authority says the town is trying to recover that money through the port.
"The town is seeking to make up for the fact that the town made a tax agreement with Husky limiting the amount of municipal taxes that Husky had to pay if it carried on business in the town, while the port obtained substantial rent from Husky," the court document reads.