Nova Scotia

Halifax gets $20M from federal government in Citadel Hill tax battle

The federal government has forked over $20 million to the Halifax Regional Municipality after a long-standing battle over taxes owed on Citadel Hill.

Federal panel valued Halifax's Citadel Hill at $41.2M after decades-long dispute

A federal panel valued Citadel Hill, a national historic site in the heart of downtown Halifax, as being worth $41.2 million. (Google)

The federal government has forked over $20 million to the Halifax Regional Municipality after a long-standing battle over taxes owed on Citadel Hill.

Last year, a federal panel valued Halifax's Citadel Hill at $41.2 million in the decades-long dispute between the city and the federal government.

"It's not a matter of winning or losing," Halifax Mayor Mike Savage said Friday. "It's just a good day because it's come to a resolution of an outstanding issue and it's to the benefit of the residents of HRM.

The money will go into the municipality's reserve fund, not any specific project.

"This won't change our priorities, it will probably enable some to be done more quickly," he said.

Site originally valued at $10

Ottawa had argued Citadel Hill, a national historic site contained within a 19.4-hectare parcel of federally owned land in the heart of Halifax's downtown business district, was only worth $10 because no development could take place on it.

An appraiser for the federal government eventually set its worth at about $12.1 million.

In 2012, the Supreme Court of Canada ruled in favour of Halifax's claim that the property was worth as much as $19 million.

The federal Public Works Department then took the case before a federal panel, which valued Citadel Hill at $41.2 million and ordered Ottawa to pay back taxes dating to 1997.

'It is at the minister's discretion'

Parks Canada operates the site as a park and museum. It is exempt from real property taxation, but is subject to a payment-in-lieu of taxes under federal legislation.

"Ultimately these are not taxes. It is a grant, a payment in lieu of that. It is at the minister's discretion," said John Traves, the municipality's director of legal, insurance, and risk management. But he said the $20-million figure was in line with the amount of what Ottawa would owe in back taxes.

Federal Public Works Minister Judy Foote is in the process of reviewing the program, he said, adding that, "the process is set out in legislation and applies right across the country." 

Payment in the bank

The $20-million payment was received Thursday night and only applies to past tax appraisals, Traves said.

"The minister is looking into the entire program and that is part of an ongoing review, and we'll deal with that. If we're dissatisfied in the future, we'll challenge it again."

The province's property valuation service will be doing future assessments of Citadel Hill and billing the federal government at the current property taxation rate in the future, he said.

Feds 'pleased' to reach agreement

Foote said in a statement that the government is "pleased" an agreement has been reached. 

"Our government is committed to ensuring that municipalities receive fair and reasonable payments in lieu of taxes for federal properties in their jurisdiction," she wrote.

A department spokesperson added this payment does not affect how payments on other "unique" properties like national historic sites should be handled.

"This resolution neither creates a precedent nor establishes a methodology on how payments in lieu of taxes for unique properties should be calculated," wrote Pierre-Alain Bujold. 

Quebec City received intervenor status during Halifax's Supreme Court case because of its own national historic sites. 

Legal costs

In addition to the $20-million lump sum payment received Thursday, the federal government paid the city $4 million in payments in lieu of taxes over the course of the 1997-2015 dispute. 

The city spent approximately $316,900 in legal and appraisal costs fighting the case. About $200,000 of that amount was recovered in a Supreme Court decision, which assigned costs to the federal government. 

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