Chelsea municipal council adopted a special resolution Tuesday that will now take the dispute with the NCC to the Federal Court of Appeal.
![The Gatineau Park sign in Chelsea on Thursday, Dec. 22, 2022.](https://smartcdn.gprod.postmedia.digital/ottawacitizen/wp-content/uploads/2023/02/1223-chelsea-09_274842230.jpg?quality=90&strip=all&w=288&h=216)
Chelsea Mayor Pierre Guénard says the municipality will appeal a “fundamentally unfair” court ruling that allows the National Capital Commission to a decide how to value Gatineau Park for tax purposes.
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Chelsea municipal council adopted a special resolution Tuesday that will now take the dispute with the NCC to the Federal Court of Appeal.
Earlier this year, the Federal Court sided with the NCC in the Crown corporation’s five-year tax battle with Chelsea.
Federal Court Judge Peter George Pamel ruled that the NCC lawfully calculated the payments it made to Chelsea in lieu of taxes for its Gatineau Park properties. Pamel called the NCC’s approach “transparent, intelligible and adequately justified.”
“The ruling is unfair for Chelsea taxpayers who will have to bear the burden for what the NCC is not paying,” Guénard charged in an interview Tuesday.
The mayor said the NCC, by chronically undervaluing its Gatineau Park property, has left an $800,000 hole in Chelsea’s $25 million-a-year municipal budget.
In 2022, Guénard said, Chelsea expected the NCC to pay $1.56 million to the municipality in lieu of property taxes based on property values established by independent appraisers.
The NCC said that valuation was unfair since its holdings were for conservation purposes, and it paid $770,000 based on its own valuation of its Gatineau Park properties.
“What that does, it means we have to cut on services for residents and on roadwork because that money was not paid in full,” Guénard argued. “It’s a significant amount of money, almost four per cent of our budget.”
Federally owned land is not subject to taxation by municipal governments in Canada, but like other federal landholders, the NCC makes payments in lieu of taxes.
In late 2021, Chelsea went to Federal Court for judicial review of the NCC’s decision to override the recommendations of a federal advisory panel, which said the Crown corporation owed the municipality $1.4 million for payment in lieu of property taxes for the years 2018 through 2020.
The NCC argued the system used to value its Gatineau Park properties was fundamentally unfair because it treated the land as if it had development potential.
The NCC said it could not accept a valuation of its Gatineau Park properties based on the sale of comparable residential properties when none were as large, or as restricted, as those it owned.
The municipality argued the NCC was duty-bound to follow the recommendations of the federal advisory panel, known as the Payments in Lieu of Taxes Dispute Advisory Panel, and it went to Federal Court for judicial review of the NCC’s decision.
Pamel sided with the NCC, ruling it is not bound by the advisory panel and can deviate from its conclusions if it believes they offend property tax principles.
Guénard said the advisory panel should not exist if the NCC or other federal landholders don’t have to abide by its findings, and he argued the court decision sets a dangerous precedent for all municipalities that play host to federal lands.
The Union des municipalités du Québec, which represents more than 1,500 municipalities in the province, has offered Chelsea financial support, said Guénard, who hopes more municipalities will join the court fight.
In a statement, the NCC said it was surprised by Chelsea’s decision to appeal the case. “It is disappointing that the municipality is choosing to extend the judicial process at taxpayers’ expense. We maintain the Federal Court’s decision is clear and unambiguous,” an NCC spokeswoman said.
According to the NCC, Gatineau Park generates more than $240 million in economic activity and helps to support more than 4,700 jobs in the region.
Two years ago, angry Chelsea taxpayers threatened to disrupt access to Gatineau Park over the NCC’s approach to taxes.
According to the Federal Court decision, the Municipality of Chelsea sought to impose valuation increases of 19 to 25 per cent on NCC properties in Gatineau Park. During the same period, the average valuation increase in Chelsea was 3.9 per cent.
After conducting its own analysis, the NCC decided it would pay the municipality of Chelsea $1.1 million for the years 2018-20 based on an effective value of $49 million for its Gatineau Park holdings, according to the court decision.
Chelsea said that valuation was less than half of what the federal advisory panel recommended.
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