Lacombe County council has voted against giving an oil company a $31,000 tax break.
Calgary-based Silverleaf Resources Inc. had asked the county to cancel the back taxes owing on six wells the company purchased from the Orphan Well Association.
The wells were among the assets of Point Loma Resources Ltd., which went into receivership last June. The company had extensive holdings in west central Alberta, including about 300 wells, 56 facilities and 182 pipeline segments.
The Orphan Well Association made the receivership application and is now left with the assets and the future cost of cleaning them up.
Because of the bankruptcy, Lacombe County had assumed most of the assets would remain on the well association’s books and the county would be out the taxes it is owed.
However, earlier this month the county found out that Silverleaf Resources had conditionally purchased six well sites from the Orphan Well Association. As part of its due diligence on that sale, Silverleaf wanted the county to forgive $29,958 in unpaid taxes from 2019 and 2020, as well as a portion of the 2021 taxes owed prior to the sale of the well sites for a total of $31,494.
A report to council says it is unlikely the county would see any of that money even if the well site deal goes through.
Under current bankruptcy laws, municipalities are considered unsecured creditors, which means other creditors can try to recoup what they are owed before municipalities can seek what they owed in taxes.
It is a situation that Rural Municipalities of Alberta wants to see changed.
A recent survey by the group that represents 69 Alberta rural municipalities and municipal districts found that oil and gas companies — 57 per cent of which are operating — owe $245 million in unpaid property taxes. That debt is up from $173 million last year and $81 million in 2019.
“Non-payment of property taxes by some oil and gas companies is an ongoing and increasingly urgent threat to the ability of rural municipalities to provide the core infrastructure and services that the oil and gas industry relies on to access natural resources,” says the association.
Rural municipalities oversee and maintain 70 per cent of the province’s roads and 60 per cent of its bridges.
The RMA wants the province to change the Municipal Government Act so that municipalities have the same power to recover taxes from oil and gas companies that municipalities have to ensure other property owners pay. For instance, municipalities can auction off properties where taxes are in arrears with the proceeds going to pay off tax debts.
RMA president Paul McLauchlin said earlier this month municipalities are willing to work with the government and the energy industry to help ease the tax burden during the current tough economic times.
“However, constructive dialogue will not take place while the oil and gas industry continues to take advantage of municipalities through the non-payment of property taxes, and the province stands by and does nothing,” says McLauchlin.
“Let’s have a conversation about how municipalities, industry, and the province can work together to support one another, rather than continue to let some companies take advantage of legislative loopholes.”