Kneehill County cancelled more unpaid oil and gas industry taxes at their regular council meeting March 9, this time stemming from the shuttering of Trident Exploration.
Councillors read a report written by Caroline Silverson, property tax officer, and presented by Bill McKennan, director of corporate services, regarding $9,451.37 in unpaid taxes owed on two property tax rolls, 32222331300 and 34231420400, formerly owned by Trident Exploration, which no longer exists.
County staff recommended, “That the amount of $9,451.37 in property taxes be expensed and cancelled on rolls 32222331300 and 34231420400.”
“The accounts in this request for decision are for two wells purchased from Trident Exploration,” stated the staff memo.
“The court order approving the purchase indicated that the new owners were responsible for the 2020 levies as prorated from the purchase date. These monies have been paid. The balance is required to be cancelled.
“The amount of 2021 penalties to be reversed is approximately $411.74. By reversing these amounts in the 2021 general ledger, we are not artificially showing revenue that will not be collected.
“Administration will apply for the Provincial Education and Designated Industrial Property requisitions in the next round, January 2022, if this is still available to us.”
The topic of uncollectible energy industry property taxes has been on the agenda of Kneehill meetings for many months, similar to rural municipalities across Alberta.
“The ability for the municipality to collect on tax arrears relating to industrial and linear tax accounts has become extremely difficult based on decisions of the courts.,” stated the staff memo.
“The Virginia Hills decision regarding the validity of linear tax arrears has made it impossible for municipalities to collect any amounts owing.
The Redwater decision has also affected the oil and gas sector due to the expectations of any monies left from a bankruptcy to be paid first to the Alberta Energy Regulator (AER) for reclamation purposes.
“Municipal collections are no longer a priority as legislation provided for in the past due to these decisions.”
One problem municipalities face with unpaid oil and gas taxes is education requisition that is billed directly by the provincial government. Local taxpayers pay the tax upfront with their municipalities collecting it later from property owners like Trident.
However, when property owners go out of business and leave unpaid taxes, the local ratepayers are left not only with their unpaid tax bill but the unpaid education requisition as well.
Staff also noted the 2021 budget has been prepared assuming more unpaid tax problems are on their way.
“In anticipation of this situation, the county operating budget for 2021 provided for a $1,100,000 cancellation budget,” stated the memo.
McKennan explained another company has stepped in and purchased the two properties in question. He added that it looks like more assets of the defunct Trident may be acquired in the future.
Councillors unanimously approved cancelling the unpaid taxes and penalty fees and applying for the appropriate reimbursement from the provincial government.
Calgary-based Trident Exploration announced in spring, 2019 it was walking away from its over 4,400 assets and ceasing operations, noting it faced $329 million in environmental reclamation costs and that unsecured creditors and shareholders shouldn’t expect any financial recovery.
The company blamed its misfortune on a number of factors including low natural gas prices, high property taxes and pipeline capacity problems.
Stu Salkeld, Local Journalism Initiative reporter