Cities Win Airport Tax Ruling

Dale Smith, Blacklocks.ca
Municipalities stand to gain millions in tax assessments with a court ruling on airport lands. Nav Canada, the Crown corporation that manages traffic control towers, had fought for tax assessments of as little as $20 on property valued in seven figures.

“It’s an important decision in assessment,” said Jack Walker, lawyer with Walker West Longo LLP of Toronto. “You’re going to have this situation now where you have these unique properties that are going to be litigated. Municipalities that lost out are going to be revisiting a lot of these things.”

Tax assessors in four B.C. communities challenged a Property Assessment Board ruling that airport lands including Nav Canada offices and control towers be assessed at a “nominal value of $10 for land and $10 for improvements.” The rates were challenged by assessors in Pitt Meadows, Penticton, Castlegar and North Saanich, B.C., home to the Victoria International Airport. North Saanich assessors put the value of Nav Canada property at $1.4 million.

“It’s simply an issue of valuation, and with respect, I don’t think that valuation is an issue the Supreme Court  feels it should be bothered with,” said Walker. Nav Canada had appealed a B.C. court ruling that struck the $20 assessments. Supreme Court justices declined to hear the case.

Nav Canada, created as a non-profit corporation to manage civil air services in 1995, had objected to market-based property tax assessments. Federal lands are subject to local taxes under the Assessment Act.

“How does one value lands and improvements for assessment purposes that are dedicated to a single purpose, entirely unique, with no identifiable market and used by a monopoly for the restricted use? That is the essential question,” B.C. Court of Appeal Chief Justice Robert Bauman wrote in an earlier ruling on the case. The provincial court overturned a Property Assessment Board decision as flawed, and ordered the Board to reconsider assessments on airport lands.

The Board had concluded market rates didn’t apply to Nav Canada offices and air traffic control towers, noting there must be “a competitive and open market for the property being valued”; “The Board concluded there was no such market in this case.”

Chief Justice Bauman said airport lands indeed had value over $20: “To Nav Canada I would say that it is using the noted lands and improvements for its business; it charges fees to users of its services,” he wrote. “The lands and improvements are totally appropriate for that purpose. Those lands and improvements have a rateable value; in assessment law that is not destroyed because of Nav Canada’s unique operation, or the fact that it may be the only entity with any possible use for these lands.”

No estimate was made of the financial impact on Nav Canada nationwide, or the anticipated tax revenues for municipalities.