Pressure Mounts on BC to Halt Pipeline Property Tax Break

British Columbia’s finance minister may be set to delay a proposal that would slash the assessed value of pipelines, giving pipeline companies a massive tax break at the expense of rural property owners.

At least that is what one local official says he was told by a pipeline company representative. But rural residents and politicians continue to wait for official word from Victoria on whether it will sign off on reduced assessments for pipelines.

In September, BC Assessment told officials at the Thompson-Nicola Regional District that it had concluded that the assessed value of transmission pipelines should be reduced by as much as 30 per cent. The proposed reduction followed a nine-year review that BC Assessment officials said was requested by the pipeline companies.

Lower assessments would allow pipeline companies to pay considerably less property tax to local governments. These governments couldn’t simply raise the tax rates to compensate for lower assessments because the province caps utility property taxes at four per cent of a utility’s assessed value or 2.5 times the municipality’s business property tax rate, whichever is greater.

Thompson-Nicola Regional District officials warned that rural residents and businesses would then face massive tax increases to cover reduced pipeline tax revenue, especially in areas with little other industry. In a letter to the provincial Finance Ministry, the Thompson-Nicola Regional District wrote that the changes could lead to a 25 per cent property tax increase for rural homeowners.

The assessment changes still need the sign-off of provincial Finance Minister Brenda Bailey.

Numerous municipal and regional district governments have followed the Thompson-Nicola Regional District’s lead and sent letters to Victoria urging the province to delay approving the changes. The Cariboo Regional District, the Regional District of Fraser-Fort George and the Fraser Valley Regional District have all sent letters, as has the District of Clearwater and a slew of Fraser Valley municipalities, including Chilliwack, Hope and Kent.

The pressure campaign may be working.

Usoff Tsao, a Thompson-Nicola Regional District representative for the remote Wells Gray area, said a Trans Mountain official recently told him the province had said it was pausing the proposed assessment reduction.

“Trans Mountain sent a letter to the minister of finance, Brenda Bailey, to request a pause, and she also said that the minister responded confirming there is a pause,” Usoff told The Tyee.

Usoff recounted the same conversation to his regional district colleagues at a meeting last week. Tsao said the Trans Mountain official also told him the pipeline company was surprised by the news that assessed values might be dramatically cut this year.

Tsao said the comments were made by a Trans Mountain community liaison at a recent community event in Clearwater.

Neither the province nor Trans Mountain head office officials would confirm the substance of the comments with The Tyee.

In a statement, a Finance Ministry official said the BC Assessment pipeline valuations are “only proposed... at this stage” and that Bailey would be reviewing the changes “in the next few weeks.” Trans Mountain said questions were best directed to the provincial government.

Meanwhile, Conservative Party of BC MLA Peter Milobar has submitted a private member’s bill to the legislature that would loosen the cap on the maximum tax rate local governments could charge.

He said changing the cap would allow the province to ease the burden on residents and small businesses if the province confirmed the assessment changes. But Milobar told The Tyee he would be just as happy to see the province pause the assessment changes.

The legislature is still sitting for another week, but it is up to the government to designate time to debate the bill or submit its own alternative.

Milobar said the Conservatives would be happy to speed the passage of a legislative fix. “We’re not out to be obstructionist on things like this that are very clearly time-sensitive and need to be dealt with,” he said.

The matter is urgent because of how little notice local governments were given about the proposed assessment changes, Clearwater Mayor Merlin Blackwell told The Tyee.

Regional districts typically have their coming budgets sketched out by December, said Blackwell, who has spearheaded the pressure campaign by local politicians. For rural areas with major pipelines — and not much else in the way of industry — changes to pipeline assessments will require major adjustments.

“They’re supposed to basically be in final budget slicing and dicing by December,” he said. “This gives them no real time to do that, and this type of tax hit is a major cut.”

The lobbying isn’t happening just among politicians. In Blue River, a small community between Clearwater and Valemount, the local community association is creating a petition to accompany its local regional district representative’s letter to Victoria.

Tsao, for his part, doesn’t want to see the assessment changes simply paused.

“I don't think any of us local government representatives should let up the pressure until there is a cancellation, not just a pause, of this type of review,” he said.

Tsao pointed to work Trans Mountain is doing to increase flow through its pipes and the pitch made to communities when the company was lobbying for local support for twinning the pipeline.

Twinning work in the Kamloops-to-Valemount corridor took years and led to traffic challenges, strains on local health care and community discord during protests, Tsao said.

“We supported all of that because the sale was it would bring immediate jobs and long-term financial support through local taxation to support local governments,” he said.

“It’s really important for us to show that we hold them to their sales pitch during the application phase. You said there’s economic benefits. You can’t just put in the pipeline, walk away and come back and say, ‘Oh, the pipeline is going to be worth less now.’”