July 7th, 2020

Good for farmers, tough on revenue

By Collin Gallant on September 27, 2018.

The inside of the Kipling Street greenhouse is seen in this photo. Current property tax exemptions for farm buildings inside corporate limits are being debated this week by mayors from across Alberta at provincial policy meetings. At issue is separating cannabis production from that exemption, which could have a huge impact on property taxes collected from the Aurora Sun marijuana production facility being built in the city's northwest.


A move by the New Democratic government to help farmers keep costs low and also aid developers holding land for future development could also mean a huge loss of property tax revenue for Medicine Hat and Redcliff.

The issue is being debated this week by mayors across Alberta at provincial policy meetings, including a request to separate cannabis production from property tax exemptions on farm buildings inside corporate limits of a town or city.

A current 60 per cent exemption on farm buildings greenhouses will grow to 100 per cent in regular increments until 2022.

It came to light in Medicine Hat this week with the News revealing there would be little to no new tax revenue coming from a proposed $130-million cannabis greenhouse being built in the city’s northwest.

That drew much discussion on the News’s social media venues, with residents calling for similar but expiring tax exemptions for all new business startups. Others were frustrated with the potential of no growth to the tax base from such a substantial operation.

Further west, the Town of Redcliff could also have to deal with the loss of revenue from greenhouses without changes to the tax regulations that considers barns and silos at the same rate as hydroponics facilities.

In an outline of tax changes to the Municipal Government Act last year, the province said it also considering how to tax “intensive agriculture” facilities.

Some sort of exemption on urban farm buildings has been in place for more than a decade.

Since the early 2000s, farm buildings in rural Alberta municipalities have been completely exempt from local property tax assessment, and those in cities charged at a 50 per cent rate.

The most recent review of the Municipal Government Act, completed in 2017, set out rules for how to assess such parcels and also when farm classification expired.

It moved the exemption rate in urban settings to 60 per cent this year, and a move to eliminate assessment over four years to help keep land productive.

The changes were made after extensive consultations over several years, during which farmers and developers made a case that holding and working farm land in cities was made more expensive by taxes.

“Municipalities and urban farm owners expressed concerns about the inconsistencies that occur in the assessment and taxation of urban and rural farm building owners living in the same region,” reads the rationale when changes were announced late last year.

To combat that, assessment for local and educational taxes in both urban and rural jurisdictions would be eliminated.

More work is expected however, to capture revenue from substantial operations

“Further work is under-way, led by the Alberta Association of Municipal Districts and Counties, to determine how intensive agricultural operations may be taxed,” the release from Alberta Municipal Affairs stated.

The difference speaks to annexed property, and keeping farm land designated for future development in agricultural production longer.

When farmland is annexed into an urban municipality it can remain in operation for years before development takes place.

Those are usually subject to board orders to keep previous taxation rates in place until such time as the land is broken for new residential or commercial lots.

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