June 24th, 2024

Company wants farm status fast-tracked for tax bill on Aurora plant

By Collin Gallant on May 24, 2024.

The company now operating at the Aurora Sun greenhouse in north Medicine Hat has requested a tax reduction based on its intended change of use from cannabis growing (a commercial enterprise under tax regulations) to vegetable seedlings (a farm use).--News File Photo

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The company repurposing the Aurora Sun greenhouse has requested they move more swiftly to tax-free status afforded to agricultural facilities in urban centres by provincial regulations.

Bevo Farms has been operating at the huge growing facility in Medicine Hat’s northwest for two months, but faces a full-year assessment at the much higher non-residential (commercial industrial) property classification when taxes are due next month.

That amounts to a $750,000 bill for its municipal portion of property taxes, which Bevo says should be reduced – a request council will consider next month.

The formal request was heard at Thursday’s meeting of council’s corporate services committee.

Property taxes are determined by two factors, said managing director Dennis Egert. They are the usage at the beginning of the year, either farm or non-residential class, and the property value at the mid-point of the year.

Farms are assessed and taxed at substantial discount to commercial operations, and the difference – if allowed by council – would be picked up by other taxpayers.

“Our recommendation is to not offer a full cancellation,” said Egert. “But we have considered options that council should deliberate.”

Aurora Cannabis acquired shares of Bevo in a deal last year when it contributed the building to the B.C.-based propagation company which also grows orchids and vegetable starter seedlings at the Aurora Sky facility in Leduc.

Work to convert one-third of the Sun facility here has been ongoing in 2024, and correspondence from Bevo states 60,000 seedlings are now growing in the north-end facility that employs about 10 full-time and 65 temporary workers.

At issue, according to Bevo, is the level of taxation on the building will eventually be reclassified, and the initial tax bill is considered large and a hardship.

It has already filed a tax appeal, said administrators, which would be heard by the composite review board unless resolved or withdrawn.

Staff options presented include a full exemption (bringing the bill to $10,000), “prorating” usage from the April growing period onward ($197,000), prorate the building at one-third farm and two-thirds commercial or industrial ($507,000), or considering a six-month switch-over between the classes.

“The company intends to operate it (fully) as farming eventually … that reduction would be $375,000,” said Lola Barta, the city’s finance director.

Council members on the committee said they would prefer a middle-ground solution.

“I appreciate that someone has come forward to purchase the building, but the city has provided support to the building already,” said Coun. Cassi Hider. “We try to work very hard with companies to come here, and be successful …but there is a limit. I think we can work on something.”

The facility was also awarded a $6.1-million subsidy on offsite levy fees to help ease the land sale with the owner, the Box Springs Business Park.

Since construction was halted in 2021, the city has collected $2.96 million in municipal taxes from Aurora Cannabis.

“My concern is that I’d rather not see the space empty again,” said Coun. Allison Knodel. “But I also worry about whether this is an issue of poor management and we’d be using taxpayer dollars to keep it (going).

“I’m hesitant to provide a full exemption, or no exemption at all.”

Aurora Cannabis and the city also recently exited a power purchase contract which the city says provided millions in revenue despite no power delivery to the site. Both sides stated the change on the 42-megawatt power supply agreement removed a large hurdle toward the sale and repurposing.

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