June 14th, 2024

Council denies tax break on former Aurora Sun greenhouse

By Collin Gallant on June 6, 2024.

City council, in a split vote, has denied Bevo Farms its request for a tax break on the Aurora Sun facility that it purchased last year.--NEWS FILE PHOTO

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A request to accelerate tax reclassification for the former Aurora Sun greenhouse – and lower the $750,000 tax bill for the new owner – was denied by a 5-3 vote of council on Monday night.

Bevo Farms, Ltd. began operating in a portion of the huge facility in April to grow vegetable seedlings – a use that would bump it to less expensive class compared to cannabis – but only in one third of the space and beginning four months after tax classification is determined.

The company’s head, John Hoekstra, wrote in a direct request to council that the facility could employ 50 workers when fully operational as an agricultural endeavour, the classification is outdated and Bevo has formally appealed the assessment.

“The financial burden imposed by this miscalculation is significant, and our margins in the agricultural sector are too tight to sustain such costs,” he wrote.

“We understand the importance of tax contributions to the community and are committed to fulfilling our obligations. However, we believe that an equitable assessment aligned with our actual use is essential for the sustainability of our business.”

City staff took the position that determining a property tax bill is highly regulated and the current bill is in accordance with existing rules and the use, as determined in December 2023.

They provided analysis or several options to pro-rate the bills considering the changeover, potentially taking between $200,000 to $500,000 off the bill, but council rejected the idea stating an appeals board is the proper venue for tax appeals.

“My worry is if we start here, where does it end?” said Coun. Darren Hirsch, who argued council may have the power to cancel taxes, but shouldn’t delve into assessment regulations.

Coun. Andy McGrogan argued that since Bevo is a related company to Aurora – the Edmonton-based cannabis company acquired shares in Bevo for the assumed value of Sun – the tax implications shouldn’t be a surprise.

Coun. Allison Knodel voted against denying the request, along with Couns. Shila Sharps and Ramona Robins, with Knodel suggesting that some compromise could be found.

“I’m mixed … because we have an opportunity to support (business), and I’d like to find a happy medium that could be a small tax cancellation,” said Knodel.

Voting against considering the cancellation request were Hirsch, McGrogan, Mayor Linnsie Clark and Coun. Robert Dumanowski.

“It’s unique and unusual circumstances, but I have confidence that (the assessment department) has followed the letter of the law,” said Dumanowski.

He said council can’t give out tax breaks to some assessed owners without granting other requests.

Clark questioned staff about why a supplementary assessment – like those performed for vacant lots that see construction in parts of two years – couldn’t be applied to the 1.6-million square-foot growing and packaging facility.

She was told mid-year reevaluation affects market value, not designation of use, or property tax classification.

“Once farming is fully established, the assessment will reflect that,” said corporate services division head Dennis Egert.

Bevo hopes to eventually convert the entire facility to grow starter seedling for wholesale distribution to other large greenhouses, and has said the horticultural and specifically orchids are a growth opportunity.

That would bring it into the largely tax-exempt farm building status. At that point the building would be taxed about $10,000 per year at current rates.

A council committee heard last week that Aurora Cannabis was in good standing with its tax bills since facility construction was halted in 2020, and over the years has paid the city almost $3 million.

The city provided $6 million in reserve funds to cover offsite levy development costs to help attract the Aurora buy land and build in the Box Springs Business Park.

Construction was halted in late 2019, according to background provided by the city’s finance department.

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