Federal Court sides with NCC in tax battle over Gatineau Park

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The federal court has sided with the National Capital Commission in the latest round of Crown Corporation’s extended tax battle with the municipality of Chelsea over Gatineau Park’s valuation.

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In a recent decision, Federal Court Judge Peter George Pamel ruled that the NCC was justified in how it calculated the payments it made to Chelsea in lieu of taxes on its Gatineau Park properties.

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“Overall, I believe that the Commission’s discretion in aggregating properties and determining their effective value was transparent, understandable and reasonably justified, both in the process and in the outcome,” concluded Pamel.

The judge also awarded NCC court costs.

Two years ago, angry Chelsea taxpayers threatened to disrupt access to Gatineau Park over NCC payments.

Federally owned land is not subject to local government taxation in Canada, but like other federal landowners, the NCC makes payments in lieu of taxes.

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In late 2021, Chelsea went to federal court for judicial review of the NCC’s decision to overrule a federal advisory panel’s recommendations that Crown Corporation should pay the community $1.4 million in lieu of property taxes for 2018-2020.

But the NCC argued that the system used to rate its Gatineau Park properties was fundamentally unfair because it treated the land as having development potential.

The NCC said it could not accept a valuation of its Gatineau Park properties based on the sale of comparable residential properties if none were as large or as restricted as Crown Corporation’s.

The municipality argued that the NCC was obliged to follow the recommendations of the Federal Advisory Board.

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Both sides have been fighting over the payments for five years.

In his decision, Pamel said the NCC is not legally bound by the Advisory Panel’s decision and may depart from its conclusions “if it considers that those conclusions are inconsistent with principles applicable to wealth taxation.”

According to the decision, the Chelsea Municipality wanted to enforce appreciation rates of 19 to 25 percent for NCC properties in Gatineau Park. Over the same period, Chelsea’s average rating increase was 3.9 percent.

After conducting its own analysis, the NCC decided it would pay the Chelsea community $1.1 million for 2018-2020 based on an effective value of $49 million for its Gatineau Park holdings, the NCC said court decision.

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Chelsea Municipality said the rating was less than half of the advisory panel’s recommendation.

Chelsea Mayor Pierre Guénard on Wednesday did not respond to questions about whether the municipality would appeal the ruling or what it might mean for the municipality’s finances.

Spokeswoman Maude Prud’homme Séguin said the community would issue a statement in the coming days. “We are still analyzing the verdict,” she said.

Meanwhile, the NCC welcomed the Federal Court’s decision, which supported its argument that the property in question must be valued on the basis of its use as a nature reserve.

“The NCC is confident that we can continue to work closely with the community of Chelsea and hopes the clarity of this decision will help us move forward,” Crown Corporation said in a statement on Wednesday.

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The federal court ruling has important implications for all municipalities with states.

A spokesman for the NCC said it paid the community a total of $1.8 million in payments in lieu of taxes for 2018-2020 and an additional $1 million for the same properties in 2021 and 2022.

The NCC did not respond to a request for timely clarification of the breakdown of these numbers or an explanation as to why the totals did not match other published numbers.

According to NCC, Gatineau Park generates more than $240 million in economic activity and helps sustain more than 4,700 jobs in the area.