Chelsea Loses Tax Case

Reuel S. Amdur

Chelsea has gone to defeat at the hands of the National Capital Commission (NCC).  On May 6, a unanimous Court of Appeals panel found for the NCC in a property tax-related dispute.

Certain land in Gatineau Park that is within the boundaries of Chelsea was designated as residential, and Chelsea applied a valuation to it on that basis.  In 2018, the NCC objected to the designation and chose not to pay Chelsea what that designation would entail.

Federal government bodies do not pay property tax.  Instead they make payments in lieu of taxes (PILT).  The NCC agreed to abide by a finding of the Payments In Lieu of Taxes Advisory Panel.  The panel ruled for Chelsea, but the NCC backtracked on its commitment and instead went to court, where Chelsea lost.  Chelsea appealed and lost again.  Since the judges were unanimous, it appears most unlikely that the Supreme Court would choose to hear an appeal of the Court of Appeals decision. In any case, there is the old saw about sending good money after bad.  The battle is already costing Chelsea over $300,000.  There will also be court costs awarded the NCC.  

Since 2019, the NCC has been paying a continuing declining portion of the in-iieu charge, leaving Chelsea, a small municipality of some 8500 residents, with a revenue shortfall in the million-dollar range.  No small potatoes, given that the entire budget for 2024 is $26 million.

The court decision leaves Chelsea with virtually no legal recourse to claim anything in lieu of taxes.  As Chief Justice Yves de Montigny explained, “It is ultimately up to the NCC’s discretion to establish the value of the land as well as the PILT to be paid to the municipality.”  This decision seems to leave the advisory panel without any function.

So where does that leave Chelsea?  Clearly, there is no legal recourse.  The court ruled on the basis of the law, but there are other considerations.  The NCC had agreed to abide by the advice of the panel, but it reneged on that commitment.  Is its commitment worthless?  Apparently.

In dealing with the NCC one would be advised to proceed with extreme caution.  It is said that when you dine with the devil, you must use a very long spoon.  The NCC appears to be sprouting horns and a tail.  Caveat emptor.

Chelsea’s recourse now appears to be political.  In appealing to the government and the opposition parties, Chelsea can argue that it is faced with declining payments from the NCC and a court decision giving it no recourse.  It must therefore ask the federal government to come through.

Update: on June 4, Chelsea Council voted to seek leave to appeal the Court of Appeals decision to the Supreme Court.  As noted, this is a long shot, as it is unlikely that the Supremes will hear the case, since the Court of Appeals decision was unanimous.