WHEREAS Section 348 of the Municipal Government Act (MGA) states:
Taxes due to a municipality
WHEREAS Section 284(1)(f) defines Crown as:
“Crown” means the Crown in right of Alberta, and includes a Provincial agency as defined in the Financial Administration Act and an agent of the Crown in right of Alberta; and
WHEREAS the Agricultural Financial Services Corporation (AFSC) falls under the definition of Crown; and
WHEREAS in instances, the Crown may take priority over claims of every person; and WHEREAS the AFSC has asserted that as a Crown corporation, they take precedence over municipalities in the recovery of taxes according to Section 348 of the MGA; and
WHEREAS Section 348 of the MGA has the potential to seriously impede municipality’s ability to collect unpaid taxes; and
WHEREAS AFSC is a lending institution and has the ability to do their due diligence, therefore all risk should be burdened by all provincial taxpayers not just a municipality;
THEREFORE, BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties request that the Government of Alberta amend Section 348 of the Municipal Government Act to reflect that no Crown lending institutions be allowed to take priority over any claims due to the municipality.
An entity in the County of Two Hills is in receivership and the corporations that initiated the receivership include Agricultural Financial Services Corporation (AFSC). The entity was sold in the receivership. AFSC had loaned this entity more money than was received in the sale. The sale proceeds are enough to pay the outstanding municipal taxes (which are over one million dollars) with a small amount left over. AFSC has taken the position that under Section 348 of the MGA, it is entitled to recover its secured claim before the municipality. The effect of this position has the potential to wipe out any recovery for the municipality.
The County is concerned about the position being taken here and question if this position is going to be taken in other receiverships going forward. It has the potential to seriously impede a municipality’s ability to collect unpaid taxes which is becoming a significant issue in Alberta. It is understood that risk needs to be shared amongst taxpayers, but in this case, the burden will be borne disproportionately by the municipal residents because the municipality has no choice but to provide municipal services to its residents and businesses. AFSC on the other hand has the ability to do due diligence and chose to make loans.
The AAMDC has no active resolutions directly related to this issue.
As part of the Municipal Government Act (MGA) Review, Alberta Municipal Affairs (MA) has conducted extensive public and focused stakeholder engagement. This issue was not raised in any engagements that have occurred with either the public or focused stakeholder groups.
An amendment to Section 348 of the MGA would require substantial consultation with the federal government and its agencies, as well as other Alberta ministries and agencies.
Agreement by both levels of government to remove themselves from the order of priority would require substantial analysis and discussion, due to its likely ramifications beyond just property taxation.
As such, amendments to Section 348 of the MGA are not being contemplated at this time.
AAMDC members have been facing considerable challenges collecting unpaid taxes from property owners. These efforts are further frustrated by the hierarchy of claims that places municipalities at a significant disadvantage to collect unpaid property taxes against other liabilities that the property owner possesses. As indicated in the response from Alberta Municipal Affairs, amendments to Section 348 are not being considered at this time and therefore, this resolution is assigned a status of Intent Not Met. Where opportunities arise, the AAMDC will advance this resolution through the review of the Municipal Government Act and other avenues where discussions associated with unpaid taxes and property owner liabilities are discussed.