+ RMA Rural Municipalities
of Alberta

Resolution 2-17S

Amendments to Section 348 of the Municipal Government Act

March 21, 2017
Expiry Date:
April 1, 2020
Active Status:
County of Two Hills
Municipal Governance and Finances
Vote Results:

WHEREAS Section 348 of the Municipal Government Act (MGA) states:

Taxes due to a municipality

  • are an amount owing to the municipality,
  • are recoverable as a debt to the municipality,
  • take priority over the claims of every person except the Crown; and

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;

Operative Clause:

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.

Member Background:

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.

RMA Background:

The AAMDC has no active resolutions directly related to this issue.

Government Response:

Municipal Affairs:

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.


RMA members have been facing considerable challenges collecting unpaid taxes from property owners. A 2019 RMA member survey indicated that rural municipalities are facing a liability of between $81 million and $96 million in unpaid property taxes. 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. Three RMA members are currently involved in legal action as to whether the special lien provisions in section 348 are applicable to linear property. Should section 348 be deemed not applicable to linear property, municipalities will be even more challenged in claiming uncollected taxes. RMA is also planning to work directly with Municipal Affairs to clarify what options are available to municipalities under section 348 and other areas of the Municipal Government Act, both in cases where tax-owing companies are bankrupt or continue to operate.

In addition to the general challenges associated with section 348 outlined above, this resolution is intended to specifically address the ability of the Agricultural Financial Services Corporation (AFSC) to priority over a municipality in seizing property and assets to recover outstanding debt from the property owner. As a lending institution with the ability to evaluate, approve and reject loan requests based on the risk involved, it is unclear why AFSC should be able to transfer the risks they incur as a lender to municipalities who must collect taxes to provide municipal services by having the ability to take priority over a municipality in the recovery of assets for unpaid debts/taxes.

As indicated in the response from Alberta Municipal Affairs, amendments to Section 348 are not being considered and therefore, this resolution is assigned a status of Intent Not Met.

Provincial Ministries:
Municipal Affairs
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