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Resolution 3-13S

Assessment of Part and Component Replacement for Linear Property

April 4, 2013
Expiry Date:
March 31, 2016
Active Status:
MD of Greenview
4 - Northern
Municipal Governance and Finances
Intent Not Met
Vote Results:

WHEREAS Section 292 of the Municipal Government Act specifies that each linear assessment must include the “specifications and characteristics” of the linear property; and

WHEREAS the Municipal Government Act does not contain a definition or explanation of what is meant by “specifications and characteristics”; and

WHEREAS a clarification of the Construction Cost Reporting Guide is necessary to indicate that it applies to construction projects during the life of the facility and not just to initial construction; and

WHEREAS the Linear Assessment Unit of Municipal Affairs has, for decades, routinely assessed part and component replacements as changes to the “specifications and characteristics” of linear assessment; and

WHEREAS four assessment complaints from power generation companies have gone before the Municipal Government Board arguing that part and component replacements do not constitute a change in “specifications and characteristics” and each of these complaints have been successful; and

WHEREAS the Linear Assessment Unit has no choice but to capitulate with these rulings and change the manner in which linear assessments are performed which means significant assessment reductions for many Alberta municipalities;

Operative Clause:

THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties hereby formally requests that the Government of Alberta amends Section 292 of the Municipal Government Act to add “part and component replacements of linear property during the life of the linear assessment constitutes a change in specifications and characteristics”; and 

FURTHER BE IT RESOLVED that the Construction Cost Reporting Guide for linear assessment be amended by the Province of Alberta to indicate that the Guide applies not just to construction when linear property is first built, but it also applies to construction projects during the life of the facility.

Member Background:

In the past few years, four decisions made by the Municipal Government Board (MGB) regarding the assessment of power plants (Transalta in Parkland, Battle River Plant in Paintearth, Sheerness Plant in Special Areas and H.E. Milner Plant in Greenview) have resulted in interpretations of the governing legislation which are contrary to the practices of several decades of the linear assessors.  In the opinion of the responding municipalities, the power companies have exploited ambiguities in the regulations to limit their assessment.  Immediate changes are required to rectify this situation. Four cases have been heard by the Municipal Government Board (MGB) regarding changes in assessment recorded by the linear assessors for the replacement of parts and components in each power plant.  The Municipal Government Act (MGA) directs that changes in “specifications and characteristics” are to be assessed.  While the assessors understand that a straight repair – where there are no changes made in the equipment or components is not assessable – replacement of worn parts with new and/or updated parts, many of which would be expected to increase the longevity of that component of the plant, are definitely a change in “specifications and characteristics”.  The governing legislation does not provide a definition of what constitutes a change in “specifications and characteristics” (see attached excerpt from the MGA). In short, the MGB determined that unless a work activity amounted to increasing the production output of the plant or added a component, or components that are completely new, all other activities will not be assessed. Theoretically, under this ruling, it would be possible for a power company to make several millions of dollars of part and component replacements and never be assessed for them even if the technical specifications of these parts are substantially different (i.e. superior) and improve the life of that component of the plant substantially. The power companies have successfully exploited what amounts to “loopholes” – weaknesses and ambiguities in the MGA and relevant guidelines, resulting in substantial assessment losses to the affected municipalities. Immediate changes to the regulations and the MGA are needed to restore the original intent of the legislation which we believe is for all new installations to be assessed other than for bona-fide repairs where there are NO changes in the technical specifications and characteristics. If there is no change to the regulations, it is likely only a matter of time before other parties in the power sector and sectors other than the power industry try to exploit the same ambiguities which will force the municipalities ultimately to increase their non-residential tax rates to compensate. There will be significant “collateral damage” if this occurs in that other assessment classes such as commercial will bear the brunt of a higher tax rate. Collectively, the revenue loss from the Municipal Government Board decisions for the four municipalities involved is more than $1,000,000 and is summarized as follows: MunicipalityAssessment LossRevenue Loss Parkland County$86,357,600$585,867 County of Paintearth  27,193,470  316,211 Special Areas  14,504,180    95,438 M.D. of Greenview    5,112,530    40,788   It is fair and equitable to assess changes in technical specifications and characteristics (such as better parts with longer life) of power plants to ensure that they are paying their fair share of the taxes.  Assessment needs to happen with a level playing field.  These rulings have served to slant the playing field in the favour of power companies, to the detriment of not only the affected municipalities, but all other assessed parties within each municipality. It is critical to understand that we are not asking for policy changes.  This is the manner in which linear assessments have been completed for decades (although it appears that some of the property owners dispute this).  We are just asking to “plug the loopholes” and restore the equitable process that was in place prior to these assessment complaints. Municipal Government Act (Section 292): Assessments for linear property 292(1) Assessments for linear property must be prepared by the assessor designated by the Minister. (2)Each assessment must reflect (a)the valuation standard set out in the regulations for linear property, and (b)the specifications and characteristics of the linear property (i)as contained in the records of the Alberta Utilities Commission or the Energy Resources Conservation Board, or both, on October 31 of the year prior to the year in which a tax is imposed under Part 10 in respect of the linear property, or   (ii)on October 31 of the year prior to the year in which a tax is imposed under Part 10 in respect of the linear property, as contained in the report requested by the assessor under subsection (3). (3)If the assessor considers it necessary, the assessor may request the operator of

RMA Background:

The AAMDC has no active resolutions related to this issue.

Government Response:

Municipal Affairs (MA) is in the process of a “principles-based” review of the Municipal Government Act (MGA).  This review will be comprehensive with all areas of the MGA being considered concurrently, so that the outcome is a sound, well-considered piece of legislation.  

The review will include a stakeholder engagement process that will give all interested parties the opportunity to provide input – including municipal officials, municipal associations, private businesses and industry, as well as members of the public.  MA encourages members of the Alberta Association of Municipal Districts and Counties to bring their concerns about the assessment of Linear Property forward during the MGA review.  

It is anticipated that the stakeholder engagement process will begin this summer (2013).  The timing of municipal elections (October 2013) will be factored into the stakeholder engagement plan.  

It is anticipated that the result will be a new MGA, which is scheduled to be introduced in the Spring Session of 2015.  


While the Government of Alberta has noted this issue will be part of the MGA review, there is no indication of its favorability toward making the amendment suggested. Therefore, the AAMDC assigns this resolution a status of Intent Not Met. The AAMDC continues to advocate on this issue through our engagement in the MGA Review Process.   

Provincial Ministries:
Municipal Affairs
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