Chelsea Mayor Pierre Guénard said the outcome was a loss for Chelsea residents and for all Canadian municipalities hosting federal properties.
The Supreme Court of Canada has ended Chelsea’s seven-year quest to significantly hike the National Capital Commission’s tax payments for Gatineau Park.
The country’s highest court this week dismissed with costs Chelsea’s leave to appeal a 2024 Federal Court of Appeal decision that sided with the NCC.
The court did not offer reasons.
Chelsea Mayor Pierre Guénard said he was disappointed with the outcome, which he described as a loss for Chelsea residents and for all municipalities hosting federal properties.
“The Supreme Court’s decision not to hear our case is a major disappointment for the municipality,” he said, “especially since this decision goes beyond Chelsea’s borders as it has an impact on the taxation of all cities and municipalities in Quebec and Canada with federal properties on their territory.”
Chelsea spent seven years and well over $300,000 pursuing the case, which was rejected by three separate courts.
Guénard defended the municipality’s litigation strategy as necessary to defend the interests of Chelsea residents.
“The fiscal impact is very significant for our citizens,” he said, “not to mention all the other responsibilities we have to assume in connection with the two million visitors a year to Gatineau Park, mainly road maintenance, traffic management and parking.”
Chelsea’s court battle was supported by, among others, the Union des municipalités du Québec, the MRC des Collines-de-l’Outaouais and the City of Gatineau.
NCC officials did not return a request for comment on Friday.
Chelsea and the NCC have been at loggerheads over the Gatineau Park tax bill since 2018. The dispute once became so heated that Chelsea taxpayers threatened to disrupt access to the park.
Evening Update
In 2021, Chelsea first went to court for judicial review of the NCC’s decision to override the recommendations of a federal advisory panel that said the Crown corporation owed the municipality $1.4 million for payment in lieu of property taxes for the years 2018 through 2020.
Federally owned land is not subject to taxation by municipal governments. Instead, like other federal landholders, the NCC makes payments in lieu of taxes.
The NCC argued the system used by the advisory panel to value its Gatineau Park properties was fundamentally unfair because it treated the land as if it had development potential.
Chelsea argued the NCC was duty-bound to follow the recommendations of the advisory panel.
Federal Court Judge Peter Pamel ruled the NCC was not bound by the panel and could deviate from its conclusions if it believed they offended property tax principles.
Chelsea appealed that decision.
In May 2024, the Federal Court of Appeal dismissed Chelsea’s bid to overturn the lower court ruling, which said the NCC fairly and lawfully calculated the payments it made in lieu of taxes for its Gatineau Park properties.
Chelsea said the NCC, by chronically undervaluing its property, left a recurring $950,000 hole in Chelsea’s $25 million-a-year municipal budget. The NCC pays about half of what Chelsea says it should pay annually.
For its part, the NCC argued its park properties should not be assessed like other residential properties since they’re used for conservation and recreation and cannot be developed.
The Federal Court of Appeal sided with the NCC.
“The residential development to which these lands could potentially be subject is purely hypothetical given the numerous constraints that affect them, as well as the historical context and geography,” Chief Justice Yves de Montigny wrote.
The long-running tax dispute has made it difficult for the NCC and Chelsea to co-operate on improving municipal infrastructure within the park, such as Meech Lake Road, which connects to seven NCC parking lots. Road reconstruction has been estimated at $18 million.
With 2.6 million visitors a year, Gatineau Park is second only to Banff National Park in Alberta for annual attendance.
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