Winnipeg is short $4.4 million after Ottawa balked at paying five years worth of city bills for providing fire protection, policing and other services to the Canadian Museum for Human Rights.
Some of that money, however, could soon flow after a federal body sided with the city in a property-assessment dispute with Public Works and Government Services Canada.
Since 2010, Ottawa has paid Winnipeg less than what the city's assessment and taxation department has requested from the human rights museum for payment in lieu of taxes, or PILT, which is money federal institutions pay municipalities in place of property taxes.
Since Ottawa owns all of Canada, it's unconstitutional for the federal government to pay provincial or municipal property taxes. But it still costs cities money to provide basic services to federal institutions.
'The minister ultimately makes the decision. We don't know what will happen next. It's our first time going through this' -- city assessor Mel Chambers
PILT payments were devised to provide roughly the same form of compensation, but Ottawa is not compelled to pay whatever tab municipalities desire.
In 2011, for example, the city handed the museum a bill for $198,000, based on an empty parcel of land with no building on it and an overall assessment of $6.9 million. That $198,000 bill included city property taxes, Winnipeg School Division taxes and the provincial education-support levy.
Public Works and Government Services Canada, however, disagreed with the city's assessment of the land. So in 2012, the city took the museum bill to a federal body called the Dispute Advisory Panel.
In a move that surprised city officials, Ottawa told the panel the museum land was only worth a loonie. An appraiser hired by Public Works argued the land can only be used to house a museum and therefore can never be sold for the maximum value.
In a decision issued Tuesday, the Dispute Advisory Panel rejected the federal argument and sided overwhelmingly with the city, which argued the Canadian Museum for Human Rights should be assessed the same way as any other tenant.
The panel wound up reducing the assessed value of the land to $6.5 million for 2010 and 2011 -- and rapped Public Works and Government Services for being "unreasonable" in its $1 assessment of the museum property.
City assessor Mel Chambers, however, was not celebrating any victory following the panel's decision, which came in the form of a letter to Public Works and Government Services Minister Diane Finley.
That's because the minister ultimately has the power to decide what Ottawa will pay Winnipeg.
"The minister ultimately makes the decision," Chambers said. "We don't know what will happen next. It's our first time going through this."
Finley does not, however, have the leeway to choose any amount. The Supreme Court of Canada has already ruled the federal government may not set the bill for PILT payments at unreasonably low levels.
In 2012, the nation's highest court ruled in favour of the City of Halifax in a dispute over PILT payments flowing from Citadel Hill, a prominent park in the Nova Scotia capital. Ottawa claimed the land was only worth $10, while Halifax pegged the value at $19 million, the Halifax Chronicle-Herald reported at the time.
An official with Public Works and Government Services Canada said Friday in a statement that Finley will review the Dispute Advisory Panel’s advice.
What Ottawa does is crucial for the city, which may head back to the Dispute Advisory Panel over low Public Works PILT payments for the 2012, 2013 and 2014 taxation years.
Chambers said the combined difference between what Ottawa has been asked to pay since 2010 and what it has paid is $4.4 million.
"We will continue to protect the city's interests," Chambers said. "We are likely going to be in the same process with respect to the building value."
Mayor Sam Katz said the money expected from Ottawa is significant and noted $4.4 million is roughly equal to a one per cent property-tax hike.
"If and when we get that money, it will certainly help us with some of our priorities," he said.
Winnipeg has also taken Ottawa to the Dispute Advisory Panel over Public Works' decision to pay the city $1.5 million less than what the city requested in PILT for the National Microbiology Laboratory.