Canaport LNG tax deal shouldn't apply to pipeline: Norm McFarlane

An architect of the 2005 tax deal between Saint John and Canaport LNG says the agreement should not apply to any new developments at the facility.

Norm McFarlane, who negotiated the property tax deal when he was mayor of Saint John, told city taxpayers in 2005 that nothing but liquefied natural gas would ever benefit from the discount rate.

A decade later, McFarlane stands by those words.

"If there's a tax on pipelines then, yeah, I would say it is separate from the deal the government made with the landowner of where the LNG is situated,” McFarlane said.

The Canaport LNG property sits next door to Irving Oil Ltd.'s main crude oil tank farm. Canaport LNG is a joint partnership between Spain's Repsol and Irving Oil Ltd.

An oil pipeline built for the Irving Oil tank farm on the Canaport LNG property last year is suddenly raising a lot of questions.

Irving Oil normally uses a monobuoy to transfer oil from tankers to shore, but it malfunctioned seven years ago. That caused a backup of ships in the Bay of Fundy, leading the oil company to develop a backup unloading facility at the LNG wharf.

The oil pipeline starts at the end of the LNG wharf and runs its entire length until it reaches shore on the Canaport property.

The pipeline crosses into the Irving Oil crude oil tank farm on the other side of the facility’s LNG tanks. There is nothing wrong with that as long as the pipeline does not benefit from the Canaport LNG property tax deal.

Irving Oil Ltd. hasn't said what taxes, if any, are being paid on the pipeline. But the company issued a statement on Wednesday saying it is following processes to ensure its commitments are met.

The oil pipeline is one potential issue that could affect the 25-year property tax deal.

You know, we don't have enough money to feed the monkeys in the zoo.- Coun. Gerry Lowe

This week, a CBC investigation showed Saint John could renegotiate its tax deal with Canaport LNG if the property is used for other things, such as an export terminal.

On Tuesday, Saint John Mayor Mel Norton raised the possibility that may affect the LNG property's tax discount. Norton asked city staff to investigate the city’s options regarding the tax deal.

Other city councillors are also asking questions about how the pipeline and any possible changes may affect the tax deal.

Coun. Gerry Lowe said he wants to know if the oil pipeline is benefiting, in any way, from the property tax deal that is only intended to apply to the LNG facility.

"We just went through three or four months looking for money,” Lowe said.

“You know, we don't have enough money to feed the monkeys in the zoo."

Canaport LNG carries the highest property tax assessment in New Brunswick at $299.4 million.

But under the 2005 property tax deal, its annual property tax bill is frozen at $500,000.

That's a 91 per cent discount on the $5.3 million in annual property taxes the facility would owe Saint John without the deal — an arrangement that does not expire until 2030.