Saint John should pressure Irving Oil to ease tax deal, Gerry Lowe says

A Saint John city councillor who has been pushing to reopen a 10-year-old tax deal with Irving Oil Ltd. at the Canaport LNG site says he is not put off by a new legal opinion that says the arrangement cannot be fought through the courts.

• Irving LNG tax break tough to undo, advises city solicitor
• Irving Oil says Saint John's 'hands are tied' over LNG deal
• Saint John seeks 'full disclosure' over Canaport LNG tax deal

Coun. Gerry Lowe says court action is not required. Instead, the city needs to formally ask Irving Oil to renegotiate the tax deal or failing that ask the provincial government to repeal it.

"This council can ask Irving Oil and ask the province to do anything. There should be another look at it," said Lowe.  

"I'm hoping we can get some traction on it."

Saint John council is receiving a detailed report on Monday from John Nugent, the city solicitor, about the history of the tax deal and legal options available to the city to challenge it in court.  

In a key finding in the report, Nugent says it is likely Irving Oil did not tell city or provincial politicians about a deal it had to lease property to the LNG development for $12 million US ($16 million Cdn) per year prior before convincing the city and province to grant a multi-million-dollar tax reduction on the same property.

"One must conclude that the Irving interests made no representation as to their anticipated financial benefit from the project to either the mayor or common council," writes Nugent.

I would love to see us and go ahead and see if we can move that $500,000 up a little bit.- Coun. Gerry Lowe

Nevertheless, Nugent says because the city did not seek proof of Irving Oil's need for the tax concession or sign an agreement laying out conditions for granting it, legal options to undo the deal are limited.

"It is my view that it is highly unlikely that the Supreme Court's recent recognition of a duty to act honestly in the performance of contractual obligations would operate in the circumstances at hand," Nugent concludes.

But Lowe said he is hoping the absence of a written contract with Irving Oil will also mean the city has no enforceable obligation to live with the tax deal either

"If there's no legal [avenue] there's definitely a moral [avenue]," said Lowe.

"I mean that information that was given to council and that mayor that voted for it — all the facts were definitely not on the table. Nobody knew, or I don't think anybody knew — including the provincial government."

Tax deal struck in 2005

The city endorsed the tax deal, which eventually cut municipal property taxes at the LNG site by more than 90 per cent to $500,000 per year, at the request of Kenneth Irving, who was the president of Irving Oil in March 2005.

But the city had no authority to grant the reduction.  That was done by the provincial government in June 2005 at the city's request.

The Gallant government has already said it will not involve itself in revisiting the tax deal unless it is formally approached by the city to do so.

"Government will wait to hear from the city in regards to a specific request before commenting on the next steps," government spokeswoman Jennifer Graham told CBC News last June.

Lowe says that is what the city should do.

"I would love to see us and go ahead and see if we can move that $500,000 up a little bit," said Lowe.

Irving Oil did not immediately respond to a request for an interview about Nugent's report.