A recent decision of the Assessment Review Board (“ARB”) (Waste Management of Canada Corporation v MPAC, ID 138737 (ARB)) has concluded that the market value of the rights associated with an Environmental Compliance Approval (“ECA”) should be reflected in the current value of a landfill for the purposes of property tax assessment.
Waste Management (“WM”), the owner of a 743 acre landfill site located in the County of Lambton (the “County”), was issued an ECA permitting the use and operation of the landfill in 2011. WM argued that the ECA ought not to be considered a component of the value of the land for assessment purposes. Both the County and the Municipal Property Assessment Corporation (“MPAC”) disagreed, arguing that it should.
With the consent of the County and MPAC, WM sought a determination from the Assessment Review Board (“ARB”) as to whether the market value of the rights associated with the ECA should be reflected in the current value of a landfill under the Assessment Act.
The Assessment Act provides that land is assessed based on its “current value” (s 19(1)), which is defined as “in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer” (s 1).
An important aspect of the ARB’s decision was its consideration of a 1986 Court of Appeal decision involving a licence issued to a nursing home, Restfulcare v Regional Assessment Commissioner. In Restfulcare, the Court found that:
Where lands and premises have an inherent capacity for a certain type of use and a licence from the proper authorities authorizes the utilization of that capacity, the value of the licence is a component part of the value of the land. The licence is not property but a form of government control, like zoning, which may enhance the value of the land for which it is issued. Hence it is an element which has no separate quantifiable value; but which should be taken into consideration in determining market value.
The ARB concluded that similar to a nursing home licence, the ECA is a form of government control that runs with the land and is not an encumbrance upon it.
The WM landfill property, it found, has the inherent capacity for a particular use, and the ECA provides it with the authorization to utilize that capacity. An ECA may enhance the value of the land, even though the ECA is potentially of no value when the landfill is at the end of its lifespan.
The ARB examined jurisprudence dealing with the valuation of waste disposal sites, largely from the US, and found that it supported its position that any value that the ECA may add to the land value ought to be included.
This is the first decision that we are aware of in Canada to consider whether environmental permits such as an ECA have value for the purposes of property tax assessment.