City of Ottawa to appeal federal court ruling on tax payments for federal buildings

Ottawa City Hall (CTV News Ottawa)

The City of Ottawa says it intends to appeal a recent federal court decision regarding how much money the federal government owes the city for its buildings.

The municipality cannot demand property taxes from the federal government, but a system of payments in lieu of taxes, or PILTs, is used instead.

The City of Ottawa took Public Services and Procurement Canada (PSPC) and Canada Post to court, claiming they had shortchanged the city $22 million in 2021 and 2022 on federal payments for tax-exempt buildings. The case involved a move by the provincial government to lower the Business Education Tax rate on property taxes for private businesses during the COVID-19 pandemic, and the federal government’s decision to set its PILT rate at the same level.

The City of Ottawa wanted to charge the federal government the rate that was in place prior to the provincial decision, but in February, Federal Court Justice Panagiotis Pamel sided with the federal government, which argued that the reduced rate is what it would have paid had it not been exempt from property taxes.

In a memo Friday, the city’s Chief Financial Officer Cyril Rogers said, after consulting with lawyers, the city believes it has grounds to appeal.

“Given the financial and legal implications of the recent ruling, and through consultation with Interim City Solicitor Stuart Huxley and external counsel, the City has taken steps to preserve its appeal rights to the Federal Court of Appeal, and intends on filing an appeal by the appeal deadline of March 21,” Rogers wrote.

The case is at the core of Mayor Mark Sutcliffe’s “Fairness for Ottawa” campaign, which is seeking $100 million from the federal government to cover payments in lieu of taxes over the past five years and a commitment for funding over the next 10 years. Staff previously told councillors that the city is estimating a funding shortfall of $252 million to $445 million over the next 10 years unless the federal government changes the PILT formula.

The federal government paid the City of Ottawa $124 million in 2023, $119.6 million in 2022, $114.6 million in 2021, $124.4 million in 2020 and $122.7 million in 2019.

With files from CTV News Ottawa’s Josh Pringle