Lexin receivership leads to significant revenue reduction for MD of Pincher Creek

Christian Davis - In her May 9 report to council, MD of Pincher Creek Director of Finance Janene Felker explained a significant reduction in mill rate revenue from what was projected in the MD's 2017 budget. On February 15, 2017 the Alberta Energy Regulator forced the insolvent gas producer Lexin Resources Ltd. into receivership, citing violations of the Responsible Energy Development Act. The company had over 1,600 well sites, pipelines and facilities across Alberta; including several sites in the MD of Pincher Creek.  According to Felker, "In late April, the MD received an updated linear assessment from the Alberta government. Normally these updates are small and can be accommodated within budget, but this adjustment saw the reduction of all linear accounts owned by Lexin Resources to 0 (zero)."


Linear tax revenues are collected by municipalities from companies that have linear property items such as oil and gas wells and pipelines, and power generation, power lines and utility lines within their municipality. (source)

"The total loss in linear assessment is 4,397,140. This results in a total loss of revenue $54,978.33 (municipal $35,890.99, school $17,288.24, foundation $939.67, emergency services $879.43). Due to the fact that the mill rate bylaw was already passed and notices already generated when this adjustment came to our attention, the funding for this lost revenue will have to come from reserves."

"Lexin Resources also has a number of other properties in the MD, which our local assessor will be looking at in the next few weeks. The Company also hasn't paid their 2016 taxes, which amounts to $132,684. These taxes will continue to be outstanding and Administration will attempt to collect these amounts through the bankruptcy proceedings."

Councillor Fred Schoening noted that Lexin has not paid last years taxes either, and that bankruptcy proceedings were likely the MD's only recourse to try to recoup some of those funds.  Felker said the MD would indeed proceed with legal action for last year's taxes and this year's to date as well.  Schoening said it was frustrating that the province has eliminated the assessment but still requires the MD to pay the full 2017 requisition for schools and emergency services "out of something that no longer exists."  Reeve Brian Hammond and councillor Garry Marchuk (the other two council members present at the meeting) agreed with that assessment.  "I think it's an issue the province should look at addressing," said Schoening.

Felker recommended "that the lost taxation revenue of $54,978.33 due to the Provincial linear reassessment of Lexin Resources be funded by a transfer from the Mill Rate Stabilization Reserve."

Council approved Felker's recommendation.