McDonald v Edmonton (City), 2023 ABKB 615

Court of King’s Bench of Alberta Citation: McDonald v Edmonton (City), 2023 ABKB 615 Date: 20231101 Docket: 2103 18650 Registry: Edmonton Between: Cameron Fraser McDonald and Right at Home Housing Society Applicants - and - The City of Edmonton and The City of Edmonton Composite Assessment Review Board Respondents _______________________________________________________ Memorandum of Decision of the Honourable Justice G.R. Fraser _______________________________________________________ [ 1 ] This matter comes before me by way of Judicial Review.

The applicants, Cameron Fraser McDonald and Right at Home Housing Society (Society) seek to overturn the finding of the City of Edmonton’s Composite Assessment Review Board (Board) that a property was not tax-exempt. The Board’s decision can be found at : Cameron Fraser McDonald, Right at Home Housing Society v The City of Edmonton , 2021 ABECARB 1331 .

[ 2 ] The property in question is located in Edmonton’s Belvedere neighbourhood. It is a 42 unit building that provides housing and support services to low-income individuals and families. The building also has an office, meeting rooms, and a large common area. Building management uses a “housing first” method to try and assist homeless people. The building is run as a not-for-profit business collaboration between the Society and NiGiNan Housing Ventures (NiGiNan).

NiGiNan is a registered charity that was formed to address the needs and requirements of Indigenous people in Edmonton. [ 3 ] In order to construct the building, the partners received large grants from the City of Edmonton and the Alberta Social Housing Corporation. To receive the grants, the partners had to comply with various conditions. [ 4 ] The building opened in September 2020. Shortly after it opened, an application was made to have it exempted from property taxes. That application was denied January 26, 2021. The denial was appealed to the Board.

The appeal was heard in August 2021 and dismissed in a split decision dated September 21, 2021. It is the decision of the Board that is now subject to Judicial Review. [ 5 ] The issues before the Board were as follows: a. Is the property primarily used for a charitable or benevolent purpose (s 4)? b. Is the property owned by a non-profit organization and not subject to a lease, license or permit (s 5a)? c.

Are individuals restricted from using the property more than 30% of the time that the property is in use, (s 10) on any basis, including race, culture, ethnic origin or religious belief or the requirement to pay fees of any kind, other than minor entrance or service fees (s 7)? d. If the residential units are not exempt, should the fifth floor (which contained the office, meeting room, and common area) be exempt? [ 6 ] The Board’s decision was based on the application of the Community Organization Property Tax Exemption Regulation , AR 281/98 ( COPTER ).

The relevant sections for the purpose of the Board’s decision were as follows: 1

(1) In this Regulation, ... (b) “charitable or benevolent purpose” means the relief of poverty, the advancement of education, the advancement of religion or any other purpose beneficial to the community; 4

(1) Property is not exempt from taxation under section 362(1)(n)(iii), (iv) or (

v) of the Act or

Part 3 of this Regulation unless the property is primarily used for the purpose or use described in those provisions.

(2) For the purposes of this Regulation, a property is primarily used for a purpose or use if the property is used for the specified purpose or use at least 60% of the time that the property is in use. 5 When section 362(1)(n)(

i) to (

v) of the Act or

Part 3 of this Regulation requires property to be held by a non-profit organization, a society as defined in the Agricultural Societies Act or a community association for the property to be exempt from taxation, the property is not exempt unless (

a) the organization, society or association is the owner of the property and the property is not subject to a lease, licence or permit, or (

b) the organization, society or association holds the property under a lease, licence or permit. 7

(1) In this Regulation, a reference to the use of property being restricted means, subject to subsections (2) and (3), that individuals are restricted from using the property on any basis, including a restriction based on (

a) race, culture, ethnic origin or religious belief, (

b) the ownership of property, (

c) the requirement to pay fees of any kind, other than minor entrance or service fees, or ...

(3) Not permitting an individual to use a property for safety or liability reasons or because the individual’s use of the property would contravene a law does not make the use of the property restricted. 10

(1) Property referred to in section 362(1)(n)(iii) of the Act is not exempt from taxation unless (

a) the charitable or benevolent purpose for which the property is primarily used is a purpose that benefits the general public in the municipality in which the property is located, and (

b) the resources of the non-profit organization that holds the property are devoted chiefly to the charitable or benevolent purpose for which the property is used.

(2) Property is not exempt from taxation under section 362(1)(n)(iii) of the Act if, for more than 30% of the time that the property is in use, the use of the property is restricted within the meaning of

section 7 . [ 7 ] The Board denied the application on three grounds: 1. Under s 10(2) the use of the property was restricted more than 30% of the time. This was due to leases for individual units that granted the tenant exclusive use and control of the unit. 2. Under s 7(1)(

c) the requirement to pay rent for a residential unit, even a below-market rent, was found to be more than a minor entrance or service fee. 3. Also under s 10 (2), the requirement that at least 50% of the lessees have an Indigenous background also restricted the property more than 30% of the time. Standard of Review [ 8 ] The leading case on standard of review in the context of judicial review is Canada (Minister of Citizenship and Immigration) v Vavilov , 2019 SCC 65 . The Supreme Court was clear that reasonableness is the presumptive standard of review.

In this case, all parties agree that the standard of review is reasonableness. [ 9 ] The Board found that the property met the test under s 362(n)(iii) of the Municipal Government Act as it is used for a charitable and benevolent purpose that is for the benefit of the general public. There can be no doubt that the goals of the Society and NiGiGan are highly laudable. They are working very hard to address an urgent need in Edmonton. Homelessness has become a serious problem in Edmonton.

One only has to look out the window of the Courthouse or walk a few blocks in any direction to see multiple people who are un-housed. [ 10 ] The City of Edmonton’s website states it is building an inclusive city where everyone can enjoy safety, stability, and the opportunity to build a life. That begins with ensuring there are housing options for all Edmontonians. [ 11 ] The funding agreement between the City of Edmonton and the Society includes in the

preamble that creating permanent supportive housing is the highest priority for investment in the eradication of homelessness. [ 12 ] The Society and NiGiGan are trying to provide housing options for some of those who are most hard to house. They have other successful joint projects within the city. Successfully moving people away from homelessness saves every level of government a significant amount of money. [ 13 ] However, laudable actions do not mean laws and regulations do not apply.

Section 7 and s 10 of COPTER apply to the property. [ 14 ] The majority of the Board found that the property did not comply with COPTER s 7(1)(c). It found that access to the property was restricted more than 30% of the time it was in use in three ways. First, the individual leases meant that tenants had exclusive use of the units. Second, it found the requirement to pay rent to be more than a minor fee. Thirdly, the NiGiGan Agreement requiring 50% Indigenous occupancy also provided a more than 30% restriction. [ 15 ] COPTER does provide some permissible reasons for restricting access. Those reasons are contained in s 7(3). It reads:

(3) Not permitting an individual to use a property for safety or liability reasons or because the individual’s use of the property would contravene a law does not make the use of the property restricted. [ 16 ] The majority decision took a broad

interpretation of the phrase in s 7 of COPTER . “use of the property is restricted”. It found that the property is restricted if individuals are restricted from using the property on any basis. I find this

interpretation to be unreasonable. It is too broad.

[ 17 ] In order for any property to operate effectively, there must be some restrictions on its use. Some areas may be required to have limited access for reasons other than safety or liability. A property may not want people from the next building coming into use the microwave, lunchroom and bathroom. This is certainly a reasonable restriction, but hard to categorize as one required for safety or liability reasons. [ 18 ] I note that other decisions of the Board have found that non-profit daycares can be eligible for exemption [1] .

It is difficult to envision a daycare that does not in someway restrict public access to its facility. [ 19 ] The Board has also found that a fenced storage and parking area could qualify for tax-exempt status. [2] Again, it is difficult to envision how a fenced storage area does not restrict public access to the property. [ 20 ] It is difficult to imagine any building that provides individual housing units that does not also restrict access. It would be ridiculous to provide people an apartment, but then allow anyone access at any time.

Even people living in a tent have some control over who enters the tent. [ 21 ] The minority decision interprets s 7 in a narrower manner. It found that whether “individuals are restricted from using the property on any basis” should be interpreted as meaning restricted from participating in the program. [ 22 ] I find that this is the proper

interpretation of the section. The property does not restrict who can access the services offered at the property. Those services include providing accommodation, counselling, and other support services. Consequently, providing individual, exclusive access accommodation does not constitute a restriction of use under s 7. [ 23 ] Using the same

interpretation, I find that charging rent does not violate s 7. There are no fees to access the services offered at the property. There are fees associated with having dedicated accommodation at the property. In order to be eligible for accommodation at the property, the tenant must meet requirements under the Provincial Affordable Housing initiatives. Among other things, the tenant must have income below a certain threshold. [ 24 ] I note that previous Board decisions have found that fees charged for space rental were not considered a restriction under COPTER s 7(1)(

c) when the fees were similar to those charged by other non-profit organizations. I also note that a not-for-profit daycare was found to not violate the same section. Although not specifically stated, it seems that the daycare did not provide free childcare services. It likely charged subsidized user fees. [ 25 ] I find that the minority decision was correct.

Charging a fee for individual accommodation at the property does not constitute a restriction under COPTER s 7(1)(c). [ 26 ] The third ground on which the Board based its decision concerned the requirement that 50% of the program participants self- identify as Indigenous. This requirement is contained in the Articles of Agreement between Homeward Trust Edmonton and the Homeward Trust Foundation and NiGiGan Housing Ventures and the Society. Pursuant to the agreement, Homeward Trust Foundation would provide up to $684,500 to NiGiGan to provide services as the property.

One of the conditions required to receive the funding was that “a minimum of 50% of the program participants (must) self identify as Indigenous”. [ 27 ] It is a sad fact that for various reasons Indigenous persons disproportionately suffer from homelessness. Again, the efforts of the Society and NiGiGan to try and address the overrepresentation of Indigenous persons within the homeless population are truly laudable.

However, laudable goals do not mean that laws do not apply. [ 28 ] The dissenting decision of the Board found that having a majority of Indigenous participants and creating programming responsive to their needs was not “a restriction based on … race, culture, ethnic origin or religious belief”.

Instead, it was simply recognizing the demographics of the population to be served. [ 29 ] Although the restriction might be properly recognizing the demographics of the target population, I find that the specific requirement that a minimum of 50% of the program participants must self-identify as Indigenous to be a restriction based on race, culture, or ethnic origin. There is no other reasonable way to interpret this requirement.

I can find nothing unreasonable in the majority decision of the Board on this point. [ 30 ] The property does not qualify for a tax exemption. [ 31 ] It is unfortunate that this written requirement in the funding contract results in a denial of tax-exempt status for the property. It is quite likely that given its mandate, the property would have more than 50% of its program participants self-identify as Indigenous regardless of the written requirement. Funds that would have been used to support programs at the property will now be used for property taxes.

The City’s website states “T he City supports the work of Edmonton’s homeless-serving sector, providing funding to social agencies for street outreach and activating the extreme weather response to support vulnerable people”. At least some of that funding will come from the homeless-serving sector paying property taxes. Heard on the 12 th day of May, 2023. Dated at the City of Edmonton, Alberta this 1 st day of November, 2023.

G.R. Fraser J.C.K.B.A. Appearances: Roger C. Stephens, Stephens Mah Toogood for the Applicants Tanya Boutin, The City of Edmonton for the Respondent, The City of Edmonton Kate L. Hurlburt, K.C., Emery Jamieson LLP for the Respondent, The City of Edmonton Composite Assessment Review Board