City wins landmark appeal in PILT dispute with federal government

Cold Lake, AB – The Federal Court of Appeal has ruled that the way the former Minister of Public Services and Procurement Canada valued 4 Wing Cold Lake was unreasonable.

The decision represents a significant and positive step forward for the City of Cold Lake in its attempts to resolve a long-standing dispute over Payment in Lieu of Taxes (PILT) payments from the federal government for 4 Wing Cold Lake. While each property owner in Cold Lake pays property tax, the federal government, as the owner of 4 Wing Cold Lake, instead makes a payment in lieu of tax as set out by the PILT Act. PILT is intended to be the amount that would be paid in property tax, had the federal property been taxable. This creates a fair distribution of the tax burden between federal and non-federal properties in municipalities. 

For over 10 years, the City of Cold Lake has contended that the federal government has been undervaluing 4 Wing Cold Lake, effectively shorting the City’s tax bill by $1.1 million to $1.8 million annually. This has required the rest of the City’s taxpayers to pay more to cover the shortfall.

“We have been fighting for a decision on this PILT dispute since 2012,” said Mayor Craig Copeland. “It was never an option for us to give up: When your largest taxpayer shorts its tax bill, the rest of the residents are forced to pick up the slack. That’s not a sustainable place for the city to be, and so we need to see this dispute through to its conclusion.”

Over the past decade, the federal government has paid PILT based on its own assessment of 4 Wing Cold Lake, instead of paying the amount levied by the City. From 2013 to 2021, short payments resulted in underpayment totaling almost $14 million.

Since the beginning, the City has maintained its position that 4 Wing Cold Lake, arguably the most important military base in Canada, needs to be valued in the same manner that all other properties in Cold Lake are valued. Serviced properties are valued by taking into consideration the contributory value of having adjacent services. The services themselves are not valued; however, assessors do not pretend that a serviced property is unserviceable to establish a lower valuation. The Federal Government has disagreed. The position of the Minister has been that 4 Wing Cold Lake should be valued as if it is an unserviceable property, reducing the land value considerably. 

The Federation of Canadian Municipalities, representing municipalities across Canada, intervened at the Federal Court of Appeal on the side of the City of Cold Lake.

On July 23, 2025, the Federal Court of Appeal issued its judgement, agreeing with the City that the Minister’s decision was unreasonable, and that the Minister failed to meaningfully account for the two central concerns raised by the City. The Federal Court of Appeal has directed that the Minister reconsider their earlier position in light of the Federal Court of Appeal’s interpretation of the PILT Act.

“This case will have an impact for all municipalities that have federal property within their jurisdiction,” Copeland said. “In Cold Lake, where nearly one-third of the City’s land base is federal property, it is important that federal properties are valued accurately, and we are looking forward to a new decision from the Minister that reflects a fair value of 4 Wing Cold Lake.”

The Government of Canada is tasked to make a new decision based on the finding of the Federal Court of Appeal or make application to the Supreme Court of Canada. The new decision must respect the existing interpretation of legislation, rather than departing from it, and the Court of Appeal directed that the government address the troubling aspects of the Minister’s previous decision.

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