An Expensive Comedy of Errors

Gaps in communication, paperwork, lead Explore Edmonton to rack up a tax bill of over $1 million — that it can't afford to pay

Explore Edmonton received a tax write-off worth almost $1.2 million, but the price the organization had to pay was a scolding from Mayor Amarjeet Sohi.

“There was a level of accountability that was not fulfilled,” said Sohi. “That kind of sloppiness is not acceptable.”

This week, the City’s Executive Committee voted 5-0 to forgive Explore Edmonton’s nearly $1.2 million in unpaid taxes and penalties. How did Explore Edmonton end up falling into arrears with one of its biggest funders, the City itself?

It’s a comedy of errors, really. Explore Edmonton, which promotes the city and works to attract major events to the area, was born out of the ashes of Economic Development Edmonton (EDE). Way back in 2007, EDE signed a lease from the Government of Alberta to take over a building in the Edmonton Research Park. Subtenants in the building paid the property taxes. Everyone was happy.

Then, in 2021, the building was inherited by Explore Edmonton, but no information was provided to the City on who was sub-leasing the building. With no one to send tax notices to, the City started running the meter on Explore Edmonton.

Except, Explore Edmonton didn’t know that bill was piling up. So, the tax bill grew, penalties were accrued, and it sat with the City as a growing, unpaid debt.

Explore Edmonton simply doesn’t have the money to pay it, and administrators told the members of the Executive Council that it’s impossible to go back to the sub-tenants to retroactively bill them for taxes.

Mayor Sohi said that, had Explore Edmonton simply provided the updated info on the tenants when it took over the building, this whole mess could have been avoided.

“I’m willing to do this, but I don’t want to be rewarding sloppiness,” he said.

“This is a challenging situation,” said Coun. Ashley Salvador. “But, from my perspective, there have been gaps in communication and errors on both sides of this conversation. Ultimately, I understand that Explore Edmonton does not have the funds to be able to address this on their own.”

There is money the city puts aside to cover tax losses. Administrators said the expected tax loss for the year is expected to be around $12 million. Many of these losses come from assessment appeals that the city loses. But administrators warned councillors that they should expect more appeals in 2024. The tax rate is slated to go up by 6.6 per cent, and that means homeowners are more likely to appeal how much the City thinks their homes are worth.