The podcast from CBC Radio of a 27 July interview by Portia Clark with Perry Batke the President of the Alberta Hotel and Lodging Association reveals a stark reality for the accommodation services sector in rural Alberta. In the interview Mr. Batke paints a very sombre picture for hotel operators outside the mountain parks and major cities. The words used by this industry representative include “dire situation,” “in jeopardy,” “life savings,” “unprecedented,””helpless and hopeless feelings,” and “industry in crisis.” Batke also observed that he has not seen the situation as bad in the 23 years he has spent in the industry, including during the financial crisis.
Land lease delinquencies
The Alberta Surface Rights Board is reporting an four-fold increase in non-payments to rural landowners whose land (or portion thereof) is leased to oil companies.CBC Calgary reported that Gerald Hawranik, the Board chair, was predicting 1,600 to 2,000 complaints at the start of 2016 and is now predicting the number will be much higher and a $3 million compensation judged earlier to be sufficient will be exceeded substantially.
According to its website, the Board “is a quasi-judicial tribunal that grants right of entry and assists landowners/occupants and operators resolve disputes about compensation when operators require access to private land or occupied crown land to develop subsurface resources such as oil, gas, and coal or to build and operate pipelines and power transmission lines.”
According to the Board’s 2015 Annual Report in 2015, 765 of the Board’s 1472 decisions related to compensation. Of 475 recovery of rental applications 423 were paid by the Minister and 48 by the operators.
[An earlier report from Dan Healing in May cited these growing concerns (See article in Bankruptcies). ]
Municipality looks to dissolution
The Municipality of Grande Cache, near Jasper and Hinton, is in the news as the collapse of the demand for coal has caused significant lay-offs and stress on the local economy and has eroded its tax base. Grande Cache Coal, the town`s major employer recently laid off 400 staff and Maxim, a utility, also laid off 37 employees. The town was established in the late 1960s and its infrastructure requires considerable upgrades.
The crisis reveals a structural problem with tax bases in rural Alberta where, generally speaking, rural counties enjoy superior tax bases due to oil and gas and other industrial property taxes while towns with greater population and service demands do not receive enough revenue to cover their costs. The fiscal structures are complicated so over-generalizations are dangerous.