A levy of $0.40 per tonne on all shipments of sand and gravel within the County of Two Hills was introduced and passed at the May county council meeting, May 22. The levy came in to effect that same day, according to the text of the bylaw, which was made available to The Journal on June 3.
All sand and gravel businesses operating within the County of Two Hills are now required to report the tonnage of shipments of aggregate from pits within the county boundaries on a quarterly basis, and to pay the levy of $0.40 per tonne.
During the meeting, discussion focused on when the levy would come into effect and who would be impacted by it.
Division 4 Coun. Soren Odegard asked if the County was required to advertise the levy. Chief Administrative Officer for the county Sally Dary said under the Municipal Governance Act the county did not have to advertise the levy, but did have to inform the affected businesses.
Proposed dates for when the levy would become effective included June 1, 2019; Jan. 1, 2020; and fiscal 2020. Division 2 Coun. Murray Phillips spoke in favour of making the levy effective sooner.
“You do it as of January and all those piles are gone by January. I wouldn’t let it sit there. It’s either you do it June 1 or you carry it. But anybody that has a pile, it’s going to be gone,” said Phillips.
Odegard expressed concern the levy would ultimately be passed on to the landowners by the companies crushing the aggregate, and asked if existing pits would be grandfathered in and exempt from the bylaw.
“We have to treat everyone equally, so it’s all or none. Except ours of course,” said Dary.
According to the bylaw pits owned or leased by the Crown or municipality, shipments of aggregate for government projects, and shipments required for construction, repair, or maintenance of roads, are all exempt from the levy.
“Anything with the county doesn’t get touched, which incentivizes people in a way to stick with us so it stays in our roads. The people with ongoing contracts now, they get slapped $0.40 a tonne on what’s going out, if they were getting $2 royalty, they’re down to $1.60. The landowner is not going to like it,” said Phillips.
“We’re going to have lots of kickback. I don’t know if it’s worth it,” said Div. 5 Coun. Elroy Yakemchuk.
“Ultimately, the goal is to look after infrastructure. We have road use agreements that do that, but we’ve had situations where they don’t cover the cost . . . We have a lot of abandoned pits out there that have to be reclaimed and this money could go towards that. That in itself is a good use for these monies,” said Odegard.
Odegard made the motion to give Bylaw 6-2019 first reading. Yakemchuk made the motion to give Bylaw 6-2019 second reading. Div. 3 Coun. Dianne Saskiw moved to proceed to third and final reading. Phillips moved to give Bylaw 6-2019 third reading. All the motions carried unanimously.
Mixed response from industry
Response from industry to the aggregate levy is mixed, with concerns being raised over the lack of notice given by the County of Two Hills.
According to Alberta Sand and Gravel Association executive director John Ashton, aggregate levies are widely used across the province with at least 30 municipalities participating in the program since the province introduced it in 2013 with the support of the ASGA.
“We support this program because we do make an impact on municipalities when aggregate extraction is happening. There is road use, and there are other impacts to infrastructure. We do agree that producers should be contributing something to offset that,” said Ashton, noting the funds a municipality receives from the levy can be used to improve infrastructure and fund other projects which benefit the entire community.
“When it’s done right, it’s done with a good amount of notice for producers. And the reason for this is because most commerce in the aggregate industry is done by bids. You bid on a project to be a supplier for that project. And obviously when you’re putting a bid together, the economics of that bid including the cost of levies, taxes, etcetera need to brought in to play. So more important than the question of whether or not to do it is, is the notice given before implementation,” said Ashton.
He said generally the ASGA recommends at least six months of notice for producers.
When the Journal made calls to aggregate companies working in the region, some had only just received the letter detailing the levy, while others declined to comment as they had not yet received it and only knew second and third-hand the letter was coming.
Laurence Ferbey is the owner of Ferbey Sand and Gravel, a company based in Vermilion that operates a pit near Myrnam in the County of Two Hills.
“It caught us off guard. We didn’t really understand why, and no one from the County had spoken to us that this was even going to be a possibility,” said Ferbey.
He said his company hauls roughly 75,000 tonnes annually from their Myrnam pit, and the levy is certainly going to pose a problem because it increases not only the direct cost of the gravel, but also his costs for record keeping, filling out and sending in the appropriate forms to the county each quarter.
“We have given out prices to various projects that did not include the levy. And so when we go back to these people, I haven’t yet to all of them, but I’ve mentioned to some of them that there’s a possibility of an increased price, they were not happy. They were suggesting that the price I gave them is the price I have to stay with. So if that’s the case, then it’ll cost me for the levy,” said Ferbey.
According to Ferbey, his company also does work in the County of Vermilion River and County of Minburn. He said the County of Two Hills is the first municipality in that region to introduce an aggregate levy.
The County of St. Paul had an aggregate levy bylaw in 2015, but council repealed it on Aug. 8, 2017.
Mixcor Aggregates has a pit east of Two Hills on Highway 45. According to general manager Gary Zeitner, the levy won't have a significant impact on business because the pit is not very active at this point.
"Many other counties have already implemented that levy. So it's something we're familiar with and used to dealing with," said Zeitner.
