The two sides went before the payment in lieu of taxes advisory panel in Halifax over seven days last June and July to help determine how much Ottawa owes the city in back taxes for Citadel Hill.
The amount has yet to be settled, about two and a half years after the Supreme Court of Canada ruled in favour of Halifax and more than 20 years after the disagreement began.
In the panel's Jan. 15 decision provided to The Canadian Press by the Halifax Regional Municipality, it said based on evidence presented by appraisers and city planners from both sides, it has determined that the land's market value is about $41.2 million for the 2013 assessment year.
An appraiser for Ottawa set its worth at about $12.1 million, but the federal Public Works Department argued it should be valued at a 70 per cent discount because of the national historic site's land restrictions, bringing Citadel Hill's value down to about $3.6 million, the decision said.
The city put forth two property assessments during the hearing, which was closed to the public, saying the land was worth $51 million and $68 million, the panel said.
Halifax Mayor Mike Savage says although the panel's recommendation is less than what the city had argued, he supports the decision.
"It's not everything that the city had suggested, but I think it's reasonable and fair," said Savage in a recent interview. "So we're obviously supportive of that and look forward to the next step."
Ottawa had argued in Canada's top court that the roughly 16 hectares of land was only worth $10 because it has no commercial value.
The Supreme Court ruled in June 2012 that Ottawa cannot set payments based on its own property value assessments that are far lower than provincial assessments.
But the decision didn't include a value for the site in downtown Halifax, and the two sides were not able to come to an agreement on their own.
The panel's decision said although the site will never be sold, public lands are still valuable and therefore have a market value.
Its recommendation has been sent to Public Works Minister Diane Finley, who will ultimately make the final decision.
Finley said Friday her department has received the panel's recommendation and she will make a decision "in due course."
"I'm looking forward to having a chance to go through the report," she said in Halifax. "We want to be fair about how we treat all of the properties to make sure we're fair to the municipality but also fair to Canadian taxpayers."
Savage said although Finley has the final say, the federal panel's recommendation cannot be ignored.
"In light of the fact that it was the federal government who appointed this panel after the Supreme Court decision carries a lot of weight and should make it incumbent upon the federal government to accept the findings," said Savage, adding that he has sent a letter to Finley in support of the panel's recommendation.
"But we're not being belligerent about it. We're not standing on the rooftops and begging for fairness. We think that the next step is clear, that we should all follow the findings of the panel."
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