a successful $60-million judgment against the Municipality of North Cowichan over denying zoning for a new expansion at the Vancouver Island Motorsport Circuit would have staggering repercussions in the municipality, according to a staff report. (File photo)

Residents in B.C. city could face 133% tax hike in ‘worst case’ lawsuit outcome: report

An average home could see a tax increase of $2,164 in one year

The tax ramifications for any large judgment against the Municipality of North Cowichan if the Vancouver Island Motorsport Circuit sues and wins its case would be staggering, according to a staff report.

The report, written by CAO Ted Swabey, said the potential liabilities associated with the VIMC claims for damages can’t be ignored, and could have potentially devastating implications for North Cowichan and its taxpayers over the next 10 years and beyond.

The VIMC and municipality have been at odds over the company’s wishes to expand a private motorsport circuit.

Swabey said that if the worst-case scenario were to happen and the municipality were saddled with a $60-million judgment, minus the $20 million that would be covered by insurance, there would be two options for council to choose from.

RELATED STORY: VIMC SAYS NORTH COWICHAN BACKED OUT OF “ASSURANCES”

The first is a one-time tax increase of 133 per cent that would see a tax increase of $2,164 for an average home, and $8,134 for an average business, in North Cowichan for one year.

The second option would be to borrow some or all of the required funding and repay over time.

Swabey said that borrowing over 10 years would result in annual loan payments of $4.6 million each year, which equates to a 15 per cent tax increase each year.

That means that the average home in the municipality would see a tax increase of $250 per year for 10 years, and the average business would see an increase of $930 per year.

“In addition to these tax increases, an additional tax increase of three per cent, at best guess, would be required to pay for our insurance premiums during those 10 years,” Swabey said.

RELATED STORY: NOISE MITIGATION TOP OF MIND AS N. COWICHAN COUNCIL CONSIDERS VIMC EXPANSION PROPOSAL

Swabey said $40 million is the equivalent of building two new RCMP detachments or two aquatic centres.

“Borrowing would make increases slightly more palatable, but would use up a large portion of the district’s borrowing power and cost millions in interest,” he said.

“The opportunity costs of this expenditure would be the tax room used up that could have been used to advance council’s priorities.”

Council decided on Oct. 4, following two marathon nights of public hearing, to deny rezoning at the VIMC property on Highway 18 to allow a major expansion due to community concerns about noise, environmental impacts, and First Nations objections.

But North Cowichan Mayor Al Siebring has announced since then that he is exercising his power to ask council to walk back their decision not to approve the rezoning and have council reconsider its vote, revealing that turning down the rezoning has opened the municipality up to the possible $60 million liability.

RELATED STORY: NORTH COWICHAN WILL HOLD A SECOND PUBLIC HEARING ON VIMC EXPANSION PLANS

That means another public hearing on the rezoning request is scheduled for Dec. 9 at 6 p.m. at the Cowichan Performing Arts Centre.

Swabey said the municipality already has significant budget challenges facing it over the next number of years.

He said that without adjustments to the work expectations, service levels or major increases to North Cowichan’s revenues, the municipality is already facing five per cent tax increases each year for the foreseeable future.

Swabey said those tax increases are related to the costs of the new RCMP building, the loss of forestry revenue from the Municipal Forest Reserve, loss of revenue from land sales, replacing the Crofton fire hall and other expenses.

Swabey said the scale of any potential claim by the VIMC would be known within three years, and North Cowichan can’t build enough of a reserve in that time to significantly address the issue without unprecedented tax increases.

“This notwithstanding, the potential liability requires attention starting in the 2020 budget,” he said.

“To this end, staff recommend an ongoing 0.5 per cent tax be allocated to a reserve for insurance purposes. This will provide approximately $150,000 per year into a reserve account.”



robert.barron@cowichanvalleycitizen.com

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

West Kootenay snowpack nearing record levels

High snowpack can mean a greater risk of flooding in spring, say forecasters

Calendars for a cause: Linocut calendars raise funds for Kalein Centre

The last few calendars and cards are available at Cowan’s Office Supplies and Zinnia Textiles

VIDEO: Kootenay Patricks, Montreal Canadiens play to the crowd in Nelson

The charity game was a spectacle from puck drop

City of Nelson creates student opportunity

“We didn’t realize how much we needed this person until we met them.”

Whitewater’s Adam Kuch to compete at Freeride Junior World Championship

Kuch is one of four Canadians competing in his division

VIDEO: Mass coronavirus quarantines seen in China won’t happen in Canada, authorities say

‘If a case comes here, and it is probably … it will still be business as normal’

Province’s oldest practising lawyer shares advice at her 100th birthday party

Firefighters bring Constance Isherwood a cake with 100 birthday candles

Vernon woman suing McDonald’s for spilled coffee

Woman seeking nearly $10K, says employee failed to put lid on properly

Diners’ health tax not catching on in B.C., restaurant group says

Small businesses look for options to cover employer health tax

B.C. comic wins judgment after club owner slaps cellphone out of his hands

Incident happened last summer when Garrett Clark was performing in Abbotsford

Mayors call for ‘calmness’ as highway rockslide cuts Tofino, Ucluelet off from supplies

Ministry of transportation expects to open road for “essential travel only” from noon-8 p.m. Friday.

Owner surrenders dog suffering from days-old gunshot wound to B.C. SPCA

The dog was also found to be emaciated and suffering from a flea infestation

B.C. man dies after police called for ‘firearms injury’ in rural Alberta

Victim is 30-year-old Greater Victoria man, say police

Most Read