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)

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

An Interior Health nurse administers Pfizer-BioNTech COVID-19 vaccines to seniors and care aids in Kelowna on Tuesday, March 16, 2021. (Phil McLachlan/Kelowna Capital News)
105 new COVID-19 cases in Interior Health

Just over 8,000 new vaccine doses administered in the region for a total of 158,000 to date

Twin falls in Yoho National Park. Yoho is one of the mountain parks whose draft management plan is now available for review. (Claire Palmer photo)
Local input sought to shape future of mountain national parks

Banff, Yoho, Kootenay, Mount Revelstoke and Glacier national parks are amongst those seeking input

The last 400 bear-proof garbage bins will be rolled out this spring. Keri Sculland/Star Photo
The bear-proof garbage bins are a must to keep bears out of town. Keri Sculland/Star Photo
Bear bins required as weather warms

The Town is reminding people to make use of their bear bins now that the bears are back in town

Titanic was the largest and most luxurious ship in the world. Photo provided and colourized by Jiri Ferdinand.
QUIZ: How much do you know about the world’s most famous shipwreck?

Titanic sank 109 years ago today, after hitting an iceberg

In a feature article published April 10, 2021 in The Times of London, ‘headlined British Columbia has what it takes to rival Napa Valley,’ the valley is praised extensively for its natural beauty and wine. (File photo)
From the U.K. with love: Okanagan wine, scenery receives international praise

The Times of London newspaper recently featured the valley in a wine and travel piece

Arlene Howe holds up a picture of her son, Steven, at a memorial event for drug overdose victims and their families at Kelowna’s Rotary Beach Park on April 14. Steven died of an overdose at the age of 32 on Jan. 31, 2015. (Aaron Hemens - Kelowna Capital News)
Moms Stop the Harm members placed crosses Wednesday morning, April 14, on Rotary Beach in memory of children lost to drug overdoses. (Aaron Hemens - Capital News)
Kelowna mothers remember children lost to the opioid crisis

It has been five years since illicit drug deaths was announced a public health emergency

Demonstrators at the legislature on April 14 called on the province to decriminalize drug possession and provide widespread access to regulated safe supply across B.C. (Jake Romphf/News Staff)
Rally calls for decriminalization, safe supply on 5th anniversary of overdose emergency declaration

From 2016 to the end of February, 7,072 British Columbians died due to overdose

A Keremeos family lost their home after a fire shortly before midnight on April 13. No injuries were reported. (Contributed)
Keremeos home destroyed in late-night fire

The family inside was unharmed

Naloxone
Op/Ed: Interior Health CEO speaks on five years of strides and challenges in overdose crisis

In 2020, close to 4,000 people across IH had access to opioid medications

Somewhere in the pack being celebrated by his teammates is Vernon Vipers forward Zack Tonelli, who scored in overtime Wednesday afternoon, April 14, to give the Snakes a 6-5 win over the Salmon Arm Silverbacks in B.C. Hockey League pod play at Kal Tire Place. (Liza Mazurek - Vernon Vipers Photography)
Vernon Vipers bite Salmon Arm Silverbacks in OT

Snakes blow 5-3 third-period lead, rally in extra time for 6-5 pod play result over rivals

(Government of Canada)
Liberal MP caught stark naked during House of Commons video conference

William Amos, in Quebec, appeared on the screens of his fellow members of Parliament completely naked

New parking meters have been installed on Main Street, Ellis Street, Front Street, Nanaimo Avenue and Padmore Avenue in Penticton. (City of Penticton photo)
Pay parking now in effect in downtown Penticton

A spot downtown will now cost you $2 per hour

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Feb. 1, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps to 1,168 Wednesday, nearly 400 in hospital

Now 120 coronavirus patients in intensive care, six more deaths

Moss covered branches are seen in the Avatar Old Growth Forest near Port Renfrew on Vancouver Island, B.C. Thursday, Sept. 29, 2011. THE CANADIAN PRESS/Jonathan Hayward
B.C. blockades aimed at protecting old-growth forests reveal First Nation split

Two Pacheedaht chiefs say they’re ‘concerned about the increasing polarization over forestry activities’ in the territory

Most Read