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

Vernon shops like Expressions of Time have shown their strength, resiliency and adaptability amid the COVID-19 crisis. (Facebook)
COLUMN: A toast to small businesses in Vernon

Show local business some love this Small Business Week

File Photo.
BOOMER TALK: Talking back

Columnist Carole Fawcett responds to feedback over ‘Are you Sheeple?’ column

The Brown Derby’s Mysterioso was one of three entries in the 2020 Armstrong Professional Grilled Cheese Sandwich competition held Tuesday, Oct. 20. (Roger Knox - Morning Star)
Bakery gets judges’ attention in Armstrong pro grilled cheese sandwich event

Country Bakery’s German Kase Pretzel Grilled Cheese oozes past Brown Derby, Wild Oak Café

A power outage caused by a vehicle crash affected 2,178 BC Hydro customers in Enderby Wednesday night, Oct. 21, 2020. (BC Hydro image)
Vehicle crash in Enderby knocks out power for more than 2,000

BC Hydro crews are expected to arrive by 6:30 p.m.

Ahead of the provincial election on Oct. 24, Enderby residents put their questions to the Shuswap riding’s three candidates: Greg Kyllo for the BC Liberal Party, Sylvia Lindgren for the BC NDP and Owen Madden for the BC Green Party. The candidates recorded their answers in videos distributed by the Enderby and District Chamber of Commerce. (Salmon Arm Observer image)
B.C. VOTES 2020: Shuswap candidates answer Enderby’s top election questions

The candidates submitted video responses for an all-candidates forum ahead of the Oct. 24 election

Provincial health officer Dr. Bonnie Henry presents modelling of COVID-19 spread in B.C., March 25, 2020. (B.C. government photo)
B.C. sets another COVID-19 record with 203 new cases

up to 1,766 active cases in B.C., two more deaths

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Green Party leader Sonia Furstenau is seen as she leaves media event during a campaign stop in West Vancouver, B.C., Tuesday, October 20, 2020. THE CANADIAN PRESS/Jonathan Hayward
B.C. Green leader hopes voters see value in minority government

The Greens received nearly 17 per cent of the popular vote in 2017 yet received just three seats

Local candidates Pam Alexis, Abbotsford-Mission, and Preet Rai, Abbotsford-West, look on as NDP Leader John Horgan main streets in Abbotsford, B.C., Wednesday, October 21, 2020. THE CANADIAN PRESS/Jonathan Hayward
B.C. NDP takes snap election risk during pandemic in quest for majority government

Green Leader Sonia Furstenau said the election was unnecessary and irresponsible during the pandemic

Liberal Leader Andrew Wilkinson speaks during a drive-in car rally campaign stop at a tour bus operator, in Delta, B.C., on October 17, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. Liberal Leader maintains confidence as campaign tests party identity

Liberal campaign has been disrupted by controversy

(Kelowna Capital News)
B.C. Labour Board orders Peachland cannabis company to reinstate laid-off employees

The B.C. Labour Relations Board determined the employees were laid off due to their plan to unionize

RCMP. (Phil McLachlan - Black Press Media)
British Columbia man dies during ski trip near glacier west of Calgary

Kananaskis Public Safety and Alpine Helicopters responded around 2:30 p.m.

Prime Minister Justin Trudeau arrives on Parliament Hill in Ottawa on Monday, Oct. 19, 2020, following a week-long break for the House of Commons. THE CANADIAN PRESS/Sean Kilpatrick
One crisis after another for Trudeau since last federal election one year ago

It has been a year of unprecedented calamity and crisis

Two pigs roam the Salmon Arm Walmart parking lot during a prior visit photographed by Danielle Burgi. (Danielle Burgi photo)
Pigs trot over for a visit at Salmon Arm shopping centre

Employees say this was the second drop-in from the temporarily free-range porkers

Most Read