Vernon taxpayers could be on the hook for almost $3 million.
The B.C. Supreme Court ruled Oct. 6, 2011 that the city’s latecomer bylaw is invalid and Okanagan Land Development Corp, which built the Outback resort, is entitled to $2.8 million for installing a sewer line.
“They have not complied with their obligation to the developer,” said Reinhard Burke, a Kamloops lawyer representing Okanagan Land Development.
Okanagan Land began construction of the Outback in 2004 and while the developer proposed treating sewage on site, the city insisted that a sewer main be extended along Eastside Road.
The size of the sewer line was based on the city’s projections for future growth in that area over 20 years. The city took over title of the main in 2007.
Where the problem arose, says Burke, is the city should have charged a fee to all 53 benefitting properties along the sewer route, whether they connect to the line or not, so his client could be reimbursed his costs. Instead, the city’s bylaw calls for payment towards the developer when someone connects to sewer.
“There is no valid bylaw so he hasn’t seen a nickel,” said Burke.
Burke says his client always expected he would recover the majority of the costs for the line.
“When Vernon made my client build this line, the city identified properties that could be developed in the future. Within a year, they changed the official community plan so none of the hillside lands could be developed.”
The total cost of the sewer line was $3 million and $2.8 million reflects the portion not required by the Outback for its own use.
The city is appealing the October ruling and both sides will appear in Vancouver court May 7.
“The city in the past has not pre-charged people (for services they may access),” said Dale Rintoul, a planner.
“We wait until there is a building permit or subdivision permit application and the ability to use the service.”
Among the city’s concerns is the financial formula referenced in the October ruling.
“That’s the primary nature of the appeal,” said Rintoul.
If the appeal is denied, the city’s options for restitution are covering the payment itself or enacting a new latecomer bylaw for impacted properties.
The Municipal Insurance Agency, which provides local governments with insurance, is monitoring the situation.
“They see a possible impact on other jurisdictions,” said Rintoul.
“Our bylaw is no different than many other communities.”
Coun. Bob Spiers admits he is aware of the case but he would not get into specifics.
“Council is briefed on all legal matters from time to time,” he said.
