Property tax upheaval hitting Island (Bob Rennie

Saturday » June 27 » 2009 Property tax upheaval hitting Island Les Leyne Times Colonist Saturday, June 27, 2009 Vancouver Island needs some kind of new deal. The economy is being transformed before our eyes, but the property tax system that links economic activity to social well-being is left over from another age. For years the Island has been evolving relatively slowly. It's been growing away from the withering forest industry and toward the steady pension and service economy. The transition seems to be speeding up and some new friction is developing. It started when some of the forest companies recognized that the logging and milling mainstays of the 20th century are now over. Real estate development is where the profit is. Western Forest Products' chaotic attempts to start developing part of its thousands of hectares of holdings are an example of the friction. The government freed the firm of tree farm licence requirements on its private land two years ago. That allowed WFP to sell some property to reduce its debt load. The resulting development plans have created all kinds of controversy. In Campbell River, there's another example of a forest company trying to turn a buck in the real estate business. Timberwest went public in a big way at the start of this year with an announcement that it was creating a real estate arm to maximize profit from its extensive land holdings on the Island. It partnered with high-profile Vancouver condominium salesman Bob Rennie to create Couverdon, its real estate venture. The deal looked a little sketchy at first glance. What could the self-styled downtown "Condo King" know about community development on Vancouver Island? But there were a lot of reassuring words in the announcement about learning what people want, sensible planning and ending the "hit and run" approach to subdividing. A court petition filed earlier this month, however, shows not everyone was reassured by the prospect of a timber company selling real estate under a different name. Timberwest asked the court to overturn the city of Campbell River's tax plan for the coming year. The case illustrates how tricky this transformation will be. And combined with another tax dispute heading to the courts, it shows how expensive the slow fade of the forest industry is going to be. Timberwest has owned a substantial chunk of land within Campbell River's boundaries for years. It was designated as managed forest land. When the company announced its new focus on maximizing real estate values, the change didn't escape Campbell River's attention. Although Timberwest has only announced plans to subdivide 65 hectares of the 3,000 hectares it owns in the municipality, the city now views all the holdings as development property, based on the company's pronouncements. So it set a new, higher tax rate to reflect the potential developed value of the land. Timberwest's municipal tax bill went from $75,000 last year to $1.3 million this year. That's what brought the lawsuit. It arrived the same week that Catalyst Paper filed four other petitions in B.C. Supreme Court. They also illustrate the seismic shift on the Island. The flagging company is suing three Island municipalities -- Campbell River, Port Alberni and North Cowichan -- and Powell River over the taxes on its pulp and paper mills in those towns. The mills were built after the war and were welcomed as major employers paying top wages. But gradually the jobs were taken for granted and the mills became known as polluting eyesores. So an unwritten understanding emerged. The big industrial monoliths were penalized for the big downsides they created by huge tax bills that increased over the years until the rate was 10 to 20 times higher than residents and small businesses pay. Residents vote. Mills don't. The deal lasted as long as the companies thrived. But they don't anymore and their losses are now more than just a cyclical downturn. Some kind of new convention has to be drawn up to reflect the new realities on the Island. Forest companies will always be the target of first opportunity and deservedly so. But they're a smaller and smaller target. Politicians might come up with one, or a judge may dictate it. Wherever it comes from, it's hard to picture a new arrangement that doesn't mean higher taxes for most residents and businesses. lleyne@tc.canwest.com © Times Colonist (Victoria) 2009 Copyright © 2009 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved. CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.