B.C. Ferries must pay taxes on terminals

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B.C. Ferries won’t get away with sidestepping property tax on its waterfront terminals, but municipalities also won’t get back all the tax revenue they had hoped for, the provincial government announced Thursday.

The ferry corporation and the B.C. Assessment Authority agreed to new rules on how ferry terminals should be valued, which prevents municipalities from getting an unfairly small slice of taxes, said Community, Sport and Cultural Development Minister Bill Bennett.

“It’s a win-win for everybody,” he said.

But the new rules aren’t a complete victory for municipalities, many of which will lose thousands of dollars under the deal and result in tax hikes for homeowners.

“There’s a slight reduction in assessment overall,” said Bennett.

“But the alternative to this is that B.C. Ferries would have continued with its 48 [ferry terminal property assessment] appeals and we could have conceivably ended up with ferry terminal properties in this province essentially having no value.”

The government intervention in the tax dispute came after B.C. Ferries appealed its $47-million property assessment at the Horseshoe Bay terminal in West Vancouver.

The B.C. Property Assessment Appeal Board overturned the assessment, and declared the value of the land to be $20, cutting the ferry corporation’s taxes to almost nothing and costing West Vancouver approximately $1 million. It reasoned that the B.C. Ferries sites had minimal market value because they could only be used for terminals.

“That was kind of a scary proposition,” said Bennett.

“That decision by the Property Assessment Appeal Board was a surprise, not only to the government and B.C. Assessment but also to B.C. Ferries.”

Outraged municipalities, which depend on tax revenue from 48 ferry terminals in B.C., threatened legal action.

The Swartz Bay terminal in North Saanich was assessed at $44.48 million in 2012. The new assessment deal cuts it 22 per cent, to $35.6 million.

That results in a $96,158 drop in municipal taxes to the District of North Saanich, which equates to a 1.12 per cent hike for taxpayers.

“The dip, of course, is something that is hard for us to deal with and it will affect our budget,” said North Saanich Mayor Alice Finnall. “We hopefully will find a way to mitigate it.”

Despite the drop, it’s good to have the security of a new assessment deal, she said.

Provincewide, the new assessments drop ferry terminal property values between 12 and 22 per cent.

In Nanaimo, which has the Duke Point, Departure Bay and Gabriola Island terminals, the new assessments mean a loss of $150,686 in revenue.

Nanaimo Mayor John Ruttan called the deal “the best you could hope for in a bad situation.”

“The other alternative, we could have had the property assessed at $20 and got zero taxes — that was the worry,” he said.

The new ferry terminal assessment method is a five-year deal, said Bennett. He also recommended future legislation on the subject, to better address the issue of ferry terminal property value.

B.C Ferries appealed its assessment because it wanted a slightly lower value, but it did not intend to end up with a $20 value, said spokeswoman Deborah Marshall.

“We wanted to pay our fair share,” said Marshall. “Twenty dollars is quite a low amount.”

When B.C. Ferries was a Crown corporation in 2003 it paid $1.3 million in grants in lieu of taxes for its terminals, said Marshall. Last year, as a private entity, it paid $5.2 million in property taxes.

“We’ve always intended to pay our fair share, we just felt it was getting too high,” said Marshall.

B.C. Ferries will save $1 million under the new assessment rules, meaning it is now set to pay $4.2 million in taxes.

“We’re pleased that everyone was able to come together and get a solution,” said Marshall.

rshaw@timescolonist.com

— With a file from Darrell Bellaart, Nanaimo Daily News

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