11/21/2012 04:23 EST | Updated 08/19/2013 02:37 EDT

BC Ferries Property Tax Rebate Hurts West Vancouver


VANCOUVER - Cities that host BC Ferries terminals are awash with worry their municipal and education budgets could take a big hit after West Vancouver had its Horseshoe Bay property taxes slashed to nearly nothing.

As the city gears up for a legal battle to get hundreds of thousands of dollars in taxes back, the mayors for other municipalities are demanding the situation be rectified by the provincial government.

"To suggest that a large parcel of West Vancouver waterfront has no value is absurd," said Mayor Michael Smith in a release earlier this month, shortly after the decision was handed down.

The city filed notice last week it is taking the arms-length board that hears appeals of property tax assessments to B.C. Supreme Court, after the board downgraded the value of the Horseshoe Bay ferry terminal from $47 million to only $20.

The devaluation occurred in late October, when the Property Assessment Appeal Board ruled in favour of BC Ferries after Ferries asked the board to take another look at the terminal's value.

The board determined the two parcels of land that comprise the terminal have no market value because the province has designated their only purpose to be as a ferry terminal. The board noted fairness was not its concern in making the determination, only that there is no potential for profit under that use.

The decision means West Vancouver will collect no tax from BC Ferries in future years and is also required to repay property tax revenues collected for the past three years amounting to about $750,000.

Mayors from other municipalities with BC Ferries' properties fear they could be next.

"It's quite a landmark case," said Delta Mayor Lois Jackson, whose city currently receives $688,000 in property taxes from the Tsawwassen ferry terminal.

"(If) West Vancouver is not able to receive any tax dollars from their ferry terminal, it stands to reason that BC Ferries would go after the rest of us."

Neither Delta nor Nanaimo have been given notice BC Ferries is appealing their terminals' property assessments.

However, the board has received property assessment appeals for the Swartz Bay terminal near Victoria and three more in the Courtenay-Comox area, as well as for some other BC Ferries properties in Richmond and Prince Rupert.

A spokeswoman for BC Ferries declined to comment while the case is before the courts.

Jackson said her municipality is attempting to gain intervener status when the case is put before a judge. She noted that about $400,000 of the taxes Delta gains goes to the local school board.

If her city and others in the same predicament lose those funds, education will be impacted around the province, she said.

Nanaimo hosts three BC Ferries terminals, which cumulatively haul in $655,000 in property taxes each year.

Mayor John Ruttan called the devaluation "totally unrealistic."

"Now give me a break," he said, reflecting on the Horseshoe Bay scenario. "Obviously, if you took a window out of one of the buildings you could get $20 for it."

Both Ruttan and Jackson noted that even though the board felt the land has no market value, their cities must still pay costs for water, roads and emergency services leading to the terminals.

Ruttan argued the province should step in to fix the legal loophole that resulted in the devaluation.

"I would think that an order-in-council from the provincial government could change that designation in about three minutes," he said. "To try to convince anyone that a very large, multi-acre ocean-front property is worth $20 in Vancouver? I don't think so."

Every $800,000 loss to the municipal budget amounts to a one per cent tax increase, Ruttan said.

He added he's also concerned other industries might try to follow BC Ferries' lead, resulting in further tax losses.

A call for comment by the minister responsible for BC Ferries was not immediately returned.

Cheryl Vickers, chair of the appeal board, said the board is holding off adjudicating the outstanding BC Ferries appeals until the Horseshoe Bay case is resolved.