Oceanfront Developer Insists Tax Break Should Continue

By Gagandeep Ghuman
Published: Sept 3, 2017

Squamish council’s inability to clearly and conclusively tie the Oceanfront tax exemptions to the downtown and business park exemptions could cost the Squamish tax payers hundreds of thousands of dollars in lost tax revenue on SODC lands.

With the exception of Coun. Doug Race, the council seems to believe the Oceanfront exemptions were meant to level the playing field with downtown and business park tax exemptions. Now that the downtown exemptions are on their way out, the Oceanfront exemptions should also follow suit, the council argues.  

The developer sees it in a different light. 

The Squamish Oceanfront developer wants his tax holiday to continue while council prepares to discuss on Tuesday how and if the tax exemptions granted in 2015 could be repealed. In a strongly worded letter to the district, the developer insists the district would be acting in “bad faith and contrary to the spirit of the lengthy negotiation process” if it went ahead and repealed the taxes. 

The district staff is also warning council to let the exemptions stay as they fear taking away the exemptions could bring legal action from the developer.

The Oceanfront lands are being developed by Matthew Southwest and Bethel Lands Development, which is owned by local developer Michael Hutchison. 

“This is yet another example of how we have been outsmarted. We haven’t been able to negotiate to the tax payers benefit because whoever has negotiated this deal clearly missed the fine details of the tax exemption. Now that is going to cost tax payers hundred of thousands of dollars.” Coun. Ted Prior.  

The tax exemption issues goes back to 2013 when the district approved a tax exemption on new builds in downtown and the business area for five years. That bylaw would lapse in 2018, which means any new development in downtown or in the business park won’t get any tax exemptions. 

The story gets curious on Oceanfront tax exemptions.   

The developer successfully negotiated the tax exemption for the Oceanfront development to be included in the final sale and purchase agreement for ten years. It meant that between January 2016 and 2015, any new commercial, industrial, or mixed use developments on the Oceanfront land would be exempted from paying taxes for five years after construction.

At that time, staff supported the tax exemption at the request of the developer, noting that SODC lands would generate employment and investment. Council tagged along and approved those exemptions for a decade.

What the council didn’t do was make the connection between downtown tax exemptions and Oceanfront exemptions clear, even though it was assured by the staff and the district consultant that the council has the ultimate power to suspend or renew the exemptions. “We will get this in writing,” assured CAO Linda Glenday.

The district seemed to have made only a feeble attempt at legally tying the both tax exemptions together.

At the first reading, the district sent a letter to the developer adding the clause that council may cancel the Oceanfront tax exemptions if and when it nixes the downtown tax exemptions.  But in the negotiations that followed, the district never included that clause in the bylaw that would have tied both exemptions together. 

“In the negotiations that followed, there was no reference to this amendment and the bylaw was never changed to include such clarity of intent. If the district had wanted this matter clarified they could have proceeded with the proposed amendment,” Caroline Lamont, the land development manager for SODC lands told the council. 

Coun. Ted Prior says this is yet another example of how the Mayor and the council along with the staff have been outsmarted. Prior isn’t allowed to vote because of a conflict of interest.  

“This is yet another example of how we have been outsmarted. We haven’t been able to negotiate to the tax payers benefit and whoever has negotiated clearly missed the fine details on the tax exemptions. That is going to cost tax payers hundred of thousands of dollars,” Prior says.  

Coun. Doug Race was on the negotiating table and he says the tax exemptions should stay, even though the council could “technically” end them. “The expectation was that we will do this, and we did do that and now we are going to pull that. And that to me seems wrong. It shows people that individually and collectively we can’t be trusted.”

Coun. Jason Blackman-Wullf said the council gave the tax exemptions to ensure parity with the downtown. “You know who pays for that (loss of taxes). That is you and me, the tax payers and the home owner. If the development isn’t viable because there are no tax exemptions , then they really need to revise their business plan,” he said. 

He said the development has come back to the drawing table before to ask for other changes, and it’s not unreasonable for the district to demand so. “It’s a two-way street,” he said.