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District of Tofino locks horns with resorts over MRDT spending

Tofino is at a crossroads in terms of how to spend its Municipal and Regional District Tax funds

Tofino is at a crossroads in terms of tourism spending and negotiations over the next two months will send the district towards wildly different and potentially unprecedented paths.

Tofino’s municipal council and the town’s accommodation providers were unable to reach an agreement on Municipal and Regional District Tax spending by their Nov. 30 deadline and have received a two-month extension from the province to sort it out.

The MRDT, formerly known as the additional hotel room tax, is a 3 per cent tax paid by tourists staying at Tofino’s hotels and resorts with the money going to the town’s destination marketing organization, Tourism Tofino.

The district wants to spend $400,000 of those funds annually to help cover the cost of a $65 million wastewater treatment plant and finally fulfill its federally mandated requirement to treat its sewage.

Tofino mayor Dan Law estimates that $400,000 amount will account for less than 0.8 per cent of the 3 per cent MRDT being collected.

The town had a Nov. 30 deadline to submit a five-year MRDT spending plan to the province, but the district needed signatures of support from 51 per cent of Tofino’s fixed roof accommodation providers and 51 per cent of the total rooms available and did not cross that threshold.

“I was surprised that some of the initial supporters backed out the way they did. That did surprise me,” Tofino mayor Dan Law told the Westerly News on Sunday.

He said the idea to put some MRDT funds towards sewage treatment was initially met with “strong support” from the accommodation sector, but that support waned leading up to the deadline.

“Over the last few months, that has certainly turned around. There’s definitely been a concerted effort to mobilize, kind of, a rejection of this application,” Law said.

The list of signatures received is not public and Law declined to divulge which accommodations supported the sewage treatment idea and which ones did not.

“The province is still showing strong support for the district’s application and so has given us an extension into the New Year,” he said. “The district has been very supportive of business and understands that tourism is an essential component of our economy and a very important part of our economy. We do believe that treating our sewage and keeping our beaches and our waters clean and restoring health to the seabeds around Tofino really is of prime importance and that we’ll all benefit. I do believe that visitors to Tofino can see the benefit of helping keep Tofino, the beaches and the oceans clean and free of raw sewage.”

He said Tofino has about 29 fixed roof accommodation providers, ranging from five rooms to hundreds of rooms and with 51 per cent of the rooms needed to be represented in support, the town’s larger resorts seemingly hold the keys.

“The district could get a very broad sweeping support from many accommodation providers, but because there are a relatively small number of very large fixed roof accommodation providers, that very small number holds a lot of sway with this agreement,” he said. “We can have four or five of the very largest fixed roof accommodation providers not support the district’s application and then it won’t go through.”

He said he has spoken with accommodation providers and remains optimistic that enough support can be achieved by the end of January, but noted a 1 per cent sustainability fee proposed by the newly formed West Coast Hospitality Association has muddied the waters.

“Some people were confused with the West Coast Hospitality Association’s counter proposal at the last minute,” he said.

JJ Belanger is the general manager of Crystal Cove Beach Resort and a founding member of the West Coast Hospitality Association.

The WCHA has voiced opposition to spending MRDT dollars on sewage treatment and has presented the sustainability fee as a compromise, suggesting it would be a new 1 per cent tax collected by accommodations with the money going towards projects like the wastewater treatment facility. Belanger told the Westerly News on Sunday that the community needs to come together and hash out the best way forward.

“Let’s get together and figure this out because the government’s kind of doing their own thing trying to do this and nobody’s really keen on it. Let’s get back to the table. Let’s talk about this. What is the best way to achieve $400,000 a year or more to pay off this sewage treatment plant?” he said. “We think our proposal is better, could mean more money for the district and could mean more money for the community if we went ahead with this. Let’s get together and figure out what the best direction is to go in because, right now, they don’t have 51 per cent and they won’t get 51 per cent.”

The WCHA’s 1 per cent sustainability fee idea received pushback from district staff when it was presented to council on Nov. 9 and Law reiterated that an unproven, voluntary fee would not meet the requirements of the Community Charter for the district’s budgeting obligations.

“To be clear, the district of Tofino has to fund our core infrastructure projects with secure funding and ultimately that funding has to be tax based…To have the suggestion that the district can use a voluntary fee, which really isn’t secured in anyway through tax or through property is just not feasible,” he said. “We’re limited to paying for our wastewater treatment plant essentially through taxation and of course the Municipal and Regional District tax is a tax so that would suffice if we could get support.”

He said the wastewater treatment plant is expected to create a 25 per cent property tax increase for local residents if alternative funding is not found.

“It is a very significant tax increase and that was of course the reason why this idea of using a portion of the MRDT to help fund it was brought to the district in the beginning,” he said. “It does make sense. I think it’s a reasonable and good use of that money and that it’s quite the best option going forward. The other option is taxation at this time.”

Belanger doubts the district will be able to receive 51 per cent support and said he had spoken to Law about six months ago and explained “80 per cent of the people that you need to sign this don’t live in this town” as it’s the resort owners, not general managers, whose signatures are needed.

“They’ve got an uphill battle to try to get there,” Belanger said. “That’s why we’re trying to come up with these ideas to try and salvage this in one way, shape or form so that the taxpayers are not on the hook for it.”

Law noted that if the district and accommodation providers cannot reach an agreement, a new proposal will need to be submitted and suggested that could mean lowering the 3 per cent tax back down to 2 per cent.

The general MRDT is 2 per cent, but in special circumstances the province allows for an extra per cent to be added with 0.8 per cent going towards a special project.

Tofino raised it’s MRDT from 2 to 3 per cent in 2016 to cover the cost of a new visitor centre at Cox Bay, which was expected to be paid in full by the time that five-year plan ran out, but currently sits one year away from being paid for.

“If the accommodation providers do not support the district’s application for a portion to go to the wastewater treatment plant, then mayor and council have to look at the application and whether or not the district will support 3 per cent or go back to 2 per cent as was originally collected,” he said. “That’s a discussion that’s going to have to come to council once we find out if indeed the fixed roof accommodation providers just absolutely will not support this.”

Belanger said going back down to 2 per cent would have “huge impacts.”

“We don’t know when we’re coming out of COVID what we’re going to be up against. If we go back to 2 per cent and all of a sudden travel resumes and a lot less people come back to Tofino and start going to other places and we need more money to push advertising to get other people to come, that money’s not going to be there,” he said. “Then we’re stuck between a rock and a hard place because all these other communities around us that are at 3 per cent are going to have a lot further reach with their advertising dollars than Tofino will.”

Belanger also expressed concern over what spending MRDT funding on infrastructure projects could mean for the program’s future.

“The impact is not just going to be in Tofino, it’s going to be all around the province,” he said. “As soon as MRDT funds are released to the District of Tofino to use on infrastructure, every other community in this province is going to go after those funds and the program is going to be lost.”

Both sides have pledged to work together on a solution with both Law and Belanger expressing optimism that some sort of agreement could be reached.

“It is a tricky situation, but it’s not insurmountable. Ultimately the district’s goal is to find ways to pay for the wastewater treatment plant outside of (property) taxation,” Law said. “If it doesn’t succeed, then we do have to go back to taxation and continue to look at other ways to reduce the burden on residents. Perhaps there’s other options for reducing the burden on residents and making the cost for this wastewater treatment plant fair and equitable.”

Belanger said a path forward can be found through collaboration.

“I’m very optimistic. I think this community is very resilient. We’ve fought together in different ways in the past and won and so now this is just another one. Let’s sit down, let’s talk and let’s come up with a proper solution that makes everybody happy, because right now nobody’s happy,” he said.

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Andrew Bailey

About the Author: Andrew Bailey

I arrived at the Westerly News as a reporter and photographer in January 2012.
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