Having swirled past a federally mandated deadline to treat its sewage, Tofino looks set to buck a tourism-spending trend and ease the burden on local taxpayers.
The town’s municipal council plans to spend a portion of its annual Municipal and Regional District Tax dollars on a roughly $65 million wastewater treatment facility, despite concerns raised by the Tourism Industry Association of B.C. and the British Columbia Hotel Association and a last minute proposal from local accommodation providers to create a brand new fee instead of siphoning funds from the MRDT.
The MRDT, previously known as the additional hotel room tax, is a 3 per cent fee paid by tourists staying at Tofino’s tourism accommodations.
The funds have traditionally been used on marketing the town to potential travelers, though Tourism Tofino has been using roughly 0.8 per cent of that 3 per cent tax annually since 2017 to cover the cost of its new visitor centre at Cox Bay.
With the visitor centre nearly paid in full, Tofino’s municipal council has been exploring the possibility of putting that 0.8 per cent portion towards sewage treatment.
A final decision must be made in short order as the deadline to submit Tofino’s next five-year MRDT financial plan falls on Nov. 30 and council reviewed a letter signed by the Tourism Industry Association of B.C. and the British Columbia Hotel Association urging them to change course during their Nov. 9 regular meeting.
“The district’s proposal to redirect a portion of MRDT toward infrastructure outside of the scope of tourism and the parameters within the MRDT act, not only creates uncertainty over multiyear marketing budgets and investments by Tourism Tofino, but it also has the very real likelihood of causing uncertainty and division between the district, residents, businesses and the accommodation/tourism sector,” the letter reads, in part.
“In a worst-case scenario, the breakdown of this important three-party agreement on the use of the funds could ultimately put a halt to MRDT collection. From a broader industry perspective, once a community like Tofino sets a precedent for use of MRDT beyond tourism marketing, programs or projects, other BC communities are likely to follow suit, putting the entire provincial tourism marketing eco-system in jeopardy…a move we can ill afford as our industry at-large continues its long road to recovery.”
Council also heard from JJ Belanger of Crystal Cove, Charles McDiarmid of the Wickaninnish Inn and Christopher Fehr of Tofino Resort and Marina who spoke as a delegation on behalf of the newly formed West Coast Hospitality Association.
Fehr said accommodation providers support the development of a wastewater treatment plant and explained that the WCHA is proposing a brand new sustainability fee that he suggested would add tourism revenue to town, rather than reallocate existing dollars from one area to another.
He said the idea would be that, beginning January 2023, local accommodations, including resorts, vacation rentals, bed and breakfasts and campgrounds, would begin collecting a new 1 per cent sustainability fee from visitors.
Fehr said the sustainability fee would “generate a significant amount of new revenue that will not only help finance the wastewater treatment plant, but will raise funds in perpetuity for other infrastructure needs.”
He suggested the fee would generate an estimated $500,000 annually and the WCHA would give 80 per cent of that to the district with the remaining 20 per cent going towards administration and “charitable donations within the community.”
“The WCHA is committed to creating a solution that generates a very significant amount of new money to help finance major municipal infrastructure, reduce the tax burden on residents, yet retain current funding programs for their intended purposes, mainly MRDT and (Resort Municipality Initiative funding),” he said. “As residents ourselves who are all active community members, we are presenting an excellent and exciting new program that will accomplish this for many years to come…We ask the District of Tofino to acknowledge this commitment and support the positive solution.”
Belanger said the WCHA has secured commitments from roughly 85 per cent of the town’s accommodations willing to collect the new fee and that $500,000 is a conservative estimate, adding that if other businesses, like restaurants, buy into the program, “It could be huge.”
He said “resorts can collect fees for many reasons” and cited a similar sustainability fee collected in Jasper as an example.
He added the new fee would help ease the residential tax burden without the negative impacts he believes reallocating MRDT funds would have on the town’s tourism industry.
“We don’t know where we’re going to end up a year from now or two years from now. We need to be able to support marketing. There’s still a lot of businesses in this community that have not fared well through COVID,” he said. “If we choose to spend this money in another way, it opens a large crack in the door of MRDT for every other municipality and every other city to go after.”
Several councillors seemed initially interested in the idea but, in a rare move, district staffers raised concerns directly to the delegation as manager of corporate services Nikki Best and director of finance Nyla Attiana cautioned council against the idea.
“I typically refrain from commenting on a proposal like this that is full of a lot of detail at this stage without having any background information prior to going into the meeting, so I speak cautiously and I feel like it is important in my role as the financial officer for council to caution council in considering a proposal like this, at this stage, for the next five years as we go into financial planning,” Attiana said. “It is difficult for me to advise council to move in this direction without having the security or any recourse for collecting such funds.”
Attiana explained that the district plans on a five-year basis and guaranteed revenue sources must be accounted for in each year.
“This proposal, while it could have some merit once it is an established program and it could be something that we could look to once those revenue sources are more secure, but I have a great deal of difficulty advising council to consider it at this stage and particularly over the next five years as we plan,” she said.
She added the MRDT funds would provide roughly $400,000 of guaranteed revenue over the next five years and suggested it would take multiple years for the WCHA to prove itself stable and viable.
“We are looking at $896,000 per year to service the debt on the wastewater treatment plant, which is a significant tax increase on municipal taxes of approximately 25 per cent. By contributing $400,000, we have an opportunity to reduce that for taxpayers down to 15 per cent, potentially more if we’re able to use other sources of funds, such as gas tax for example,” she said.
“At any time a program like this (sustainability fee) or the resort association could collapse and be no longer and we have no recourse and we still have a 30-year debt term…There’s no guarantee to me that this cash flow will be there for 30 years. That is my hesitation to move forward with something like this.”
Coun. Tom Stere said the association had presented an “obviously very intriguing proposal,” but added, “There’s a tremendous amount of detail that would need to be coming forward to be able to accurately get any kind of conversation around this.”
Coun. Cathy Thicke said it was late in the game to consider new proposals, noting the district has been working with the provincial government on the idea of spending MRDT funds on sewage treatment for roughly two years.
“I think this could be a plausible idea. It’s hard to receive this information at the last minute,” she said. “While it sounds like a good idea on the surface, I’m not convinced at this point that this is a way that I would like to proceed.”
Council also heard from resident Jack Gillie who spoke on behalf of the Tofino Ratepayers Association during the meeting and urged council to stay the course and move ahead with spending a portion of the MRDT on the wastewater treatment plant.
“The main concern for us is achieving fairness for Tofino residents who would otherwise contribute significantly to wastewater treatment costs well beyond their relative contribution to sewage production,” Gillie said. “We see this proposal as a move towards levelling the playing field for residents while also extending tourist promotion monies into the future.”