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Lagoon, Royal Bay to test Colwood sewer tax

Colwood is scaling back efforts to overhaul how sewer tax rates are calculated in the municipality.

Just before Christmas, the City unveiled a plan to reduce variability in sewage tax by basing the rates on a parcel tax, rather than property tax. It also hoped to merge the 56 sewage local service areas (LSAs) into just six.

But that proved to be too large an undertaking to push through in time for the 2011 tax roll. So, instead Colwood will leave mergers until next year and test the rate change on two of the city’s most problematic LSAs — Lagoon and Royal Bay will make the switch to parcel tax-based rates.

Unlike property tax, which changes year-to-year based on the assessed value of land, parcel tax usually remains stable because it’s based on building potential for the land. Only a change in zoning would change the parcel tax.

Lagoon users were linked into municipal sewers five years ago, but have only ever paid usage fees for system maintenance — not a sewage tax, which is levied to pay back the debt for installing the sewage infrastructure. But the free ride is over.

Colwood engineer Michael Baxter said that area will now be responsible for paying back the debt and interest accumulated in the years of non-payment. He expects the average residential household will be charged $800 to $900 annually to pay back the debt over 25 years.

The City has mailed letters to inform affected residents of the new charge that will show up on their property tax bills next June. The letters won’t specify an exact dollar amount, for that residents will need to call city hall.

“The letters will let people know a change is coming and outline the appeal process,” Baxter explained.

Residents have until March 24 to appeal the charge, and on March 28 the appeals will be heard by a new review panel consisting of Colwood’s mayor and two city councillors.

“It used to be that appeals went through B.C. Assessment, but when we charge by parcel tax the City takes that over,” Baxter said.

Residents using sewers in the Royal Bay LSA will also receive letters. For that area, which has been paying sewage fees based on property tax since 2004, the switch to parcel tax will mean a reduced charge for most.

Only owners of vacant property will be charged more. The vacant Royal Bay lands, for example, would be charged based on its potential to hold 2,200 homes, as specified in its zoning permit. That land is still owned by Lehigh Northwest Cement.

But Baxter was optimistic this wouldn’t cause too much trouble.

“It will be more (for undeveloped land), but not significantly more,” he said. “We’ll have to wait and see if they appeal.”

Baxter said the City will continue to work towards shifting all LSAs to parcel tax and that mergers remain an option.