Decision Date: June 22, 2012
Panel: Loreen Williams
Keywords: Private Managed Forest Land Act – s. 19(1); Assessment Act – s. 24(3); Private Managed Forest Land Regulation – ss. 2, 3(1); private managed forest land; exit fee; exemption; gift; right of way; statutory interpretation
Oceanview Golf Resort & Spa Ltd. (the “Appellant”) owns five parcels of land in Nanaimo, BC. The Appellant is in the process of developing the land, which was previously managed as private forest land. The development process engages a number of processes, including those in the provincial legislation regulating private managed forest land, and the City of Nanaimo’s development approval process.
When the Appellant’s corporate predecessor, Cable Bay Lands Inc. (“Cable Bay”), purchased the land, it was classified as “managed forest” under the Assessment Act. The managed forest class of property was established to encourage land owners to manage their forest land for long-term forest production. Land classified as managed forest is taxed at a lower rate than other classes of land, such as residential land. Owners can enter and exit their land from the managed forest class by providing notice to the Private Managed Forest Land Council (the “Council”) and meeting certain requirements under the under the Private Managed Forest Land Act (the “PMFL Act”) and its regulations. One of the requirements for entry is to submit a forest management commitment to the Council for approval. When private managed forest land is sold, the land will be declassified under section 24 of the Assessment Act if the buyer fails to submit a new management commitment to the Council. When land is declassified or withdrawn from the managed forest class, the buyer may be liable under the PMFL Act and Private Managed Forest Land Regulation (the “Regulation”) to pay an exit fee, if the land was managed forest land for less than 15 consecutive years and none of the exemptions in section 3 of the Regulation apply. The Council calculates the exit fee, which is paid by the land owner to the appropriate municipal government.
In 2005, Cable Bay purchased the land, and failed to submit a management commitment to the Council for approval. As a result, the land was declassified as managed forest land.
In 2007, the land was reclassified as managed forest land after Cable Bay submitted a management commitment that was approved by the Council.
In January 2008, parcels 3 and 4 of the land were declassified as managed forest land after Cable Bay requested their withdrawal. Cable Bay paid an exit fee to Nanaimo for the withdrawal.
In September 2008, Nanaimo passed a new Official Community Plan (“OCP”) Bylaw that included designation of the Appellant’s land as a resort centre, which is the first phase in the development process. In addition, Nanaimo requested that all of the Appellant’s land be withdrawn from the managed forest class due to the future land uses proposed under the Master Plan, because section 21 of the Act prohibits local governments from adopting a bylaw in respect of private managed forest land that would restrict a forest management activity.
In January 2010, at Cable Bay’s request, parcels 3 and 4 were reclassified as managed forest land.
In February 2010, Nanaimo approved a Master Plan for the proposed development by way of an amendment to the OCP Bylaw, which is the second phase in the development process. The Master Plan, which was negotiated by Nanaimo and the Appellant, designates portions of the Appellant’s land for future use as park land, right of ways, and public utilities.
In January 2011, at the Appellant’s request, all of its land was declassified as managed forest land.
In April 2011, the Council notified the Appellant that the exit fee for declassification of the land was $312,957.20. The Appellant requested that the Council reconsider the exit fee determination.
In November 2011, the Council issued a reconsideration decision, which upheld the Council’s April 2011 decision regarding the exit fee.
The Appellant appealed the reconsideration decision to the Forest Appeals Commission. The Appellant raised three main arguments:
The Appellant requested that the Commission rescind the Council’s reconsideration decision and exempt all of the Appellant’s land from the exit fee; or alternatively, recalculate the exit fee based on exemptions for the portions of land that are designated for future use as parks, public utilities and right of ways.
The Commission found that, when the Appellant’s land was declassified in 2011, it had not been classified as managed forest land for more than 15 consecutive years, and therefore, it was not exempt from the exit fee under section 2(5) of the Regulation. Although Cable Bay may have intended for the land to remain in the managed forest class when it purchased the land in 2005, Cable Bay’s failure to file a management commitment for the land, as required by the legislation, led to the declassification. The Commission found that Cable Bay should have been aware of the applicable legal requirements, and the Appellant, as Cable Bay’s corporate successor, cannot seek an exemption under section 2(5).
In addition, the Commission held that the legislative framework requires the Council to determine the exit fee when the land is declassified, rather than at a future date when the development process is complete. In particular, the language in section 2(1) of the Regulation requires the Council to determine the exit fee when the land is declassified under the Assessment Act. The Council has no discretion to delay the determination of the exit fee, and even if it did, the process would be unmanageable because the Council would have to monitor proposed developments to determine when they are complete. The Commission also found that delaying the determination of the exit fee would be contrary to the statutory scheme, which encourages owners of private forest land to manage their land for forestry over the long term in return for a lower tax rate on the land.
Finally, the Commission held that when the Appellant’s land was declassified in 2011, none of it fell within the exemptions in sections 3(1)(a) or (c) of the Regulation. Section 3(1) states that the exemptions apply to declassified land that “is” gifted to a government or “is” subject to a right of way or easement. When the Appellant’s land was declassified, none of it had been transferred to Nanaimo. Furthermore, the OCP Bylaw could be amended in the future to change the land uses contemplated in the Master Plan. Consequently, the designations in the Master Plan should not be taken as certainties upon which exemptions from the exit fees may rest.
Accordingly, the appeal was dismissed.