NSSWD Parcel Tax Review June 2022 Presentation Overview

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This presentation provides an overview of the North Salt Spring Waterworks District (NSSWD) Parcel Tax Review for June 2022. It covers topics such as the existing parcel tax structure, rates, budget, revenue streams, and proposed options for legislative frameworks. InterGroup Consultants Ltd. conducted the review to simplify the parcel tax structure while ensuring a consistent revenue stream for the district.

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NSSWD Parcel Tax Review June 2022

This presentation covers the following topics: Introduction The existing structure and rates 2022 Budget and existing rate revenues Review of other districts/municipalities Proposed Options for NSSWD Legislative Framework Bill Impacts 2016 Proposed Parcel Tax Phase-in Plan 2 Prepared by InterGroup Consultants Ltd.

Introduction North Salt Spring Waterworks District ( NSSWD or District ) is the largest of the 15 community water systems on Salt Spring Island. InterGroup Consultants Ltd. was first retained by the District in 2016 to review the parcel tax structure. The objective of the 2016 review was to develop a new parcel tax structure that more fairly reflected the costs of providing services to different types of customers and that provided a consistent revenue stream to assist with covering operating costs, debt repayment and future infrastructure requirements, and maintaining a prudent operating reserve. The current review focuses on simplifying the parcel tax structure while still maintaining a consistent revenue stream to the District to cover the operating and current and future capital projects. 3 Prepared by InterGroup Consultants Ltd.

The Existing Parcel Tax classes and rates Currently there are 22 Parcel Tax classes compared to 10 classes under Water Tolls [single family, multi-family, commercial and industrial customers have the same water rates, only farm and institutional customers pay different water tolls]. Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad Count of Parcel Tax Class Parcel Tax [incl Surtax] Sum of Units Sum of # Rooms Class Parcel Tax Class A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin SFD or farm 5 to 10 acres of land with secondary suite or cabin SFD or farm over 10 acres of land with secondary suite or cabin Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units Senior Care & Community Service Apartment Buildings with 1 or more rental units 4 Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites (first 4 RV pads count as 1 unit, 5 campsites = 1 unit) Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips Townhomes, (83% of Class A) 848 516 75 46 105 54 16 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $748.43 $779.08 $813.75 $845.48 $748.43 $779.08 $813.75 $845.48 $662.22 $686.73 $714.48 $739.88 $813.07 $813.07 $813.07 $813.07 $583.77 $813.07 $813.07 $813.07 $813.07 $621.19 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $8.14 $40.65 $40.65 $8.14 N/A 117 62 19 $56.14 $58.44 $61.02 $63.42 N/A N/A N/A N/A N/A $85.76 $101.63 $53.04 $583.77 $77.83 $101.63 $101.63 $101.63 8 8 0 0 0 0 0 48 18 7 8 37 42 212 15 115 137 3 1 3 0 1 7 65 97 61 43 6 4 11 436 222 0 0 N/A Total 2,114 704 659 4 Prepared by InterGroup Consultants Ltd.

The existing Water Tolls classes and rates Single Family Dwelling Service, Multiple Family Dwelling Service (per unit), Class 1 Commercial Service, Class 2 Commercial Service Multiple Units (per unit), Class 3 Commercial Residential Service (per unit), Industrial Service: Nov 1 Apr 30 per 100 Gal May 1 Oct 31 per 100 Gal Nov 1 Apr 30 per m3 May 1 Oct 31 per m3 Level Quantity - Gallons Quantity - m3 1 2 3 4 5 6 7 8 9 10 - 7,000 7,001 - 15,000 15,001 - 25,000 25,001 - 40,000 40,001 - 60,000 60,001 - 80,000 80,001 - 100,000 100,001 - 150,000 150,001 + $1.04 $1.19 $1.74 $2.33 $2.40 $2.45 $2.56 $2.92 $3.50 $1.04 $1.24 $1.82 $2.75 $3.12 $3.48 $3.90 $4.88 $6.10 0.00 - 31.82 31.83 - 68.19 68.20 - 113.65 113.66 - 181.85 181.86 - 272.77 272.78 - 363.70 363.71 - 454.62 454.63 - 681.94 681.95+ $2.28 $2.61 $3.84 $5.14 $5.30 $5.39 $5.65 $6.41 $7.70 $2.28 $2.73 $4.01 $6.04 $6.87 $7.66 $8.59 $10.74 $13.42 Farm Service Year Round per 100 Gal Year Round per m3 Level Quantity - Gallons Quantity - m3 1 2 3 4 5 10 - 7,000 7,001 - 25,000 25,001 - 40,000 40,001 - 100,000 100,000 + $1.04 $1.14 $1.19 $2.40 $2.92 0.00 - 31.82 31.83 - 113.65 113.66 - 181.85 181.86 - 454.62 454.63+ $2.28 $2.51 $2.61 $5.30 $6.41 Classes 1 & 2 Institutional Service Year Round per 100 Gal Year Round per m3 Level Quantity - Gallons Quantity - m3 1 2 3 4 5 10 - 7,000 7,001 - 25,000 25,001 - 40,000 40,001 - 100,000 100,000 + $1.04 $1.14 $1.19 $2.40 $2.92 0.00 - 31.82 31.83 - 113.65 113.66 - 181.85 181.86 - 454.62 454.63+ $2.28 $2.51 $2.61 $5.14 $6.41 Plus a meter charge of $90.81 per billing payable by water users who do not pay water parcel tax to the District. There is also Class 3 Institutional Service not included in the table above. 5 Prepared by InterGroup Consultants Ltd.

2022 Budget and existing rate revenues The forecast parcel tax revenues in the 2022 Budget is $1.7 million [including revenues from capital construction charges]. In 2019 and 2020 the share of parcel tax revenues in total revenues were about 50% [excluding revenues from capital construction charges about 26-27%]. 2022 budget assumes about 49% of revenues will be collected through parcel tax [about 28% excluding revenues from capital construction charges]. 6 Prepared by InterGroup Consultants Ltd.

Parcel Tax and Surtax Revenue Forecast for 2022 at current rates Base Parcel Tax Revenues Additional Unit Revenues Additional Room Revenues Total Parcel Tax Revenues Class Parcel Tax Class A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin SFD or farm 5 to 10 acres of land with secondary suite or cabin SFD or farm over 10 acres of land with secondary suite or cabin Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units Senior Care & Community Service Apartment Buildings with 1 or more rental units Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites (first 4 RV pads count as 1 unit, 5 campsites = 1 unit) Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips Townhomes, (83% of Class A) $634,669 $402,005 $61,031 $38,892 $78,585 $42,070 $13,020 $6,764 $31,787 $12,361 $5,001 $5,919 $30,084 $34,149 $2,439 $3,252 $584 $2,439 $34,962 $4,878 $3,252 $137,904 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $634,669 $402,005 $61,031 $38,892 $85,154 $45,694 $14,179 $7,271 $31,787 $12,361 $5,001 $5,919 $30,084 $52,330 $3,964 $9,352 $80,560 $2,967 $39,007 $8,069 $7,919 $137,904 $6,568 $3,623 $1,159 $507 $0 $0 $0 $0 $0 $18,181 $1,524 $6,100 $79,976 $0 $527 $3,943 $2,480 $3,549 $102 $711 $1,118 $0 $0 Total $1,586,049 $119,571 $10,499 $1,716,119 7 Prepared by InterGroup Consultants Ltd.

Review of other waterworks districts/utilities The parcel tax structure for the following waterworks districts/utilities have been reviewed: Cowichan Bay Waterworks District; North Cedar Improvement District; Fletcher Creek Improvement District; Kemp Lake Waterworks District; Cherry Creek Waterworks District; City of Parksville; and CRD North Saanich. 8 Prepared by InterGroup Consultants Ltd.

Review of other waterworks districts/utilities Number of parcel tax classes in other districts/utilities vary considerably. No uniform parcel tax structure. Each district/municipality set the tax structure and rates based on their needs. The number of parcel tax classes also vary significantly: The City of Parksville and District of North Saanich [regional district] charge a flat parcel tax to all customers, where applicable [$179/year and $150/year respectively]. Some districts have as high as 32 classes [North Cedar Improvement District - for 5 classes the tax rate is $0]. Some districts also have specific parcel tax classes for larger customers such as hotels and shopping malls [e.g., Cowichan Bay has separate classes named after specific customers such as shopping mall, hotel and a resort]. The parcel tax structure in reviewed districts/utilities do mot match water rate structure. Some municipalities/districts also have other means to collect revenues to cover utility costs [e.g., property tax] and the water rates and/or water parcel taxes may not fully recover the costs of providing water service to customers, thus, affording a flat parcel tax applicable to all customers. Share of parcel tax revenue out of total revenues also vary considerably [the share in the smaller districts is very high, for other districts ranging from 11% and 36%]. The share of parcel tax revenue for NSSWD is about 27% [2020]. 9 Prepared by InterGroup Consultants Ltd.

Review of other waterworks districts/utilities Ratio of Parcel Tax in Water Utility Revenues Number of classes for Parcel Tax Number of Water Classes Revenues, $000 (2) No. Communities including: Total 2019 2020 Other (1) Residential Commercial 1 NSSWD 22 8 10 4 $3,226 26% 27% 10 2 Cherry Creek Waterworks District 6 2 3 1 $1,086 N/A N/A 1 1 3 City of Parksville 1 $9,159 N/A N/A 3 4 Cowichan Bay Waterworks District 10 5 5 $576 11% 23% 2 1 5 CRD North Saanich 1 $4,014 11% 12% 1 6 Fletcher Creek Improvement District 10 8 2 $37 92% N/A 7 Kemp Lake Waterworks District 15 5 8 2 $512 63% 44% 1 8 North Cedar Improvement District 32 10 21 1 $1,373 31% 36% 2 Notes: 1. Other category includes undeveloped, vacant, unmetered and unclassified lands/properties. 2. Revenues for the district or water utility for 2020, where available and exclude government transfers: Revenues for City of Parksville include water, sewer, and solid waste revenues. Cowichan Bay Waterworks District revenues for 2020 are lower compared to 2019 due to removal of capital expenditure charge and developer contributions [also impacts percentages]. For Kemp Lake Waterworks District the 2020 parcel tax ratio was lower due to higher revenue from water tolls. 10 Prepared by InterGroup Consultants Ltd.

Summary Considerations for Proposed Revisions 11 Prepared by InterGroup Consultants Ltd.

Summary Considerations for Proposed Revisions to Parcel Tax Structure The following was considered in developing the options for Parcel Tax structure changes: The main objective of this review is to simplify the parcel tax structure and closely align it with water toll classes. There are ten classes under water tolls rate structure [residential single family, multi family, three commercial classes, industrial class, farm and three institutional classes]. However, there are only four rate schedules: Residential single family, multi family, commercial and industrial properties are charged the same water toll. Separate water toll for farm Water tolls for institutional 1 & 2 Water toll for institutional 3. 12 Prepared by InterGroup Consultants Ltd.

Summary Considerations for Proposed Revisions to Parcel Tax Structure Some parcel tax classes have the same base parcel tax [e.g., SFD, duplex or farm up to 1 acre vs SFD or farm up to 1 acre with secondary suite or cabin ; or some of the commercial classes]. 8 out of 22 parcel tax classes have total annual revenue less than $10,000 [i.e., may not be cost effective to have separate classes]. The revisions will be revenue neutral, i.e., the Parcel Tax rates under revised structure will collect the same amount of revenue as the current structure. The revisions will have minimal bill impacts. The proposed parcel structure also addresses an issue of customer classes that do not fit into the existing categories by creating a catch-all parcel tax class. 13 Prepared by InterGroup Consultants Ltd.

Recommended New Parcel Tax Structure 14 Prepared by InterGroup Consultants Ltd.

Recommended New Parcel Tax Structure Existing Class Recommended New Class Parcel Tax Class A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin SFD or farm 5 to 10 acres of land with secondary suite or cabin SFD or farm over 10 acres of land with secondary suite or cabin Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units Senior Care & Community Service Apartment Buildings with 1 or more rental units Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips Townhomes, (83% of Class A) A B C D add to A add to B add to C add to D applied to each class G H J E I H; B&B moves to I I F new class - "other" A new parcel class, Class K, is recommended that would include the parcels that do not fit within other parcel classes. 15 Prepared by InterGroup Consultants Ltd.

Recommended Parcel Tax Classes and Rates Metered Parcels New Parcel Tax Class Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad Count of Parcel Tax Class Unmetered Revised Parcel Tax Sum of Units Sum of # Rooms Revised Parcel Tax New Parcel Tax Class Residential - Single Family Dwelling (SFD), Duplex, Townhome (MFD) or Farm SFD, duplex or farm up to 1 acre with secondary suite or cabin A 953 117 0 $344.81 $431.02 $32.33 N/A SFD, duplex or farm 1 to 5 acres of land with sec. suite or cabin B 570 62 0 $369.32 $461.67 $34.63 N/A SFD, duplex or farm 5 to 10 acres of land with sec. suite or cabin C 91 19 0 $397.07 $496.35 $37.23 N/A SFD, duplex or farm over 5 acres of land with sec. suite or cabin Modular home park with 2 or more modular home units and/or common facility unit, per unit Townhomes D 54 8 0 $422.47 $528.09 $39.61 N/A E 1 137 0 0 $239.72 $321.97 $266.36 $357.75 $266.36 N/A N/A F 222 0 N/A Commercial 1 - Single Commercial Business (Retail Store, Office etc.) G Single unit commercial business 37 0 0 $446.11 $495.67 N/A N/A Commercial 2 Multi-Commercial (Hotels, Strip mall etc.) Commercial businesses with 2 or more business suites/units H 94 235 158 $446.11 $495.67 $61.95 $24.78 Commercial 3 Multi-Commercial Residential (RV Park, Apartment, Vacation Rentals, B&B, Marina etc.) I Commercial residential with 2 or more units 7 11 501 $446.11 $495.67 $61.95 $4.96 Institutional Non-Profit Residential (Church, Senior s Centre, Community Hall, Seniors Assisted Living, Hospital etc.) J Non-Profit Institutional Organizations 4 115 0 $446.11 $495.67 $37.17 N/A Other K $446.11 $495.67 $61.95 $24.78 All other parcels Unmetered customers pay about 10% lower parcel tax [consistent with the current variance between metered and unmetered]. 16 Prepared by InterGroup Consultants Ltd.

Recommended Surtax Classes and Rates Metered Surtax Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad New Surtax Class Count of Surtax Class Unmetered Revised Surtax Sum of Units Sum of # Rooms Revised Surtax New Surtax Class Residential - Single Family Dwelling (SFD), Duplex, Townhome (MFD) or Farm SFD, duplex or farm up to 1 acre with secondary suite or cabin A 953 117 0 $317.41 $317.41 $23.81 $0.00 SFD, duplex or farm 1 to 5 acres of land with sec. suite or cabin B 570 62 0 $317.41 $317.41 $23.81 $0.00 SFD, duplex or farm 5 to 10 acres of land with sec. suite or cabin C 91 19 0 $317.41 $317.41 $23.81 $0.00 SFD, duplex or farm over 5 acres of land with sec. suite or cabin Modular home park with 2 or more modular home units and/or common facility unit, per unit Townhomes D 54 8 0 $317.41 $317.41 $23.81 $0.00 E 1 137 0 0 $285.67 $237.11 $317.41 $263.45 $317.41 $0.00 $0.00 $0.00 F 222 0 Commercial 1 - Single Commercial Business (Retail Store, Office etc.) G Single unit commercial business 37 0 0 $285.67 $317.41 $0.00 $0.00 Commercial 2 Multi-Commercial (Hotels, Strip mall etc.) Commercial businesses with 2 or more business suites/units H 94 235 158 $285.67 $317.41 $25.36 $15.87 Commercial 3 Multi-Commercial Residential (RV Park, Apartment, Vacation Rentals, B&B, Marina etc.) I Commercial residential with 2 or more units 7 11 501 $285.67 $317.41 $39.68 $3.17 Institutional Non-Profit Residential (Church, Senior s Centre, Community Hall, Seniors Assisted Living, Hospital etc.) J Non-Profit Institutional Organizations 4 115 0 $285.67 $317.41 $15.87 $0.00 Other K $285.67 $317.41 $39.68 $15.87 All other parcels 17 Prepared by InterGroup Consultants Ltd.

Revenues and Bill Impacts At existing Parcel Tax structure and rates At Recommended Parcel Tax structure and rates Base Base Additional Unit Revenues Additional Room Revenues Additional Unit Revenues Additional Room Revenues New Class Existing Class Parcel Tax and Surtax Revenues Total Revenues Parcel Tax and Surtax Revenues Total Revenues Bill Impact Existing Class A B C D A B C D A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin$42,070 SFD or farm 5 to 10 acres of land with secondary suite or cabin $13,020 SFD or farm over 10 acres of land with secondary suite or cabin$6,764 Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units $2,439 Senior Care & Community Service Apartment Buildings with 1 or more rental units Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites (first 4 RV pads count as 1 unit, 5 campsites = 1 unit) Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms $34,962 Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips $3,252 Townhomes, (83% of Class A) $137,904 $634,669 $402,005 $61,031 $38,892 $78,585 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $634,669 $402,005 $61,031 $38,892 $85,154 $45,694 $14,179 $7,271 $31,787 $12,361 $5,001 $5,919 $30,084 $52,330 $3,964 $9,352 $80,560 $2,967 $39,007 $8,069 $7,919 $137,904 $634,669 $402,005 $61,032 $38,893 $78,585 $42,070 $13,020 $6,764 $31,787 $12,361 $5,001 $5,919 $30,084 $34,149 $2,439 $3,252 $584 $2,439 $34,963 $4,878 $3,252 $137,906 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $634,669 $402,005 $61,032 $38,893 $85,153 $45,693 $14,180 $7,271 $31,787 $12,361 $5,001 $5,919 $30,084 $52,659 $3,749 $9,352 $80,560 $2,966 $38,993 $7,969 $7,917 $137,906 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.6% -5.4% 0.0% 0.0% 0.0% -0.04% -1.2% 0.0% 0.0% $6,568 $3,623 $1,159 $507 $6,567 $3,623 $1,160 $507 $31,787 $12,361 $5,001 $5,919 $30,084 $34,149 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 G $18,181 $1,524 $6,100 $79,976 $18,510 $1,310 $6,100 $79,976 H $3,252 $584 $2,439 J E I $0 $527 $3,943 $2,480 $3,549 $0 $527 $3,943 $2,480 $3,546 $102 $711 $1,118 $87 $611 $1,118 H $4,878 I F $0 $0 $0 $0 Total $1,586,049 $119,571 $10,499 $1,716,119 $1,586,054 $119,569 $10,496 $1,716,119 0.0% 18 Prepared by InterGroup Consultants Ltd.

Bill Impacts at New Structure Bill Impact, $/parcel/year Base Parcel Tax and Surtax Additional Unit Charge Additional Room Charge New Class Existing Class Only one class would see about 0.6% [$2/year] bill increase Three classes would see decreases of $14/year. Existing Class Bill Impact A B C D A B C D A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin SFD or farm 5 to 10 acres of land with secondary suite or cabin SFD or farm over 10 acres of land with secondary suite or cabin Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units Senior Care & Community Service Apartment Buildings with 1 or more rental units Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites (first 4 RV pads count as 1 unit, 5 campsites = 1 unit) Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips Townhomes, (83% of Class A) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.6% -5.4% 0.0% 0.0% 0.0% -0.04% -1.2% 0.0% 0.0% G H -$14 $0 $0 $0 -$14 -$14 $0 $0 J E I H I F 19 Prepared by InterGroup Consultants Ltd.

Parcel Tax Reform Phase-In Continuation from the 2016 Study 20 Prepared by InterGroup Consultants Ltd.

Equitable Allocation of Costs The following provides a summary of the existing legislative framework regarding parcel taxes and other fees improvement districts may charge: Under Section 697 of the Local Government Act the District may assess land and improvements, levy and collect taxes, tolls and other charges and recover them by suit, by distress or by sale of the assessed land , and under Section 698 the district may, by bylaw, establish tolls and other charges, including charges for capital expenditures, payable to the improvement district, and the times of their payment . Source: British Columbia Local Government Act, available at http://www.bclaws.ca/civix/document/id/consol5/consol5/96323_23 And in accordance with the Ministry of Community Services Improvement District Manual [2006] states, [t]axes may be fixed on the basis of parcels, groups of parcels, values or areas, or any combination of these and [w]hatever the basis of taxation chosen, it should be based on an equitable allocation of costs that can be explained to the landowners . Source: Improvement District Manual, Ministry of Community Services of British Columbia. http://www.cscd.gov.bc.ca/lgd/gov_structure/library/improvement_district_manual.pdf Accordingly, the District is allowed to implement any type of charges, but it should be able to explain that these charges are equitable. This was the main focus of the 2016 study. 21 Prepared by InterGroup Consultants Ltd.

Equitable Allocation of Costs Prior to 2016, parcel tax was assessed solely on property size, regardless of water use or number of units in the property. Based on that all customers within the same property size group paid the same parcel tax, without consideration of a type of a property and its costs to the system s operation. Accordingly, this single metric did not reflect any equitable cost allocation and was not consistent with the Improvement District Manual. The charges proposed in the 2016 study addressed this by creating different charges by customer categories recognizing that different types of users impose greater costs on the system. Parcel taxes were revised to be charged based on the number units, hotel rooms, boat slips and secondary suites on a parcel. The proposed charges for non-residential customer categories reflected a premium over single family rates to account for higher consumption and use by these customer groups. The 2016 study reviewed parcel tax rates of other peer jurisdictions and targeted the midpoint of the premiums charged in other districts. 22 Prepared by InterGroup Consultants Ltd.

The 2016 Study Recommendations Key recommendations in the 2016 Study included the following adjustments to the parcel tax rates: Base Parcel Tax: All commercial customers pay 30% premium over SFD Group A rates. The 30% premium was approximately the midpoint of the commercial premium charged in other districts at the time of the 2016 Study. Secondary Unit/Modular Home/Apartment/Cabin SFDs with secondary suite/apartment pay 15% of the applicable group tax for each additional secondary suite [i.e., Group A SFD customer with secondary unit pays full tax for the parcel, plus 15% of the Group A tax rate for the secondary suite]. Commercial customers with additional units pay 25% of commercial rate for each additional business unit. Additional room/suite/boat slip/RV pad Commercial customers pay 10% of commercial rate for each additional room/suite/RV pad (Hotels, Guest Houses, Apartment Rentals, RV Parks). Marinas pay 2% of commercial rate for each boat slip. 23 Prepared by InterGroup Consultants Ltd.

The 2016 Study Recommendations Phase-In The 2016 Study recommended phasing in the new parcel tax structure in order to reduce the annual rate impact to the customers. Review of the parcel tax rates continuity since 2017 indicates rate adjustments were phased-in over 2017 and 2018 but were not fully completed. The rate adjustments were implemented at about half of the increases recommended in the 2016 study. The current review recommends completing the remaining phase-in from the 2016 Study over a two-year period. 24 Prepared by InterGroup Consultants Ltd.

Existing Parcel Tax Rates and Premiums (At Proposed Structure) Metered Parcels Rate Premiums Additional Units Room/Slip/RV New Parcel Tax Class Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad 2016 Study Recomme nded 2016 Study Recomme nded 2016 Study Recomme nded Revised Parcel Tax New Parcel Tax Class Actual Actual Actual Residential - Single Family Dwelling (SFD), Duplex, Townhome (MFD) or Farm SFD, duplex or farm up to 1 acre with secondary suite or cabin A $431.02 $32.33 N/A 15.0% 7.5% SFD, duplex or farm 1 to 5 acres of land with sec. suite or cabin B $461.67 $34.63 N/A 15.0% 7.5% SFD, duplex or farm 5 to 10 acres of land with sec. suite or cabin C $496.35 $37.23 N/A 15.0% 7.5% SFD, duplex or farm over 5 acres of land with sec. suite or cabin Modular home park with 2 or more modular home units and/or common facility unit, per unit Townhomes D $528.09 $39.61 N/A 15.0% 7.5% E $266.36 $357.75 $266.36 N/A N/A F N/A Commercial 1 - Single Commercial Business (Retail Store, Office etc.) G Single unit commercial business $495.67 N/A N/A 30.0% 15.0% Commercial 2 Multi-Commercial (Hotels, Strip mall etc.) Commercial businesses with 2 or more business suites/units H $495.67 $61.95 $24.78 30.0% 15.0% 25.0% 12.5% 10.0% 5.0% Commercial 3 Multi-Commercial Residential (RV Park, Apartment, Vacation Rentals, B&B, Marina etc.) I Commercial residential with 2 or more units $495.67 $61.95 $4.96 30.0% 15.0% 25.0% 12.5% 2.0% 1.0% Institutional Non-Profit Residential (Church, Senior s Centre, Community Hall, Seniors Assisted Living, Hospital etc.) J Non-Profit Institutional Organizations $495.67 $37.17 N/A 15.0% 15.0% 7.5% 7.5% Other K $495.67 $61.95 $24.78 All other parcels 25 Prepared by InterGroup Consultants Ltd.

Parcel Tax Rates Proposed Phase-in Year 1 Metered Parcels Rate Premiums Additional Units Room/Slip/RV New Parcel Tax Class Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad 2016 Study Recomme nded 2016 Study Recomme nded 2016 Study Recomme nded Year 1 Phase- in Year 1 Phase- in Year 1 Phase- in Revised Parcel Tax New Parcel Tax Class Residential - Single Family Dwelling (SFD), Duplex, Townhome (MFD) or Farm SFD, duplex or farm up to 1 acre with secondary suite or cabin A $431.02 $48.49 N/A 15.0% 11.3% SFD, duplex or farm 1 to 5 acres of land with sec. suite or cabin B $461.67 $51.94 N/A 15.0% 11.3% SFD, duplex or farm 5 to 10 acres of land with sec. suite or cabin C $496.35 $55.84 N/A 15.0% 11.3% SFD, duplex or farm over 5 acres of land with sec. suite or cabin Modular home park with 2 or more modular home units and/or common facility unit, per unit Townhomes D $528.09 $59.41 N/A 15.0% 11.3% E $266.36 $357.75 $266.36 N/A N/A F N/A Commercial 1 - Single Commercial Business (Retail Store, Office etc.) G Single unit commercial business $528.00 N/A N/A 30.0% 22.5% Commercial 2 Multi-Commercial (Hotels, Strip mall etc.) Commercial businesses with 2 or more business suites/units H $528.00 $99.00 $39.60 30.0% 22.5% 25.0% 18.8% 10.0% 7.5% Commercial 3 Multi-Commercial Residential (RV Park, Apartment, Vacation Rentals, B&B, Marina etc.) I Commercial residential with 2 or more units $528.00 $99.00 $7.92 30.0% 22.5% 25.0% 18.8% 2.0% 1.5% Institutional Non-Profit Residential (Church, Senior s Centre, Community Hall, Seniors Assisted Living, Hospital etc.) J Non-Profit Institutional Organizations $495.67 $37.17 N/A 15.0% 15.0% 7.5% 7.5% Other K $528.00 $99.00 $39.60 All other parcels 26 Prepared by InterGroup Consultants Ltd.

Parcel Tax Rates Proposed Phase-in Year 2 Metered Parcels Rate Premiums Additional Units Room/Slip/RV New Parcel Tax Class Unit/Modular home/ apartment or cabin room/ suite/slip or RV pad 2016 Study Recomme nded 2016 Study Recomme nded 2016 Study Recomme nded Year 2 Phase- in Year 2 Phase- in Year 2 Phase- in Revised Parcel Tax New Parcel Tax Class Residential - Single Family Dwelling (SFD), Duplex, Townhome (MFD) or Farm SFD, duplex or farm up to 1 acre with secondary suite or cabin A $431.02 $64.65 N/A 15.0% 15.0% SFD, duplex or farm 1 to 5 acres of land with sec. suite or cabin B $461.67 $69.25 N/A 15.0% 15.0% SFD, duplex or farm 5 to 10 acres of land with sec. suite or cabin C $496.35 $74.45 N/A 15.0% 15.0% SFD, duplex or farm over 5 acres of land with sec. suite or cabin Modular home park with 2 or more modular home units and/or common facility unit, per unit Townhomes D $528.09 $79.21 N/A 15.0% 15.0% E $266.36 $357.75 $266.36 N/A N/A F N/A Commercial 1 - Single Commercial Business (Retail Store, Office etc.) G Single unit commercial business $560.33 N/A N/A 30.0% 30.0% Commercial 2 Multi-Commercial (Hotels, Strip mall etc.) Commercial businesses with 2 or more business suites/units H $560.33 $140.08 $56.03 30.0% 30.0% 25.0% 25.0% 10.0% 10.0% Commercial 3 Multi-Commercial Residential (RV Park, Apartment, Vacation Rentals, B&B, Marina etc.) I Commercial residential with 2 or more units $560.33 $140.08 $11.21 30.0% 30.0% 25.0% 25.0% 2.0% 2.0% Institutional Non-Profit Residential (Church, Senior s Centre, Community Hall, Seniors Assisted Living, Hospital etc.) J Non-Profit Institutional Organizations $495.67 $37.17 N/A 15.0% 15.0% 7.5% 7.5% Other K $560.33 $140.08 $56.03 All other parcels 27 Prepared by InterGroup Consultants Ltd.

Annual Bill Impacts with Phase-In of Premiums Bill Impact, $/parcel/year 4 classes would see $16- $20/year bill increase 7 classes would see $32- $72/year bill increase Base Parcel Tax and Surtax Additional Unit Charge Additional Room Charge New Class Existing Class Existing Class Bill Impact A B C D A B C D A B C D E F G H I J K L M N O P Q R S T U V SFD, duplex or farm up to 1 acre SFD, duplex or farm 1 to 5 acres of land SFD, duplex or farm 5 to 10 acres of land SFD, duplex or farm over 10 acres of land SFD or farm up to 1 acre with secondary suite or cabin SFD or farm 1 to 5 acres of land with secondary suite or cabin SFD or farm 5 to 10 acres of land with secondary suite or cabin SFD or farm over 10 acres of land with secondary suite or cabin Non-metered Properties up to 1 acre Non-metered properties 1 to 5 acres of land Non-metered properties 5 to 10 acres of land Non-metered properties 10 acres of land and over Single unit commercial business Commercial business with 2 or more business suites/units Commercial Residential with 2 or more long term rental units Senior Care & Community Service Apartment Buildings with 1 or more rental units Modular home park with 2 or more modular home units and/or common facility unit, per unit (78% of Class A) Seasonal RV parks & Campgrounds with 1 or more RV pads or Campsites (first 4 RV pads count as 1 unit, 5 campsites = 1 unit) Hotel, guest house or B&B no restaurant, 1 or more business units & 1 or more accommodation rooms Hotel with restaurant, 1 or more business units & 1 or more accommodation rooms Marinas with 1 or more business units & 1 or more boat slips Townhomes, (83% of Class A) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3 0.0% 0.0% 0.0% 0.0% 2.2% 2.3% 2.5% 2.2% 0.0% 0.0% 0.0% 0.0% 4.0% 18.2% 11.0% 0.0% 0.0% 9.7% 7.31% 15.6% 23.0% 0.0% $16 $17 $19 $20 $0 $0 $0 $0 $0 $39 $23 $0 $0 $0 $23 $23 $37 $0 G $32 $32 $32 $0 $0 $32 $32 $32 $32 $0 H J E I $15 $15 $3 $0 H I F 28 Prepared by InterGroup Consultants Ltd.