Standoffs over who should hold a water licence are delaying progress on the giant Kensington development at Union Bay.

Disagreement on the issue between Union Bay Improvement District and Comox Valley Regional District has now been reflected in Victoria, where two provincial ministries appear at odds over the future of the licence.

Now the Improvement District has enlisted the help of Comox Valley MLA Don McRae to try to bang heads together to sort out the matter once and for all.

And on behalf of the Regional District, rural Area A director Bruce Jolliffe has also written to McRae, urging him to seek clear direction on the way forward.

Kensington Island Properties (KIP) has agreed to pay for a new water treatment plant to serve existing Union Bay properties as well as new homes and businesses to be constructed as part of its huge residential, commercial and recreational project.

But under a ‘master development agreement’ between the Regional District and KIP signed almost two years ago, there must be a legal agreement that, at some stage, the water licence held by UBID will be transferred to the regional district.

Such a binding commitment has to be made before any building permits are issued to KIP by the regional district.

The thinking behind the provision is that the regional district will ultimately take ownership of the water treatment plant and become responsible for the costs of its ongoing maintenance. So it wants to be sure it has the rights to the water on a long-term basis.

Even if the licence were to be transferred, UBID would continue to be responsible for the distribution network to homes and businesses in the area, billing residents for water they use and retaining the income.

But the transfer would mean that UBID would no longer have ‘free access’ to the water in Langley Lake Reservoir and would instead have to buy it at bulk rates from the regional district.

That would, they argue, increase costs to landowners, even though UBID would no longer be responsible for the costs of storing and treating the water.

So UBID has dug in its heels and opposed the idea of transferring the licence and thinks the master development agreement should be changed to reflect its view.

Meanwhile, the regional district says until it receives a commitment from UBID to transfer the licence, building permits for KIP will remain on hold.

Ultimately, only the provincial government can resolve the issue, as it owns and allocates all water licences.

But that’s not as simple as it sounds.

There is disagreement between senior staff in two government departments on the issue, and according to UBID chair Carol Molstad, “conflicting information” is coming out of Victoria.

She said the Communities Ministry – which deals with local government – “is kind of insisting the licence must be transferred” as set out in the master development agreement, despite the fact that UBID was not a party to that agreement.

But the Ministry of Forests, Lands and Natural Resources – which directly controls water licensing – “has no intention of requiring that we transfer our licence,” unless all parties are agreed, which they are not.

Molstad said there had been a meeting with Don McRae on the issue and he was pursuing the matter.

“He needs to get those two ministries in the same room together in order that we can have a clear and definitive decision and know where we are going with this,” she said.

“The whole process is holding up the start of the Kensington project and building the water filtration plant.”

Getting that plant built soon is essential to UBID, because the Vancouver Island Health Authority is pressing for improved water treatment in the community and has already given two extensions to an original time limit.

Without KIP’s funding of the plant, the bill would fall at the feet of Union Bay’s existing 650 landowners – and it might cost around $500,000.

McRae’s office confirmed yesterday he was actively pursuing the issue and hoped to report back soon.

If things are not resolved quickly, UBID could be made to go it alone and raise its water quality to VIHA’s new standards with the provision of new filtration equipment and UV treatment.

Molstad said they were talking big money for a small community, which is why the KIP offer was so significant and why the licence issue needed rapid resolution one way or the other.

The UBID board believed it was looking after the best interests of its landowners by wanting to retain the existing licence, and she hoped the outcome would allow that.

The problematic clause in the master development agreement could then be changed so KIP could obtain building permits, and both water supply and distribution remained UBID’s responsibility.