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An aerial view showing construction on Grace Islet, near Saltspring IslandEric McLay

The Capital Regional District will decide next week whether to expropriate a tiny islet off Saltspring Island after the provincial government refused to stop the construction of a luxury home amid First Nations burial cairns.

Grace Islet is not even a hectare in size and lies just a stroll from Saltspring's Grace Harbour in low tide. It was bought in l990 by Edmonton business owner Barry Slawsky, who obtained a permit to build the home. The cement foundation of the house is now being laid.

But members of the district's board, archeologists, aboriginal leaders and local activists are appalled the province has done nothing to stop the building.

Protesters took to kayaks last week to try to prevent a barge of trucks from delivering building supplies to the islet, only to be warned off by the RCMP. They've also draped white tarp houses over graves in Victoria's historic Ross Bay cemetery to make the point that such construction would never happen on the gravesites of non-aboriginals.

The CRD voted unanimously in July to demand Mr. Slawsky's building permit be suspended, but that hasn't happened.

So Ben Isitt, a Victoria councilor and a regional CRD director, said expropriation is the next logical step.

"We have the legal power to do so and I think the ethical responsibility to do so," Mr. Isitt said in an interview. "There's cairns and human remains all over the place. Whether they're five years old or 5,000 years old, I think they should be protected."

Grace Islet is recognized as a burial site under the provincial Heritage Conservation Act, but it is not protected as a cemetery because B.C.'s Cremation, Interment and Funeral Services Act only includes graves created post-1846.

The islet was zoned in 1974 as residential property. But provincial archeologists recognized it as part of an ancient First Nations village on Saltspring in the 1960s.

"Our elders have told us that the graves on the islets were of chiefs and the families of chiefs," says Eric Pelkey, Chief of the Tsawout First Nation. "It was well known to us that we were not to set foot on Grace Islet unless we were burying more remains of our ancestors."

The province's Archaeology Branch discovered both human remains and burial cairns in 2006. An archaeological impact assessment recorded 15 archaeological features, including two human remains, for 17 burial features in total.

But Mr. Slawsky applied for a site alteration permit and was granted one in 2011.

Mr. Slawsky declined to be interviewed for the story. In a letter to the Times Colonist newspaper this week, he said he is not building a home in a First Nations cemetery.

"Nothing could be further from the truth," he wrote.

His lawyer, Brad Cramer, said in a letter to CRD directors that the burials are "neither under nor near Mr. Slawsky's home … this is not building on a grave."

After construction began in 2012, several aboriginal chiefs complained to the Archeology Branch about suspected violations, such as the mass clearing of trees and scraping and excavation of bedrock.

The Archaeology Branch then amended Mr. Slawsky's permit to change some of the criteria, and construction resumed earlier this year.

But further complaints from chiefs prompted the ministry to look again at the construction site on July 29. Ministry spokesman Greg Bethel told The Globe and Mail in an interview that nothing significant was found.

But in a letter sent this week, the Archeology Branch acknowledges a July 29 investigation by a provincial archaeologist found the construction is impinging on some of the burial sites.

"Two of the cairns are now straddled by the foundation wall and lie partially within the interior of the house footprint … with the interior portion enclosed in a protective concrete casing," writes Justine Batten, director of the branch.

Another rock feature "is situated within the house foundation … contrary to our previous understanding, this [rock] feature will no longer be directly accessible from outside the house but will remain undamaged and protected."

The letter, obtained by NDP MLA Gary Holman, was Ms. Batten's response to a letter from Chief Earl Jack of the Penelakut band. The letter goes on to say archeologists have found another burial cairn, and that all the rock features "remain untouched."

Forests and Lands Minister Steve Thomson said the legislation of the HCA requires not only the protection of aboriginal sites but also that permits and archaeological assessments be done. He said if the conditions of the permit weren't being met, staff would have to look at it.

"We need to balance the interests by respecting the private property interests, as well as ensuring that we protect those other longstanding values. And to find compromises through the permitting process where conflicts exist."

But for the aboriginal groups demanding construction stop, the matter is simple.

Robert Morales, lawyer and chief negotiator for the Hul'qumi'num Treaty Group, said provisions in the Heritage Conservation Act allow the minister to stop the permit.

"Under the HCA, it says that a person must not desecrate or alter a burial place … desecrate means to insult something that is holy, to damage something sacred, to damage something that is revered. Building a house on a gravesite is an insult to something that is considered holy to the Coast Salish People."