Identification of funding and revenue sources will be essential for the City of Powell River to implement a significant list of capital projects during the next five years.
At the Thursday, August 14 budget committee meeting, Shehzad Somji, the city’s chief financial officer (CFO), introduced a draft five-year capital spending plan, indicating that an additional $500,000 to $760,000 per year will need to be found if all projects are to proceed.
The project list includes: Powell River Airport GPS; renewing city equipment; a new fire hall; a new library; roads; technological upgrades [software]; the liquid waste management plan and Haslam Lake water main.
Somji said a few assumptions have been made in creating the draft plan. If the city is to borrow from the Municipal Finance Authority (MFA) for some of its larger capital projects, there is a 30-year amortization period at 3.95 per cent interest.
A second assumption is that the city’s Community Works Funding agreement will provide revenue of anywhere from $530,000 to more than $600,000 over the next five years.
Somji said another assumption is the use of Powell River Community Forest dividends to offset any recreation and culture projects that arise. Somji said $500,000 is the estimated annual requirement.
Existing projects are not impacted in any way in the consideration of the draft budget. That means funding will not be taken away from any projects currently underway.
Somji provided an estimate of project costs and annual costs for the city.
The airport GPS project is estimated at $100,000, with an annual cost of $20,000 over five years. Replacement of equipment is valued at $750,000, with an annual cost of $150,000.
A new fire hall would require the city to borrow about money $6 million with an annual cost of $343,981.
The price tag for a new library has been pegged at $10 million, of which the city’s share would be up to $3.5 million. The annual cost of this loan would be $200,655 based on the 3.95 per cent interest rate from MFA.
Annual road upgrades are estimated at $600,000 with some of that coming from gas tax rebates.
Somji said for technology, software costs are estimated at $200,000 to bring everything up to date. The annual cost would be $40,000.
The liquid waste management cost could be between $6 and $25 million. Somji said there is still a lot of work to be done before calculating a final figure.
Haslam Lake water Main is $2.2 to $3.5 million, with an annual cost estimate of between $100,000 to $185,000.
Mayor David Formosa pointed out how funding for city infrastructure and capital projects has changed substantially. Formosa said the piece city politicians have been struggling with is when they go to build a library, a new water or sewer system, or any of these types of infrastructure projects, there used to be a different funding formula in place. Under the old formula, municipalities, the federal and provincial governments each contributed a third of the cost.
“Two years ago myself and the chief administration officer were sitting in the audience and the federal minister of infrastructure was bragging about how many billions of dollars he was going to give us all and he got a standing ovation,” Formosa said. “And then last year he never showed up. It seems all that just disappeared. I am still dumbfounded.”
Formosa said he recently attended a meeting with the federal transportation minister, sponsored by John Weston, MP, West Vancouver – Sunshine Coast – Sea to Sky Country. Weston asked what needed to be done at the Union of BC Municipalities meeting to be held at Whistler in September.
“It’s in John Weston’s riding this year,” Formosa said. “He asked what could he do for the riding that will help us. He said he was thinking of having a barbecue at his house.
“I said if you want to be helpful, do something onsite. What would be a good thing to do is get somebody high up in the Building Canada Fund to come and speak to your constituents’ representatives and staff about this fund and the issues we are hearing.
Somji then introduced a five-year cash flow, outlining capital expenditures from 2015 to 2019. The deficit in funding for those years ranges from a minimum amount of $503,403 in 2015, to a maximum of $776,021 in 2016, for an average of about $750,000 over that five-year span.
“That’s what we need to makeup,” Somji said. “Where are we going to find that money annually? That’s something we need to look at and determine.
“This is something that I want to finalize by December, so we have to find that money somewhere.”
Mac Fraser, Powell River’s chief administration officer, said the city traditionally had expectations of sizable and relevant infrastructure grants from the federal and provincial governments. It is “much diminished.”
He said the city has been receiving Community Works Funds and gas tax funds for a few years. He said about $575,000 to $600,000 per annum flows to the city through the gas tax. That would cover the amortization for the fire hall and the library, but those projects are not eligible for Community Works funding.
“With the restrictions we can’t use the money for what you, the local government, decides is the priority,” he said. “So it reinforces your commitment to lobby for wide-open, or at least greater eligibility or projects, for gas tax.”
Formosa said he was of the impression that the federal gas tax money was going to be made less restrictive so that cities could use it to lever borrowing and use it for purposes other than roads.
Fraser said the federal minister in a meeting indicated that the funding was wide open but the way the infrastructure money flows is by way of a federal-provincial agreement with each province.
“In the name of stewardship of our infrastructure, our province chose to say we do not want criteria as wide open as the federal government offered,” he said. “It’s the made-in-BC gas tax agreement that has the restrictions, which reinforces my point of it being a UBCM issue. It’s the provincial agreement that restrict the wide-open approach of the feds.”
Somji said the budget process will begin in September and city staff believe it is important to start it sooner rather then that.
“We are going to start looking at this and fine-tune it. We are going to look at avenues to try and makeup that shortfall,” he said.
Fraser said the capital expenditure plan was trying to fund projects for services and infrastructure the city has now.
“It is not seeking new and innovative service enhancements,” he said. “This capital plan is conservatively saying, for what we have now, this is what we really need to do. We are trying to make up ground.”
