Capital costs for the City of Yorkton are likely to be significant over the next 15-years, and to be prepared for those costs Council was given a possible plan at its regular meeting Monday.
In response to the rising costs we thought it would be diligent to provide Council with a draft Capital Financing Projection for the next 15 years, Shannon Bell, Director of Finance with the City told Council.
“This projection looks at the major infrastructure projects that Management is currently aware of,” she said.
Two schedules were provided to Council, the first being the Water Projections and the second being the overall City Capital Financing Projection, explained Bell.
In terms of water it is a self-sustaining department.
“The Water Projections schedule assumes that the City will increase water rates over the next 15 years by three per cent each year. It also assumes that our costs to operate the water and sewer utility will increase an equivalent three per cent. Management has identified $69,000,000 in infrastructure projects over the next 15 years. This includes $22,000,000 for the water and sewer lines associated with the Broadway reconstruction project, which will not likely proceed unless we receive the corresponding grant of $15,000,000. The utility will be able to handle these capital projects with all debt being paid in 2030,” detailed Bell.
The Capital Financing schedule assumes that the current level of funding from taxation of $4,085,000 for Capital and $705,000 for Reserves would remain at a constant level over the next 15 years.
“Projects amounting to approximately $60,000,000 have been identified in this schedule over the next 15 years. We would require long term financing to proceed with these projects. Management has prepared a financial plan for Council to consider when discussing these and any other future capital projects,” said Bell.
The projects will come with a significant cost, and that would require new money be raised.
“The funding for the estimated $24,000,000 for the Civic Operations Building would require the City to increase property taxes by three per cent each year for 2016, 2017 and 2018, as well as continue with the existing $300,000 that is included in the Capital Budget and use $100,000 annually from our Fleet Operations,” said Bell.
One of the biggest projects will also require financial buy-in from both the federal and provincial governments.
“The funding for the Broadway Reconstruction project is dependent on whether the City is successful in its grant application through the Build Canada Fund. If approved at the full amount, the City would receive almost $35,000,000 of a $52,000,000 project. The remaining $17,000,000 would be funded through the water utility and an $11,000,000 long term loan. This loan would be repaid by increasing property taxes in 2019 by three per cent and by increasing the current Gallagher Centre levy of $100 to $150 per property beginning in 2020,” said Bell.
The tax increases would continue if the plan were to be followed moving forward.
“The funding for the Kinsmen Arena would require the City to increase property taxes by three per cent each year for 2020 and 2021,” said Bell.
Bell said in general terms annual increases specific to the capital plan would be needed.
“In summary we would suggest a three per cent increase to property taxes each year over the next six years plus increase the Gallagher Centre payment to $150 per property beginning in 2020,” she said.
“This financial plan only takes into account the financing of the major projects listed in the schedule. From the schedule you can see that we would have $2,025,000 annually for “other” capital items throughout the entire City. Also the three per cent increases suggested above would only be for these specific projects. Additional increases to property taxes would be required for other capital and operating purposes.
“Each project and related financing will be brought back to Council at later meetings. This report has been prepared for Council’s information only at this time.”
Councillor Les Arnelien was quick to point out the report was just a 15-year capital projection, and not one passed by Council.
Arnelien said that a three per cent property tax increase for six-years would be very difficult to approve as it would be a huge cost to taxpayers.
Coun. Ross Fisher said such tax increases might not be palatable, but added the document presented was a good look “at what we’re facing the next few years.”
Fisher then added “some of this is several years down the road.”
The plan put forward is a good one “for people to think about … what the City will be dealing with the next little while,” he said.
At the same time Fisher said the proposed increases might be too much.
“There is a limit on the amount of increases on a year-over-year basis,” he said.
Coun. Chris Wyatt took the plan in a different light.
“This is a warning from Administration what’s coming down the pike,” he said, adding Council can’t ignore the need. “These aren’t going away.”
Coun. James Wilson said the report was the start in developing a direction for the next 15-years.
“The reality; we have to plan for the future,” he said.
