Time heals all wounds.
And time will be needed to reduce the wound of the Columbia/Washington project, a vital and necessary infrastructure upgrade with subsequent make over that has put the downtown in a new positive light, but the city in a financial bind.
A 26-page report from city staff to council has found the project will cost the city $5.78 million—a number revealed after the project scope was finalized in early 2012. It's a sizeable sum, but one that is right on budget.
According to the report from city staff, delivered June 24 to council for review, the construction cost of the $7.23 million project was never in doubt, with a figure of $4.9 million being originally touted, and the number that now has come due.
Now borrowing for the $5.78 million—which includes engineering costs—will head out to the public for approval through the alternate approval process to either soften or sharpen the blow to city taxpayers.
Mayor Greg Granstrom said the fact that the cost came within budget was remarkable.
“With any project, once you start digging into the ground there are surprises. The surprises in this case, were not as significant as they could have been,” he said.
He lauded the look of the city's main thoroughfare, but also the unseen aspects of the project.
“In order to have a viable community it is all relevant to the state of its infrastructure,” Granstrom said. “While not everyone sees the pipes under the ground, what you don't see are cuts in the asphalt or leaks and disruptions to businesses because these pipes were replaced.”
In 2011/2012 the City of Rossland, in conjunction with the Ministry ofTransportation, funded a major project to upgrade Columbia and Washington Streets.
It was a one-time opportunity to improve the infrastructure in the downtown and the two streets for efficient traffic flow, tourism attraction, pedestrian safety and reduction in greenhouse gas through improvements in street lighting.
A bylaw to authorize the borrowing of $6 million for the project received elector approval through the alternative approval process in February 2011. However, due to a timing issue the inspector of municipalities did not issue the required certificate of approval.
In early 2012, the project scope was finalized. The resulting budget for the project for the city's portion was set at $5.64 million. The city advanced the required funding in order to ensure that the project could proceed as planned.
In May 2013, as part of the 2013-2017 5 year plan, a further $130,000 to cover the costs of street furniture and signage, handicap stalls and other sidewalk works was approved. The total budget including these additions was now $5.78 million.
The total project is projected to be within the total budget of $5.78 million. The funding proposed is $295,313 from the Towns for Tomorrow grant, $31,375 from development cost charges, $1,014,547 and $4 million from long term (30 year) borrowing.
The reason most municipalities borrow for large capital projects is that borrowing enables the sharing of the project cost with future taxpayers, said city chief financial officer Cecile Arnott. Funding a capital project strictly from reserves and surplus means past and present taxpayers are the only contributors to the project.
And the impact of borrowing $4 million could result in an estimated annual debt repayment of $212,000. The average home in Rossland is assessed at $255,400. Therefore, the maximum estimated annual tax increase would be $96 per year.
However, council is reviewing the long term strategy for managing its assets, therefore the increase could be lessened through strategic planning, Arnott pointed out.
Councillor Kathy Moore thought the project was up from the $3.6 million estimated in an October, 2011 presentation to city council by the project consultants.
Arnott said the budget was not presented accurately at the time, and did not include the engineering costs that will run the city around $885,000, including conceptual design, preliminary design and construction.
Ministry of Transportation's portion of the project was budgeted at $1.592 million and came in at $1.747 million.
Moore was concerned an opportunity was lost to show the citizens of Rossland a straight forward accounting on a big infrastructure project that rose after its initial estimate.
“I want to be clear, the downtown looks great and it is probably worth every penny, but I think the citizens of Rossland need to know what we thought it was going to cost and what it actually cost,” she said. “To me, to not put those honest truths of what the budget was and how the money was spent is disingenuous at best. It's not what we thought we were going to spend, it's not what we signed up for, and that bothers me.”
She said the city did not do a good or accurate job of reporting the budget number changes to the public.
“It's more important to be up front and open about it than to look good,” she said. “So the report that is coming out makes us look good ... but the reality is the budget turned into a moving target on this project as it has in the past and I find that disappointing and it is a disservice to the citizens.”
editor@rosslandnews.com
Long versus short term
It should be noted that if the long term borrowing fails, council will review a strategy for borrowing over five years and further depleting reserves.
This would probably result in borrowing $3-4 million and repaying over five years. The annual debt repayment would be between $650,000 and $840,000. The estimated annual tax increase to that same average home would be between $300 and $400 per year.
In the previous alternative approval process there were 18 petitioners against the adoption of the loan authorization bylaw. If 10 per cent of the electors—256 signatures—sign the petition against the bylaw then the long term borrowing fails.
It is estimated that the total number of electors who are residents and eligible non-resident property electors in the city is approximately 2,558.
Therefore, if a taxpayer agrees to the long term borrowing, they should not sign the petition against the bylaw.
The established deadline for response is 4 p.m. on Aug. 27.
Source: City of Rossland