City Council is looking at a long list of big capital projects that could be completed next year thanks to increased funding and new financial policy.
The city’s director of financial services, Shannon Saucier, summarized the staff perspective on the 2016 capital budgets to members of council on Monday night.
Assuming the budgets she presented are approved and grant and reserve funding come to fruition, city staff are proposing spending just less than $26 million on general capital projects in 2016, plus an additional $13.3 million on water and sewer projects.
Capital spending, which helps maintain, improve and add to the city’s $1.2 billion in infrastructure assets, has been reduced the past two years and City Council could be looking to reverse that trend.
“The majority of the dollars are being allocated to asset maintenance and renewal-type projects,” Saucier said simply. “Another key element is the fact that we are anticipating receiving more grants than we did in the previous years, so that will help to boost some of the spending.”
Last year, the city commissioned an asset management plan that identified the most important needs and wants, while also recommending a plan to support infrastructure services at the lowest lifecycle cost.
At the time of submission, the plan identified a $22.7 million shortfall in 10-year capital funding.
Up to 90 per cent of that deficit was attributed to roads, bridges and storm sewer infrastructure, the report states, which must be funded by the tax levy. The remaining projects, on the other hand, fall under the water and wastewater capital budget and are funded by user fees.
The report suggests the city increase its capital spending to upwards of $55 million by 2023 in order to keep its infrastructure in good, working condition. That would require a $1.5 million increase every year over the 10-year period from the time the plan was written.
As the most recent report to city council states, reduced government funding, lower operating revenues, increased operated costs and a myriad of other factors have added some unwanted financial pressures recently.
But next year’s capital spending might be the change of pace the city is looking for though, which could also be influenced by whether or not council adopts the Mayor’s budget plan, which is characterized by calling in the city’s loan to North Bay Hydro to offset the pay as you go component and give the capital budget a shot of life.
McDonald has pitched to have approximately $12 million of the recalled hydro loan be injected into the capital budget over the next three years while also reducing debenture borrowing to $5 million from the current $8.5 million.
Meanwhile, the city is receiving significantly more government grants and have also been reviewing their long term capital funding plan, which will pave the way for a new spending policy.
In accordance with the special review committee’s recommendation, capital projects will now be classified into three categories: asset maintenance, strategic investment, or growth. Previously, each capital project was classified according to its business unit.
Council heard a public presentation from resident on Monday night urging it to invest more into the maintenance and asset improvement category instead of new growth and expansion, especially in a down market.
But as Saucier explained in her presentation, the preliminary general capital budget, which addresses roads, bridges and other non-water related infrastructure, calls for 80 per cent of spending to be put into that category.
Growth projects are earmarked to get 15 per cent of the funding, while strategic investment projects have been allocated five per cent.
Some of the most notable projects the city is prepared to start in 2016 include re-construction to the Lakeshore Drive overpass ($5.5 million), Seymour Street - Highway 11/17 intersection ($3.6 million), King’s Landing Commercialisation project ($525,000 in 2016), and ongoing road resurfacing ($3.5 million), as well as a long list of other ongoing projects.
The city is also in line to pay down a portion of the outstanding $3.1 million for their pre-commitment to the Memorial Gardens renovations.
Meanwhile, the water and sanitary sewer capital budget is forecasted to be just over $13.3 million. Maintenance projects are expected to take up 62 per cent of that budget, while growth projects and strategic investments projects are anticipated to take up 33 per cent and five per cent, respectively.
One of those major projects in question is the $4.2 million sewer trunk extension project at Laurentian Ski Hill, which has already been a hot topic around the table.
That was just one of the water and sewer capital projects that were pitched to councillors not long ago that could be reduced, deferred or eliminated for a savings potential of close to $5 million.
Resident Gary Gardiner, who was arguably the most active throughout the special water and sanitary sewer rates review committee process, took to the podium on Monday night to lobby council against moving ahead with certain growth and development projects in favour of reducing the levy, at least in the short-term.
Based on anecdotal evidence, he identified 181 residential lots in various developments throughout town that are serviced and ready for further development, which he said should be occupied or committed-to before any more growth related projects get funded.
Coun. Daryl Vaillancourt challenged that idea, arguing instead that the city needs to be prepared for when the market turns up again.
“There’s no doubt that we’re in a downturn in the economy, but it will come back around,” said Vaillancourt. “When it does come back around, imagine if we had very few serviced lots; in my opinion, having a good stable of serviced lots is a good thing.”
Meanwhile, Coun. Mark King, who has expressed his opinion against excessive capital spending in a down market, was upset that he and his colleagues were not provided with a copy of the presentation prior to Monday’s meeting.
“Normally in our agenda, we would get a copy of the presentation made by staff, and I’m sitting there trying to comprehend these different figures that were being thrown around […] and I was not happy about that; that’s an understatement,” said King. “I expect the reports to be part of the agenda; they need to be part of the agenda so that everybody understands what’s going on."
The long-term financial policies special review committee, headed up by Coun. Derek Shogren, has recommended that the 10-year capital budget and review of capital projects be referred to a special committee of council to be discussed in-depth.
The special committee will also be tasked with establishing a new long-term capital funding policy, which Shogren has previously said should be tightly linked to growth in the city.
That plan, along with the asset management plan and capital budgets, are an important part in applying to provincial and federal government grants.
“The challenges are not unique to North Bay, they are common to all municipalities, and those are trying to balance the needs and the risks of your projects,” said Saucier. “We only have so much money that has been allocated to spend and it's determining what those projects are.”
Both capital budgets are expected to be discussed in detail on Tuesday, December 8, when members of council can decide on particular projects. After that, the budgets are scheduled to be approved at council’s meeting on January 11, 2016.
