A proposed one per cent capital levy may appear to have come out of left field to taxpayers, but it’s something the city has been pondering for some time in city hall as a way of addressing New West’s aging infrastructure.
At its Jan. 8 council meeting, council directed staff to implement an annual one per cent capital levy, with the funding helping to address the challenge of replacing infrastructure, buildings and equipment and investing in new services and infrastructure to meet the needs of a growing community. The concept came forward as part of consideration of the city’s draft 2018 to 2022 financial plan, which is proposing a 2.95 per cent property tax increase this year.
Mayor Jonathan Cote said the issue of a capital levy arose out of discussions about the finding a way to fund the replacement of Canada Games Pool and other capital projects that will be required in the city.
“Staff did present an option that we defer the capital levy until next year, but I actually think council is showing some leadership – if we want to be out there in the community saying we support the redevelopment of the Canada Games Pool or other projects, like the renovation of the library or the new animal shelter, we have to be able to demonstrate and be able to be upfront and talk to the community about how these things are going to be funded, instead of pushing that off into the future,” he said.
Cote said the city has spent a significant amount of time consulting with the public about new infrastructure projects like the Canada Games Pool/Centennial Community Centre replacement and thought it was important to be able to let the community know about some of the costs associated with the project.
“It’s the first time it is being considered,” he said of the levy. “As we go through this budget process, we are going to want to hear some feedback. I think the reality is, the thinking is, we are going to be utilizing some of these funds ongoing into future years. There is going to be opportunities for the city to be able to consider that.”
Colleen Ponzini, the city’s acting chief financial officer, said the levy will strictly be used to fund the maintenance and replacement of the city’s capital assets.
“For 2018, council has directed staff to put the levy towards the replacement of the Canada Games Pool/Centennial Community Centre,” she said. “The levy will be shown as a separate line item on the city’s property tax notices.”
Ponzini said the concept of a capital levy has been around for quite a while and is something a number of municipalities in the region have implemented.
“This year, the capital budgeting process with departments was particularly challenging with the need to increase funding for the maintenance/replacement of existing capital assets, and finding moneys for new capital projects tied to the city’s strategic initiatives,” she said. “Because of these challenges, staff thought that it would be prudent to formally bring forward the capital levy as a potential funding solution.”
A staff report states that some of the proposed items in the capital plan were removed because the plan was deemed to be “too ambitious” to complete in five years and “put too much pressure” on the city’s reserves, but will eventually need to be done. The report states that the plans include “significant capital requirements” that will require increased funding to maintain sustainable reserves – thus the introduction of a capital levy.
The proposed 2018 capital budget is $64 million (up from $54 million in 2017) and includes funding for annual maintenance and replacement of transportation infrastructure, civic vehicles, vehicles and equipment, as well as projects like city hall renovations, relocation of the animal services facility and tow yard, uptown library upgrades and design work for the future replacement of Canada Games Pool and Centennial Community Centre.
The draft 2018 to 2022 financial plan is also proposing a 2.95 per cent tax rate increase to provide ongoing municipal services and funds to accommodate salary increases and additional staff and contracted services to deal with workload issues and strategic initiatives. In past years, staff have made a number of presentations to council about the budget and department heads have appeared before council to make a case for funding various new staffing positions in that year’s budget.
“During the year, departments have approached council to address staffing requirements. This year, most of the requests related to existing staff positions – extending term contract positions or making term positions into full-time positions depending on expected ongoing trends in workload,” Ponzini said in an email to the Record. “Since most of the requests had implications to existing staff, these discussions were conducted in closed council sessions.”
Having presented the draft 2018 to 2022 financial plan at the Jan. 8 council meeting, the city is inviting community members to comment on the plan at its Feb. 5 meeting in council chambers. Staff anticipates that council will consider a financial plan bylaw at its Feb. 19 meeting.
What's happening elsewhere?
New Westminster is the latest city in British Columbia to approve or consider a levy to address its capital infrastructure needs. Here’s a sampling of some of the levies implemented or being considered in other B.C. communities:
* On top of this year’s tax increase, the City of Port Moody’s 2018 draft financial plan proposes a one per cent tax increase for an “asset renewal levy” that would be used for the replacement and upgrading of existing city infrastructure. Port Moody is also considering a one per cent tax increase for a master transportation plan levy, which would allow the city to use those funds to service debt taken over a 10-year term for projects identified in its master transportation plan.
* In 2016, the District of West Vancouver created an asset levy to provide for the maintenance and replacement of its capital assets. While a 2.45 per cent levy was approved as part of the 2017 budget discussions, the issue was a divisive topic, with the mayor and a councillor voting against the budget, in part because of concerns about the levy.
* Faced with a significant deficit for infrastructure funding, the City of Quesnel launched the “capital reinvestment program” in 2015 that included a special levy for infrastructure and annual five per cent increase to utility fees.
“For Budget 2018 it will be $2,037,500 which is 13.44 per cent of the total taxes we collect. We first taxed for the levy in 2007 at a level of $495,000. Our current council has made significant increases to the levy the last few years,” said Kari Bolton, Quesnel’s director of corporate and financial services. “At this point, the funds from this levy are used only for replacements projects related to roads, sidewalks and storm systems. It was very apparent that as our capital infrastructure aged we needed to ensure we had the resources to replace it in the future. This levy enables us to build up funds so that we are able to undertake major road rebuilds without having to use debt and undertake the replacement projects in a timely manner.”
* In an effort to address its infrastructure needs, the District of North Vancouver has a one per cent asset renewal policy. A 2018 budget report indicates staff is recommending the policy continue to 2022, as it will “enable the district to reduce its infrastructure backlog and begin to replenish its reserves.”
* The Capital Regional District’s “land acquisition fund” collects a levy of $20 per average residential household to buy land to add to the regional parks and trails system and is expected to generate about $3.7 million annually until 2017. When established in 2000, the fund collected $10 per household but that was increased $2 each year starting in 2010. The regional district’s parks committee has discussed the idea of surveying Greater Victoria residents as to whether they want a $20-per-houshold levy collected to buy parkland to also be used to build park infrastructure such as parking lots, trails and washrooms.
