The City of New Westminster is taking “significant” hits to its finances during the COVID-19 crisis.
Mayor Jonathan Cote said the city is taking a series of actions to minimize the impacts of a substantial decrease in revenues during a time of “unprecedented” financial challenges.
“So far, the City of New Westminster is estimating we are losing more than $1 million a month in revenue to the city,” he said. “Most of those revenue losses, so far, are concentrated in a lack of recreational programming fees, which we are not collecting, and casino revenue.”
According to Cote, the parks and recreation fees and casino revenues are “pretty even” as the city’s top two lost revenue sources.
“It’s a significant drop in revenue,” he told the Record.
Because of the closure of casinos, the city has lost half-a-million-dollars a month in revenues, Cote said.
“Casino revenues mainly go into funding debt for capital projects that the city has taken over a number of years,” he said. “The city is still obligated to make payments on our debt for our capital projects. It is part of our operating program, and we do need to make sure we are able to account for that lost revenue.”
In recent days, the City of New Westminster has informed 601 auxiliary employees that they won’t be scheduled for shifts until further notice and they won’t be paid after April 17. Many of these employees work in facilities shuttered because of COVID-19, including recreation centres.
“The parks and rec fees largely go to cover the cost of putting on the programming,” Cote said. “With what’s happening with the auxiliary employees, those savings will actually cover off the loss in revenue when it comes to those fees.”
But casino revenues and parks and recreation fees aren’t the only areas where the city is taking a financial hit.
“A lot of the revenue sources are dependent on activity happening out in the community, whether it is parking fees or building permit fees. We are already getting signs that that activity has gone significantly down because of the COVID-19 crisis,” Cote said. “We are anticipating revenue losses in a lot of different areas throughout the city.”
The City of New Westminster is developing plans to reduce its costs in response to the drop in revenue.
“We are definitely going to be having to look through our budget and look at all opportunities to reduce costs,” Cote said. “We definitely feel the city has a strong role to ensure that we are maintaining the essential services in the community and making sure we are still able to serve the community, but I think we need to recognize these are going to be unprecedented financial challenges for the city. As time progresses and as more information comes forward, there may be future actions the city has to take to be able to address those issues.”
Because of the anticipated cash-flow challenges, Cote said the city expects a “significant portion” of this year’s capital plan to be deferred.
“We are focusing on our capital program and trying to determine which projects should continue going and which ones should be paused for the year and not move forward, given the financial strains on the city,” he said.
Cote said projects that are already under construction, like the Queen’s Park Sportsplex, will proceed, as there would be very little savings by stopping those projects. Projects that have life and safety implications and those where the city has secured third-party funding from other levels of government will also be prioritized.
“I think there will be more information made public in the coming weeks with council,” he said. “Certainly it will be our intent to share with the community what work we are still moving forward with but also what areas we are putting on hold.”
According to Cote, a lot of the city’s capital programs need support from consultants to move forward, and those are costs the city doesn’t want to take on at this time.
“We also need to make sure that our reserves might have to be used for some other unanticipated emergencies during this crisis,” he said. “Spending our reserves as normal doesn’t seem like the prudent thing for the city to be doing in this financial crisis.”
Cote said the city has many different reserves, with some being flexible and others being allocated to specific areas of spending.
“Certainly we will be having a good look at what options we do have,” he said. “I think we definitely want to make sure we are keeping as many options open as possible for the city during this crisis so we can keep stability in our organization.”
Construction of a replacement for Canada Games Pool and Centennial Centre is likely one of the programs that won’t make the cut in 2020.
“For the time being, we are taking a pause on the redevelopment on the Canada Games Pool,” Cote said. “That is the city’s most significant capital project that we have going. Although we had anticipated construction to start this year, that seems very unlikely at this point in time.”
The city had applied for a federal grant to help with the project and was expecting to hear about that application in March.
“Understandably, COVID-19 has taken all levels of governments’ attention away from previous work,” Cote said. “We are not anticipating hearing announcements in the short-term regarding that project.”
The current financial picture faced by the City of New Westminster is far different from what was envisioned less than two months ago.
“It is definitely a strange dynamic,” Cote said. “Back in February, our early budget discussions were talking about a lot of ambitions of the city, whether that be the redevelopment of the Canada Games Pool or tackling climate change. All of those things are still important for council but I think we recognize they have to be put on the back burner at this point because this is a crisis that none of us has ever experienced and needs all of our attention at this point.”
