A commentary by the vice-chair of Grumpy Taxpayer$ of Greater Victoria, a non-partisan citizens advocacy group for municipal taxpayers.
People don’t whistle as much as they used to.
That may change during the next few weeks now that municipal taxpayers — about half of those on the South Island — are faced with voting on whether to approve two costly infrastructure projects.
Compared to previous megaprojects here and elsewhere, there are now far more dollars required to renew infrastructure for the next generation.
The cost of capital projects has escalated sharply on account of inflation, labour and material shortages, a backlog created by the pandemic, provincial building code changes, and so on.
Let’s start with the replacement of the crumbling Crystal Pool.
The 53-year-old facility has been closed for weeks, and will continue to need expensive maintenance into the near future. Residents are unhappy an important community service was sidelined.
It’s apparent the facility is falling apart and a new facility, rebranded as the Crystal Pool and Fitness Centre, requires taxpayers to do without or dig deep into their wallet. A much larger facility will cost as much as $216 million and substantially draw down reserves.
With five interest rate decreases since June, perhaps the financing of the project has fundamentally changed?
Tax implications are significant. Initial increases would be gradually phased in over four to five years. Once the facility is open, taxes would be hiked 7.24% annually for the Central Park North location for 20 years. At 7.54% annually, it’s even more if the complex is built at Central Park South.
A referendum Feb. 8 doesn’t give city voters much choice. Both options are high-end, if not luxurious, in quality and located a few metres apart on the existing site. Much of the bill can be attributed to adding 52 per cent to the existing space.
The battle for your heart and taxes has already begun with the formation of the lobby group letsgetcrystalclear.ca.
Critics though point to the more modest and smaller aquatic centre that’s proposed in Fort Saskatchewan, Alta.
Their council recently approved a borrowing bylaw for $54 million to pay for a lovely 52,000 square foot facility. That’s about $1,000 a square foot, built to meet harsh Alberta weather conditions.
On the other hand, the Crystal Pool and Fitness Centre facility is projected to cost $216 million for a 92,570 square foot facility. That’s more than $2,000 a square foot, double the cost despite being built in a balmy climate.
Given it is borrowed money, these are huge sums.
To give taxpayers a better idea, Fort Saskatchewan evaluated the project in terms of capital investment, annual operating expenses, and the cost to taxpayers over a 40-year lifecycle, offering a comprehensive view of the financial implications for the community.
Totalling all these costs in 2023 dollars is referred to as net present value (NPV). In this case it amounts to tax support of $220 million over what is collected from users fees during this time.
It would be helpful if Victoria provided taxpayers with the net present value. While they are at it, they need to justify and account for the substantial cost difference in the two facilities.
At the end of the day though, any savings by building a more utilitarian facility several years from now is liable to be negated by inflation. Meanwhile residents will likely be without a much-needed pool.
Taxpayers in Saanich are whistling a similar tune.
Ratepayers are dealing with the crumbling 60-year-old Works Yard, rebranded as the Saanich Operations Centre, requiring residents to find about $172 million, plus or minus 25 per cent. Imagine the NPV on that project.
The district says, early in the new year there will be “electoral approval,” although not committing to either a democratic referendum or the cheaper alternative approval process (AAP) is undemocratic as proven by the $85 million housing AAP held by the CRD in January 2024.
Provincial guidelines around AAPs are clear. Municipalities need to carefully consider if the project is “….viewed as significant or sizeable in cost, scale or scope from the community’s point of view.”
Saanich council deserves recognition for their efforts in consulting the public and structuring the deal to offset the cost of the operations centre.
It plans to leverage Saanich-owned land to increase the supply of affordable and supportive housing along with rental units. The goal is to build 400 to 600 units.
It’s expected a partnership with private sector development will net $30 million. This will drive the taxpayer demand down to a more manageable $142 to $150 million, and create another significant revenue stream from property taxes.
It’s more than the entire capital budget of $132 million in 2024 for several dozen projects around the largest jurisdiction in the region.
Taxpayers remain skittish about the track record on large capital projects even coming remotely close to being on budget. Are all governments intentionally underestimating infrastructure costs in order to “sell” them to the public?
Decisions will hang around taxpayer necks for a very long time.
The Johnson Street Bridge in Victoria was initially contracted at $63 million and eventually cost $110 million. The budget of No. 2 Fire Hall in Saanich has soared to $44.6 million, almost double the original estimate a few years ago.
Until taxpayers demand the 13 municipalities and 100 local politicians integrate more services or moderate staff complements, or the province consolidates municipalities, brace for ever increasing tax loads.
Listen for more and more taxpayers whistling while they work (overtime).
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