Mayor Nicole Read.

City has plans for borrowing $110 million

Would not affect budget; 3.3% increase for 2016.

Borrowing $110 million so the city can build recreation facilities was the highlight of the city’s budget talks on Tuesday night.

The city gave first and second readings to a budget that will hike taxes 3.33 per cent, and Paul Gill, the general manager of corporate and financial services, noted that is “the lowest increase we’ve experienced in quite some time.”

Council will get more public feedback on the budget, and it will be given third and final readings in the new year.

The proposed $110 million in borrowing will not impact the 2016 budget, Gill said.

“When it comes to sports and recreation infrastructure, we are behind. We need significant investments.”

Comments from councillors began that discussion, and they challenged staff to put together a strategy to fund new facilities.

“In the conversations that we have had, in order to make a new pool happen, perhaps an arena, some sports fields, some theatre space and all of that kind of stuff, we’re likely looking at a number in excess of $100 million. So how do we make that happen?”

The answer is to consider a borrowing strategy.

“Especially given the way interest rates look today, and the announcement today that the federal government might be looking at negative interest rates,” said Gill.

He developed a model, and noted “this is the start of the conversation,” and that public approval will be needed.

“We cannot borrow without the assent of the electorate.”

He noted that the spending will happen over a timeline of approximately five years, beginning in 2016.

“If we were to spend the money, we’re not going to be able to spend this in Year 1. The chances are it will be spread out over several years.”

He recommended short-term borrowing, because interest rates are “just incredible,” and that council not make principal payments.

“That’s not a strategy I recommend unless you have a plan, and we have a plan,” said Gill.

Part way through the program, the city would convert short-term borrowing into longer-term debt, he explained.

“When that happens, your annual payments will be close to $6 million per year.”

He said the city should be able to handle that level of debt, in part because its Town Centre debt obligations retire in 2027 and 2028, freeing up close to $4 million in cash flow.

The town centre debt helped pay for a new library, arts centre, youth centre, expanded Leisure Centre, office tower, underground parking and reconfiguration of Memorial Peace Park.

“How do we handle the rest of it, in the meantime? You can handle it through a variety of sources,”

He said the community amenity program, which is being created, will help. Based on the last five years, developers would have been contributing $3.2 million under that plan.

While the amenity contributions will fluctuate, all indications are that Maple Ridge will continue to grow, said Gill.

Grant funding from senior government is another way to manage the debt repayment, said Gill.

“On top of that, you may want to consider some sort of small, phased in tax increase, if you so wish.”

“All of what this model is designed to say is, thinking long-term, you can do a lot in the short-term.”

Gill gave an overview of the financial plan, and the 3.3 per cent tax increase. He is frequently asked why the city needs to raise taxes, when new development and growth is already providing additional revenue.

He explained that new construction will add about $1.5 million in new revenue this year, and the tax increase will add another $2.2 million.

But police and fire costs alone are rising $1.3 million, without “anything substantially different” than the current service levels.

“The costs of what we are currently providing continue to go up year after year.”

For an average Maple Ridge home, based on a house, apartment or townhouse with a $400,000 assessed value, the tax in crease would mean a total bill of $2,768 for general services and utilities (sewer, water and recycling).

The city is budgeting for $4 million in new revenues next year, primarily from growth in the property tax base and property tax increases.

Of that, approximately $2.4 million will cover labour increases.

The city’s major areas of increased expenditure are policing contracts, at $835,000, fire department, at $505,000, and employee wage and benefit increases, at $1.06 million.

Compared with 16 Lower Mainland communities, Maple Ridge had the fourth lowest taxes on an average single family dwelling in 2015, at $3,055 based on the average $474,000 single family residence. The highest was West Vancouver, at $5,487, and the lowest Pitt Meadows, at $2,853 in 2015.

 

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