Whistling through the Grave Yard of Broken Fantasies
Ron Bolin: Feb. 17, 2013
Imagine that you are going down life’s highway without a care in the world. You are paying your monthly bills, even if you are borrowing a bit to do so. You can handle it. And then… the bottom falls out: Your car breaks down and you need a new one; you find that your condo is leaking and the money set aside to handle repairs is hugely overwhelmed; and you have committed all your current funds to paying your helpers, repaying debt on the extras you have acquired along with the usual expenses of eating, medicine, electricity, municipal taxes and fees, etc. Your savings are committed, your borrowing limit is stretched, and most of the assets which you hold can only be sold if you are prepared to virtually give them away.
While I hope this scenario doesn’t describe your personal situation, it does, as recently revealed by the release of a preliminary report on Nanaimo’s “Asset Management” condition, describe the situation of our Municipal finances. As we go down life’s highway it is easy for us as individuals to forget that all that stuff that we have acquired needs repair, eventual replacement or elimination and that we should plan for these circumstances. We often plan for catastrophic occurrences by purchasing insurance. But routine wear and tear, the long term destroyers of value, are too often overlooked by individuals and have, until recently, been almost entirely overlooked by government agencies, the very ones who should be paying attention because their life, unlike ours, goes on forever. While we eventually die and leave this cycle, governments are bound by them and the bills eventually come due. Governments, however, can afford to overlook these difficulties for a long time as they are comprised of individuals who are easily satisfied to let it devolve on those who come after them to take care of the mess. It is easy to forget responsibility if it going to fall on someone else’s shoulders.
Recent requirements have led to examinations of the extent of these problems as governments at all levels find themselves approaching the abyss of major infrastructure maintenance with some already off the edge. While certainly not among the worst in these areas, Nanaimo still finds itself with a serious case of the shorts, as described in the City of Nanaimo 2012 Asset Management update which can be found at:
This report identifies six steps in the Asset Management process:
- What do we own and where is it?
- What is it worth?
- How do we operate?
- What condition is it in?
- What do we need to do and when?
- How much will it cost and how will we pay for it?
The preliminary results are presented in the report which identifies some $2.214 billion (with a b) dollars in infrastructure assets which is described in eight categories:
|Infrastructure||Description||Current Value – $M||% of Total|
|Water Utility||Dams, reservoirs, mains, control stations||719||33%|
|Sewer Utility||Mains, lift stations||402||18%|
|Transportation||Roads, bridges, sidewalks, traffic signals, street lighting||386||18%|
|Parks Amenities||Playfields, playgrounds, trails, recreational dams||30||1%|
|Facilities||Civic offices, public works yards, fire and police buildings, parkades, recreation and cultural buildings||245||11%|
|IT Equipment||Hardware, communication equipment||8||0%|
|Fleet||Cars, pickups, heavy equipment, sanitation equipment, fire apparatus, zambonis||19||1%|
Total 2,214 100%
City Infrastructure – Average Age and Expected Useful LifeWater Utility 36 80 Sewer Utility 35 80 Drainage 21 80 Roads 19 39 Bridges 21 75 Traffic Signals 12 40 Street Lighting 18 50 Sidewalks 14 60 Park Amenities 19 25 Recreational Dams 88 100 Facilities 24 52 Technology Equipment 5 10 Fleet 7 16
Getting down to the nitty-gritty, an examination of the figures shown in the report leads to some startling and disturbing conclusions:
- Between 2013 and 2032 unless things change, Nanaimo will fall behind in maintaining our assets by $8.3 million dollars each year.
- We will be short $2.5 million each year in our water and sanitary infrastructure which is funded from grants, user fees, and development cost charges which are not within the City’s control; and
- We will be short $5.8 million dollars each year in other asset areas which must be recovered from general taxation and grants.
- If we look at the long run, given that many if not most of our infrastructure assets are fairly new, the shortfall after 2032 increases dramatically.
- While we face these shortfalls, Council continues to add new infrastructure with a planned cost over the coming years of some $150-200 million dollars.
Nanaimo does not have the worst problems in the province or the country in these areas, but the problem is serious. Especially for the young if we simply, as we have been doing, ignore the problem and pass it on to the next Council, and the next, and the next. Instead of planning new projects, we had best put our efforts to managing better those that we already have. The attitude that every expense is an investment is a dangerous mirage.
The problem, as you suggested, is not unique to Nanaimo.
The Western World has overspent & accumulated to too much debt , as I have said before, we do not live in a bubble.
As per Jim Taylors blog; 70% or so of our taxes go to wages & benefits.
They do so as our tax dollars are fritted away on fantasy projects.
When will we realise that we have to tailor our wants to our capability to pay for them & I mean us; not future generations.
But on we go with idealogically driven Councillors working with out of control staff to bleed the last out of the ususpecting taxpayer who are often as not idealogically or selfishly driven.
It will take a tougher more realistic Council to guide us through this mess & as of now I do not see a single Councillor that is up to the challenge.
We live in an never ending cycle where one boondoggle is ( hopefully)being bailed out by yet another boondoggle.
Get ready for the Multiplex!
There is one relatively easy means to acquire considerably more funds that could be used to pay for infrastructure, parks, housing etc.. I have mentioned this before, and over the years at council meeting, that by increasing the community contribution from subdivision applications monies could be gained. For years a guidline of $1000.00 per door was used to base negotian with the developer for these community contributions.
Last year a Development Process Review committee was struck, http://www.nanaimo.ca/assets/Municipal~Hall/City~Council/CommitteesCommissionsBoards/DPRC.pdf (see mandate and members), to re-vist the development process and hopefully streamline it to make the whole process easier. Lo and behold all members except for the two councillors are from the development community and they have now, as could be expected made the $1000.00 per door policy.
Some simple math; if a developer were to subdivide a single property to say 25 lots the contribution negotiated would be $25,000.00. That same property if a more realistic contribution of $10,000.00 per door were to be used would equal $250,000.00. How many subdivision requests are there in a year; I am not sure but I expect the numbers are considerable and a more realistic contribution would soon add up.
Speaking of the Development Process Review Committee, one of its members, Maureen Pilcher (former city staffer) is a Land Use Consultant who quite often appears before council on behalf of her clients. She also represents her clients’ applications to the Board of Variance. Seems that the focus is always on conduct of city council members re conflict, etc. Why not look at the activities of some members of council committees?
The assumption being that the market can support $10,000 per door. Real estate sales in Nanaimo have pretty much slowed to a crawl as it is and adding $9,000 to the price may not be realistic. However, when times were booming, the market could very likely have absorbed the extra charge.
I think one thing of note is the fact, the city can not actually set a fee and it does have to be negotiated (or extorted) depending on which side of the table you sit.
We clearly are not charging enough for the new development in the city, as our taxes keep rising to support the new growth.
Another thing which needs serious consideration is the fact that 77.3% of all tax revenue is used to pay staff wages and benefits at city hall.
The $1000.00 has been used for a couple of decades so if you look at 20 years ago the amount would probably be equal based on the cost of an undeveloped lot.There are actually numerous communities that do have a ‘fee’ per se. Some will talk about a percentage of the properties subdivided going to the city or an amount based on the market value of that percentage of properties.
Perhaps extra revenue could be extracted by taxing larger lot sizes & oversize homes.
I’m sure it was more cost effective to service the original smaller lots in Nanimo than the sprawling 3,4 & 5000 suare foot homes on large lots now in vogue.
Sprawling subdivisions such as Benson Meadows are a good example of a waste of financial resources.
I agree with Jim Taylor on the cost of City Staff ; a festering financial burden that will not be cured by anything but huge increases in taxation at all levels.
In case someone missed it.
2007/2008 ‘signaled’ the start of a downturn caused by unrealistic expectations.
Who you choose to blame for the problem matters not.
The fact remains that the ammount of debt that will have to be repayed will take generations to complete.
Until then we will have little or no growth.
The world will not end but we will have to change our ways .
We are not alone.
Developers will pass all costs on to the consumer. Why should a new home owner have to pay the wages of a bloated bureaucracy? The issue is lack of control over expenditures hence the need for a ratepayers association as has been suggested elsewhere on this blog.
Joe says, “The issue is lack of control over expenditures hence the need for a ratepayers association …”
Yup …. first the City’s taxpayers learn that, at this time, it is necessary to be extravagant and purchase a $100,000 toilet for installation in a downtown square … $20,000 for service connection … $10,000 annually for toilet maintenance … reason apparently, being the behaviour of all the inebriated patrons of the many downtown bars …. AND THEN those same hardworking taxpayers are told that they have purchased a refrigerated truck for the food bank, which apparently, is a much-needed resource in this City. Talk about being out of touch!!! Oh ya, I forgot … it must be “in the public interest”.
As others have pointed out 77.3 % of all tax revenue is used to pay staff wages and benefits at City Hall. That’s money picked from your pocket to pay salaries at a rate I would wager 3 times the average income of a citizen. Now our tax money is used to buy a refrigerator truck for the food bank? Ah, for the charitable life of the entitled and privileged.
Maybe even before we talk about a core review, we had better define what we mean by “core”. Does it extend beyond our transportation needs. our requirements for water purification and distribution as well as taking away our waste, and managing our emergency services. Are there other services which we wish to call “core”, or should we call all others discretionary? Defined this way, what is the cost of our “core” and what is that of our non core desirables? Given that there are an unending list of desirable -even noble- non core services, how much can we afford given that, at the margin, each demand for extra services is likely to take some folks from service tax payers to those folks who need extra services.
Given that the city identified a $12 million shortfall in water, sewer and roads funding and has only addressed it with a $5 million levy, arguably we are not properly funding our ‘core’ services now. So, cut other services or raise taxes higher?
As Ron said; what are Core services?
The argument for or against is of no use unless we have a baseline.
So far we have two contending camps.
Those that wish to reduce City employees wages & benefits & those that think that developers should shoulder more of the consequences of their profits!!
To put it another way.
Do we recieve good value for out tax $$ employing the many salaried & hourly payed workers .
Do we recieve good value from unfettered development who build services to projects that are invariably to the minimum standard set & require repair not too long after the handover to the tax paying public?
I think there are no innocent parties just special interests.
Has anyone added up just how much money has been spent on consulting fees in the last ten years?
Say it isn’t so.
The Daily News reports that negotiations are under way with Chinese investors for the construction of a Conference Centre Hotel. The rumoured elements of a deal (as reported by the Daily News) is as follows:
1. The Conference Centre is leased to the Investors for 30 to 50 years for $1.00 per year.
2. The City will cover the first 1.23 million dollars of annual operating losses for the Conference Centre indefinitely.
3. The City will separately pay for marketing and advertising for the Conference Centre.
4. The hotel will have a ten year tax holiday.
The Rumored Deal is so ridiculously bad it can’t possibly be true. Please, Mr. Mayor, say it isn’t true.
You missed the report that Mayor Ruttan and other Councillors will take turns as bell boys at the new hotel.
The rumored deal is so bad it must be true.
Bring on the Multiplex.
Will the last person to leave please turn out the lights.
If that is the kind of bell hop talent that this Investor is prepared to accept, we are obviously not talking about a first class facility.
If you don’t want to see this council and city admin give away untold millions in yet another attempt to make a success of the convention ‘business’, you need to make more noise than just sounding off on Ron’s blog. Write the editors of the papers, council and Mayor, tell anyone who will listen. Because if you don’t, the next we will hear of it is when council has inked the deal, and we are royally screwed once again.
Downtown Revitialzation….. the gift that keeps on giving.
When you think it could not become worse it did.
If this newspaper article is accurate then we have a “multiplex’ of problems.
Not only do we have a Mayor ,Council & Staff that that have become oblivious to reality in both City matters & world affairs we have a newspaper that prescibes equal ammount of taxation to fund more madness in the form of a Multiplex.
The only thing more onerous than Ruttan/Kenning/Hotel is McKinnon/ Multiplex.
More of the same is not a cure..
Build as many Multiplexes as the private sector wants to build without tax dollars!
Letter to the Editor Below; also brought it up at the Committee of the Whole meeting last night, tied it into the Financial Plan discussion check out the Video once it is posted on the City Website.
One of the problems, well not so much if they came out and stated they were not in favour, is that because of all the In Camera decisions being made we do not know who supports or does not support what. Fred Pattje made an interesting comment after I spoke, make of it what you will:)
Letter to the Editor:
Kudoes to whomever it was that decided the Citizens of Nanaimo have a right to know the depths of foolhardiness our Mayor & Council could be willing to go to secure a new Hotel for the convention centre. In the realm of stupidity this deal, what we know of it, would rank up there with building the convention centre in the first place.
Potentially the costs, all inclusive, to the taxpayers could be $50 million plus; as much as we were led to believe it would cost to build the convention centre. We all know how that worked out.
Prior to signing any deal we, as Citizens footing the bill, have a right to know what Mayor & Council are willing to give away to get a hotel built. This council seems determined that we will not; they have by far exceeded the numbers of any council before in holding closed door ‘In Camera’ meetings and continue to do so.
Council’s level of secrecy has reached such a height that even consultant reports, which we the citizens have paid for, on removal, reparation or rehabilitation of the Colliery Dams, have been heavily redacted so that we would need to submit Freedom of Information Requests to get any of the pertinent information.
This closed door mentality has to stop and should council decide to move forward on a deal such as this it must go to referendum, not the alternate approval process, prior to signing.