Nanaimo politicians will consider banking dollars for future strategic infrastructure projects, such as the proposed sports and entertainment centre or a new public works building.
The City of Nanaimo already lays away money through taxation for asset management to address aging infrastructure. A strategic infrastructure fund would see money set aside for new projects.
The potential reserve and a strategy to build it would see dollars shuffled into the new pot from general revenue, the same account tax dollars go into, and would mean a 3.3-per cent tax hike spread out over five years for residents.
The idea is to set money aside so the city can either put cash toward projects or use it to service debt. With a strategy to fill the reserve, a city report by chief financial officer Victor Mema shows the city could fund the reserve at $5.6 million a year by 2021, a level that could allow the city to access $100 million in infrastructure funding through the Municipal Finance Authority at low interest rates.
Among the ways the city would build the fund is a three-per cent reduction in its budget for the RCMP contract and redirect Fortis B.C.’s more than $500,000 franchise fee. The fund would also see casino revenue from general revenue phased in over time.
As a host to a casino, the city gets 10 per cent of the cash flow from tables and slots after prizes, which amounted to $2.5 million last year. Previously money has been used for things like policing, property tax reductions and debt servicing for the conference centre, a city report shows, which Mema says is not a smart way to handle the money.
“If you look at other municipalities across B.C., they’ve built beautiful structures using casino money,” Mema said. “Us, we are taking that money and spending it on recurring expenses. It’s like you are buying groceries when you could actually buy a car.”
Mema also said the city has been reacting, like what it’s doing now with the event centre, “like OK we want to build this … where is the money going to come from?” and the best way is to have a fund that sits and is accessed if there’s a strategic asset being built.
The fund is long overdue and makes sense, according to Coun. Bill Bestwick, chairman of the city finance and audit committee, who said it’s money that can be made available for infrastructure improvements with strategic and capital planning and it’s planning for the future.
“Maybe it’s a public works yard improvement that we’ve been wanting to do for well over a decade, but haven’t done because where is the money going to come from without going to referendums and all those other things because of the current model of our policies?” said Bestwick.
He doesn’t anticipate a problem in keeping taxes low if there’s both the asset management and strategic infrastructure funds, pointing to savings found in a core services review around procurement and how the city conducts its business and affairs. Through changes to purchasing staff hope to save between $4-6 million.
Mayor Bill McKay said he’s always wanted to put casino revenue toward legacy projects, like the Port Theatre expansion, but it was suggested to him taxes would rise if money was taken out of general revenue. He’s perplexed, he said, that all of a sudden the entire amount will go into the strategic infrastructure fund.
McKay said he can go along with money going into the reserve if the community is asked if they want the sports and entertainment complex because it’s “obvious that this money is going to be going towards our ability to borrow a significant amount of money” to build it.
“I believe we should be saving up for future projects, particular the bigger ones, however, we have to be mindful where the money is coming from,” he said.
The finance and audit committee is set to discuss establishing the fund Thursday (Dec. 8) at a special meeting.