Cumberland is looking to a parcel tax to fund repayment of debt for recent water supply capital improvements.
At a meeting on Feb. 22, council passed the first three readings of a bylaw for the infrastructure debt servicing. Financial officer Michelle Mason said the village had started with grants to help fund the work on the new water system, with over $4.9 million or an estimated 83 per cent of the roughly $6 million. This has been followed by long-term borrowing, which will need repayment.
“Now, we’re at the parcel tax stage,” she told council. “The process for the parcel tax will be similar to your frontage tax.”
Through the alternative approval process, the village received voter assent for the debt of $1,050,100. As well, the village had incurred debt of $447,120.72 from upgrade work and stabilization to Steven’s Lake Dam. Together, the debt funding of $1,497,220.72 is to be covered by the parcel tax.
RELATED STORY: Work starts on new Cumberland water treatment plant
The village has options such as frontage or area tax, but staff recommended a parcel tax. While they had looked at a 30-year repayment option, they recommended sticking with a 20-year period — the same term as the debt — which would amount to about $45 per parcel per year.
“It is much cleaner to have your debt term equal your parcel tax term,” Mason said, adding shortfalls would need reserve funds to be used.
The village can refinance the debt in five years, and Mason pointed out the possibility of higher interest rates at that time. With higher interest rates, the possibility could be a charge of up to $60 per parcel. She also pointed out the option to charge more for the parcel tax now and put funds in reserve for later but added there will also be more properties in the future.
“Council does have some choices,” she added.
Council voted in favour of the staff recommendations for the parcel tax and the 20-year term. Before adoption, there will be a parcel tax review panel, if required, scheduled for 4:30 p.m. on Monday, March 22, prior to council’s regular meeting. As well, the village is scheduling the tax review panel the same day and time, if needed, for any issues around water ($1.64 per taxable foot), sewer ($2.03) and stormwater ($1.42) frontage tax rates for the year. These taxes fund infrastructure asset replacements. These bylaws were also given their first three readings at the Feb. 22 meeting.
mike.chouinard@comoxvalleyrecord.comLike us on Facebook and follow us on Twitter.
