The City of Kelowna is looking to tackle what it says is a $477 million infrastructure deficit over the next nine years with an extra tax on property owners.
While the proposed 1.95 per cent tax would only generate $44 million over the next nine years, city staff say it’s a start. And, the finance department says, coupled with other options such as changes to the development cost charge program that generates money for infrastructure from developers, a new storm drainage utility, developer incentives, a review of fees and charges, alternative service models, local area services and grants from other levels of government, an even bigger dent could be made.
“It’s a long-term goal,” finance director Genelle Davidson told city council Monday. “You’re playing the long game.”
Based on city estimation of infrastructure requirements, more than $1 billion will be needed between now and 2027 to pay for new and renewed infrastructure. But, based on the city’s 10-year capital plan projections, only $573 million will through generated through existing revenue sources including annual property taxes.
The finance department’s Joel Shaw said the deficit is due to three factors: city’s existing infrastructure is getting older, the fact Kelowna is a growing community with growing needs and because it’s a community in transition moving from what was a rural area to an larger urban centre.
“People coming here want urban service’s,” he said.
The infrastructure tax—or levy as the city describes it—would not be unique to Kelowna.
Many other municipalities across B.C. have a version, including Vernon, Port Moody, Saanich, West Vancouver and the District of North Vancouver, said Davidson.
While some, such as Vernon, use a cumulative version that started with one per cent in 2014 and has increased it by one per cent per year since, the city’s finance department is suggesting it by kept at 1.95 per each year starting 2019.
City council did not vote on implementing the tax Monday—instead they will receive another report in February. Still, some council members seemed receptive.
“It’s a good step forward,” said Coun. Maxine DeHart, but she added it will be good to wait until after the city hears from residents in the annual citizen’s survey as that will help guide council in making a decision prior to the 2019 budget.
Mayor Colin Basran noted the whole issue of asset management is relatively new for many municipalities.
While the city is facing a large infrastructure deficit, it has made moves to address it in recent years including hiring an asset manager, having healthy reserves in place to pay for some of its infrastructure and developing an asset management program to keep on top of future needs.
Adoption of the infrastructure tax will likely put pressure on the city to deliver lower annual property tax increases in future than it has in the past. In recent years, the annual average tax increase have been between two and four per cent.
The 1.95 per cent infrastructure tax would equate to a $44 cost on the average annual city tax notice.
The levy would not cover Kelowna’s airport, water or wastewater unties. They generate their own funding and are not supported through annual city property taxes.
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