Borrowing, borrowing, everywhere and me without a dollar to spare.
The present situation where the city wants to borrow $32 million dollars for various and sundry projects leaves one flabbergasted.In fact to try and figure out what is being borrowed, whether or not it is "critical" as outlined in somecorrespondence, and the cost attached for interest over the 20-year borrowing period is beyond comprehension.
The interest on borrowing $32 million over 20 years would be in the area of $18 million.If that doesn't get your attention, then read on.
In October 2017, the citizens of Prince George approved borrowing of $35 million for a new pool and $15 million for a new fire hall, so $50 million in total.Interest on this $50 million would be in the area of $22 million.So if we approve the new $32 million borrowing request, we are looking at roughly $40 million in interest over 20 years.
Normally a city would borrow these substantial amounts of money for major capital projects. The new police station borrowing of roughly $38 million and the new pool and fire hall would fall under the category of major capital projects.So would CN Centre and the Aquatic Centre when they were built. However, the projects that the city now want to borrow for are far from being major and we should not be borrowing money for these projects over a 20-year period.
In fact for a number of them we should not be borrowing at all. Some examples of non major projects in my opinion would be:
1. Mausoleum expansion phase 2 - $1.4 million.
2. Masich Stadium amenities refurbish - $2.7 million.
3. 14th Avenue upgrades - $1.2 million.
4. Goose Country Road culvert replacement - $1.1 million.
5. Street light and traffic signal replacement - $5 million.
There are more but you get my drift. These and other projects should be paid for out of our regular budget monies as has been done in the past.
To group all these projects under one borrowing umbrella and calling them major projects, or deeming them to be "critical" might be pushing the envelope.
To further muddy the water, the city has issued an alternative approval process for all eleven projects that it wishes to borrow money for.
This means that citizens will have to fill in and sign eleven forms if they do not want the city to borrow the money.
To make things even more confusing, the city has applied for grants from other levels of governments for some of these projects, i.e. $6.3 million for the Aquatic Centre. If the grant is approved, then somehow they will apply this money to the initial loan of $10.2 million.
I am not sure how they can apply this money when they are not allowed to make a payment on the principal of a 20-year loan in the first 10 years.
In any event, it is moot, because what they should do is not borrow the money for the Aquatic Centre until they know what the status of the grant is and by then there may be a way to pay for it without borrowing.
They want to borrow $6.8 million (short term borrowing that does not require approval from taxpayers) to cover the costs of the Haggith Creek bridge and return $3.1 million of the original money for this project to the respective reserves that it came from. Wouldn't it make more sense to apply this $3-plus million to a couple of the 11 projects and thereby reduce the need to borrow?That $3 million would go a long way to pay for the 12 roofing projects they have planned for a cost of $4.67 million.
I could go on and on but I won't.
I will, however, give a quick outline of the responsibilities of the taxpayers when it comes to major borrowing that extends beyond five years.
In order for the city to borrow this money, they need the approval of the electors but if 10 per cent of the eligible voters, which has been determined to be 5,546, sign 5,546 or more alternative approval forms then the city cannot borrow the money.
They would then have to go to a referendum where a majority of the voters in Prince George will decide whether or not they can borrow the money or they can discontinue the process and go back to the beginning.
They cannot try and borrow money for the same projects for a significant period of time and must haveapproval from Victoria if they wish to do so.
The B.C. Government has issued some guidelines and recommendations when it comes to thealternative approval process and referendum process some of which I find quite interesting.
If the proposal is contentious, or it seems likely that 10 per cent or more of the electorate may sign response forms, local governments may decide to proceed directly to assent voting (referendum) to reduce the overall time and costs involved in securing elector approval.
How the AAP will be received by the electors is another consideration for local governments.
There is more but suffice to say that this is probably the most contentious issue facing our local government for many years and it would be fair to say that the AAP is not being very well received by electors.
I believe that there will be many more than 5,546 signed AAP forms turned into city hall by May 30.In addition, I also believe that if the issue of borrowing this huge amount of money goes to a referendum, it will fail. If that happens, then six months from now we could be right where we are today.
So really what is the point of the whole exercise?
I believe that it is time for the mayor, city council and administration to revisit this situation with a view to stop this borrowing of $32 million and to come up with a solution to the financial situation they find themselves in without borrowing and raising taxes.
They can do it now on their own initiative on we can force them to do it by not allowing the borrowing.
It's time for a change in direction and some fiscal responsibility.We can no longer afford a cavalier attitude to borrowing as a solution to all problems.
-- Eric Allen, Prince George