Newsletter February 09, 2018
Part ll of Council Report: January 22, 2018
The Reserve Fund Veil Of Secrecy
As previously reported by Oak Bay Watch on January 22, 2018, the District is not intending to collect a significant statutory reserve fund payment when processing the Subdivision Development Application at Brighton Avenue and Foul Bay Road. The District also has no Bylaw or Policy in place to collect any Development Cost Charges.
If this were not bad enough, the Mayor has clearly demonstrated that he has either failed to recognize or is suppressing the seriousness of our infrastructure crisis. We consider the amount that has been presented (in the Director of Financial Services Report - submitted to Council on January 22, 2018 ) as being inadequate and caution against misinterpreting the Reserve Funding on hand and available to address this incredible deficiency.
At Council, the Mayor asked for and got the answer he was obviously looking for: that our reserve funds are in good shape and our debt load is low compared to other CRD Municipalities. Wow - this is good news. But wait! On closer examination the Director of Financial Services Report shows:
There was a total for all Reserve Funds of $27.5 million. Of this amount, $19.9million is for Capital Works of which $9.4 million is dedicated to the Uplands sewer project.
The $7.6 million balance has been collected for other commitments and contingencies. When the Uplands Sewer Reserve is deducted from the $19.9 Capital Works Reserve, there remains only $10.5million to address the $250 million infrastructure deficit that has been identified. How is a reserve of 4.2% of the funding required, a healthy position?
Our low debt load is the result of neglect because for a number of years and until quite recently, we could have been borrowing at a very low interest rate to address the infrastructure deficit. The Mayor, while saying we are in good shape, is also saying he is now ready to borrow - when interest rates have increased and will continue to do so.
The real facts are: Every Oak Bay District Financial Officer Annual Report from 2012 through 2015 has stated:
“The aging infrastructure requires additional funds to maintain or replace it, leading to a strain on the budget. The challenge of keeping the property tax increases at an acceptable level makes it difficult to maintain and renew the physical assets of the Municipality”.
This statement for some reason was omitted from the last (2016) Annual Report. Perhaps because the recently released Asset Management Report (withheld for a considerable time) had a similar infrastructure under-funding message.
Oak Bay’s Infrastructure Deficit Problem has been well known for years, yet Council has continued to increase taxes to pay for development initiatives and unjustified staffing expenditures. The problem has been compounded by the non-collection of Development Cost Charges, unlike virtually all other CRD Municipalities.
As indicated reserve fund management has been operating under a veil of secrecy for some years now. Just recently the standard practice of identifying our reserve funds has been completed thanks to the diligence of a resident who researched the issue, made presentations and provided submissions to Council. However, providing policy for the newly categorised reserve funds is another matter - Council currently has none. We have been told developing policy will take some time. While there has been no explanation of what would delay this, Oak Bay Watch has pointed out that Reserve Fund Policy examples are plentiful throughout the CRD.
Let’s hope we do not have to wait the three-years it took to identify the Reserve Fund Accounts. Let‘s also hope that it will not take another eight-years (2 Council Terms) to develop an Asset Management Plan to start to address the District’s infrastructure under-funding.
The real purpose of Reserve Funds is to sustain the long-term financial health of the municipality through a funding strategy that is designed to cover future expenditures. Primarily it is to set aside sources of funds for future capital requirements. This protects the Community from special one-time levies that would otherwise be required for unplanned expenditures.
Reserve Fund administrative requirements are legislated by the BC Community Charter. Councils have a responsibility to ensure reserves are adequately funded and are documented in a comprehensive and public Reserve Fund Report for review and adoption by Council.
As pointed out by Councillor Murdoch and reported in our previous newsletters - using our reserve funds for overspending on operating budgets is not sound policy.
Other communities send subdivision applications to their neighbourhood associations for input and/or hold public meetings. In contrast, Oak Bay residents have been prevented from even discussing a subdivision application.
Oak Bay Council is declining to collect hundreds of thousands of dollars of development charges and statutory payments on account of subdivision and large projects. These development fees are required to deal with the impact new developments have on our infrastructure. Our low debt load should not be used as a comparison to other CRD municipalities. They most likely have debt because they wisely borrowed to address essential improvements when interest rates were at an all-time low.
Their governance model also did not embrace deferral of needed capital expenditures to address infrastructure maintenance and improvement. A more accurate measurement would be which municipalities have implemented corrective approaches, or who has such a large infrastructure deficit
and so little in reserves to tackle it with? Saanich has had development cost charges in place since 1983. Our Mayor states every community has aging infrastructure problems. While this is most likely true, it does not take into account that others have been addressing their aging infrastructure problems and Oak Bay Council has badly neglected ours. Representing our Reserve funding as “healthy” while leaving out important details like our deferred liabilities, is misleading to say the least.
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Keep informed please sign up for our newsletter – bottom of Newsletter Page - see top right Menu Item (Oak Bay Watch will be publishing regular, thought provoking Council Meeting Reports 'Pre 2018 Municipal Election)
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Donate Button at bottom of oakbaywatch.com Home Page)
Part ll of Council Report: January 22, 2018
The Reserve Fund Veil Of Secrecy
As previously reported by Oak Bay Watch on January 22, 2018, the District is not intending to collect a significant statutory reserve fund payment when processing the Subdivision Development Application at Brighton Avenue and Foul Bay Road. The District also has no Bylaw or Policy in place to collect any Development Cost Charges.
If this were not bad enough, the Mayor has clearly demonstrated that he has either failed to recognize or is suppressing the seriousness of our infrastructure crisis. We consider the amount that has been presented (in the Director of Financial Services Report - submitted to Council on January 22, 2018 ) as being inadequate and caution against misinterpreting the Reserve Funding on hand and available to address this incredible deficiency.
At Council, the Mayor asked for and got the answer he was obviously looking for: that our reserve funds are in good shape and our debt load is low compared to other CRD Municipalities. Wow - this is good news. But wait! On closer examination the Director of Financial Services Report shows:
There was a total for all Reserve Funds of $27.5 million. Of this amount, $19.9million is for Capital Works of which $9.4 million is dedicated to the Uplands sewer project.
The $7.6 million balance has been collected for other commitments and contingencies. When the Uplands Sewer Reserve is deducted from the $19.9 Capital Works Reserve, there remains only $10.5million to address the $250 million infrastructure deficit that has been identified. How is a reserve of 4.2% of the funding required, a healthy position?
Our low debt load is the result of neglect because for a number of years and until quite recently, we could have been borrowing at a very low interest rate to address the infrastructure deficit. The Mayor, while saying we are in good shape, is also saying he is now ready to borrow - when interest rates have increased and will continue to do so.
The real facts are: Every Oak Bay District Financial Officer Annual Report from 2012 through 2015 has stated:
“The aging infrastructure requires additional funds to maintain or replace it, leading to a strain on the budget. The challenge of keeping the property tax increases at an acceptable level makes it difficult to maintain and renew the physical assets of the Municipality”.
This statement for some reason was omitted from the last (2016) Annual Report. Perhaps because the recently released Asset Management Report (withheld for a considerable time) had a similar infrastructure under-funding message.
Oak Bay’s Infrastructure Deficit Problem has been well known for years, yet Council has continued to increase taxes to pay for development initiatives and unjustified staffing expenditures. The problem has been compounded by the non-collection of Development Cost Charges, unlike virtually all other CRD Municipalities.
As indicated reserve fund management has been operating under a veil of secrecy for some years now. Just recently the standard practice of identifying our reserve funds has been completed thanks to the diligence of a resident who researched the issue, made presentations and provided submissions to Council. However, providing policy for the newly categorised reserve funds is another matter - Council currently has none. We have been told developing policy will take some time. While there has been no explanation of what would delay this, Oak Bay Watch has pointed out that Reserve Fund Policy examples are plentiful throughout the CRD.
Let’s hope we do not have to wait the three-years it took to identify the Reserve Fund Accounts. Let‘s also hope that it will not take another eight-years (2 Council Terms) to develop an Asset Management Plan to start to address the District’s infrastructure under-funding.
The real purpose of Reserve Funds is to sustain the long-term financial health of the municipality through a funding strategy that is designed to cover future expenditures. Primarily it is to set aside sources of funds for future capital requirements. This protects the Community from special one-time levies that would otherwise be required for unplanned expenditures.
Reserve Fund administrative requirements are legislated by the BC Community Charter. Councils have a responsibility to ensure reserves are adequately funded and are documented in a comprehensive and public Reserve Fund Report for review and adoption by Council.
As pointed out by Councillor Murdoch and reported in our previous newsletters - using our reserve funds for overspending on operating budgets is not sound policy.
Other communities send subdivision applications to their neighbourhood associations for input and/or hold public meetings. In contrast, Oak Bay residents have been prevented from even discussing a subdivision application.
Oak Bay Council is declining to collect hundreds of thousands of dollars of development charges and statutory payments on account of subdivision and large projects. These development fees are required to deal with the impact new developments have on our infrastructure. Our low debt load should not be used as a comparison to other CRD municipalities. They most likely have debt because they wisely borrowed to address essential improvements when interest rates were at an all-time low.
Their governance model also did not embrace deferral of needed capital expenditures to address infrastructure maintenance and improvement. A more accurate measurement would be which municipalities have implemented corrective approaches, or who has such a large infrastructure deficit
and so little in reserves to tackle it with? Saanich has had development cost charges in place since 1983. Our Mayor states every community has aging infrastructure problems. While this is most likely true, it does not take into account that others have been addressing their aging infrastructure problems and Oak Bay Council has badly neglected ours. Representing our Reserve funding as “healthy” while leaving out important details like our deferred liabilities, is misleading to say the least.
-------------------------------------------------------
Keep informed please sign up for our newsletter – bottom of Newsletter Page - see top right Menu Item (Oak Bay Watch will be publishing regular, thought provoking Council Meeting Reports 'Pre 2018 Municipal Election)
*******Please help us continue to provide you with information about Community concerns and Council decisions and actions. Oak Bay Watch members also help community groups with their specific development concerns. Donate to Oak Bay Watch - even $5 or $10 dollars provides expenses for door- to- door handouts and helps us maintain our website. Oak Bay Watch is committed to ensuring the Community gets the full range of information on budget, governance and all key development issues – a well-informed opinion cannot be made without this.
(Please use Donate Button at bottom of oakbaywatch.com Home Page)