A motion for North Cowichan staff to prepare a report on the long-term costs of maintaining and eventually replacing the planned water, sewer, storm and roads infrastructure in the Bell McKinnon area was defeated at the council meeting on Feb. 16.
Coun. Rob Douglas, who introduced the motion, said a report prepared for the municipality in 2020 by Urban Systems concluded that the municipality’s average annual capital spending is $7.2 million, while the required costs to replace capital assets over the next 20 years is between $10.8 to $16.1 million, indicating an annual gap of between $3.6 million to $8.9 million.
“As outlined in the Bell McKinnon Local Area Plan, the municipality expects private developers to pay for the necessary infrastructure upgrades to support the build-out of the area surrounding the new hospital,” Douglas said.
“However, the municipality will be responsible for replacing these assets once they reach the end of their life cycle, which would further increase the current gap of between $3.6 to $8.9 million in annual average life cycle investments. This would have both immediate and long-term implications on property taxes, user fees and parcel taxes paid by North Cowichan residents.”
A recommendation from the committee of the whole in September calls for a full build-out along the southern servicing corridor in the Bell McKinnon area as far as the site where the new $887-million Cowichan District Hospital is to be built, providing for a mix of uses and densities as outlined in the Local Area Plan.
The lands north of Herd Road have been designated as a “future growth area,” meaning they could see development when certain thresholds of development south of Herd Road are met, which could result in approximately 10,000 to 20,000 people living in the now mostly rural area.
Asked by Coun. Tek Manhas how long a report on the issue would take staff to prepare, CAO Ted Swabey said North Cowichan already has a large asset management plan underway, and that plan should be completed before looking at specific areas of the municipality.
“To undertake this report will take a lot of time and resources, and we have no budget for it and we would need to hire a consultant,” Swabey said.
“This is a bit out of sync with the work we’re doing.”
Manhas said that with what he has been hearing from Douglas, Coun. Christopher Justice and Coun. Kate Marsh, it appears they feel there should be no further development in the municipality because the infrastructure costs will increase.
“We need growth to build up our infrastructure. That’s my opinion and the opinion of many others,” he said.
Later in the discussion, Marsh asked Manhas to refrain from saying that she’s against growth in the community.
“It’s not true and I don’t think it’s proper procedure,” she said.
“I’m against sprawl, but not against growth.”
Mayor Al Siebring said it’s his understanding that the municipality takes into account the costs of maintaining and replacing infrastructure in their planning processes.
“It seems to me the more parcel tax contributions we have, the more we put in our reserve funds,” he said.
“Do we do that kind of math when putting together funds in our water and sewer functions [in other areas of North Cowichan]?”
Clay Reitsma, North Cowichan’s engineering director, responded that staff don’t analyze those costs development by development.
“Part of the process on the way it should be handled involves looking at our tax rates and making sure we set them such that they cover the costs of maintaining our capital assets and replacing them in the future,” he said.
“This is where a lot of local governments have struggled and I believe rates have not been traditionally high enough to cover these costs. Part of the asset planning management process is to get these numbers right so when the Bell McKinnon area is built out, all of those property owners will contribute to replacement and maintenance of assets.”
Coun. Rosalie Sawrie said she worries about the accuracy of a staff report on the issue at this time when it’s expected that the replacement costs of the infrastructure would be covered over time by people moving into the Bell McKinnon area.
She wondered how any effort to provide accurate cost projections will be successful when it’s not known how many people will be moving into the area.
“I think we may be provided with a big scary number with no context around it of how it’s going to be covered until our asset management planning is underway and we figure out the tax rates,” Sawrie said.
Douglas countered that he sees no reason staff can’t come up with a reasonable estimate of the long-term implications of asset management in the Bell McKinnon area, and the report should be done.
The motion was defeated in a 4-2 vote.