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Bestwick admits $80m multiplex debt is just the start, expects “whole lot more” for other projects

Almost $100 million in extra debt projects in pipeline as council ignores advice to adopt detailed debt policy
Nanaimo city councillor Bill Bestwick, who is championing construction of an $80-million waterfront arena in Nanaimo, has admitted that he expects the city to take on “a whole lot more” debt.

Meanwhile, city documents show that council shifted projects needing up to $100 million in additional borrowing to future years after learning about the large price tag for the proposed arena. That includes borrowing for a new water supply dam to support a growing population.

And it has emerged that council has failed to follow experts’ advice to carefully consider how to use borrowed money and adopt a formal debt policy.

“Free money”

Bill Bestwick
Bill Bestwick sees some existing city revenues as private money

 

During a recorded interview on Saturday, Mr. Bestwick, who is chair of the city’s finance and audit committee, referred to hotel taxes and casino funds that have been earmarked to pay off part of the proposed $80 million loan as “free money” and “literally not public money.”

He said the $80 million the city hopes to borrow if residents approve a referendum question on March 11 “will increase our debt load to 25% of our capacity, meaning we still have a 75% capacity to do other borrowing, other major projects.”

Later Mr. Bestwick added: “I expect us to do a whole lot more in the next 10 years beyond this project.”

The median municipality in BC used 17% of its debt capacity in 2015, according to the most recently available statistics. A higher percentage means a city has less ability to adjust to unplanned events and changing circumstances.

$100 million in debt needed for future projects

City budget documents approved by council show that on top of the $80 million for the multiplex, the city plans to borrow an additional $15.8 million in the next five years for the Port Theatre, sewer projects and replacing the trestle bridge at the Wellcox property.

Meanwhile, a presentation to councillors in November said the city needs to borrow up to $85 million more in 2021 for a new water supply dam to support population growth.

That project was moved to future years after BBB Architects told council two weeks later that the multiplex would cost $62-$83 million.

New debt earmarked in November 2016 presentation
In November 2016, council was told it needed to borrow $85m for new water supply.

 

Other projects that have not been included in the city’s 5-year plan include:

  • $8 million for a new public works building
  • $6.6 million for expanding the RCMP operations building; and,
  • Unknown cost for replacing or upgrading fire hall #1.

Councillors were also told in November that a new asset management plan that might highlight other possible borrowing needs would be available last month. It is now delayed until after the referendum.

Council ignores debt policy advice

Last May, Western Management Consultants (WMC) advised council that the city had low debt relative to similar-sized cities. But they cautioned council to adopt a formal debt policy before deciding to borrow at higher levels.

“Establishing and adhering to a debt policy will ensure that debt is issued and managed for appropriate amounts and reasons and in a way that protects the city’s strong fiscal health,” said WMC in a report.

WMC advised council to adopt a debt policy but none has been considered yet

The consultants said the city’s debt policy should include:

  • Limitations on the amount of outstanding debt such as the maximum debt service ratio the city should have;
  • Guidance on when it is appropriate to use debt;
  • Consideration of matching debt term to useful life of assets, which can reduce annual payments; and,
  • Definition of the types of permissible debt.

To date, council has not considered or adopted a debt policy but voters are being sent to the polls to approve the largest single borrowing in the city’s history.

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  • Civic tax revenue goes into general revenues, so it’s not “free” money, but public money. This guy has stopped too many hockey pucks.

  • A very small percentage of Nanaimo taxpayers are interested in, or finacially able to enjoy the Port Theater. $4.6 million is a lot of money. The $80 million for a sportsplex, also of little value to most of the city’s taxpayers, adds to the nuthatchery.

    We already have many overfunded, underutilized, public spaces and programs. Taxes are already high enough.

    What value will we see for $6.6 million proposed to be spent on the RCMP operations building? Is the requested expansion neccessary? Is Nanaimo going to see more front line officers posted to the city? What is the trend in staffing levels? Are there other business requirements not being met? How has the operation conducted business in the current space – are there substantive issues?

    Who gave the promoters of these projects the rope to even begin exporing these fiscal fantasies?

    A reality check is long overdue.

    • I have no issues in paying more taxes to support infrastructure projects including policing and fire… People who complain loudly about funding or increasing capacity to emergency services seem to be even louder when they actually need them…

  • The city wants to spend $80M on a vanity project — aimed at creating a bigger hockey venue, with culture and entertainment tacked on as little more than an afterthought in an effort to justify this outrageous proposition — as the city’s fire department goes begging. Instead of investing in crucial infrastructure to improve flagging fire department service levels, shown by response times to be already below expected safety standards for the expanded and expanding city, they want to lay out $80M of public cash on a glorified hockey arena. And what is the city’s answer to this stunning failure to adequately support our fire service? They will send firefighters to knock on doors to, in effect, tell residents not to smoke in bed or let children play with matches. Oh, and change the batteries in your smoke detectors. That is the city’s plan to deal with sub-standard response times that put lives at risk. How could this council and staff be so inept as to set hockey as a priority over public safety? There’s a great deal more wrong with this proposal that justifies a No vote, from the failure to consult the Snuneymuxw to the Yes side turning tail and running from a Chamber of Commerce debate held at that other massive and costly failure — the confererence centre. Residents need to remember the disastrous results of that conference centre referendum as they cast their votes.

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