Leader hopefuls discuss City debt

All three mayoral candidates say while the municipality is in the red for $19.4 million, they have a plan to tackle it.

All three mayoral candidates — Walt Cobb, Scott Nelson, and Kerry Cook — say while the municipality is in the red for $19.4 million, they have a plan to tackle it.

As a mayor in the 1990s, Cobb says his philosophy was pay as you go.

From 1990 to 1996, the City borrowed only from the water and sewer fund.

“We tried to get rid of as much debt as we could and we budgeted for projects that we could raise money for in that particular year,” Cobb said.

However, he conceded that approach didn’t always work and there were times such as an emergency when borrowing was a necessity.

“Debt is not all bad. It’s the amount of debt that’s the problem.”

To be fiscally prepared, Cobb said the councils he worked with agreed to keep a certain number of dollars in the City’s reserve fund.

As for how much debt is acceptable, Cobb said the City needs to look at its ability to pay and the state of the local economy.

He added that if downloading from senior levels of government is creating a financial burden the City should re-evaluate whether to continue to provide those services. Paying for items like general infrastructure — water and sewer and roads — and policing are required services but Cobb classified any other items as “wishes.”

Cobb agreed that many of the capital projects the City has engaged in over the last few years were necessary; however, he questioned how they were done and suggested less expensive projects should have been considered or more money put aside in the City reserves to fund a portion of them.

Moving forward, Cobb is intent on balancing borrowing, spending and the City’s ability to pay in addition to cutting waste in the municipality.

“I’m sure there are lots of areas where we have to tighten our belt and we will tighten our belt for a few years to bring it into control,” he said.

Despite advocating for fiscal control, Cobb agreed the City needs to address its road infrastructure and plan for a new pool.

Return on investments is what Nelson says guided him when making spending decisions at the City as mayor from 2005 to 2008.  He holds up the Walmart development as an example of that philosophy. While Nelson agreed the South Lakeside/Hodgson Road realignment was completed for the development of the retail giant, he insists taking $1.3 million out of the City’s reserves to complete the project will pay dividends in the future in terms of generating tax revenue from the existing development and any future development as well as the employment benefit it brings.

“So I would look at that project and say when is that payback period going to come back to the municipality. I call that a good mortgage,” he said. “That’s good debt where we would get a significant payback to the community.”

Nelson added the fire hall project, which was approved through an alternative approval process, was necessary and says it was a good investment that will be in place for the next 35 to 40 years.  He added that at the time council gave direction for the portion of land unused by the fire hall facility and located on the other side of Hodgson Road to be developed and leased in order to offset the facility’s capital and operational costs.

Other projects undertaken during his term, like upgrades to the river valley storm sewers to manage the City’s runoff, were necessary to meet environmental and Department of Fisheries and Oceans standards, he said. Without a partnership with other levels of government, the City wouldn’t have been able to afford it.

“It was one of those returns on investment for the community that would be worth that much more many years down the road. It saved millions on the front end but the long-term legacy in terms of cleaner run-off water and being better for the environment is huge.”

Nelson said he’s heartened by B.C. Assessment numbers that indicate Williams Lake’s overall assessment has increased from $800 million in 2000 to $1.2 billion this year.

“It’s probably one of the most significant positive indicators for any investor. If you’re going to invest in any community and they flat line and there’s no activity, it’s stale and assessment value is the same,  that means there is no growth. Our community has seen significant, rapid positive growth decade after decade which is huge,” he said.

Nelson conceded that a situation of too much debt could arise when interest and expenses exceed revenue.

“Then you’ve got problems. We’re far from being at that point.”

A solid financial plan is what the City needs when facing the City’s current fiscal situation, according to Cook, the current mayor.

“When we look at the big picture we are $19 million in debt, $12 million was approved by the last council and we are currently paying close to $2 million in debt and interest payments and we have a lot of projects that are coming our way in the future,” she said. “So how do we deal with this?”

Cook proposes to create a long-term capital infrastructure plan to prioritize areas of spending in the future, take advantage of infrastructure grants offered by senior levels of government when possible, increase City revenue through economic growth, implement cost-saving measures and reduce spending at the City in order to manage the municipality’s current debt load.

“We need to take a look at all our long-term plans. We need to set big picture targets of where we want to be. Once you have those priorities then those should dictate your spending,” Cook said.

She suggests the task of prioritizing capital projects could resemble council’s efforts to identify and rank paving projects as has been done with the pavement management plan. That plan, said Cook, includes the setting aside of money on an annual basis to fund paving: $200,000 in 2011 and $300,000 in 2012.

Cook says she thinks accruing a “certain amount” of debt is part of life.

“But when we incur $12 million on projects that yes, they needed to be done, but it’s how we do it.  We need to make sure we are capturing the partnerships; that we’re going after the funding opportunities. We can’t do any of those pieces in isolation; we need to look at the big picture.”

Cook added she wouldn’t turn down a “key” project if the right partnership came along for fear of incurring further debt and noted that a capital projects management plan could help the community to prioritize its needs.

“We need to ensure that every capital project that we’re doing is in the best interest of the whole community.”

Cook points to the Mackenzie Avenue reconstruction as an example of partnerships through grants that enabled the City to get more than $10 million dollars of paving for its output of $3.5 million.

For related City debt story, see page A1.