Home page

Text size

E-mail this page

SOMBA K'E/YELLOWKNIFE
The city plans to spend more than $50 million over the next 10 years to replace aging infrastructure, the director of corporate services announced Monday.

It remains to be seen, however, how the city plans to come up with the money.

The city's infrastructure "gap" for items such as water and sewer pipes and a brand new water treatment plant, as mandated by the territorial government, is currently in the range of $74 million. The city aims to lower that to $20 million by 2012, which will require an "accelerated" investment in capital expenses and almost certainly more borrowing.

Carl Bird, director of corporate services, said it is a good time to borrow because interest rates are at all-time lows and the cost of construction will be higher if the city doesn't try to close the gap now.

"We can get very good rates on any borrowing we do," said Bird.

"It would free up some of our cash reserves and do the other infrastructures that we have issues with."

The city formed a task force with senior staff and members of the private sector in November after it was determined efforts to reduce the infrastructure gap were not moving fast enough.

Along with Mayor Gord Van Tighem, deputy mayor Mark Heyck, and senior city staff members Carl Bird, Bob Long, Dennis Kefalas and Grant White, the task force includes: Bob Doherty, president of the NWT Construction Association; Northern Properties REIT representative Kelly Hayden; Yellowknife Chamber of Commerce president Larry Jacquard; MacKay LLP partner John Laratta; and Gary Strong of Dillon Consulting and the Consulting Engineers of the Northwest Territories.

Questions remain, however, as to the extent in which the city may need to borrow to address infrastructure needs, such as the $20-million water treatment plant currently under construction, and if this might require a referendum at some point.

"We still haven't looked at that, but that is part of the consideration," said Gord Van Tighem.

"There are some things that can be done without a referendum," he added without specifying.

Whether the need to go to the public for approval is needed, he said, depends on the purpose of the borrowing. The city is still "uncertain" if the Cities, Towns, and Villages Act would allow borrowing for the water treatment plant and other infrastructure needs without a referendum vote.

The city failed in its bid to get voter approval in its last borrowing referendum in March of last year, when the city was seeking permission to borrow up to $49 million to build a community energy system to heat 39 buildings downtown.

The following week, the city attempted to eliminate referendums for future borrowing in a debt management bylaw but was forced to backtrack after administration conceded it was legally required to seek voter approval on major borrowing projects under $200,000.

As the asset management plan comes forward in the coming weeks, Bird said it would "likely" include a draft borrowing bylaw for consideration by council that would deal with the water treatment plant expenses.

"The current economic environment of low interest rates and increasing inflation suggest that the city may be better off borrowing in the near term to address the large infrastructure requirements of the water treatment plant, water and sewer system and the roads and sidewalks," a city memorandum read.

The memorandum ensures that though the task force supports borrowing for the projects, it is only on the condition that there is no "negative impact on the currently forecasted property tax rates."

The city is currently anticipating a need for tax increases of 2.66 per cent next year and 2.82 per cent in 2014.

The proposal for borrowing proved to be a contentious issue for some city councillors.

Coun. Bob Brooks said he usually is not "very keen" on borrowing because of possible additional operations and maintenance costs that may result.

Coun. David Wind was similarly hesitant to commit.

"Before we resort to borrowing which people always reach to as an easy solution to a problem like this, I want to be assured the task force is examining our expenditure patterns in the past and making recommendations on how these might be adjusted so that we do a better job with the funds we already have available for addressing our infrastructure deficit," said Wind.

"I hope we would not reach for the borrowing option as the first (move), as tempting as that may be with the low interest rates."

Couns. Cory Vanthuyne and Mark Heyck, however, appeared more ready to support the borrowing scheme, warning construction costs are rising by up to 15 per cent each year.

"If you can do that construction work in the near future, as opposed to stretching it out over a longer period, the savings can be considerable," said Heyck.

We welcome your opinions. Click here to e-mail a letter to the editor.