Aside from ‘desperate’ state of water and sewer infrastructure, city financial outlook looks good

City: Campbell River’s debt load is low

City council “desperately” needs to be put money aside to replace its aging water and sewer infrastructure.

That was the message delivered by Brad Piercy of MNP who presented his annual audit findings to council at its May 9 meeting.

Piercy said that much of the city’s infrastructure was initially installed in the ’50s and ’60s and in the coming years will need to be either replaced or upgraded.

“There’s a lot of dollars that desperately need to get earmarked for sewer and water infrastructure,” Piercy said. “It’s part of the picture of what’s happening in Campbell River.”

Piercy said on the bright side, the city’s financial outlook looks good. Campbell River’s debt load is low, with a long-term debt of $2.7 million as of Dec. 31, 2015 which is a decrease of $894,826 from last year.

“This amount of debt is very low overall, particularly for a community of our size,” said Dennis Brodie, the city’s finance operations supervisor. “While $15 million of long-term debt was authorized for water and sewer infrastructure in 2013 financial planning, much of this debt has yet to be drawn upon.”

Nearly three years ago, council approved borrowing $10.2 million for water projects and another $4.8 million for sewer infrastructure. Council secured public assent in 2013 to take on that debt through the alternative approval process which required voters not in agreement to sign an opposition form.

The funding is expected to help the city finance water main improvements, a water booster pump station, a chlorine facility upgrade and an expansion to the Beaver Lodge reservoir, among other projects. Tºhe city’s debt is low because those projects have largely yet to begin.

“The reason your debt is so low is because your assets are depreciated so much,” Piercy said. “You have low debt because the amortized assets are older assets.”

Mayor Andy Adams asked Piercy whether the city’s low debt puts the city in a good position to undertake necessary infrastructure improvements.

“We are certainly not alone in the situation of aging infrastructure that requires attention in the next 10, 15, and 20 years at most,” Adams said. “But the one thing I noticed…the continual reduction in our debt provides us a significant amount of opportunity to take on those projects compared to maybe other jurisdictions and local governments that aren’t in as favourable a position. Is that accurate?”

Piercy agreed that Adams was correct, but reiterated that the city’s debt is low because its assets are depreciating. Piercy also said that council may want to consider putting more money aside in its sewer and water reserves, which combined sit at $19 million.

“From a standard build out on any large water or sewer project…you’re just kind of scraping the barrel for what’s kind of needed in there,” Piercy said. “Going forward in the capital plan I’d want to be having more dollars in there.”

Adams said he’s hopeful help is on the way.

“Thank goodness the federal government is looking to do a 50 per cent instead of 33 per cent matching on those infrastructure projects.”

 

 

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