With the 10-year forecast estimating the city's infrastructure deficit will hit a staggering $3.1 billion by 2027, city councillors struggled Tuesday to decide where to spend a fraction of that amount – $4.1 million.
That is how much a special 1.5 per cent tax approved during the 2020 budget will raise this year, part of a long-term plan to address the deficit. It's part of recommendations from KPMG, who prepared a long-term financial plan for the city in 2017.
Meeting on Tuesday afternoon at Tom Davies Square, members of the finance and administration committee reviewed recommendations from a staff report on where and how to spend the money.
The report offered a number of ways to use the money, said Kevin Fowke, the city's GM of corporate services, including leveraging the $4.1 million to repay a 30-year bond worth $80 million.
"Our intent with this report was to provide a buffet of options," Fowke said.
Under that scenario, the report recommends spending the money for the Pioneer Manor Bed Redevelopment, a $50-million project to replace 149 beds that are decades old and no longer fit provincial standards for LTC homes. The remainder would be spent completing Phase 2 of the Lorne Street reconstruction, from Power Street in Copper Cliff to Logan Street.
“These projects total $93 million ($84 million net of water wastewater contributions), but can be scaled to fit into the amount of debt financing available using the capital levy,” the report said.
Other options included focusing the money on community priorities, asset renewal, local road improvements or projects that leverage the most money from upper levels of government.
Ward 5 Coun. Bob Kirwan supported the Pioneer Manor option, arguing that the province will refund the city about $25 million over 10 years once the work is complete. That $1 million could be leveraged again for a bond to raise another $17 million for other work, he said.
Pioneer Manor Director Aaron Archibald said the 149 older beds were built at a time when residents had to be able to walk to live there.
"Today, most of our residents are in wheelchairs," Archibald said. "The new (bed and room) standards are a little larger, and make it easier to move and care for residents."
Once the new beds are ready, Kirwan argued the city could re-purpose the old rooms for something like a drug rehab centre, or to ease the load at Health Sciences North by making them ALC beds.
"The space is there,” Archibald said. “It could be used to accommodate different types of (facilities). It is not space that will be thrown away."
But Mayor Brian Bigger was unimpressed with the ideas in the report, and said the long-term implications haven't been fully fleshed out. While the city may received $1 million from the province over 25 years, the bond is 30 years.
"So in year 26, we're short a million dollars," Bigger said. "(And) they're asking us to borrow $80 million ... you may hear a little bit of frustration with this report."
While the special tax was approved by council, he opposed the 1.5 per cent. And some of the proposals in the report seem to run counter to the city's own debt-financing policies.
"I have a finance background and I still have difficulty following these proposals," Bigger said.
While they agreed to debt finance work on MR35, that was an exception, he said. As a rule, when the city borrows money, it should be for one-time projects that users will pay for, as was the case for the new arena and the other big projects.
"The approach we're taking here is straying significantly from the (borrowing) policy that was developed," Bigger said. "We need better clarification on some of these projects being recommended."
And Pioneer Manor is part of the core services review, he said, so approving the bed redevelopment before that report is presented would be premature.
"A lot more discussion is required before we commit to any of these projects," he said. "Just because we can borrow money doesn't mean we have to borrow instantly."
Ward 9 Coun. Deb McIntosh was unhappy that the 1.5-per-cent levy she supported to address the infrastructure deficit related to roads and buildings was suddenly being directed to Pioneer Manor.
She moved a motion to defer a decision and to ask for a report focused on those issues only, as well as information on where they could direct the money and get the biggest payback – lighting retrofits, for example, that cut energy costs long term.
She suggested the money be split three ways equally on major road repairs, local road repairs, and on buildings and facilities.
"That's a suggested starting point," McIntosh said.
Ward 10 Coun. Fern Cormier agreed, saying the staff report veered into funding projects outside of what council wanted.
"This isn't what we signed up for, Mr. Chair," Cormier said. "I heard the word buffet. This is not a buffet. We're trying to be strategic here."
In the end, councillors voted to delay a decision on where to spend the money and ask for more information from staff. Kirwan was the only one to vote against the delay.