*Editor’s note: This article provides a general overview of the draft budget/financial plan. You can find a more detailed breakdown of funding by department here. All budget information for the Committee of the Whole presentation can be found here.
Bowen’s draft budget for 2022 and beyond was presented last week, with plenty to digest as the numbers now head into public consultation.
The various municipal directors were on hand during the plenary committee meeting on April 11 to highlight the resources, people and projects they would like to see funded in their department. These ranged from technology to staffing, replacing bridges and culverts, as well as some new fire equipment.
Several major capital projects are also underway, led by the nearly $17.5 million that will be spent on the community center over the next two years. The final construction of the fire station and the repair of the storm drains under Bowen Island Trunk Road will cost approximately $1.5 million each, with an additional $1 million going towards road rehabilitation (a number that will increase by 250,000 $ every two years).
Informing every financial decision, however, was a stark reality: debt repayments will be felt strongly in the years to come. While interest and principal payments amount to $215,596 this year, the 2023 figure is expected to climb to $782,663 and remain within that range through 2026.
“These payments are going to eat into a large portion of our municipal budget over the next few years,” Chief Financial Officer Kristen Watson said.
The majority of the upcoming debt comes from three loans – $4 million for the community center, $3 million for the fire hall and $2 million for community land. They will be repaid over the next 30 years at an annual rate of $241,906 for the community center, $179,633 for the fire station and $106,038 over 26 years for the community lands, for a total annual amount of $527,577. .
Bowen also has a pair of short-term debt that should add to the budget, stemming from a $640,000 loan for a new fire truck and $500,000 for the planned composting facility. Paying off the principal and interest on the truck will cost $134,500 per year for five years, while the composting loan will cost $120,586 per year over the same period. This $255,086, added to the total long-term debt, equals the annual amount of $782,663.
$2.5 million still needed for community center
The growing costs of the community center were also discussed, in particular the approximately additional $2.5 million needed to complete construction. $8.5 million was budgeted for the center this year, followed by $8,951,196 in 2023, but only $14,911,207 of the $17,451,196 was raised.
“It’s a very big funding gap,” Watson said, adding that there is hope a second grant application will be successful. But even if it did, the money wouldn’t arrive until after construction is complete, estimated to be July 2023.
In the meantime, Watson proposed that $500,000 be raised from the Civic Facilities Reserve this year and next year to create a $1 million contingency fund. This money can be reallocated by the council to something else, such as the composting facility, if the grant is successful or fundraising manages to cover the costs.
Watson says the community center needs a new financial operating plan as a whole, calling the current one “outdated and unrealistic”. Cost increases are expected to include $130,000 for more staff, facility maintenance costs of $40,000 and debt financing of $241,906.
It is expected that there will be savings and revenue, including $105,000 in rent for the municipal building and $30,000 in rental fees to Bowen Island Community School for the use of its classroom. bodybuilding and its recreational facilities. The budget also takes into account $17,000 in rental income and $30,000 to maintain the teen center and dance studio.
Property taxes will rise by double digits
Yet looming debt means new revenue must be generated. It was revealed that part of the plan to achieve this is a 10.42% increase in property taxes, which would net the municipality $636,900. And it won’t be a one-off.
“I think it’s here to stay, given the huge increase in our debt repayments,” Watson said. “It is very likely that we can also expect a similar increase next year.” The 2023 property tax increase is tentatively set at 10.74%.
The average property value of a single-family home on Bowen has increased by more than a quarter in value from 2021 to 2022, from $1,229,648 to $1,538,776. Using these figures, the average property tax would increase from $2,673 to $2,960, for an annual increase of $287.
Watson pointed to four main reasons the property tax is needed: an increase of nearly $200,000 in reserve funding this year, including money set aside for the community center; $278,000 in new operating funds, including fuel, property insurance, miscellaneous legal and accounting fees such as those associated with the termination of the former CFO; salary and benefit increases of $194,326; and increasing debt repayments by $105,000 starting in 2021.
Reserve funding is a key part of the budget, which Watson says will help managers know exactly what they are dealing with in terms of money. All transfers to or from a statutory reserve will be required to be presented in a financial plan, which the chief financial officer says will increase transparency and communicate the board’s strategic priorities. There is $1,929,392 due to go to reserves this year, but $1.5 million will be withdrawn immediately to cover road maintenance ($1 million) and the community center contingency fund ($500,000). $).
With the repeal of the Alternative Tax Collection Regulation earlier this year, Watson says she plans to revert to a general 10% tax late penalty, explaining that she wants to make tax collection a priority for ensure that companies working on construction and capital projects are paid on time.
Council could consider raising business taxes
The CFO also asked the board to consider whether they wanted to make any changes to the property tax allocation. Using the residential tax rate as a 1:1 baseline, different types of properties pay different amounts. For example, agricultural properties are 0.5:1, so pay half the rate, while utilities pay over 4 times as much at 4.16:1.
Businesses also operate at a 1:1 residential ratio, meaning Bowen joins Anmore Village as the only other Metro Vancouver community to offer this rate. Sechelt has businesses at 2.35:1, Gibsons 2.75:1 and Lions Bay up at 3.02:1.
Watson found that if Bowen firms’ ratio were doubled to 2:1, their municipal taxes would almost double from an average of $1,315 to $2,583, an increase of $1,268 or 96.4%. The increase for businesses would also drop average residential rates by about $50 per year, from $2,960 (taking into account the 10.42% increase in property tax) to $2,909.
“With more tourists coming in, obviously businesses benefit, but we don’t get the tax benefit… It’s a huge difference there,” Coun said. Rob Wynen.
Mayor Gary Ander agreed, saying business tax was kept low in the past to encourage businesses to stay, but the island has changed a lot since then with the influx of people.
On a technical note, the distillery was reclassified as “light industrial” this year, meaning it moves to the 4.16:1 tax ratio for that category. The Switch is also responsible for a 443.4% increase in the value of Bowen’s entire light industrial category to $1,021,500 in 2022 from $188,000 last year.
The assessed value of all Bowen residential properties sits at $3,424,648,332 this year, up $680,592,575 (24.8%) from 2021. Businesses are now worth $62,180,700, up $9,397,400 (17.8%).
The total value of all Bowen properties is $3,499,302,362, up $692,308,687 (24.7%) from the 2021 total of $2,806,993,675.
The public consultation runs until the end of Friday, April 22 and includes an open house to discuss the budget which will be held on Thursday, April 21 at the municipal hall from 6 p.m. to 8 p.m. People can also participate online via Zoom. A special council meeting is then scheduled for May 2 to discuss the amendments and the adoption of the five-year financial plan by-law.