The specter of borrowing money to overhaul local roads resurfaced at the Burns Lake village council meeting on May 15, prompting debate about a potential referendum on public debt.
But council ultimately opted to pay for next year’s roadworks using reserve accounts after a report by Susan Meeds, the director of finance, indicated that interest payments would result in higher property taxes for residents.
Councillor Susan Schienbein continued to push for a referendum, saying that it would give residents a chance to have their say on a proposed overhaul of Eighth Avenue, a project that she described as essential.
“The time has come for us to make a significant investment in our roadwork,” said Schienbein.
“I do think we should be going to a referendum for Eighth Avenue and letting our constituents have their say on whether on not they want to assume the expenses,” Schienbein said, adding that this year’s October 20 municipal election would be a good chance to hold the vote.
Schienbein, Holliday oppose motion
Mayor Chris Beach said that a referendum could set a precedent leading to plebiscites on overhauling roads across town, and that council would appear to be favoring one area by going to the polls over Eighth Avenue.
Beach also said that interest fees on loans would be better spent on repaving projects that could be funded without taking on new debt. On the prospect of taking a loan without resorting to a referendum, a process outlined in the staff report, he suggested that it wouldn’t make good financial sense.
“We don’t really know what’s coming down the line in terms of the economy in the next few years, and I don’t want to commit our taxpayers to paying that kind of large amount of interest payments,” he said.
Council ultimately voted to pay for next year’s roadwork with reserve funds, instead of borrowing, with Schienbein opposing the motion with councillor Kelly Holliday.
Tax hikes on debt
The staff report argued that proceeds from the federal gas tax and the Burns Lake Community Forest (BLComfor) could cover the costs of a repaving program without resulting in higher property taxes for residents stemming from interest on a loan.
That would leave the village with borrowing power for other projects, including the construction of a new water treatment plant, the report said.
At current interest rates, a loan worth just $500,000 — scarcely enough to repave a 900 metre stretch of Eighth Avenue — would cost the village $150,000 in interest over the course of 10 years.
And a 10-year loan for about $5.8 million — which would bring the village to its maximum legal debt load — would result in a tax increase of about $368 for every $100,000 in assessed property value.
The village has estimated that a complete overhaul of Eighth Avenue alone would cost $3 million, but the project was shelved when the Strategic Priorities Fund — a major source of infrastructure money administered by the Union of BC Municipalities — rejected two applications for funding from Burns Lake.
Repaving with reserve funds
Simply repaving several troublesome stretches of road in Burns Lake — the village has a list of 10 spots that are “highest ranked in need of repair” — would cost roughly $2.1 million, the report said.
That amount could be covered over the next five years with a combination of funds from the Community Works Fund — which consists of annual proceeds from a federal tax on fuel at the pump — and money from BLComfor’s reserve account.
But the report didn’t completely dismiss the prospect of taking on debt, suggesting “a combination of borrowing and utilization of reserve accounts” as an option for the next five-year financial plan.
The staff report provided this list of streets, calling them “the highest ranked in need of repair,” and provided estimates for paving costs that totalled more than $2.1 million, including a $280,000 contingency fund. Eighth Ave., Centre to Shelford — $460,000
Ninth Ave., Carroll to Centre — $210,000
Fifth Ave., Hwy. 16 to Centre — $110,000
Pioneer Way, Hwy. 35 to Flogum (arena entrance) — $45,000
Pioneer Way, Hwy. 35 to Francois Lake Drive — $90,000
Francois Lake Drive, Hwy. 35 to CN tracks —$350,000
Government St., Hwy. 16 to Third Ave. — $252,000
Government St., Third Ave. to bus shelter — $160,000
Frontage road below Blue Spruce Trailer Park — $37,000
Third Ave., Kerr to Aspen — $140,000