Thursday, December 14, 2017

Funding shortfall threatens Pincher Creek recreation projects

Jonathan Skrimshire - The gap between budgeting assumptions and reality came fully into view December 6th as the Pincher Creek Committee of the Whole discussed the matter of capital funding requests to the Municipal District of Pincher Creek for the construction of new recreational facilities. The Town is currently engaged with the Canada 150 spray park and pool slide project (nearing completion), the creation of two new sports fields (land acquisition under way), and the proposed construction of a new curling rink (land and funding recently committed in writing). All of these projects involve completion dates in the 2018-2020 timeframe. All of these projects were undertaken with the expectation of large capital funding contributions from the MD. But there's a problem. The money isn't there.

Recreational facility cost sharing

Recreational facilities within the Town of Pincher Creek are used both by Pincher Creek residents and by residents of the Municipal District. In recognition of this fact, informal cost sharing arrangements exist between the MD and the Town.

The Municipal District financially supports recreational facilities within the Town in two ways. The first is via an annual contribution in support of operating costs. This is calculated at a rate of $100 per year for each MD resident. Based on the 2016 census population of 2965, for the 2018 budget year the amount remitted to the Town will be $296,500. That funding commitment is ongoing.

Second, the MD maintains the Town Recreation Facilities Reserve, a reserve fund specifically earmarked to service capital requests from the Town of Pincher Creek for Town-owned recreational facilities and equipment. Contributions to the reserve fund are calculated at a rate of $45 per year for each MD resident. Current annual contributions to the fund are $133,425. The projected balance of the reserve for 2018, including the contribution for the 2018 budgetary year, is $438,000.

2017 capital funding requests

Capital funding requests for recreational facilities are made by the Town to the MD periodically, as needs dictate. In February of this year, the Town requested $500,000 towards the Canada 150 spray park and pool slide project, representing one third of the project budget, and $15,000 towards the purchase and installation of the swimming pool climbing wall, representing half the climbing wall budget, for a total capital request of $515,000. Council for the Municipal District reviewed the request and advised the Town that any capital funding request would need to be made in the fall for consideration in the following budgetary year.

In the months that followed, the financial picture deteriorated significantly. The climbing wall, originally budgeted at $30,000, proved less expensive than anticipated and was revised to a cost of $25,000. But the spray park and pool slide, originally budgeted at $1.5-million, ran 40% over budget, coming in at a tendered contract price of $2,131,685. The capital request to the MD was adjusted to reflect one third of the revised spray park and pool slide price, and one half of the revised climbing wall price, and was reissued in July. That request was for $700,000 towards the spray park and pool slide, and $12,500 towards the climbing wall, for a total capital request of $712,500.

Council for the MD discussed the Town's revised capital funding request as part of the MD's annual budget deliberations in September, 2017. Those discussions led to a decision to provide no funding to the projects the Town had presented.

Committee of the Whole discussion

The above history, presented in some detail by Diane Burt Stuckey, Pincher Creek's Director of Community Services, formed the background for discussion of the issue by the Committee of the Whole.

Mayor Don Anderberg expressed concern about the long term viability of the Town's recreation programs, given that the Town's capital funding requests to the MD had been denied. "Our recreation budget is three and a half million dollars, or thereabouts, and we're getting approximately ten per cent", he said, referring to the $296,500 received from the MD towards operating costs. "If there isn't a fair way of funding this, eventually we may get to the point where we can't afford some of this stuff because we're subsidizing the whole community."

The group discussed the capital requests that had been made and the financial arrangements in place between the Town and the MD in an effort to understand the reasons for the rejection and to formulate an appropriate response.

"They are looking for a specific amount", said Burt Stuckey, reviewing the correspondence exchanged with the MD. "On the Multi-Purpose Facility Canada 150 project we said their share would be $700,000. But that's more than they have in reserve."

Councillor Lorne Jackson was concerned the Town might not be providing adequate information to the MD Council. "How educated is the MD on some of these projects?" he asked. "I'm looking at it from the perspective of the MD's Council. They get this list of projects, but how much supporting information do they have?", he said, suggesting "that's something that we need to work on."

The committee discussed how the question of capital funding for recreational facilities might fit into the context of the Intermunicipal Collaboration Framework, a process mandated by the recently revised Municipal Government Act which may, in time, result in more formal funding arrangements being put in place between the Town and the MD.

Councillor Scott Korbett appeared concerned with the need for Council to address the immediate funding shortfall. "I feel like we're going to talk about this for a long, long time and not actually make something happen. And I'd like to make something happen", he said. "They're saying we have $438,000. Why don't we say we want that $438,000 for this", meaning that Council should request the full amount for a specific project.

Councillor Brian McGillivray wasn't supportive of the idea. "If we do that, we are then accepting the fact that we're okay with the $438,000", he said. "In fact, the $438,000 is grossly inadequate."

Total capital requirements

The magnitude of the gap between the Town's ambitions and the MD's preparedness to pay becomes clear when one quantifies the total capital requirements through 2020. As of the 2018 budget year, the available balance in the MD's Town Recreation Facilities Reserve will be $438,000. When annual contributions of $133,425 for each of 2019 and 2020 are added, the total amount set aside by the MD for capital requests through the 2020 budgetary year will be $704,850. Within this timeframe the Town is proposing the development of three major recreational facilities.

The spray park and water slide will be complete by the spring of 2018. The new sports fields are being optimistically targeted for completion in time for the 2019 Southern Alberta Summer Games. Construction of the curling rink will likely take place in 2019-2020. (The Curling Club currently has a grant application being considered by the Community Facility Enhancement Program. Should the CFEP grant be approved in March, the Club will have a 30 month period in which to complete the project, meaning the new rink would need to be constructed and ready for use by fall, 2020.)

Barring any last minute surprises, the Town is projecting a cost of $2.13-million for the completed spray park and pool slide. Initial guesstimates put the sports fields, including land acquisition, in the $1-million to $2-million range. Somewhat more reliable initial estimates price the curling rink at $2.5-million to $3.5-million. Overall, this sums to a total capital outlay of $5.6-million to $7.6-million in the 2018-2020 timeframe.

Federal and provincial grants, some of which may prove quite substantial, will mitigate these costs somewhat, as will, to lesser extent, direct fundraising efforts. Nonetheless, local government funding in the range of $4-million to $6-million will be required to build these facilities, against which the MD will have a balance of $704,850 set aside in reserve. These are the facts on the ground.

Funding request to be resubmitted

The impasse between the Town and the MD over the funding of these facilities raises legitimate issues of equitable cost sharing and serious questions about the wisdom of proceeding with projects in the absence of firm funding commitments. The previous MD Council, for whatever reasons, chose not to contribute to the recreational projects that were put before them. Both the Curling Club, in November 2016, and the Town, in July 2017, approached the MD with capital funding requests and were turned down. Yet Pincher Creek Town Council does not appear to be contemplating a change of course.

The Committee of the Whole concluded its discussion of the issue with a resolution to resubmit the Town's funding request to the MD, noting that the composition of the MD Council has changed as a result of the October municipal election. The Town's renewed request will include capital amounts towards the Canada 150 spray park and pool slide, the proposed sports fields, and the curling rink, and a request for increased operational funding for the pool, arena, and other existing recreational facilities.

As the year draws to a close, the ball is once again in the MD's court. In the meantime, construction of the spray park continues. Sports field land negotiations are approaching completion. Curling rink site plan drawings are being revised. The bills are mounting. And they will all need to be paid.

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