Nanaimo’s mayor says updates to provincial borrowing rules will help the city deliver necessary infrastructure.
The province announced this week that municipalities can now borrow up to 10 per cent of their annual revenue without elector approval. This is doubled from the previous limit of five per cent.
Municipalities can also borrow up to $150 per capita, up from $50, when the term of the borrowing is less than five years.
“It will assist us in undertaking necessary capital expenditures. It’s not as big a change as might be hoped for but it is a step in the right direction,” Nanaimo mayor Leonard Krog says. “It is a recognition by the province that municipal governments are facing incredible challenges with growth, particularly when the provincial government is setting housing targets for various municipalities that in some cases, will be a challenge to meet.”
Krog says the new rules will mostly impact projects that do not get a lot of public attention, such as waterlines or replacing utility vehicles.
“This won’t make any difference to the major projects that are under consideration, whether it be the public works yard, a new police station, a waterfront walkway, a south end community centre – those are major projects that are tens and tens of millions of dollars,” Krog says. “The kinds of projects that are provided for here are much less substantial.”
He says it is challenging for municipalities to increase revenue to fund projects and taxation on the local level is more visible to the public than other levels of government.
“We are on the frontlines of the public response to taxation and yet we provide the infrastructure that many people don’t appreciate or even see. If we put $55 million worth of water lines under our streets, as we did in the last couple of years, no one notices but if we throw up a prison in town, everyone notices,” he says. “The requirement for referendum borrowing for things that we know are necessary is a bit of a challenge.”
The mayor compares electors denying funds for needed upgrades to a car crashing and the driver regretting not taking advice to buy new brakes.
“Think of municipal government as the mechanic. We’ve told you you need to get the brakes replaced. You told us not to – here we are,” Krog says.
He adds the provincial changes reflect increased cost for materials and contractors for infrastructure upgrades.
READ MORE: Province doubles municipal borrowing limits to speed up infrastructure projects
