*Editor's Note: This article provides a general look at the budget/financial plan draft. You can find a more detailed breakdown of financing by department here. All budget info from 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 out for public consultation.
The various municipal directors were on-hand at the April 11 Committee of the Whole to make their pitches for resources, people and projects they’d like to see funded in their department. These ranged from technology to staffing, to bridge and culvert replacement, and some new fire equipment too.
Several major capital projects are also in the works, led by the nearly $17.5 million to be spent on the community centre over the next two years. Final construction of the fire hall and fixing the storm sewers under Bowen Island Trunk Road will cost approximately $1.5 million each, with another $1 million going to road rehabilitation (a number which will increase by $250,000 every two years).
Informing every financial decision was a stark reality though: debt repayments are going to be felt heavily in the years ahead. While interest and principal repayments make up $215,596 this year, the 2023 number is projected to leap to $782,663 and stay in that range through 2026.
“Those payments are going to eat up a big part of our municipal budget in the next few years,” said chief financial officer Kristen Watson.
The majority of the upcoming debt comes from three loans - $4 million for the community centre, $3 million for the fire hall, and $2 million for the community lands. They’ll be repaid over the next 30 years at an annual rate of $241,906 for the community centre, $179,633 for the fire hall, and $106,038 over 26 years for the community lands, for a total yearly amount of $527,577.
Bowen also has a pair of short-term debts set to chip into the budget, stemming from a $640,000 loan for a new fire truck and $500,000 for the planned composting facility. Principal repayment and interest on the truck will run $134,500 each year for five years, while the composting loan will cost $120,586 a year over the same period. This $255,086, added to the long-term debt total, equals the yearly amount of $782,663.
$2.5 million still needed for community centre
Burgeoning costs for the community centre were also discussed, specifically the approximately extra $2.5 million needed to complete construction. $8.5 million has been budgeted for the centre this year followed by $8,951,196 in 2023, but only $14,911,207 of the $17,451,196 has been raised.
“It’s a really big funding gap,” said Watson, adding there’s hope a second grant application will be successful. But even if it was, the money wouldn’t arrive until after construction was complete, estimated to be July 2023.
In the meantime, Watson proposed $500,000 come from the Civic Facility Reserve this year and next year to create a $1 million contingency fund. This money can be reallocated by council to something else, such as the compost facility, if the grant is successful or fundraising manages to assist with covering costs.
Watson says the community centre needs a new financial operating plan overall, calling the current one “outdated and unrealistic.” Increased costs are expected to include $130,000 for more staffing, facility maintenance costs of $40,000, and the $241,906 in debt financing.
There are expected to be some savings and revenues though, most notably $105,000 in rent for the municipal building and $30,000 in rental fees to Bowen Island Community School for use of their weight room and recreation facilities. The budget also factors in $17,000 in rental revenue and $30,000 to provide maintenance of the teen centre and dance studio.
Property taxes to rise by double digits
Still, the impending debt means new revenue needs to be brought in. It was revealed part of the plan to achieve this is a 10.42 per cent rise in property taxes, which would yield $636,900 for the municipality. And this won’t be a one-time hit.
“I think it’s there to stay, given the huge increase in our debt payments,” says Watson. “It’s very likely that we can expect to have a similar increase next year as well.” The 2023 property tax increase is tentatively set for a 10.74 per cent rise.
The average property value of a single-family home on Bowen rose more than a quarter in value from 2021 to 2022, going from $1,229,648 to $1,538,776. Using these numbers, the average property tax would increase from $2,673 to $2,960, for a $287 yearly bump.
Watson pointed out four main reasons which make the property tax necessary: a nearly $200,000 increase to reserve funding this year, including money set aside for the community centre; $278,000 in new operating funds, including fuel, property insurance, various legal and accounting fees such as those associated with finishing the previous CFO’s work; salary and benefit increases of $194,326; and increased debt repayments of $105,000 from 2021.
Reserve funding is a key focus of the budget, which Watson says will help managers know exactly what they’re dealing with money-wise. All transfers to or from any statutory reserve will need to be laid out in a financial plan, which the CFO says will increase transparency and communicate council’s strategic priorities. There’s $1,929,392 set to go into reserves this year, however $1.5 million of it will be immediately withdrawn to cover road maintenance ($1 million) and the community centre contingency fund ($500,000).
With the alternative tax collection bylaw repealed at the beginning of this year, Watson says she plans a return to a general tax late penalty of 10 per cent, explaining she wants to make tax collection a priority to ensure companies working on construction and capital projects are paying on time.
Council may consider increased taxes on businesses
The CFO also asked council to consider if they wished to make any changes to property tax distributions. Using the residential tax rate as a 1:1 baseline, different types of properties pay different amounts. For example, farm properties are 0.5:1, so pay half the rate, while utilities pay over 4 times more at 4.16:1.
Businesses also operate at the residential 1:1 ratio, which means Bowen joins the Village of Anmore 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 jumps up to 3.02:1.
Watson found if the Bowen businesses ratio were doubled to 2:1, their municipal taxes would nearly double from an average of $1,315 to $2,583, a rise of $1,268 or 96.4 per cent. The raise on businesses would also drop average residential rates about $50 a year, from $2,960 (factoring in the 10.42% property tax increase) to $2,909.
“With more tourists coming, businesses are obviously benefitting from that, but we’re not getting the benefit tax wise… That’s a huge difference there,” said Coun. Rob Wynen.
Mayor Gary Ander agreed, saying business tax was kept low in the past to encourage businesses to stay, but that the island has changed a lot since then with the influx of people.
On a technical note, the distillery has been reclassified as ‘light industry’ this year, meaning they move into the 4.16:1 tax ratio for that category. The switch is also responsible for a 443.4 per cent rise in the value of Bowen’s entire light industry category, up 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 property on Bowen is $3,499,302,362, up $692,308,687 (24.7%) from the 2021 total of $2,806,993,675.
Public consultation runs until the end of Friday, April 22, and includes an open house to discuss the budget which will be held Thursday, April 21 at Municipal Hall from 6-8 pm. People can also participate online via Zoom. A special council meeting is then scheduled for May 2 to discuss changes and adoption of the Five Year Financial Plan bylaw.
