With no one able to even ballpark the effect COVID-19 will have on municipal tax coffers, should the City of Sault Ste. Marie start work this spring on almost $55 million in planned capital construction projects?
Or, should we hold off on building pretty new stuff to make sure property taxes don't go through the roof?
The issue's on the agenda for Monday's City Council meeting.
Malcolm White, the city's chief administrative officer, sees few advantages to pulling the plug on projects including a $15 million upgrade of the West End Wastewater Treatment Plant, and $16.8 million in scheduled road work.
"Other projects that are proceeding through final design/costing and/or awaiting other potential funding include the twin pad arena project [at Northern Community Centre on Goulais Avenue], Third Line reconstruction and the McDonald Avenue storm sewer," White says.
"Proponents of deferring capital projects in light of the financial impacts of the COVID-19 pandemic usually reference being able to reduce the municipal levy as a result," White says in a report prepared for Mayor Provenzano and ward councillors.
"There are a number of reasons why this approach is not recommended. As council is aware, we face a considerable challenge in maintaining our linear infrastructure to acceptable levels and, like other municipal jurisdictions, face a significant backlog of projects in this respect. To defer our 2020 projects in this area would only increase this challenge," White says.
"The investment of levy funds enable the city to leverage significant funding from other levels of government. For example, a levy investment of $6,420,000 for the 2020 capital budget (roads/bridges/storm sewers) leverages $10,566,885 in grant funding. The flow of this additional funding would be reduced, with the subsequent loss of value to the municipality, if we deferred projects."
"Additional projects, such as the twin pad arena project, are candidates for expected stimulus funding, post pandemic. It is expected that both senior government funding levels and rates for any required borrowing for ‘shovel ready’ projects will be at their most advantageous during the stimulus finding period."
"Projects of this nature will be submitted to council for approval prior to proceeding so that council can assess their relative merits, including an assessment of municipal and community financial conditions present resent at that time."
"Completion of capital projects ensures meaningful activity for an important segment of our local economy at a time when private sector development and investment may be curtailed. The municipality receives considerable value for this investment, and injects a level of funding into the economy that cannot be matched through other means."
"The city is experiencing good value for investment with competitive pricing on 2020 projects as several tender prices are below budget. That is to be expected when the industry anticipates a potential reduction in the volume of work." White says.
Monday's City Council meeting, teleconferenced to comply with the pandemic emergency, will be livestreamed on SooToday starting at 4:30 p.m.