Mayor defends new $56M headquarters

It's not often that $56 million infrastructure projects come without a certain amount of skepticism and apprehension from the public.

It’s not often that $56 million infrastructure projects come without a certain amount of skepticism and apprehension from the public.

The City of Whitehorse’s plans to spend $56 million over the next three years to build itself two new headquarters for city staff is no exception.

The new city services building would be erected where the fire hall now stands on Second Avenue, and the new operations building would be located near Range Road and Two Mile Hill.

The city defends the plan, announced last month, by saying its current buildings are falling apart and beyond their lifespans.

The new buildings, they argue, would be 80 per cent more efficient than the National Energy Building Code.

City council is scheduled to make a decision on the plans on Monday. Construction could begin in early 2016.

Mayor Dan Curtis and City Manager Christine Smith addressed some concerns that have been raised about the project in an interview with the News this week.

There are several reasons why the project wasn’t officially announced before the Nov. 10 council meeting, said Curtis.

The mayor insists that the project won’t affect property taxes, so he says he saw no rush to make an announcement.

He and Smith also said council never considered putting the question to residents in a plebiscite.

“We’re within our borrowing limits, and we have no reason to ask for special permission from anyone,” said Smith.

“It’s a very normal thing for a municipality to replace its infrastructure. These buildings are important because they allow for the basic operation of the city to continue.”

When the city invited residents to take part in its budget open house on Oct. 1, the building consolidation project wasn’t mentioned then.

It also was not part of the city’s Citizen Budget tool – interactive software that let residents rank which programs they valued the most and least.

Councillor John Streicker brought up the question at Monday’s council meeting.

Curtis said that it wasn’t part of the budget tool because it doesn’t affect property taxes.

Those taxes help pay for roads, fire protection, parks, transit and other city operations. About half of Whitehorse’s operating budget – roughly $65 million – is funded through property taxes, he said.

He also said the project has been discussed before, both by the current council and previous ones.

“We’ve mentioned it during council meetings several times and it’s in some older budget speeches,” he said.

Smith said the city decided to bring it up on Nov. 10 because it’s part of next year’s capital budget, and those are always announced this time of year, in part due to requests made by the Whitehorse Chamber of Commerce, which wants ample time to plan jobs for the following summer.

“Furthermore, we didn’t announce it before because we simply weren’t ready. We were setting money aside,” Smith said.

When council was elected in 2012, discussions about the project began almost immediately, Curtis said.

The talks centred mostly on whether there was a desire to “squirrel away” some resources from the gas tax to go towards the project. When it was determined everyone was on board, and how urgent the need for new buildings had become, they began setting gas tax money aside, said Curtis.

However, Curtis and Smith concede that a portion of property tax surpluses have been set aside in reserves. Those reserves would now be drawn upon to help finance the project.

The city receives $7.5 million annually in gas tax from the territorial government, and those funds are earmarked specifically for infrastructure projects.

Curtis said the alternative option, to keep fixing and upgrading the city’s infrastructure, would have been both irresponsible and more costly.

“In the Municipal Services Building alone, the equipment is ready to fail, the walls and ceilings are propped up and it’s littered with asbestos,” he said.

“The status quo would mean that taxes would increase by 23 per cent over the next 50 years. We’ll avoid that by having much more energy efficient buildings.”

The $56 million project amounts to a cost of $200 million over the 50-year lifespan of the buildings, while the status quo would have ballooned that cost to $575 million, Curtis added.

“The systems are at the brink of failure,” Smith said.

“We have boilers that have been MacGyvered and MacGyvered. It’s irresponsible for us to talk about sustainability when we have a building like that.”

According to a report on the project, the MSB building consumed more energy than any other operations building and more than the 11 smallest city buildings combined. Funds recovered from the sale of that property, and other city-owned buildings, will go towards paying off the city’s debt.

The private sector may have the opportunity to buy those properties, Smith said, or they could be turned into affordable housing.

Other savings will be achieved by avoiding costly leases, Curtis said.

That annual $500,000 or so will go towards decreasing the burden on operations and maintenance, which is where residents are taxed for services.

Fluctuations with the new building’s energy costs could make taxes go up, Smith acknowledged, but the city is working on making the buildings as energy efficient as possible.

“We used to joke that the biggest pig in the Yukon was the Canada Games Centre. Well, the MSB is second,” Curtis said.

In terms of the $29 million the city plans on borrowing for the project, those funding avenues are still being explored.

There has been talk of getting money through the Build Canada Fund, which is handed down through the territorial government to municipalities.

“Having 70 per cent of the population and the infrastructure that we do, it’s quite likely we’ll see some of that money,” Curtis said.

From the annual capital budget, $2.2 million will go towards paying off the interest of that loan.

If you take into account the money saved from avoided lease costs and energy costs, it comes down to $1.7 million.

The city decided to give itself $700,000 in wiggle room and set aside $2.4 million per year, in case construction costs fluctuate. When Brian Crist, director of infrastructure and operations, was asked at Monday’s meeting whether the final $56 million price tag would indeed fluctuate, he said the numbers had been crunched so many times that it was unlikely.

The mayor said he was surprised to hear residents were surprised when the project was announced.

He said “it’s been out there” since he was elected in Oct. 2012.

“I guess if someone doesn’t go to council meetings, doesn’t participate in the city, they wouldn’t notice,” Smith said.

“It doesn’t affect the tax base so people are less interested. If the territorial government said they were investing $56 million in infrastructure people would be doing high fives, but when we do it, it’s like, hold the phone.”

This project will not affect any organization or business negatively, Curtis said, and no resources will be cut because of it.

“The business plan is airtight,” he said.

Contact Myles Dolphin at

myles@yukon-news.com

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