"YOUR WORSHIP"

A Feudal Practice

Worship, (noun) (Government, Politics & Diplomacy) (preceded by: Your, His, or Her) Brit a title used to address or refer to a mayor, magistrate, or a person of similar high rank

   Should the practice of referring to elected officials (i.e. mayors) as “Your Worship” be continued? Some argue that the practice be discontinued on religious grounds, as expressed recently by G. Peachey; that the term is reserved for addressing our Creator God. I have never heard anyone use it that way, nor have I ever referred to God as “Your Worship”, but when used as a verb, it has for me always denoted an action directed towards God.

   Used as a noun, however, it does not convey the same meaning for me. I will, however, suggest that it should be discontinued on other grounds, which speak more directly to its origin, dating back to the feudal era. At that time, there was a wide social and economic disparity between the peasants and their landlords, who were obliged to provide safety and justice in return for the peasants’ labour. These landlords not only provided security, but also ruled the feudal lives of the lower-class serfs.

   It was in this relation of landlord-peasant, where subordination and obedience was demanded and accepted, that the landlord was addressed as “Your Worship”, signifying a higher-ranking status. Following the industrial revolution, society moved from a feudal to a capitalist order, and in this environment, landlords were gradually replaced by appointed, and later, elected mayors in the English political context. Notwithstanding a total social revolution and structural change, mayors continued to be addressed as “Your Worship”, particularly in the English world.

   Canada has inherited its parliamentary system of government and judicial system from Great Britain. Many of the practices, titles, and terminology associated with both continue to be found in our country. With respect to the title, “Your Worship”, it specifically has its origin in a society and political structure that reflects inequality and subordination. Using that term in a democratic society in the 21^st century is questionable, and if we are to discontinue using it for that reason, I would certainly agree. In fact, I would support the position that it’s unacceptable. Our mayors are elected representatives and “servants” of the public, as are all elected officials. Let’s resolve to discontinue its use, but for the right reason.

REJECT "GROUPTHINK"

Reject “Groupthink” on November 15!

   AbbotsfordFIRST (AF) has put forward five candidates as a group of representatives (“Groupthink”) that it wishes to send to the Council table to represent our community’s interests. From the very start (August), when the first press release was issued, to this last week before election, AbbotsfordFIRST has presented a platform on a variety of issues, containing some unsupportable statements of fact.

   AbbotsfordFIRST and its candidates have maintained a stubborn refusal to acknowledge those factural errors, not to mention an unwillingness to make corrections when the errors were pointed out. One example will suffice. Its website states that the City has been without an Official Community Plan for three years. In fact, the Community Charter stipulates that every municipality must have an OCP, and each year a bylaw is passed renewing our OCP. That fact was communicated by email, in person, and several weeks ago at the All-Candidates Forum. Yet, a stubborn persistence continues to stay with that message: this week’s 16-page flyer (page 11) perpetuates that error, and its website has not been corrected. This reflects stubbornness, bordering on arrogance, of not willing to be held accountable, both individually and as a party.

   Abbotsford is the third most culturally-diverse community in B.C., and its economic base is similarly diverse. The citizens of Abbotsford not only need and deserve to be well-represented at the Council table, but also to have a council of approachable and accountable individuals. There is no place for party politics (Groupthink) at the municipal level, and certainly not in Abbotsford. I have expressed my views on the matter on more than one occasion; both mayoral candidates also have strong views on this matter - Henry Braun has expressed his views in a blog - The Importance of Independent-Thinking And Principle-Based Decision-Making - and I know that Bruce Banman has a similar view.

   This is not a personal plea, but a general plea to elect 8 independent voices to the Council table on Election Day – November 15^th!

If you agree, please circulate this among your acquaintances.

VERACITY OR FICTION

Disinformation Continues

   Walter Neufeld and I have had disagreements over the years with respect to property taxes and tax rates. The background for our discussions on the topic is the amalgamation of Abbotsford and the former Electoral Area known as Area 'H', where Mr. Neufeld resides. After amalgamation, property tax increases were phased in over a five-year period, as the difference between Electoral Area taxes and municipal taxes is significant, regardless of which Electoral Area one chooses to examine.

   In Mr. Neufeld's most recent comments on the subject (see Link), he claims that Abbotsford has among the highest taxes in the province, and in particular, higher than the local governments listed below. Furthermore, he claims his information is based on provincial statistics, which he conveniently omits to include. His claims, by the way, are not true! I suspect Mr. Neufeld prefers fiction!

   I couldn't resist checking the veracity of his claims, so I did visit the Ministry of Community, Sport, and Culture website, and examined the data provided for 2014. Because there is such a wide disparity across the province with respect to property values and taxes, the government ministry provides calculations based on a "Representative House". It is, they say, the only way to draw fair comparisons across the province.

   To give Mr.Neufeld the benefit of the doubt regarding his claims, I checked two sets of figures:

       A. General Municipal Total
       B. Total Residential Property Taxes and Charges

   Here are the figures provided by the Ministry, for 2014:

                               Source: Ministry Website

   The table also indicates how each municipality is policed, which is very important to be mindful of when using these statistics. It has been estimated that jurisdictions using RCMP have a subsidy advantage of about 10% over those local governments employing their own municipal (M) police forces. Coincidentally, the only two cities in the table above, that have a lower “General Total” than Abbotsford, are policed by the RCMP.

   The following table is included here again, as it provides a larger and more complete snapshot of the Lower Mainland and Fraser Valley, with respect to this discussion.

                               Source: Data based on Ministry Website

   For more clarity on the topic of Assessed Property Values, Tax Rates, and Tax Revenues, please read the article I provided last month. Link

REMEMBRANCE DAY

Our Diversity - A Valuable Asset

At this time, each year, we pause to reflect on, and express appreciation for those who gave their lives for our nation, and for all our veterans, and men and women in the Forces. Canada has much to be proud of with respect to this country's role in arenas of conflict during the last 100 years. Vimy Ridge and Battle of Ypres; Dieppe, D-Day and Atlantic; Suez and Cyprus; Rwanda and Bosnia - all resonate in the minds of Canadians. Canada's reputation is of the highest order.

Let's also consider the possibility of avoiding conflict, by redoubling our efforts to bridge the differences between ourselves and those we are in danger of becoming enemies with.

The two gentlemen pictured were mortal enemies in WW II. Siegfried Bartel (left) was an officer in the German Army; the other gentleman was a member of the U.S. Airforce. Many years after the war, they became acquainted and good friends with each other.

This photo reminds me that we have the capacity to love, to tolerate, and to forgive, notwithstanding our past differences and experiences. May the photo also cause you to reflect on what it might mean for you personally, as you relate to those you rub shoulders with each day. Abbotsford is the third most culturally-diverse city in B.C., and that diversity can be our greatest strength! Let's embrace it and employ it in becoming a stronger and more vibrant community!

I WAS CONVINCED - I WAS WRONG!

2011 Referendum on Water

Three years ago, I was part of the City’s campaign to convince the public of a need to invest significant dollars into a project aimed at water security. My belief at that time was based on a number of findings and recommendations dating back to the 1990s, when the Abbotsford and Mission water utility was managed by the FVRD.

FVRD, Mission, and Abbotsford City staff believed a secure water supply needed to be addressed by 2016; internationally-renowned, and well-paid engineering consultants agreed; the Abbotsford-Mission Water & Sewer Commission agreed; both Councils agreed (until late spring of 2011). I was convinced – I was wrong; we were wrong!

Thank goodness, the instincts and collective wisdom of our residents prevailed, not to mention key individuals who raised red flags in opposition. Only recently, engineering staff have indicated that our present supply of water should last beyond 2030! 

Moving forward, a number of things need to be addressed: 

1. Efficient distribution of available water.
2. Redundancy in the system (A major landslide in the spring blocked access to Norrish Creek supply for a number of weeks.).
3. Building our Water Reserve Fund for that day when the investment will be required.

EPITOME OF ARROGANCE

Award-Winning Department

   The City has been blessed for many years, not only with a Finance staff that is highly qualified and dedicated, but also for the national recognition given to our Finance department for its high level of reporting.

   The City's Annual Report for the years 1997 through 2012 received the Canadian Award for Financial Reporting from the Government Finance Officers Association. The award recognizes excellence in governmental accounting and financial reporting, and represents a significant accomplishment by the City of Abbotsford and its staff.

   The GFOA established the Canadian Award for Excellence in Financial Reporting Program (CAnFR Program) in 1986 to encourage and assist Canadian local governments to go beyond the minimum requirements of generally accepted accounting principles, as set by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants, to prepare comprehensive annual financial reports that evidence the spirit of transparency and full disclosure and then to recognize individual governments that succeed in achieving that goal.

   Reports submitted tothe CAnFR program are reviewed by selected members of the GFOA professional staff and a review committee, which comprises individuals with expertise in Canadian public-sector financial reporting and includes financial statement preparers, independent auditors, academics, and other finance professionals. 

   The fine work that this department is credited with, is overseen by the City's Chief Administrative Officer, George Murray, who is himself a Certified General Accountant. Mr. Murray came to the employ of the City via the Fraser Valley Regional District, where he served as CAO, and prior to that, School District #34, where he served for many years as Secretary-Treasurer.

   In the two years since Mr. Murray arrived at the City, he has helped orchestrate two near-zero tax increases without cutting programs or jobs, while accumulating a surplus of almost $20m., and while paying down debt by approximately $18m. Both mayoral candidates, Banman and Braun, speak highly of Mr. Murray's accomplishments, and Mr. Braun is quoted as saying that he expects that history will show that Mr. Murray was the best city manager Abbotsford ever had.

   This is all to say that I find the public statement of AbbotsfordFIRST, on their website, regarding the City’s financial status most presumptuous: 

   Respectfully, we disagree with nearly all of the points you (Councillors Loewen and MacGregor) raise. It is incredibly important that City Councillors understand it's Financial Statements.  We have brought together a team to analyze the financial position of the city including Chartered Accountant, Eric Nyvall. Years ago, he articled at the very same firm that acts as the City's auditor and ensures that the financial statements are presented according to Generally Accepted Accounting Principles (GAAP).  We also have numerous business owners in our volunteer base and advisory board.

      see Link

   That this “team of experts”, represented by a CA and local business owners presume to have a firmer grasp and understanding of the City’s financial affairs than the City’s own highly trained and qualified team is almost laughable, if not an insult. When will this arrogance find an end?

WELFARE OF THE CITY

The Intersection of Faith and Politics

I was interviewed, not too long ago, by The Canadian Mennonite, a national magazine serving the Mennonite faith community across Canada. It became part of a feature column that highlighted stories of individuals from the Mennonite faith community who have become involved in the political arena. The editorial and feature article are reproduced here in their entirety.

MUCH ADO ABOUT NOTHING

Tax Rates are Multipliers - Nothing More!

AbbotsfordFIRST wants the public to think there is some fundamental problem in existence because the Tax Rate in Abbotsford is higher than in some other neighbouring municipalities. The following graphic comes from their website:

Please read on:

If the public is to believe their argument on Rates, how would they explain the following table:

GO TO THE SOURCE

Clarity From Those Who Know

   Anything repeated enough times will eventually become accepted as fact, or truth. I’m afraid this is what has happened with respect to public understanding of our city’s debt. Why has this matter become an issue? It’s election time and for some it has become valuable fodder for their attempts to attract voter support. No one likes debt, and if there is one thing that might touch a raw nerve with the public, it is the thought that not only does their city have a debt, but that it has a large debt resulting from mismanagement by the Council in office, and furthermore, there is no plan to repay it. At least that is what the public is told.

   I won’t fill this space with a discussion about the pros and cons of carrying a debt, nor about how much capacity the city may or may not have to carry its debt. I want to address two issues here: the size of Abbotsford’s debt; and in particular, what qualifies as part of that debt.

   There is a fairly wide-held belief that Abbotsford has a debt of $102m. Part of the reason for this is that a sitting councillor, Henry Braun, has repeatedly expressed that opinion, while acknowledging that his Council colleagues don’t agree with him. So he shares part of the blame, but he is entitled to his views on this matter. The other Councillors, as well as our finance department don't agree with him.

   In fact, the long-term debt of Abbotsford stood at $78m at the end of 2013, a repeated point of fact supported by audited statements in the city’s Annual Report. The larger figure is arrived at by adding the $24m in “internal borrowing”. For the edification of all, I solicited information from the City’s finance department and received the following from the Assistant Director, Finance:

   “Internal borrowing is not debt, because the City has no obligation to repay anyone; only to use DCCs, as they are collected, to replace internally borrowed funds. What the City has done, is advance existing available cash to cover the costs of critical infrastructure projects. The City is being paid back by developers for that advance, plus interest, as development occurs. The end result is that all interchange funds “internally borrowed” will be fully repaid, with interest, by DCCs. Taxpayers will not have paid a penny to cover DCC internal borrowing on the interchanges. The alternatives to internal borrowing would have been to: 

§  (1) defer the interchange projects at the risk of traffic safety and at the risk of losing senior government grants worth over $30 million, or

§  (2) ignore the fact that the City had available cash on-hand and choose to finance the interchanges by issuing debt, which would have come at a much higher cost (interest rate) than the use of internally available funds. This option would have resulted in actual debt on the City’s balance sheet, but this debt, like the internal borrowing, would have been covered by DCC contributions, meaning taxpayers would not pay any of the cost.

o   Additional benefits from undertaking interchange projects and receiving government grants – The initial scope of the Clearbrook interchange project was completed over $7 million under budget. As a result, the City was able to redirect unused senior government funding to other roads, sewer, water, and storm drainage improvements in the vicinity of the Clearbrook interchange and obtain $7 million worth of senior government funded improvements that would otherwise have been costs Abbotsford taxpayers and/or developers.

o   5-year liability limit – There have been questions regarding whether or not there is a requirement to repay internal borrowing within 5-years. This question is based on Section 175 (2) of the Community Charter, which requires City liability agreements exceeding five years to be approved by referendum. Section 175, however, does not apply to internal borrowing, as it is not a debt obligation to the city, but an internal cash management decision. The relevant section is Section 189 (4.2), which requires that internally borrowed funds be repaid, with interest, no later than when it is required by the lending fund. There is no five year limit. The City has been projecting for some time that funds will be repaid by 2017 or 2018, and results to date in 2014 continue to support that timeframe as a reasonable projection.”

The question of size of our debt and the plan for repaying it has been dealt with in another recent post:

The Truth About Debt

Further to this, Bill MacGregor has just published additional information on this topic, on his Blog site. 

MY RESPONSE

In Response to Questions from AbbotsfordFirst

    Many of the questions asked require assistance from staff. That can be a time-consuming task, and if an opportunity presents itself, I can pursue those answers, Having said that, I think the point here is not an answer to every single question, but evidence that there is transparency and that nothing is being concealed. In fact, I suspect this exercise is a 'smoke screen' to deflect attention from more serious issues.

1.   At the Plan A Referendum Public Information Session held in 2006 at the Matsqui Centennial Auditorium, Dan Bottrill, City Finance Manager, stated that the City of Abbotsford was projecting a Property Tax Surplus of $4 million for 2007.

Answer: Really? 2006 – you want to address issues from 8 years ago? Only 4 of the present Council members were on Council at the time. What I don’t see here, which AbbotsfordFirst still claims on their website (Fred Thiessen’s press release) even after being reminded on numerous occasions that it is incorrect, is a statement that the City was debt-free in 2006. I challenged each of the candidates as far back as August (excluding Sandy Blue), as well as Fred Thiessen, to substantiate the claim, but no one responded to my emails. In 2006, the City had a debt of $38.4m. The closest the City came to being debt-free was 2004, when the long-term debt stood at $16m. This is but a small example of knowingly misleading the public. Trust? Integrity?

1.    Debt levels at that time are unknown to the public because Financial Statements prior to 2010 are unavailable on the City web site. In fact, hardly any financial data allowing us to compare our current financial state to that of the city before Plan A is possible. If you have access to all those Statements, please allow the public to have that same access so we can compare and decide for ourselves. We can tell you that housing starts before 2009 averaged 1100 per year. After that it has been abysmal... 2009 (365), 2010 (516), 2011 (537), 2012 (371), 2013 (749). Comparing 2013, our best year in the last 5 to 2008, we see a 40% decrease in housing starts. If you've managed our local economy so favourably, where has all the investment gone? Account for this decrease in performance? (Source: Canadian Mortgage and Housing Corp)

Answer: I‘ve seen stats posted by AbbotsfordFirst, referencing Ministry sources – the same sources where you will find that information. However, my Blog does have that information, taken from the Ministry site, and you are welcome to save time and find it there.

http://councillorloewen.blogspot.ca/2014/10/the-truth-about-debt-get-one-thing.html

And with respect to housing starts, I don’t believe I or anyone else for that matter, have disputed any statements made on the subject. In fact, I don’t recall seeing statements made anywhere else, other than in this post. You are right, the world economy took a huge nose dive in 2008, and we have not resumed the performance level in place prior to the downturn.

3. Total debt - Firstly, we are unsure why you balk at $100 million in debt, but you seem to think that $78.4 is OK. Please tell us why you think so. Secondly, you are not including the $24 million internally borrowed (DCCs). Mr. Loewen claims that money is moved back and forth between City accounts all the time. Setting aside the fact that doing that anytime you want is against the Local Government Act and the Community Charter, this debt is not the simple moving back and forth of money. This money was largely spent on the 2 overpasses on Hwy 1 and those overpasses were not in the city's budget. This means we have taken money out of our DCC fund that should have been spent on other roads, infrastructure upgrades and expansions. That other work still needs to be done. This is called an infrastructure deficit. Every time you take future DCC money and use it to pay for this expenditure of the past, you are not paying off debt, you are simply paying off one credit card with another. At the end of the day, taxpayers will be burdened with this rolling liability. How will you deal with this infrastructure deficit of $24 million?

Answer:

1.     I’ve never said that any debt is ‘OK’, as you put it. In fact, our long-term debt has been reduced by 25% over the last 6 years (a 25-year mortgage at a very favourable fixed-interest rate until maturity). I should also add that the cost of servicing our long-term debt (principal and interest) consumes less than 5% of our annual operating budget. As a home owner, I would have loved a mortgage that only required 5% of my income. Today, homeowners are lucky to stay below 30%.

2.     Drawing on Reserves is not considered debt and financial statements make that clear. If you can’t accept that fact,  I suggest you take your argument to KPMG or our city manager, Mr. Murray, who I’m sure would be more than happy to provide some enlightenment.

3.     My response is clearly laid out in one of the posts deemed irrelevant. Your words,  “…none of your posts actually answer any of the questions.” The post I’m referring to is “Take Your Choice”. http://councillorloewen.blogspot.ca/2014/11/take-your-choice.htmlhttp://councillorloewen.blogspot.ca/2014/11/take-your-choice.html

4.     Reserves are like Savings Accounts, in which monies are set aside for a specific purpose. The Charter does not forbid drawing on those Savings, but does say that those funds must be restored to that account as soon as they are required for their intended use.

5.     To summarize very briefly the post referenced in #1 above, the City leveraged Savings to get $50m. of “free” money (never having to repay it), so that our infrastructure deficit, as you refer to, might be addressed without burdening taxpayers. Your objection appears to favour the latter option. I don’t know how else to interpret it.

NOTE: Since writing this article, I've been in conversation with Finance staff, and they provided what I believe is a very concise and definitive statement on this issue; City debt WAS $78m. at end of 2013. Their statement is found at the following link:

                       To the Source  -  Of Course!

6.     Additionally, the idea of paying off current DCC debt with future DCC revenue has led Council to raising DCC's to the highest rate we can find in the Valley. Our DCC rate is approximately $29,000 per lot, whereas Langley is $21,000 and Burnaby is $7,000. The result has been a huge downturn in housing starts. In 2008, we had 1285 starts. In 2012, we had 371 and 2013 we had 749. In the 2013, the City projected $18 million in DCC revenue and it only collected $3 million. How was that revenue made up? All departments set their budgets against expected revenue so when $15 million doesn't come in, something must be cut. What was cut?

Answer: Comparing Abbotsford’s DCC rates with municipalities within Metro Vancouver is difficult.  Metro Vancouver’s DCC rates have not been updated for many years and they have made a decision to fund significant regional infrastructure through user rates as opposed to DCC rates.  This means all existing taxpayers pay for growth related items as opposed to new development.  Abbotsford Council has taken the position that growth should pay for expansion of new infrastructure. 

With respect to specific rates, I am unable to provide an answer as I’m not conversant in this matter, nor is that information easily available. That doesn’t mean the information can’t be accessed, it’s just not at my fingertips.

7.     You mention a strong cash position. Any excess cash coming to the City of Abbotsford is due to "inflated" DCC's, an 80% + increase in Water Rates from 2010 to 2012, a 43% Property Tax increase since 2006. Taxing your citizens to pay for your mistakes is not strength. Can you clarify for the citizens of Abbotsford why these rate increases are so high if your stated surplus and financial position is so strong.

Answer: Of that 43% increase (assuming your figure is correct), approximately 16% was the result of the Plan ‘A’ capital projects, which residents of Abbotsford approved in a referendum. That would leave 27% over 8 years, which translates to approximately 3.5% per annum. Clearly, too high an increase, as the last two years have been at or near zero. And for the record, I don’t think I or anyone on this Council has stated that those increases were acceptable. If you are going to revisit the last 10 years, I suggest you revisit the last 20, starting with amalgamation. Councils of the first 10 years were ultra-conservative, resulting in a significant infrastructure deficit that could not be ignored. Even while the City was growing rapidly, Councils were reluctant to spend in order to meet the challenge of a rapidly growing city.

There is also an implied comment in the question that Abbotsford property tax is excessively out of line with its neighbouring municipalities. In response, I would draw your attention to the two graphs in the following post:

http://councillorloewen.blogspot.ca/2014/10/property-taxes.html

8.       You mention the city has $130 million in cash or equivalents. "Equivalents" is meaningless Mr. MacGregor...that is like saying I have $100 in cash and coupons. What matters is the cash. In the 2013 Financial Statement, on page 2, the page the Mayor signs, it clearly states on line 1 that "Cash and Cash Equivalents" equal $21 million. No line item anywhere in the Financial Statement shows $130 million.

Answer: Surplus/Reserves - $94.1m.; DCC’s - $14m.; and deferred revenue - $21.1m. 

7.    Last year when the City of Abbotsford was thinking about giving the YMCA $17.5 million, the Finance Department issued a report to Council stating clearly that they only had $14 million available, and then they offered alternatives on how to make up the difference.

8. We would like to point out that you cannot add our Statutory Reserve to this amount because you are not allowed to spend that.

Answer: With respect, under the Charter, local governments can use those funds, but must restore within stipulated time frame; see #3 above.

9. On that same page of the 2013 Financial Statement, there are also liabilities listed. You cannot exclude those from your calculations. The NET FINANCIAL ASSET for 2013 is $9 million...and this comes after 2012's $12 million NET DEBT. This is not $130 million in the bank. This is the true financial picture of the City of Abbotsford.

     Answer: As you point out, the City had a Net Debt of $12.4m in 2012, followed by a Net Asset of $9.4m in 2013. That is a $21.8m turnaround, and projection for 2014 is similar to 2013. This is the result of two years under the management of a new CAO, who has executed Core Service Reviews in most, if not all departments and made significant changes in staffing structures and found efficiencies that had eluded previous administrations. 

10. Next you seemingly change the long term debt from $78.4 million to $40 million so that you can claim we aren't being accurate? Please answer for this inconsistency in your statement. No Financial Statement by the City of Abbotsford, nor any statement by Abbotsford FIRST includes the number $40 million. Only you use this number and yet it is used to illustrate that in your tenure you've doubled our long term debt. Explain why you would attempt to represent a $78.4 million debt as $40 million to the citizens of Abbotsford?

Answer: The paragraph you refer to is a layman’s rough estimate and interpretation of reality, with respect to the countless projects completed in the last 8 years (roughly totally in excess of $200m.) against the real debt at the end of those 8 years, leaving a net increase in debt of about $40m. These are not accountants figures, nor would I expect Mr. Murray would ever refer to that activity in these terms. If you choose to take issue with our rough guesses, I for one will choose to ignore such concerns.

11. The are also questions that you and all incumbent Councillors must answer Mr. MacGregor. With one of the highest Property Tax rates in the Province of BC, with the highest unemployment rate in Western Canada, with dwindling housing starts and businesses closing every day, and a 9 year track record of nearly every major economic indicator resulting in a decline, what are you going to do to stimulate Abbotsford's economy? Please post your plans for the economic development of Abbotsford. As an incumbent, you have far more access to information and a comprehensive plan would be appreciated.

Answer: One of my Blog posts took issue with the erroneous use of “Tax Rates” as a comparator. 

http://councillorloewen.blogspot.ca/2014/10/assessed-value-taxrates-and-total-tax.html 

I’ve responded to numerous people over the years, and still, they/you don’t get it. This is not me saying this, but Finance staff with whom I have consulted. A cursory review of a few BC municipalities would make the point quite obvious to most people. There is a common sense reason why the Provincial Government does not use ‘Rates’ to compare one municipality with another. If rates were significant, then why would West Vancouver and Whistler have the lowest tax rates in BC, while far northern communities the highest? Are you suggesting that taxes in the far North are that much higher than West Vancouver and Whistler?

I will however, humour you for the moment, and accept that our “high tax rates” are a problem to address, and ask you to account for the discrepancy between the high tax rates and the fact that Abbotsford’s property taxes compare so favourably with the other Fraser Valley and Lower Mainland municipalities, including West Vancouver (highest).

http://councillorloewen.blogspot.ca/2014/10/property-taxes.html

12. The City of Abbotsford committed to giving the Abbotsford Heat $5.5 million to leave our city. Where is that money coming from? What will be cut to provide that capital? It wasn't in our budget so it is "new" money. Where will you get it from?

Answer: My recollection is that the funds came from accumulated surplus; I would have to check, because I am not certain. It should also be noted that the City's share of the revenue from Chances Gaming Centre (almost $1m annually) has been allocated to the AESC.

13. If you're answer is from the Surplus you are generating from "inflated" taxes and rates (language used by your own Finance Department in 2013), the result has been a city with one of the lowest growth rates in the Lower Mainland. How will you rectify this lack of performance and attract business, investors and jobs?

Answer: First of all, it would be proper to reference your sources, especially comments regarding language used by Finance personnel). If you were listening to the mayoral debate this week, you should have heard the Mayor reference a number of initiatives that will have a positive influence in terms of addressing the concerns you mention: DART, revised and consolidated Zoning Bylaw, and the OCP review now underway. George Murray has been doing a Core Services Review over the last 2 years, resulting in key hires, reorganization, and finding efficiencies that have resulted in observable improvements with respect to “welcoming business”. These challenges do not disappear in short time spans, but take longer for the change to become apparent.

Those reviews have also resulted in two successive years with modest surpluses of $10m. last year, and $7 - $10m this year. Those funds have and will continue to be applied to DCC funds and/or short-term debt.

I have not responded to every single question, however, I think most of them have been covered. More detail on questions regarding DCC rates, etc, are all available, however, it will take some digging, as I have done. 

TAKE YOUR CHOICE

Option #1 or #2?

   Criticism is easy – it’s the decision-making that attracts criticism that is difficult. Are mistakes sometimes made? They most certainly are and hopefully, lessons are learned in the process. I welcome constructive criticism, but when criticism is only that, I become disinterested in listening. That kind of criticism is often just a cover for the critic’s own shortcomings, whatever they may be.

   Over the last year, and particularly now, during the election campaign, the topic of drawing on the City's Reserve funds to construct the two interchanges has been often raised. It is that issue I wish to address here.

   In 2008, the world economy went into a serious recession. Within the year, our federal government realized intervention was needed, and they launched the Economic Action Plan to generate jobs. Grants were offered across Canada to invest in infrastructure. The government wanted ‘shovel-ready’ projects, and offered one-third funding, contingent on the provincial and municipal governments each contributing one-third as well.

   It must also be noted that the federal government was in the practice of not making their one-third contribution until completion of the project. The choice that Council of the day faced was: 1) turn the offer down, or 2) draw on Reserves to provide our one-third of $50m. (each interchange was priced at $25m.). Council chose the latter option.

   Both projects were completed under budget, with the Clearbrook interchange significantly under budget. On the Clearbrook project, the City built it with its own supervising Engineer. A total of 21 local companies were awarded contracts in the construction of that interchange, creating employment for many local workers, and thereby providing for their families during a very serious economic downturn.

   In both cases, the City could have settled for the lower cost and saved money in the short-term. However, the City requested that it be permitted to apply those saved dollars to other necessary infrastructure projects. The federal authorities agreed on condition that the projects would be “connected” in some way to the two interchanges.

   At the McCallum interchange, the most significant additional work was the climbing lane on the freeway, between Sumas Way and McCallum Road, where traffic bottlenecks were common. Additional projects included the McCallum parking lot and bus stop, as well as some water/sewer infrastructure. At Clearbrook, where much more money was saved because the City did the building and contracting, significant road infrastructure was completed, namely, Clearbrook Road, from the interchange to King Road; and Marshall Road, from the traffic circle to Mt. Lehman Rd.

   That entire extra infrastructure was paid for on the basis of 33 cents to the dollar, instead of having property taxpayers shoulder the complete cost of constructing, which would eventually have to happen. Our citizens were saved millions of dollars in property taxes. Criticism is often based on only part of the story, at the expense of the truth – the other part of the story. 

   I haven’t mentioned the airport infrastructure improvements, which also entailed a $25m. investment, and also including additional work due to completion under budget. The new terminal is the result of those extra dollars, with the Airport Authority picking up only 33 cents-on-the-dollar costs.

   In all my difficult decision-making at the Council table, I am guided by the principle of what is in the best interests of the community at large. There were two options: Council chose the latter; based on the criticism leveled, I assume the critics would have chosen the former. I’ll gladly take the criticism; in this case, the City certainly benefited. I take encouragement from the words of Aristotle, who said:

“To avoid criticism say nothing, do nothing, be nothing.” 

CITY FINANCES

City Financial Outlook

   The city’s financial outlook is not as bleak as some would have you believe, and to say the city has no plans to restore finances to previous levels is simply an ignorant statement, by which I mean, the author of that statement failed to do some basic research.

   In 2013, the city generated a $10 million surplus, and this year, the surplus is projected at between $7.5 million and $10 million. It’s exactly for that reason that the city was able to hold the tax increase for 2014 to a 0% increase, the first time in at least 15 years. That required planning.

   As at December 31, 2013, the city had nearly $130 million in cash or cash equivalents, comprised of surplus/reserves ($94.1 M), DCC’s ($14 M), and deferred revenue ($21.1 M). This information is readily accessible in the city’s audited annual financial statements. Long-term debt existing from before 2006 has been repaid on an accelerated basis due to the city’s strong cash position. That required planning.

   I’ve written about the city’s debt in a previous article, but will repeat some of that here, to give the reader a more complete picture of the city’s financial state of health. The city has not been debt-free, at least as far back as 1997. In 2006, the long-term debt stood at $38.4 million, down from $45 million in 2005. Audited financial statements show that Abbotsford had $78.4 million in total long-term debt at the end of 2013 (projected to be approximately $73.0 million at the end of 2014). This long-term debt, which has a very favourable fixed interest rate until maturity, is almost entirely related to the three Plan ‘A’ projects, which were approved by the citizens in a referendum.

   In the last eight years, the city has managed to complete significant infrastructure projects and capital improvements totalling well in excess of $200 million, while long-term debt increased by a net of only $40m million. That required planning. The list includes: expansion to ARC, Discovery Trail, the Reach Gallery/Museum, Abbotsford Centre, McCallum and Clearbrook interchanges (our portion was 1/3 cost on each), Airport improvements (1/3 cost), Whatcom Road Connector, new Firehall, impoving and raising Dikes, new library, land acquired for Mill Lake Park, upgrade of water mains, upgrade of James Treatment plant, drilling of Bevan Wells (emergency supply when Norrish Creek water line became disabled in 2013), and upgrade of all-weather fields. This does not include all the annual capital projects accounted for in departmental budgets, such as Engineering annual $5 million Roads budget.

   It must also be noted that the two interchanges were completed well under projected budget costs, allowing the city to construct the climbing lane on Highway #1, between Sumas Way and McCallum Interchange, and to make the significant road improvements to Marshall Rd. between Clearbrook and Mt. Lehman Roads, and Clearbrook Rd. south of the interchange to King Rd. These capital projects would normally have been entirely funded from city funds; however, in this case the city’s cost was only one-third of the total cost. Moving forward, in the short term, the city will need to focus on the replenishing of funds used from DCC funds to complete the two interchanges.

 

   The above table is based on the latest available data (2012) supplied by the Ministry of Community, Sport, and Cultural Development. On a debt per capita basis, Abbotsford is ranked 21^st in the province. Based on the projected long-term debt of $73 M. at the end of 2014, the figure will be approximately $525/capita.

   What needs to be noted with these figures, with respect to metro municipalities, is that Metro Vancouver debt is not factored in. In 2012, Metro Vancouver had a debt of $370 M., which is shared by all its member municipalities, on a per capita basis. This debt relates to their shared utilities: water, waste, housing, and corporate programs. This would include 11 of the municipalities on the table that show lower per capita debts than Abbotsford.

   While my background is not in the financial world, it is my humble opinion that the city’s financial position is under very good control; infrastructure is in good shape; and the city is poised to make continued progress in terms of strengthening our financial health. 

WATER RATES

Abbotsford Water Rates

   I recently spoke with a friend whose children live in Germany. He was telling me how restricted they were in the use of water - for washing, for showers, etc. Their cost of water was in excess of $5.00 per cu. metre. I was not totally surprised, but nonetheless, I am very thankful for the abundant supply we do have and for what it costs my household to have running water. Our residential cost is $1.15 per cu. metre.

   The joint Abbotsford Mission Water system consists of 18 wells, Cannell Lake supply, Norrish Treatment Plant, 91 kilometers of pipe and 16 pressure reducing stations. The system has a replacement value of $138M. 

   The following three graphs provide a comparison with our neighbouring municipalities, as well as some other large BC cities. The majority of households will fall in the middle category. 

PROPERTY TAX RATE RATIOS

A. Rate Ratios (2014): Personal Property/Business Property

B. Rate Ratios (2014): Personal Property/Light Industry Property

The Facts About Tax - Property Tax!

Note that Abbotsford property tax has actually dropped from 2013 to 2014!

Sustainable Development & Growth

     A recurring experience for me, while on Council, has been the opposition of citizens to a proposed development in their neighbourhood. The most common reasons offered are: increased traffic (safety), property-value depreciation, air and noise pollution, and environmental concerns. This will, more often, occur when rezoning is proposed. The irony in many situations is the fact that the homes they live in may have once been developed in opposition to the existing neighbourhood at the time.

     Making the right decisions is not always as easy as one would think, however, it is hoped that each Council member is guided by the best interests of the greater community. Local government is charged with providing essential services to its residents and the responsibility to manage new development, both in a sustainable fashion.

     A guiding principle of sustainability is to be guided in our efforts to provide services and manage development without compromising the ability of future generations to provide for their own needs. To that end, the City of Abbotsford has implemented a variety of initiatives over the last years to address this concern, ranging from waste disposal to energy conservation in government buildings.

     In 2011, the Community Sustainability Planning Initiative (CSPI) was initiated and by 2013, five projects had been completed. Together, they are intended to enable the City, along with its partners, to build on existing sustainability successes. The end result will hopefully, be a “liveable, sustainable and prosperous community”.

1. The Community Sustainability Strategy (CSS) is a high-level vision statement and framework. It’s the strategy that guides all initiatives that follow.
2. The Appendices that accompany the CSS.
3. The Green Energy Plan (GEP) is a resource, not only for local government, but also for the private sector. The GEP recommends strategies and action plans for reducing Green House Gas and for reducing energy use.
4. The Green Community Plan (GCP) provides all of us – public, private business, and the City – with strategies for providing our citizens with a “healthy and rewarding quality of life”.
5. The Green Economic Investment Study (GEIS) examines how both the City and private partners can advance the economy while incorporating initiatives that will enhance the environment. Such initiatives may include how they operate (LNG-powered trucks) or construct their buildings, with the ultimate goal of conserving energy and preventing pollution.

     Across Canada, the infrastructure deficit has become increasingly more serious. All infrastructure has a lifespan and will eventually have to be replaced. This has been putting significant strain on local government finances, particularly in the East, where towns and cities have older infrastructure.

     One of the key pieces of Abbotsford’s CSS was the creation of a dedicated staff position for managing the City’s assets. This asset management is integrated with consideration of lifecycle of infrastructure investment, alongside land-use planning decisions and financial management. This strategy is intended to result in fiscal, social, and environmental sustainability for Abbotsford.

     For more detailed information on the CSPI, visit: 

http://www.abbotsford.ca/Assets/Abbotsford/Dev+Services+-+Planning+and+Environment/environmental/Community+Sustainability+Strategy.pdf