Month: March 2014
Town of Erin Budget Meeting
Monday’s the night to find out more about this year’s Town of Erin Budget – March 24th at 7pm at the Town Office. This will be a public meeting, to present Draft #2 and to hear input from residents. Draft 1 had a tax rate increase of 2.98%, and councillors haven’t made changes that would affect this much. Find out what’s in and what’s not and make your views known.
Special Town of Erin Meeting – BM Ross SSMP Workshop – March 20, 2014 at the Town Municipal Building at 7:30 pm. Find out more about the Settlement & Servicing Master Plan.
The following provides an overview of many of the challenges Erin faces today and in the future. If action is not taken right away, the slippery fiscal slope we are on will be impossible to climb out of……….
Residential Property Taxes:
- 22% higher than Caledon – $500,000 Erin home on water pays about $2,500 per year more
- 20% higher than Halton Hills
- 48% higher than Toronto and if you use property fair market value > 100% higher
- County has proposed a 4 to 5% tax increase up to 2017 – largest portion of our taxes
- Town of Erin’s taxes went up 15% in 2013
- Increase will be lower this year but only due to addition of debt and drawdown of reserves….not a solution to our problems
- Town of Erin in line with other municipalities in Wellington County BUT property values are significantly higher here, therefore so are property taxes paid
Industrial & Commercial Property Tax Rates:
- Industrial & Commercial are 55% & 11% higher than Caledon rates
- Higher than Halton Hills by 16% & 12% respectively
- Higher than Mississauga by 50% & 6% respectively
- Higher than King by 65% & 16% respectively
- Great deal of capacity available in GTA for commercial and industrial space at much lower rates and better location than Erin
- How can Erin attract businesses with property tax rates, hydro and water rates as they are?
- Town of Erin has one of the highest water rates in Ontario, and probably the country
- Erin’s rates are 252% higher than Peel Region (Caledon, Brampton and Mississauga)
- Erin’s rates are 224% higher than Halton Hills
- Our rates are 110% higher than Guelph
- If we get sewage, look for rates to double as there is generally a 1 to 1 ratio of water to sewage
- Town of Erin water rates are on track to going up 20% per year for 5 straight years
- Water rates could potentially double with sewage as ratio is close to 1:1
Town Balance Sheet:
- Currently have >$3.2 million in debt at end 2012 – increase of $1.5 million from end 2011
- Provincial subsidies went down more than $700,000 last year, with lower grants expected to continue……we have to make up shortfall
- Need for another $2.5 million to fix Station Rd bridge and dam
- 2013 Asset Management plan states Town needs to borrow an additional average of $824,000 per year for next 10 years on top of increasing taxes by 2.5% on top of general increases
- Debt required for any form of sewage system will be extreme to the Town as grants have significantly decreased from senior level governments
- Hydro delivery fees continue to increase dramatically
- Gas rates have been proposed to go up by 40% on April 1st
- General inflation or core items like gas, food and utilities continues to expand
Growth does not pay for growth – meaning development will not offset costs to our community.
Who will pay for infrastructure, servicing and operational costs if Erin has uncontrolled growth – WE WILL!
Note: Go to our fiscal section of website as it shows how 2013 property tax rates are getting worse relative to our neighbors…our fiscals are deteriorating
It Is Time For Erin’s Elected Officials To Face Realities
I applaud our town’s CAO and Director of Finance for putting together a budget that our Councillors and Mayor wanted to see….a 2.98% increase which on the surface looks great compared to last year’s 15% Town property tax increase. But, lets dig below the surface, where last year there was a net debt impact that added about $260,000 (reasonable assumptions based on debt interest rates and mandatory pay down of existing debt) and $800,000 was added to reserves. If you bring both components to zero, last year’s tax increase could have been around 11.4%. Saying that, building reserves for the future is very important as Erin has major infrastructure challenges moving forward.
So let’s have a look at 2014 proposed budget. To get the budget to around the 3% level, it has been proposed to add about a net $390,000 to debt (after mandatory pay down) and decrease reserves by $1,108,000. Again, adjusting for two items, the 2.98% increase would be about 14.44%. Clearly, our fiscal situation is actually worse this year than last year.
So over the last few years, we should see what has happened to total expenses (included those proposed for 2014). From 2011 to 2012 they went up 7.1%, not reasonable in a world where income and pension increases are around 1 to 2%. From 2012 to 2013, it went up 13.5%, downright depressing. And from 2013 to 2014 they are going up 16.7%, out of control. All this as revenues from the Province are going down dramatically. They decreased by over $400,000 from 2012 to 2013.
There are two ways to make up shortfalls, borrow from the future or increase taxes. Both are a failed prospect in a Town that is already fiscally challenged and has implemented a push down (Feds to Provinces to Municipalities to residents) policy for too long. Erin residents pay property taxes at more than a 20% higher premium than our neighbors Halton Hills and Caledon. It is even worse compared to many other GTA municipalities. Our industrial and commercial property tax rates are also in poor shape. Again, compared to Caledon we are 55% and 16% higher respectively and 11% and 12% higher than Halton Hills. Again comparing our rates to other GTA regions, our rates are generally much higher. This is a formula for failure. Major risks include not attracting new businesses; losing existing business and seeing overall real estate values fall.
Let’s not forget about our water rates which are an absolute embarrassment, as they are among the highest rates in Ontario if not Canada. Relative to Peel, our water rates are 252% higher and 224% higher than Halton Hills (2012 numbers). Also, we will have another increase in 2014 of 20%, the same as the last 4 years, followed by 5% increases for the next 3 years and 3% thereafter. We are not closing the gap with our neighbours but getting worse. This cannot be sustained and action must be taken.
On top of this, our recently completed asset management plan is calling for about $8.4 million total debt per year for the next 10 years as well as a an increase of 2.4% per year to cover the demands. Remember this 2.4% will be on top of regular annual increases which are out of control. Our Town debt after this year will be around $3.7 million based on my calculations. They will obviously skyrocket to over $12 million in the next decade at a minimum. This also excludes our obligation to replace the Station Road Dam of about $2.5 million. We requested a grant to fix this problem which was struck down. We may be stuck with this future liability as well.
We have a major fiscal challenge in this community today, that will do nothing but get bigger and bigger. Erin requires a very strong Strategic Plan that helps guide our future. It also needs a very dynamic and fluid Financial Plan with future Impact Statements which will assess viability of major capital projects, like a sewage treatment plant. Continued tax increases is…
1. Outline Provincial and Federal programs for public, private partnership (PPP) as a method to finance a wastewater collection and treatment strategy for the Town of Erin.
2. Outline the process of a typical P3 collaboration with a Design, Build, Operate, Maintain, Finance (DBOMF) water/wastewater infrastructure company.
3. Outline an alternative collection method to the “preferred” gravity fed sewers recommended in the SSMP.
1 – Peter Asselstine
Director of Marketing • Infrastructure Ontario (OI)
Regarding: “Alternative Financing and Procurement model, AFP” ( a.k.a P3)
2 – Richard Nie
President of Koester Canada Inc., a Water/Wastewater infrastructure company based out of Ontario
Regarding: Design-Build-Operate-Manage-Finance (P3), one of 6 companies who would bid on the tender
3 – Peter Rupcic
Senior Associate-North America
Clearford Industries Inc.
Regarding: small bore collection systems