Without sewer reinvestments, Vancouverites might be unable to flush toilets in 20 years

Feb 24 2023, 12:26 am

“We may have a situation in the City of Vancouver where we’re unable to flush toilets in the City in 20 years.”

That was the warning Mayor Ken Sim gave on Wednesday during an event for the business community, organized by the Downtown Vancouver Business Improvement Association Society, when asked about the rationale for City staff’s proposed 9.7% property tax hike in 2023.

He was referring to the previous spending choices the City of Vancouver made that did not set a sufficient amount of funding to replace aging sewers at a necessary pace — with the oldest pipes now a century old, and the lack of capacity to handle added demand from future population and business growth, and increased rainfall from climate change.

Early this month, City Council approved a sewer renewal strategy proposed by City staff to achieve 100% sewer separation by 2050 — the separation of sanitary sewers flowing from buildings, and storm sewers. This would require an average renewal and separation rate of 1.6% per year — well above the 1% annual target that has not been achieved for years. It is expected annual spending to support a 1.6% annual separation target would have to increase from $36 million per year to $99 million per year.

Sim also highlighted the deficiencies of numerous aging community and recreational facilities, such as the crumbling wall of the Vancouver Aquatic Centre, as well as the growing number of potholes in roads and necessary climate change mitigation improvements for facilities like the Kitsilano Pool.

All of this amounts to a $500 million annual capital deficit — the amount of additional spending the municipal government should be spending to repairing and replacing facilities, infrastructure, and utilities.

“I don’t want to litigate the past. We have a situation, we’re dealing with it, and we’re not complaining about the past. Let’s just put it that way: We have not had that authentic conversation with the City’s residents and businesses. People haven’t been shown what is truly going on, and we have been kicking the can down the street,” said Sim.

“Imagine you have a house, and you have not repaired the roof in 60 years, and it’s leaking. Do you fix the roof or let it go? We’re choosing to fix the roof. It’s going to be a big nut, but that’s just the reality of it.”

A large portion of the 9.7% property tax increase will also go towards growing the policing budget, including executing City Council’s strategy of hiring 100 more police officers and restoring permanent policing funding as directed by the provincial government following the Vancouver Police Department’s (VPD) successful appeal of the 2021 budget cut.

Sim suggested this reinvestment in policing returns to the City’s plan for boosting VPD officer numbers to account for both retirements and demand growth.

“That got cut by the previous administration, and you saw what happened in the streets of Vancouver. Was that the only reason we have public safety challenges? Absolutely not, but it contributed to it,” said the Mayor.

“We are laying all the cards on the table and showing residents of Vancouver what we’re dealing with, and we’re going to show them the choices that we make. It is going to be a prudent one, and it’s probably going to hurt, but I personally truly believe that whatever we decide will be the right thing to do.”

The proposed property tax hike also accounts for continued significant cost inflation in the economy over at least the next two years and the expected higher costs in the City’s unionized labour as new collective agreements are quickly approaching on the horizon.

Higher property tax increases, growing at a rate higher than historical increases, are expected for municipal governments across Metro Vancouver — not just the City of Vancouver.

About half of the property taxes paid by residents and businesses in Vancouver do not go to their municipal government. There are also property taxes levied by Metro Vancouver Regional District, TransLink, the provincial government’s school tax, BC Assessment, and the Municipal Finance Authority.

Sim says these regional and provincial authorities are all planning to increase their property taxes by 5% to 15% in 2023 — adding to the property tax portion of Metro Vancouver’s municipal governments.

The Mayor added that the City of Vancouver’s property tax hike may be lower or higher than 9.7%, as City Council has yet to discuss, debate, and make amendments. The 2023 operating budget and property tax rate will be finalized over the coming weeks.

“Let’s be authentic about the challenges that we have. We have some significant financial challenges that you’re going to see in the City of Vancouver over the next little while, but we’re not going to hide from it. We’re actually going to spotlight it and show everyone what we’re dealing with,” he said, adding that “we’re triaging our current state.”

Sim says that the focus of ABC Vancouver’s first mandate, the first four years, will be to stabilize the City’s entire situation.

“There’s a really bad sandwich that some of us are going to have to eat, and we totally apologize. But you wanted boldness and authenticity… we’re not trying to deceive people,” he continued.

While the property tax is one of Vancouver’s few major sources of revenue, and increasing the property tax rate is historically the City’s primary means of increasing its revenue to meet growing costs, Sim says they are also looking at creating new non-ancillary revenue sources that reduce the pressure to increase property taxes. The longer-term goal is to have property taxes increase at a rate below inflation.

He suggested selling naming rights for City-owned assets and facilities could be one example for consideration.

“Let’s think of things differently. Let’s have user fees for things the users will actually enthusiastically want to be pay because they’re getting something of value,” said the Mayor.

“If all we focus on is reducing costs, we’re going to lose. Just like in business, reducing cost is not a way of growing. The way we grow is by increasing the top line, and we increase the top line in a way our customers would love to buy our services. That’s the difference in mentality we’re bringing to the city.”

Sim suggested Vancouver residents have already seen a form of tax relief from ABC Vancouver’s first measures — through its recent decision in City Council to repeal the $0.25 mandatory fee applied to each single-use cup distributed by businesses, which will go into effect this spring. This potentially saves Vancouver residents and visitors as much as $21 million annually, and it is equivalent to a 2.4% property tax cut. The single-use cup fee was approved by the previous City Council, even though the City did not have the jurisdictional authority to collect it as a revenue-generating tax, nor could it require businesses to invest the fee revenue in specific ways, such as green alternatives.

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