Henry's Blog

There was a time in our history when governments lived within their means. A Canadian study (IBM Corporation using Globescan data), shows that peoples’ trust in government was relatively high in 1968 at approximately 60% or “C+.” There were no annual deficits and no accumulated debt.

The world has changed

The world has changed. Annual government operating deficits are routine and virtually all levels of government are in debt. Coincidentally, public trust in government across Canada has plummeted to less than 30% (IBM 2009 presentation). In other words, trust is now at an “F.”

Milton Friedman, one of America’s most respected economist, statistician and the recipient of the Nobel Memorial Prize in Economic Sciences, wisely observed that we spend our own money on ourselves very carefully. We spend other people’s money less carefully. Deficits and debt happen because politicians lack courage to say “no” and live within their means. Their carelessness not only jeopardizes the long-term financial health of the community, but also saddles the next generation with a debt they do not deserve.

Unfortunately, it also models a dangerous practice where families see their governments as being reckless with their finances causing them to think it is justifiable to be so with their own. According to BMO’s annual debt report, average household debt has risen from $72,045 last year to $76,140 in 2014 (an increase of 6%).

Today, governments struggle to achieve a balanced budget while making scant progress toward debt elimination. Therefore, interest payments are a millstone around governments’ necks, just as household debt deprives citizens of the full use of their financial resources.

Governments are prone to set targets but fail to establish consequences when their targets are not achieved. Accountability without consequences is not accountability.

What is accountability?

Governments also are prone to believe that accountability occurs only at the election cycle which, under new legislation for municipalities, is every four years.

Accountability should not occur only in the voting booth. Governments can implement more frequent accountabilities within the four-year election cycle.

Trust in government can be improved by setting frequent targets during the election cycle and then demonstrating that these targets are achieved.

We want to reduce debt…right?

A proposed policy for the new Council specifies debt reduction with incremental targets. Not only should the city’s annual budget be balanced, but the accumulated debt should be reduced within the budget.

Achieving these targets requires teamwork from Council members and I will propose assigning monitoring responsibility on specific areas of the budget to specific councillors.

The proposal expects each councillor to monitor the financial status of their assigned area of responsibility and provide a quarterly report to their colleagues. After reviewing these progress reports, Council can choose to adjust budget allocations for each area in order to address problems in meeting targets.

Failure to meet targets requires consequences. The team approach remains the overarching principle and, therefore, consequences would be applied equally.

Commitment and accountability

My proposal is very simple. We have an annual city budget with public expectations that we will operate our services within it. If we fail in our task, we accept responsibility by personally contributing to our failure. In other words, we put some of our pay at risk (voluntarily), as a consequence for our failed leadership beginning with the year when the newly-elected Council acquires budgetary control.

We don’t need any bylaws or policies to achieve this. We can demonstrate our accountability by placing a portion of our salary into a trust fund that will be returned to us after the audited financial report concludes that annual expenditures were within the city’s income. If not, our trust fund is the first dollar toward paying the deficit.

I will work with Council to set appropriate targets and establish which areas councillors will have responsibility for.

This is how we demonstrate our commitment in being community leaders and good stewards of our community’s money. This is how we show that we do not intend to be loose with other people’s money. This is how we ensure that accountability occurs throughout the election cycle.

Do voters have a right to know?

Candidates running for public office should have the right to solicit a reasonable amount of funding support from anyone wishing to contribute. At issue is the degree to which these financial gifts should be transparent and whether voters have the right to know who the significant donors are.

Campaign donations serve to drive-up the costs of running for election and a few substantial donations can provide a significant advantage to recipient candidates.

Do election contributions mean favour?

However, it is not unusual for donors to expect that their contributions will have some influence on the recipients’ decisions while fulfilling their political role. The public, then, should have access to information regarding who has provided funding and who may expect some favour.

It is not uncommon for governments to limit the amount one citizen can contribute. This stipulation is not currently applicable to this year’s civic elections.

How open should politicians be prior to the election?

Transparency in government is predetermined by the level of openness evident in political leadership. It is unlikely that politicians can practice transparency in office when they are not forthcoming with information during their run for office.

There is a legal stipulation that donor’s lists will be made public after the election. This is low-level transparency.

I believe citizens have a right to know.

Citizens should have information prior to the election regarding which individuals or groups may expect to benefit from their financial contributions leading-up to the election.

Practicing a high level of transparency during the election indicates a sincere desire to earn the public’s trust once in office.

Therefore I am resolved to initiate such a higher level of transparency by publicly releasing my donor list, as well as the amount of money each has contributed, one week prior (November 8) to the civic election.

Please vote in your civic election November 15, 2014.

Welcome, good morning and thank you for taking the time to be here. My comments will be approximately 10 minutes in duration, followed by a 20 minute Q & A session.

With that, let me begin by saying that my journey leading up to this day has roots that go back 25 years. It began with Henry Teichrob, a District of Matsqui Councilor who encouraged me to think about serving in public office. During the ensuing years many more added their voices. However, as President and C.E.O. of Pacific Northern Rail Contractors Corp (PNR), Canada’s largest privately held railway construction company and employing 350 employees with offices located across Canada, I simply felt that I could not give the time that was necessary and so my response was always “no.”

That all changed when I retired in 2003, following the sale of PNR. Fast forward to the summer of 2011 and a time when I became increasingly concerned with some of the things that I saw happening in Abbotsford.

I have lived here for 60 years, and I care about Abbotsford. This is where my children and grandchildren were born and live. In fact, it is the only home that I have known. At the age of 13, my parents fled from the Mennonite villages of the southern Ukraine during World War II and ended up in Paraguay, where they married and where I was born. We immigrated to Canada in September 1953, lived in Steinbach, Manitoba for a few months and then moved to Abbotsford, where I have lived ever since.

During my time here I have met many wonderful people who contribute to the life and vibrancy of this city, which makes Abbotsford one of the best places to raise a family, despite some of our more recent shortcomings.

When I ran for public office in 2011, my campaign message was “forward thinking/fiscally responsible,” coupled with the need for greater transparency and accountability to taxpayers and residents.

I believe that elected officials are servants of the people and NOT masters of the people! We bemoan low voter turnout and rightfully so; however, we need to examine why many voters are disengaged. Have they concluded that the elected leaders are not listening? Have they concluded that their best interests are not being represented?

Being a servant to the people means that we listen and then make principled decisions which will serve the interests and needs of Abbotsford as a whole and not only special interest groups, or that we do not build monuments to ourselves with no thought about how it will impact citizens, as well as future generations. We must weigh all of the competing interests and then make decisions based on principles supported by our citizens and achieved through public consultation.

During these past 2.5 years, I have asked many hard questions: questions that should have been answered before proposals came to Council. Was it easy? No, but through it all, I made decisions that I believed were in the best interests of Abbotsford. This is my pledge for as long as I am in office.

I have enjoyed my first term in office, although I acknowledge that the first 15 months were more difficult than I had anticipated. Whether I succeeded in making a difference and whether this has led to some positive corrective changes, I will leave that to the people of Abbotsford to decide.

Since our new city manager arrived in February 2013, changes I whole-heartedly endorsed and advocated for early in my tenure, are being implemented, especially on the fiscal side. Structural deficits that were embedded in our Master Plans have been corrected; however, we still have a ways to go.

Policy and governance is not glamorous work. It is hard and difficult work! And it is absolutely necessary work for an entity that employs 800 people and annually expends $250,000,000, to be organized, efficient and one which provides good value to taxpayers.

When we enact policies and bylaws, we need to adhere to them ourselves before we expect adherence from others. If we are not prepared to enforce them, we need to change them so that we will enforce them. When we simply ignore them or set some aside, we designate winners and losers, which is unfair. The playing field should be level for everyone. To favor one person or special interest group because it may be to our political advantage is not the way government should be run, especially when they are incompatible with our policies, including those from other levels of government who have jurisdiction over specific matters.

When we blatantly disregard these, we not only confuse our staff, who are charged with the responsibility of carrying out policies and bylaws that we enact, but we also confuse others who are watching flagrant violations without any consequences taken by the City. This is not the fault of our staff; rather, this is the fault of Council who send mixed messages to the point where our bylaw enforcement staff does not know what is expected.

If we create policies and bylaws, but will not do anything when they are violated, we mock the very principles that undergird our democracy. In other words, if our citizens see that others do not follow policy and obey bylaws, they understandably wonder why they should.

We must also improve efforts at demonstrating transparency and holding ourselves accountable to the public. There are many matters dealt with in closed Council session that in my view should be discussed in an open forum so that the public is aware of what is being considered and have the opportunity to engage and provide input before decisions are made which often affect them, sometimes in profound ways. We are unjust to our citizens when they learn about our decisions after the fact and when it is too late to respond.

I have repeatedly stated that we have lost trust with the majority of our citizens and that trust has to be re-established. We have to earn it all over. Without the trust of the people we serve, it is difficult to move Abbotsford toward a preferred future.

The Abbotsford Entertainment & Sports Complex, the Abbotsford Heat contract, the Stave Lake Water Referendum, the YMCA, and the defeat of the 21 unit Housing First proposal by Abbotsford Community Services have all contributed to a steady undermining of the people’s trust in local government. Despite a massive PR campaign by City Hall, costing taxpayers $320,000, the Stave Lake Referendum was soundly defeated and rightly so. I dedicated an enormous amount of time researching this proposal and, while many other candidates seeking a seat on Council in the last election were on the “No” side of the referendum, I was the only one who came out and stated that I was voting “No,” because the actual data did not support the “drumbeat” that we had a water crisis, nor did we need a new water source for another 15 – 20 years.

The $5.5 million payout to the Calgary Flames was the lesser of two evils – pay $5.5 million now or pay $12 million over the next 5 years. One of the many questions that Kevin Mills of the Abbotsford News asked me during his interview and reported in his January 2013 article was this, “The Abbotsford Heat hockey club has cost taxpayers millions. Is there any way for the city to solve the ongoing problem?”

My reply 18 months ago was: “That’s going to be a little harder to fix. There are solutions but they are all going to cost money. The question then becomes how much money. Maybe we should cut somebody a cheque for five or six million dollars.”

We also need to increase the level of respect for our community – the shame and embarrassment that the chicken manure fiasco has caused our citizens is undeserved and deplorable! This is not who Abbotsford is and we have a lot of work to do to rebuild our reputation and standing with regard to how we treat the homeless.

I could go on but these are some examples of the colossal failures and poor decisions that have made or were about to be made had it not been for some very probing and relentless questioning during my term, especially during the first 15 months.

In closing, Abbotsford has enormous potential…we are a city in the very heart of the Fraser Valley, surrounded by the most productive agricultural land in Canada. Unlike Metro Vancouver cities, the urban core of Abbotsford is not attached to any other city, which makes us very distinct in the Valley. We already have many of the ingredients that other cities are envious of. It is now time for Abbotsford to capitalize on our strengths and begin to plan a City that is livable and walkable, a place where people gather, and in so doing build community, where young families, live, work and play. Done right, the future for Abbotsford looks very promising.

This being said and after a lot of thought as well as wise counsel from many people whose opinions I value and trust, I am announcing that I will be seeking public support for the office of Mayor in the upcoming civic election. This concludes my prepared remarks. I would now like to open it up to your questions.

Abbotsford Ramada Plaza Hotel & Conference Centre

Media Press Conference (10:00 a.m.)

Apex Boardroom – 4th Floor

June 11, 2014

The Financial Information Act Report requires that every elected official must disclose the total dollar amount spent in each calendar year. However, there is no requirement to provide any detail, which means the taxpayer has no way of knowing what is included in the total amount reported.

In keeping with my campaign promise to be open, transparent and accountable to the citizens of Abbotsford, the following is an itemized listing of my council expenses during calendar 2013. Report No. COR 44 – 2012, dated April 28, 2014 provides the total expense amount of $3,661, as per Schedule C, of the 2013 Statement of Financial Information and 2013 Consolidated Financial Statements. For comparative purposes, my council expenses in 2012 were $3,932 (refer to last year’s post for details).

Following is a detailed line item breakdown of my 2013 council expenses;

EVENTS

1.	Rotary’s 100 year celebration	February 8	$20.00
2.	Mayor’s Prayer Breakfast	May 16	$25.00
3.	UDI Lunch	June 13	$63.00
4.	UDI Social Event	August 22	$26.25
5.	Chamber Lunch	September 25	$30.45
6.	UDI Breakfast	October 1	$68.25
7.	UDI FV Mayor’s Panel	October 10	$68.25
8.	BC Cancer Luncheon	November 5	$65.00
9.	Abbotsford Community Foundation Lunch	November 14	$50.00
10.	Chamber Breakfast	November 15	$21.00
11.	Chamber Lunch	November 27	$36.75
12.	Big Brothers/Big Sisters	November 28	$40.00
13.	Civic Info Forum – Open Government	December 4	$194.25
	Sub-total		$708.20

MEETING EXPENSES (LUNCH)

1.	City Manager	May 15	$ 9.27
2.	City Manager	May 30	$22.46
3.	City Manager	October 17	$25.81
	Sub-total		$57.54

CONFERENCES

Lower Mainland Local Government Association (LMLGA) – May 8 – 10

1.	Registration	$367.50
2.	Hotel (2 nights)	$368.00
3.	Parking	$12.60
4.	Meals	$14.86
	Sub-total	$762.96

Federation Of Canadian Municipalities (FCM) – May 31 – June 3

1.	Registration	$735.00
2.	Hotel (3 nights)	$1020.56
3.	Meals	$105.00
4.	Parking	$192.20
5.	Milage	$73.14
	Sub-total	$2131.90

Grand Total 2013 Expenses

$3660.60

Hotel expenses do not include any charges beyond the basic room charge, plus applicable taxes.

Copies of invoices are available upon request.

Much has already been said since last Monday’s Council’s decision to deny Abbotsford Community Services (“ACS”), supportive housing initiative, which would have seen BC Housing contribute $2,400,000 toward the construction of the building and another $12,900,000 (60 years x $215,000 per year), for operational costs.

A repeated comment made by those who oppose the ACS project is that the negotiation process was flawed, implying that something “underhanded” or “sneaky” was going on behind the scenes. Nothing could be further from the truth!

The process began in September of 2008 with the signing of a Memorandum Of Understanding (“MOU”) between the City and BC Housing. Two projects were completed (Christine Lamb, and George Schmidt Centre at Kinghaven), in May 2012 and February 2013. That left a 20 unit “low barrier” supportive housing project for men to be built.

Expressions of Interest (“EOI”), for the 3rd “low barrier” housing site predate my time on Council, which means that the process was well under way prior to December 5, 2011, the date of my first Council meeting.

Eventually a second ACS public forum was held and comments were made that the ACS proposal was the City’s remaining outstanding obligation to fulfill its commitment pursuant to the MOU. In other words, since only 30 of the 50 units slated for the Emerson & Peardonville site were constructed at Kinghaven, the remaining 20 units would have to be constructed at a third location. We know from the public record that plans for the 30 units at Kinghaven were announced in April 2011. That means that the original MOU would have been amended to reflect the scope change of the project prior to April, 2011, in order to permit the 20 “low barrier” housing units to be built at a third location.

During the Public Hearing, representatives from both BC Housing and ACS, in response to allegations that something “underhanded” had taken place between the proponent and the City, replied that the City had been involved in the Request For Proposal (“RFP”). Additionally, that Council had agreed in Principle to donate a portion of Montvue Avenue in order to ensure that ACS had sufficient lands to construct the proposed building. Without that agreement in Principle (during the first half of 2012), the project could not have proceeded at the proposed location.

If those on Council who are now opposed to this project were concerned about the location/zoning, they should have voiced their concerns thenand voted against the request to cede a portion of Montvue Avenue to the ACS. This could have stopped the project in its tracks and hundreds of thousands of taxpayer and donor dollars could have been saved. Instead BC Housing and ACS were subjected to significant costs, which included architectural drawings, consultants, legal fees to name a few, not to mention all of the staff time that all three organizations invested in the process.

When BC Housing released ACS from the confidentiality agreement, ACS made the public and the ADBA aware of the conditional award in June 2013. Shortly thereafter, the City began to look at alternative sites. All of the alternate locations were acceptable to ACS, PROVIDED, that the City would pick up the costs for redesigning their plans and the additional operational costs over the life of the project. To suggest that ACS was not prepared to move to alternate sites is simply false.

What is puzzling, at least to me, is that one of the alternate sites proposed by the City was located within the ADBA. During a discussion that I had with the President of the ADBA, he stated he expected the ADBA would endorse that alternate site. The proposed alternate site is 120 meters closer to the intersection of Essendene and Montrose, the heart of the historic downtown, than the ASC site. If the City had agreed to reimburse ACS for the cost of redoing the drawings and paying for the increased operational costs, ACS and BC Housing would have accepted the alternate site and the ADBA would have supported it.

The notion that Fraser Health Authority would provide land for a “low barrier” housing project after defeating the Bylaw is beyond belief. Moreover, the MOU makes it clear that it is City’s responsibility to provide the land, not Fraser Health Authority. Since we walked away from our commitments to BC Housing & ACS, why would Fraser Health Authority even want to entertain the idea of getting involved knowing that Council has already turned down two sites? Without a shred of evidence to support the claim that Fraser Health Authority is even remotely interested, Council walked away from 6 years of work and $15.3 million dollars that BC Housing had committed to this City.

It is unfortunate that claims are now being made that the negotiation process was flawed, especially since the ACS process was the same one used for the other two projects (Christine Lamb & George Schmidt). From this Councillor’s perspective, the process was not flawed but appears to have been hijacked while trying to rewrite history.

Music soothes the soul and stirs something deep inside of us. It triggers a range of emotions for both the hearer and those who play. Distinguished Canadian composer Stephen Chatman has stated it this way, “I cannot image a world without music, and I think a lot of people feel this way.”

As Deputy Mayor, my wife and I recently had the privilege of attending a benefit concert to launch the Bakerview Music Academy. The evening featured Calvin Dyck, Lorin Friesen, Stan Gubiotti, Mel Bowker, Johannes Weber, Paul Williamson and the Sweeney Singers.

The Bakerview Music Academy’s vision is to offer free after school music instruction to disadvantaged youth in Abbotsford, who are economically challenged, in order to encourage them to improve their academic, artistic and social skills, through the inspirational power of music and to enhance community life through the expression of music.

The Academy’s vision is patterned after Venezuela’s very successful El Sistema, a tested model of how a music program can both create great musicians and dramatically change the life trajectory of hundreds of thousands of a nation’s neediest children. Among its graduates, El Sistema Venezuela has nurtured international musicians such as Edicson Ruiz and Gustavo Dudamel and the world-renowned Simon Bolivar Youth Orchestra.

The goal for the first year is to enroll 40 students, commencing instruction in September, 2013. The program will offer group lessons in piano, violin and cello and all students will participate in choir. The collaborative setting is conducive to forming friendships; creating team work, learning self-discipline and developing a life-long love of music, not to mention, the transformational life change that will occur in the lives of these students.

The Academy’s first administrator and accomplished pianist is Mr. Graham Yates. The newly formed Society will be seeking funds from private donors in order that music lessons can be provided free of charge. Meanwhile, the Society has also filed an application for charitable status, which is pending.

Sponsoring a student is one of the ways to support what is truly a remarkable undertaking. Another need is to build a strong team of dedicated volunteers. If you have a heart for this program and you are able to help, please contact Mrs.Holda Fast Redekopp, holda@shaw.ca, Chair, Bakerview Music Academy for additional information.

One of the promises I made to the people of Abbotsford during the November 2011 municipal election was that I wholeheartedly supported open, transparent and accountable government. By extension, that meant that I would apply that same principle as an individual member of Council. In other words, whatever taxpayer money I spent should be open to the public for review and comment.

The Financial Information Act Report requires that every elected official must disclose the total dollar amount spent in each year. However, there is no requirement to provide any detail, which means the taxpayer has no way of knowing what the money was spent on or how much.

In an effort to be open, transparent and accountable to the taxpayer’s of Abbotsford for the money I spent during 2012, please find a detailed breakdown of the $3,932.10 that I spent as follows;

1. Local Government Leadership Academy. This is a conference for newly elected Mayors and Councillors. This conference was held at the Delta River Inn, February 22 – 24, 2012. Hotel cost – $317.58 (room and taxes only), Parking $28.00, Mileage $79.50. Total Cost $425.08

1. Lower Mainland Local Government Association. This conference was held at the Hilton Whistler Hotel, May 9 – 11, 2012. Registration $291.20. Hotel Cost 377.00 (room and taxes only). Mileage – $199.39. Parking $40.32. Total Cost $907.91

1. Union of British Columbia Municipalities (UBCM). This conference was held at the Victoria Conference Centre /Empress Hotel, September 24 – 28, 2012. Conference Registration – $828.80. Hotel Cost $733.84 (room and taxes only). Flights from Abbotsford/Victoria & return – $310.88. Taxi from Airport to Hotel – $55.50. Conference Meals – $58.05. Total cost – $1,987.07.

1. Miscellaneous City Events – Five (5) Abbotsford Chamber Lunches – $169.12, Abbotsford Economic Symposium – $159, Two Gala’s (Run for Water & Making News Making History) – $156.72, Abbotsford Sports Hall of Fame – $60. Urban Development Institute (Fraser Valley Lunch) – $67.20. Total Cost – $612.04

Total taxpayer monies spent during calendar 2012 – $3,932.10

If any resident of Abbotsford would like to review the backup for any or all of the expenses, please let me know and I will make those available.

The question is not whether it is a good cause, but whether it is a good cause that is affordable and justified.

There are good reasons why the City of Abbotsford may wish to extricate itself from the Memorandum of Understanding (“MOU”) that was signed with the YMCA on February 28, 2011. The underlying assumptions that were used when the City approached the YMCA included growth projections that are questionable. Moreover, given the cost of this project, and the City lacking meaningful reserve monies to fund it, common sense would dictate that this project likely needs to be delayed.

Both the City of Abbotsford and the YMCA agree that the signed Memorandum of Understanding (“MOU”, dated February 28, 2011, is what it says it is, a memorandum of understanding. It is NOT a legally binding contract. There are a number of essential elements normally found in legally binding documents that are missing in this Memorandum.

In addition, the Memorandum does not provide much in the way of definitive “understanding”. For instance, the MOU doesn’t state with any certainty what is being built, how it is being built, where it is being built, and who is providing the funding for what is being built, nor is there a set closing or completion date by which the legally binding in definitive agreement must be signed (merely an “anticipation” that a facility would open in 2016).

Even if the MOU was drafted in such a way as to make it binding upon the parties, it is questionable whether the City has the legal authority to gift $17.5 million to the YMCA, representing 50% of the capital cost of the facility contemplated. This would seem to be the City potentially providing impermissible “assistance” to the YMCA.

I am no lawyer, but section 181 and 185 of the Local Government Act seems to define what “assistance” means; “providing a grant, benefit, advantage or other form of assistance, including:

1. an exemption from a tax, fee or charge
2. (a) disposing of land or improvements, or any interest or right in or with respect to them, for less than market value;
(b) lending money;
(c) guaranteeing repayment of borrowing or providing security for borrowing;
(d) assistance under a partnering agreement

The Memorandum of Understanding does not clarify how legal restrictions against providing “assistance” can be complied with. If the proposed assistance to the YMCA is legally sustainable, consider that:

1. The City does not have the money to give to the YMCA. The anticipated plan to come up with $17.5 million by 2015/2016, is to defer, eliminate or reprioritize other capital works in each of the next 4 years. It will become a question of priority and need. This leads to the second issue.
2. The case for another indoor pool has not been made. Abbotsford’s current pool to population ratio (1,000’s) is about the same as the two Langleys and Coquitlams. Surrey and Kelowna have almost half the pools per population of Abbotsford. With another pool in Abbotsford, our pools to population ratio would be higher than Surrey, the two Langleys, Coquitlam and Kelowna.
3. When there is a real demonstrated need for another pool in Abbotsford, it might well be advisable to invest in a 50 m pool, not what is being proposed in the MOU.

Most of us would like to support good organizations that do good work, including the YMCA. But in this time of fiscal constraints we must exercise good judgment, especially when spending money we don’t have. So it is not a question of whether it is good cause, but is it a good cause we can afford and justify to future generations of taxpayers?

“When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it…when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.” Milton Friedman (1912 – 2006), famed American economist and recipient of the Nobel Prize in Economics.

The aftershocks emanating from the financial crisis of 2008 are still being felt around the globe. The private sector adjusted fairly quickly to the reality of what some have dubbed the ‘new normal’. However, the transition for governments has been much slower, often lacking any urgency to ratchet back spending for items that taxpayers would classify as ‘wants’, rather than ‘needs’. This brings me to the central question of this blog: should $17.5 million of taxpayers’ money be given to the YMCA to attract them to Abbotsford?

To be clear, the YMCA is a great organization with a long and rich history of community service spanning some 150 years. The City of Abbotsford would be greatly enriched if the YMCA located here. The YMCA coming to Abbotsford, however, is not the issue. The issue for this Councillor revolves around the following:

1. The City’s current backlog of AC water main replacement is estimated to be $14 million, plus an additional $20 million for water mains that must be replaced in the next 10 years. The fact that we have accumulated a $14 million backlog (deferrals), confirms that we do not have the funds necessary to carry out basic capital works.

1. In order to accumulate $17.5 million to fund the YMCA grant by 2015/2016, the City will have to eliminate, reprioritize, or defer other General Capital Works for each of the next 4 years. This will further increase the backlog of capital works. Moreover, a deferral plan will have a significant impact on all areas of City operations and infrastructure. At some point, this will result in increased property taxes, borrowing, or a combination thereof.

1. The City has a debt obligation via internal borrowings from the Development Cost Charges Reserve Accounts (DCC’s), totaling $29 million. DCC monies are ‘Trust Funds’ provided by developers to solely fund growth related infrastructure projects. These internal borrowings must be repaid within 5 years, which means that $20 million is due in 2015 with the remainder of $9 million due in 2016. If these funds cannot be repaid within 5 years, the City may have no choice but to borrow the $29 million in order to replenish the DCC accounts in order to fund growth related capital projects.

1. The Memorandum of Understanding (MOU), that the City signed on February 28, 2011, does not ‘cap’ the City’s grant contribution at $17.5 million. The City’s commitment is to contribute 50% of the capital costs of the facility, design and offsite upgrades, which could end up costing more than $17.5 million, or it could be less – it all depends on the final costs. In any event, the City will not have an ownership interest in the land or facilities despite paying 50% of the costs.

1. Subsequent to signing the MOU, the YMCA has requested that the City consider granting a Permissive Tax Exemption. If approved, this means that the City would forgo significant property taxes on an annual basis. Over time, the loss in property tax revenue would be much more than the City’s 50% grant.

1. A grant equal to 50% of the capital costs gives the YMCA an enormous competitive advantage over all of the other private facilities located in Abbotsford who provide similar services AND pay property taxes. There are many unintended consequences that will result from this uneven approach, including increased subsidies (taxpayer’s money), for the City’s own facilities: ARC & MRC.

Is a grant of $17.5 million to the YMCA really the best use of taxpayer monies given our current financial situation? Shouldn’t our first priority be to repay the $29 million borrowed from the DCC accounts (a very risky decision in itself), and then be in a position to fund the $14 million AC water main backlog? These are real ‘needs’, as opposed to ‘wants’. In the end, the required funds will have to come from the residents who already absorbed large property tax and water rate increases over the last 5 years.

A year ago, Abbotsford voters decidedly defeated the proposed Stave Lake project. Although there are many reasons for the defeat, one of them was discontent with increased water rates and the tiered water rate structure.

Residential water rates increased between 2007 and 2011 by 77% at the lowest of the 3 tiered rate structure. Consumption at the third tier (91 + m3), suffered a 250% increase. Most residents saw the tiered rate increases as excessive, unfair and unacceptable. What was less known was the Industrial, Commercial, Industrial (ICI), and Agriculture (AG) sectors water rates.

Although residential tiered water rates were discarded by Council in March, 2012, the ICI and AG water rates were not changed, even though the rate charged to the highest tiered (over 100,001 m3), ICI customers were billed at $0.69 per m3 – 18% below the City’s cost of $0.83 per m3.

Recently, the Audit & Finance Committee unanimously agreed that the City cannot afford to sell water to high volume ICI and AG customers at rates below cost. This rectified part of the problem but did not address the question – should water rates be the same for every customer? As it stands now, increased ICI and AG water rates will be phased in over a 3 year period, which means that the residential users will continue to pay a much higher rate for 3 more years. Also, at the end of 3 years, ICI and AG water users will only pay 90% of the residential rate.

We have an opportunity to address this question now. Here’s how, assuming the following principles are correct;

1. Every water user should pay the same rate per m3. Currently the residential rate subsidizes the entire ICI and AG sectors, with some ICI users are paying less than cost.

1. Water rate changes should be set effective January 1st of each year, so that they are in cync with our financial year end. It is very difficult to reconcile water revenues when rates are changed July 1st and financial statements are presented as of December 31st of each year.

1. Water rates must cover the cost of operating the system, including amortization (capital replacement over the asset’s life), which is approximately $0.42 per m3.

1. A utility is supposed to operate on a break even basis. Therefore, the Water Fund should not be generating a $4.6 million surplus (2011) UNLESS specifically approved by Council for a specific project(s). Currently, the water utility is making a profit of 30% on water sales, most of which is derived from the residential users who pay $1.15 per m3. Stave Lake was defeated but, despite removing this project from our 5 year capital plan, the capital cost of Stave Lake is still embedded in the current water rate structure, which is neither fair nor defensible.

1. A uniform water rate should be based on affordable and sustainable budgets and capital plans…not annual rate increases of 22% (as in 2008). The City needs proper long-term financial planning resulting in water rates that are affordable and sustainable.

Additional water sources will be required at some point in the future as a result of growth (20 plus years from now), however, existing residential water users should not have to pay for future growth, unless the residential water users are in favor of doing so. This is a conversation that needs to take place.

A suggestion to solve what many perceive as an unfair water rate structure is as follows;

1. Water rates should be set at $0.86 per m3 (our cost, which includes replacement of existing infrastructure). This means that every residential water user and over 3,000 ICI customers (99.90% of all water users), would be charged less than they are currently paying.

1. Rate changes take effect January 1, 2013.

The water rates could become one of the lowest in the region as all but four (4) high volume ICI water customers would receive a reduced water rate in 2013.

Senior management should aggressively work on resolving the Non Revenue Water (NRW) that the City cannot bill for. NRW accounts for 17% of the total water consumed in 2011. This is too high. Reducing this to 10 – 12% will reduce water costs and generate an improved ‘bottom line’.

If you believe that the solution offered has merit, is fair to all water users and represents an affordable way to correct the water rate imbalances, the time to make your voice heard is now. You can express your views by contacting the Mayor and City Councillors, urging reconsideration of the City Council decision.