Ratepayers Comments on 2021 Township Capital Budget

Subject: Muskoka Ratepayers' Association's comments on the Township of Muskoka Lakes 2021 Capital Budget and Ten-Year Forecast

Date: January 25, 2021

To: Mayor Harding and Council

The MRA would like to thank Treasurer Donaldson, staff and Council for their early presentation of the 2021 Draft Capital Budget and Ten-Year Forecast.  We also believe that taking the Ten-Year Capital Plan (the big picture) in conjunction with Muskoka Lakes recently completed Strategic Plan is the absolutely right approach, to ensure coordinated and integrated plans are developed and can be justified to all citizens.

The MRA has looked at our Township Council's desire over the past few years to minimize any tax increase and to even consider budgets that did not cover annual inflationary creep.  This we viewed as four-year short-term thinking.  We liken this to our Township's assets and infrastructure being treated like an old home with a cracked foundation, rotten windows and a leaky roof, being patched up every year rather than renovated and brought up to current standards, just to save a few points on the levy.  Let's be clear, the MRA certainly wants all taxpayer dollars to be used wisely and judiciously.  However, our residents expect a safe, enjoyable and livable Township, NOT one with crumbling roads, obsolete fire and rescue equipment, poorly maintained parks, trails, wharves, and buildings that discourage rather than encourage public usage and inhibit our Township's ability to attract talented employees.

While there is a huge increase in proposed capital spending to almost $77 million over the next decade, the MRA believes this amount is probably understated.  In the 2016 budget (5 years ago) the forecast capital requirement for 2021 to 2025 was $17.7 million verses $39.8 million in this year's budget, a 224% increase.

Perhaps Township staff are getting better at forecasting, or more assets are now included, or the service standards have improved.  The MRA does not know the answer, but it raises a huge red financial flag going forward.

These huge swings in forecasted capital requirements even year over year make funding allocations impossible.  For example, the Ten-Year Capital Forecast for the years 2021 through 2025, varied 40% in 2018, 56% in 2019, and 12% in 2020 verses what is now required in the 2021 plan.  This obviously raises questions on the efficacy of the Township's capital forecasts.

The MRA is not going to comment on every line item in the Ten-Year Capital forecast, but we would like to provide some high-level suggestions and comments for staff and Council to consider going forward:

1. We are pleased to see that $1.9 million has been allocated for a new compliant fire hall in Minett.  This is 30 years overdue and should be moved well ahead of the 2027 expenditure date.  Construction over the past decade, plus proposed construction in this area more than justifies the need.
2. The Township has a significant capital needs for improvement to docks, wharves and ramps to accommodate the current recreational and commercial usage. The MRA believes improvements need to be made, not just repairs, to maximize the use and enjoyment of these assets.  The amount allocated to the Beaumaris Wharf of $320K seems inadequate based on amounts allocated to other docks.
3. The almost $2.5 million allocated for the replacement of floors in the Bala and Port Carling arenas should be reconsidered.  For a municipality with a permanent population of less than seven thousand people, many of them seniors, two arenas are an extravagance taxpayers cannot afford.  Both buildings are approaching 50 years of age.  For a metal clad structural steel building this is past replacement time.  In addition, both buildings are under utilized and run annual operating deficits in the hundreds of thousands of dollars.  The MRA would suggest staff and council study the long-term year-round uses of not just an ice surface, but a multitude of other uses such as tennis, volleyball, pickleball, basketball etc.  Then construct one suitable multi facility that will maximize year-round usage by both permanent and seasonal citizens.
4. The Township has about 10 fire stations.  There needs to be some rationalization of these assets without increasing response times or insurance premiums.  Most are probably significantly under utilized.  Other than a replacement of the Minett Fire Station, no capital has been allocated for replacement of any other fire station i.e., Milford Bay.
5. The Township has more than ten community centres, many of which are historical relics of days past.  Even the newest, Port Carling and Milford Bay, are 40 and 45 years old respectively. All of them are under utilized and run operating deficits in the hundreds of thousands of dollars each year.  The MRA would like to see a reduction in numbers.  Perhaps capital should be allocated for one multi-use community centre, that could be integrated into an arena type facility.
6. The Township and Chamber of Commerce have identified affordable housing as one of the biggest impediments to attracting skilled workers and growing our economy and tax base.  The MRA would encourage the Township to study the building of affordable rental housing in an area like the Health Hub property or other locations near Bala and/or Port Carling using a public private partnership arrangement.
7. Significant funds have been designated for bridge replacements in Milford Bay and Bala and for a dam in Bala.  The MRA would encourage staff to rebuild the Bala bridge and enhance the observation view points as tourist magnets. In Milford Bay we would encourage lower cast options such as poly pipe or concrete box culverts rather than bridges.  For the Bala Dam the MRA questions the need to replace this dam and would prefer lower cost options be explored, such as removal of the mini hydro plant and filling the mill stream with rock rubble and providing an overflow weir.
8. The MRA is concerned that current Township Reserves are grossly depleted and if the capital requirements were funded primarily from the levy, many property owners will suffer significant financial hardship.  The MRA believes that debenture funding through the District of many long-term assets like buildings and bridges is prudent with current interest rates of 2 to 3 per cent.  The financial cost would be minimal when one includes inflation. The MRA believes that financing of roads, vehicles and short-term depreciating assets still remains best financed through the operating budget, reserves and government grants i.e., the gas tax.

The MRA notes that the “Guiding Principles” for the 2021 Budget include Accountability, Transparency and Public Engagement.  We do not feel that this year's budget lives up to those expectations, especially Public Engagement.  The Capital and Operating budgets are on the Township Website.  However, the Operating Budget is only available to the public for seven days between posting and committee review and three days between committee input and the sole meeting for public comments. This limited time is hardly adequate for public review, engagement and input, especially during a pandemic with virtual meetings. In prior terms of council, the public was much more engaged with staff and council during the operating and capital budget preparation via the Budget Review Committee which at least provided real engagement for a cross section of the public.

The MRA is very pleased that three-year operating budgets are becoming a reality this year.  Council and staff are to be complimented.

The MRA appreciates the opportunity to provide input on the Ten-Year Capital Forecast and 2021 Capital Budget and look forward to providing separate input on the 2021 Operating Budget.

Sincerely,