In a presentation by a Delegation from the Qualicum Woods Residents Association (QWRA) to QB Council on July 15, 2020, expressing concern about the cash-strapped Town’s plan to sell its properties at Juniper and Dogwood, Bob Greig referred to a list of the Town’s proposed 2020 capital projects, and their associated cost estimates. Greig suggested that Council might consider scaling back some of its expensive aspirations rather than selling off Town-owned land assets.
Councillor Harrison challenged Greig saying, “Those capital projects all had grants attached to them. How much were these grants in your calculations, and can you identify some of the grants we were applying for?” Good question, but as it turns out, quite a misleading question. Harrison’s inference was that the QB taxpayer contribution to these capital projects would be significantly reduced by offsetting grants, wishful thinking in the extreme — Harrison already knew that most of the Town’s ‘budgeted’ grant applications had already been rejected by other levels of government. Harrison himself had said so at the previous June 24, 2020 Council meeting but he either apparently forgot what he’d said three weeks earlier, or was not being forthcoming with the QWRA Delegation and the citizens of Qualicum Beach.
In the wake of the coronavirus pandemic and state of emergency declared by the province, two things stand out regarding the efforts of Qualicum Beach Council compared to other municipal governments on Vancouver Island:
- No changes have been made to our (pre-pandemic) 2020 budget; and
- Council has not undertaken any meaningful, in-depth review of its extensive, and growing, list of capital projects.
The 2020 budget, produced in the fall of 2019 and approved by Council in February 2020, forecasted the Town’s expenditures would exceed its revenues by about $5 million.
By mid-year, the Town’s 2020 budget shortfall has now ballooned to over $7 million – which can only be covered by either draining reserves, or borrowing money, or selling assets (or all three, which is the Town’s current plan).
Our Council (missing) in action
It’s worthwhile bearing in mind that the Town of Qualicum Beach appears to be unique among municipal governments in BC, in that it has not made ANY reduction or revision to planned revenues or operational spending levels in the wake of the pandemic, nor has it taken any serious steps to evaluate and priorize the Town’s discretionary capital projects.
Why is this happening, and why hasn’t the Mayor and Council explained this to the public? And how is Council planning to spend your money? Read on.
April 22, 2020 – During the Council’s review of planned property taxation rates for 2020, Councillor Filmer gave Notice of Motion: THAT Council instructs staff to bring forward the Town’s list of capital projects for budget discussion at a future Council meeting.
May 13, 2020 – Filmer’s Notice of Motion was brought forward. Council approved a motion that “instructs staff to bring forward the Town’s list of capital projects for budget discussion at a future Council meeting.” Councillors Filmer and Walker attempted to pin down an actual date with a motion to schedule “a special meeting to be held before the end of May 2020”, but were voted down by Mayor Wiese and Councillors Westbroek and Harrison.
Town planning staff eventually point out the obvious – capital spending plans are in trouble
June 24, 2020 – Up to this point, neither Council nor the Finance Department, through their routine monthly reports to Council, were sounding the alarm about any problems with the capital spending commitments in the 2020 budget.
The first stated acknowledgement of a 2020 capital spending problem came in a staff report from planner Rebecca Augustyn for Council’s consideration at their June 24, 2020 meeting, related to St. Andrew’s Lodge. Augustyn stated “There is no line item in the approved capital budget for the remediation of the lodge on the St. Andrew’s property for 2020. There are also no funds budgeted for the ongoing maintenance costs associated with a new building on the St. Andrew’s property.” All this on top of the some $3.5 million paid by QB taxpayers for this waterfront property two years ago. In stating the rather obvious, Augustyn continued: “Furthermore, there are already capital funding challenges for some budgeted 2020 and 2021 capital projects [writer’s emphasis] including the Public Works yard re-location and the roundabout at Hwy 19A and Village Way. Should Council decide to move forward with the remediation of the lodge, the capital budget would need to be re-evaluated to determine which approved capital projects to move forward and which projects will need to be placed on hold.”
At this same meeting on June 24th, during the regular Council review of the Monthly Financial Report from John Marsh, Director of Finance, Mayor Wiese — suddenly, and without any advance notice — stated to Council that they would discuss capital projects right then and there, blindsiding Councillors Filmer and Walker who had requested a separate meeting, not a mere few minutes of discussion for which they had no opportunity to prepare beforehand. [Seen at the 1 hr 50 min mark of the June 24 Council meeting, under Archived Videos] Was this brief “impromptu” discussion, two months after Filmer’s request for a re-evaluation of capital projects in the wake of COVID-19, Mayor Wiese’s way of ensuring that Council would not have a fulsome discussion of capital projects, but could still claim that it had been done?
The 2020 capital crunch – what we learned from Council meetings on June 24 and July 15, 2020
Some of the commentary from the June 24th and July 15th meetings reveals a heavy reliance on over $3 million of grant applications, that most of the grant applications have been rejected, and that “major” additional unbudgeted and/or “ungranted” projects are in the works. Here’s a look at what we gleaned about some of the capital projects, including questions not yet answered.
June 24, 2020, during review of Monthly Finance Report:
- Finance Director Marsh: “The Airport [project] is largely dependent on government grants. Memorial Avenue [completion of phase 3, i.e. Memorial / Hwy 19 A roundabout] is dependent on government grants.”
- Councillor Harrison: “I believe every single Investing in Canada [Infrastructure Canada] grant was rejected by both the provincial and federal governments. That’s the Eaglecrest [and Village Way] roundabout; that’s the all-weather [artificial turf] field; and, I believe we were also rejected for the Airport grant from the federal government. We do have one federal grant looped into the Memorial [upgrades project] at phase 3; I believe that was $1.3 million roughly. Beyond that I don’t think we have any grants in play.”
July 15, 2020, during the CAO’s strategic plan update:
- Harrison: “We have added some major [unbudgeted] projects, especially the day-care project. That is a multi-million-dollar project. It will have significant implications operationally to build it, so I think it is entirely appropriate to see what has to move as a result of that.”
The 2020 capital crunch – what we know (or not) about specific projects
Airport Projects – Several airport projects, with a total capital cost estimate of $2,276,800, are listed in the 2020 capital budget. The budgeted estimate for offsetting grants for Airport projects is $1,888,550, leaving an estimated $388,250 for QB taxpayers to cover. However, we now know that some, and maybe all, of the Airport grant applications have been rejected. What is not clear is: Which, if any, of these Airport projects is critical at this point in time? What can be deferred, without risk, to a later year? Which items are not essential at all?
Memorial Avenue / Hwy 19A roundabout – In the 2020 capital budget, all remaining components of Memorial Avenue Phase 3 completion are estimated at $3,800,000, to be funded by QB taxpayers from the Town’s savings account (Reserves). Councillor Harrison stated on July 15 that one grant of roughly $1.3 million is “looped into” the Memorial Avenue Upgrades Phase 3 project. What exactly does “looped into” mean? And to which specific unfinished component(s) of the project does the $1.3 million apply?
The ”Day Care Project” – There is no mention of any day care related capital projects in the Town’s current ten year 2020 to 2029 capital budget. Nor, to the best of our knowledge, has there been any engagement with QB taxpayers about paying for any such project. A previous Second Opinion QB article included a few snippets gleaned from Council meeting minutes about early childhood learning aspirations. On July 24, 2020 the BC government did announce that “Childcare BC’s New Spaces Fund is supporting the Town of Qualicum Beach to create 25 new spaces for children aged three years to kindergarten at the Into the Woods Early Learning Studio, which is expected to open in September 2021”. Readers can justifiably ask: What, if any, matching contribution is expected from QB taxpayers toward the construction and operation of this Learning Studio? In other words, how much is this “grant” going to cost us?
[For a closer look at some of the capital projects that were included in the 2020 Town budget back in February 2020, before COVID-19 landed its financial wallop across all levels of government, readers who love spreadsheets and accounting statements, can refer to the Town’s 2020 Budget Support Package, pages 16 thru 23.]
Town’s financial management reporting inadequate
Council is always quick to report with a flashy news release that a grant application was successful. That’s not really “news” – because those dollar amounts were already baked into the budget. However, when a grant application is rejected, that’s when Council should inform the public, because that is when our budget takes a negative hit.
What would certainly be more meaningful, and demonstrate an improved level of transparency and accountability, would be an additional column on the Town’s monthly financial reports showing Year-end (December 31) Forecast, as is common in financial management in both public and private sector organizations, both for annual revenue and expenditure accounts, and especially for individual projects that can span multiple years. Whenever Town administration learns that a grant application has been rejected, or a project goes over/under budget, or an unplanned emergency arises, then these changes could be reflected immediately in that month’s reported year-end forecast. Otherwise, the public is being kept in the dark, and Town Administration and Council may themselves be flying blind.
Stay tuned. In a future article, Second Opinion QB will examine Council’s stated rationale for plowing ahead toward the ballooning deficit.