Whitehorse city council has approved a $2.15 million contract to design and supervise the construction of the new municipal operations building.
Last week council voted 5-2 in favour of giving the contract to a Toronto-based company, but not before a lengthy debate over whether that was the right thing to do.
Boosters of the project contend the current municipal services building is in urgent need of replacement. Critics question whether the city has all the financial information needed to move ahead.
Councillors Dan Boyd and Samson Hartland were the two nay votes.
“My primary concern is having our financial affairs completely in order before we proceed to do this,” Boyd said. “I’ve asked for it for months. I’ve said I wouldn’t be supporting this at this juncture without it.”
Recent council meetings have focused on how the city would finance the $56-million project, which would consolidate many of its existing services into two locations: a services building next to city hall and an operations building off Range Road on Two Mile Hill.
The municipal services building being replaced is approximately 50 years old and houses eight departments. City officials say it consumes more energy than the 11 smallest municipal buildings combined.
Both sides acknowledge that it cannot be repaired and needs to be replaced.
“The truth of the matter is, there are some safety concerns. Is there urgency? You bet there’s urgency,” Mayor Dan Curtis said.
The pricey project first came up as part of the 2015 election campaign. Earlier this year plans to build a new services building were postponed. Now the project is being done in phases, starting with the operations building. That building it expected to take up the majority of the budget, about $47 million.
The operations building will be home to transportation, equipment maintenance, engineering, traffic, environmental sustainability, water and waste, as well as some human resources staff.
The city is looking at completing the design and site preparations this fall and winter, with construction scheduled to begin in April 2017.
There’s no timeline for when construction of the new services building could be built, city manager Christine Smith told the News.
“From the budget perspective it’s still there, it has not fallen off the radar. We were given direction to move slowly so that’s one of the ways in which we can do that.”
According to the city document, $25 million of the $56 million will be borrowed from a bank, $14 million will come from the city reserves and $17 million from the federal gas tax.
Councillors have suggested that the amount of debt the city takes on could go down if it applies for other government funding.
Of the $47-million price tag for the operations building, about $15 million is coming from the federal gas tax, leaving the city with about $32 million to cover one way or the other.
Any debt the city takes on will be at a 20-year fixed rate, according to staff.
The mayor has insisted that the project won’t affect property taxes.
The city has been planning for these projects for years, said Smith.
Each year Whitehorse has about $10 million in the budget to spend on capital projects. Since about 2009 that number has been reduced to $8 million so that more money could go to the reserves, she said.
That will continue even after the projects are built so that the city will have money to pay down the debt, she said.
“That’s your financing. That’s going to always go to the financing.”
The city estimates there will be $27 million in the reserves by 2019.
The Yukon’s Municipal Act limits how much money the city can borrow based on the size of its tax revenues. Whitehorse’s limit is about $82 million, according to Smith.
The city puts even tighter restrictions on itself through its own regulations. Right now it can’t borrow more than $500 per person. In order to go to the bank looking for the full $25 million it needs, that policy would have to be bumped to just over $1,000 per person, Smith said.
That’s still much less than the territorial rules would technically allow them to borrow, she pointed out.
City staff say the policies will be updated in the fall.
Contact Ashley Joannou at
ashleyj@yukon-news.com