By Gerry Barker
January 27, 2017
Thanks to an observant reader, I have received an expert analysis from a U.S-based organization called Strong Towns (http://www.strongtowns.org).
The comparison of Lafayette, LA, population 125,000 and the City of Guelph, population 121,000 are strikingly similar revealing the real reason both cities have no money.
Both cities have the problem of repairing and replacing aged infrastructures costing billions. Guelph has one advantage over Lafayette in that the median home price is $300,000 that is double that of Lafayette. Similarly, the median household income for the city is $41,000. The median property taxes there are $1,500.
The Lafayette report states that there is barely enough revenue to spend on infrastructure needs, thereby the city is barely treading water on the issue.
But let’s start with how Lafayette showed the real problem. The report authors with the assistance of the city staff determined that within ten years it would cost $32 billion to replace the city infrastructure. Then by adding up the entire tax base for that period, it revealed that only $16 billion would be received.
The report states: “It’s obvious to me why this is fatal, but for those of you for whom it is less clear, let me elaborate.
“The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure (more is paid to the schools and regional government). A fraction of that $150 – it varies by year – is spent on actual pavement.
“To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year. That assumes no new roads are built and existing roadways are not widened or substantively improved. That is $3,300 in additional local taxes just to tread water.
“Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year.”
That does not include underground utilities – sewer and water – or major facilities such as treatment plants, water towers and public buildings. Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year.
Make the situation worse, jack up taxes
After ten years of neglect of needed infrastructure repair and replacement, Guelph’s current city administration recently recommended a special, five-year tax levy of 1 per cent added to property taxes.
Unfortunately, city council decided otherwise and doubled the levy with half going toward “City Buildings.” It was never explained how that money would be used.
All they accomplished was to build another slush fund for use in the 2018 election year. That’s an estimated revenue stream of $5,600,000 over the two budget years, by the October 2018 civic election.
It’s still light years away from addressing the problem that has resulted in neglect of the most important element that makes the city work.
Instead, the previous administration wasted more than $50 millions on mismanagement, (Urbacon $23 million, GMHI $26 million and counting), it is a personal agenda of extreme social engineering that has left a legacy that will take years to over come.
But the council‘s decision to continue spending reminds us of ”One flew over the Cuckoo’s nest.” We are the nest and getting the bird. The administration cannot continue to ask citizens, owners, renters, businesses, and the poor, seniors on fixed incomes, to support an agenda that has problems in which there are solutions. What is required is recognition of the situation and the political will to ameliorate the problems.
Predicaments have solvable outcomes; make no mistake that or the past ten years we have been faced with dire outcomes.
It has to start somewhere and most people have lost confidence in this council and administration.
The long road back to rebuilding a city in an organized fashion that serves all the people and not just the minority who presently control the agenda. It requires a new council that is prepared to repair the multi-million losses of taxpayer money sensibly with a strong rebuke of the policies that are still financially choking our city.
How do you wipe out misguided spending of more than $1 million? Oh! The majority of council will deny this as if it has never happened. For the past ten years the millions in city reserves have been used to cover-up operating and capital spending. The city’s own audited statement as expressed by Coun. Leanne Piper six years ago, stated there was $77 million in reserves. Today, that figure has dropped to around $11 million.
Guelph’s problems of financing the growing infrastructure deficit are not unique across our continent.
Guelph, however has built itself into a huge financial dilemma.
It is one that will not go away and only increases in both costs and a dwindling ability to serve the citizens.
The empirical financial management of the past ten years only pursues an agenda that was bungled. Those millions of misspent funds will never return.
Our city administration, council and senior staff has just laid a financial responsibility on future generations.
The sad part is not even they are capable or courageous enough to take the necessary steps to solve this growing problem
When you have a growing deficit in the 200-year old infrastructure and use a tax levy as a band-aid, you know we have a serious problem.
But council went ahead and hired 13 new employees and tucked in $5,000 in the budget to promote a visiting band.
These are just some of the real reasons why our city has no money to build a Wilson Street Parking garage, a new downtown Library or a South End recreation Centre.
The tale of two cities in different countries that share the same problems points to similarities and the lack of political will. Now, there will be criticism of the comparison. Our infrastructure does not compared to Lafayette. We are in a four seasons climate area while Louisiana in the sub tropics. It makes no difference because the infrastructure needs in the South are more vulnerable to climate stresses such as tornados, hurricanes, flooding and excessive rainfall.
So let’s not use that comparison. They still have to fix the roads, storm water drainage, potable water supply and wastewater treatment, waste, including recycling and solid water processing, first responder financing, schools, and security.
Scale has little to do with it. Our problem is our costs, for ten years, are way too high compared to similar sized communities in our jurisdictional area.
Nothing will change as long as we have a majority bloc on council who fails to understand the real problems and persist in defending the mistakes of the past.
Let’s stop kidding ourselves.