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South
End Rock Tunnel May Have Revealed Tax Duplication Problem
by
Robert Kirwan
Publisher
Valley East Today |
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| Who is going to pay for the rock sewage tunnel in the south
end will have to be decided some time, but in the meantime, some residents
are concerned with an underlying problem that appears to have surfaced.
The total cost of the 6.5 km sewer tunnel will be $31 million. There is
little doubt that the construction of the tunnel is needed in order to
provide for new development in the south end of the city.
We thank Councillor Ron Dupuis for providing us with a breakdown of
where the money will be coming from:
$14,248,300.00 Previously approved through Capital Budgets
965,000.00
Previously approved through Capital Budgets
Marcel/ Bouchard lifts
8,400,000.00 committed
from the Province
340,000.00
culvert work to be funded from the Roads Capital
Envelope - 2006
106,700.00
from the Sewer and Water Payments Reserve Fund
1,000,000.00 from the
2006 Wastewater Capital Envelope
1,000,000.00 from the
2007 Wastewater Capital Envelope
1,015,000.00 from the
2008 Wastewater Capital Envelope
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$27,075,000.00
With the total cost of the tunnel being estimated at $31,075,000.00, this
leaves a shortfall of $4 million.
On the surface, this does not look that bad, but in reality:
 | The province has kicked in $8,400,000 for the project.
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| Normally, in such a project, it is customary for any costs above the
funding received by the provincial government to be split between the
developers/people who will benefit from the project, and the city.
This means that about $11.3 million should come from the City (revenue
generated from municipal taxes) and the balance of $11.3 million from
the developers/new residents.
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| The City of Greater Sudbury has already committed $18,675,000 to the
project, or some $7 million more than it should have been expected to
contribute.
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| The latest proposal is that the additional $4 million should be paid
by charging new developers an additional $3,760 for each new house and
$2,260 for each new apartment.
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| As it is now, the city charges new developers $2,612 per lot to help
pay for services regardless of where the development is. This means
that the new development in the south end would have to pay the extra
cost in addition to the current $2,612. |
The biggest argument coming from developers is that the extra $3,760
would make new homes in the south end less attractive and scare
professionals from moving to the city. This argument is not holding much
water with residents who live in other areas of the city for the following
reasons:
| The average price of new homes in the south end is well above
$250,000, therefore, anyone who can afford to purchase one of those
expensive homes can well afford the additional $3,760 development fee.
If not, then there are plenty of other great developments taking place
in Valley East.
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| Ratepayers all across the region, many of whom could never even
think of living in a $250,000 home, are already contributing a portion
of their municipal taxes to help come up with the almost $19 million
that the City is putting into this new rock sewage tunnel. This is
already $8 million more than our share and is money that could be put
towards improved roads and snow removal.
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| It has been argued that the increased assessment from the south end
would benefit the entire city. However, there will be increased costs
to service the south end of the city and those expenses will
effectively wipe out the increased tax revenues. |
What Councillors appear to be debating at this time is whether or not
commercial and industrial properties should also chip in with new
development fees. Arguments are forthcoming from a number of sources
stating that these development fees would deter business expansion. This
does not hold much water either since businesses will locate where they
feel the market will support them. New development fees are a small price
to pay to be located near their market.
As it stands now, it would also appear as if the City is prepared to
dig into the Wastewater Capital Reserve Fund for the $4 million and
recover the money over a 40 year period. This in itself is causing concern
for many ratepayers. For example, over $1 million per year is already
scheduled to come from the Waste Water Capital Envelope in 2006, 2007 and
2008. The City is now prepared to borrow from the Waste Water Capital
Reserve Fund to pay for the rock sewage tunnel in hopes of recovering the
money in the form of new development fees over the next 40 years.
Financial advisors may wish to give some advice to the City on the merits
of turning over that amount of money and losing the interest earning power
it could otherwise generate.
This situation has created so many difficult issues that it is hard to
comprehend.
The biggest thing on the minds of people living in Valley East is that
with so much space and infrastructure already in place here, why would we
ever want to pay additional taxes to cover the expenses of developing a
new area in the south end of the City to help out people who can afford
$300,000 and $400,000 homes? Perhaps we should take the $19 million and
spend it developing the North End. Or just save the $19 million and put it
to other uses and allow new developers to pay the full shot. If they want
to live here, they will gladly pay.
It would appear that there is little support in a decision that will
see local ratepayers having to come up with any additional funding for the
south end - many feel we are already paying twice for this development. |
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