FAQ
What kind of infrastructure is Penticton responsible for?
The City owns and operates all water, sewer, and electrical infrastructure. It also has a large collection of general infrastructure, which includes among other things: 184 km of roads, 24 bridges, 143 km of walkways and sidewalks, 16 major buildings, 42 smaller buildings, 67 parks, 12 sports fields and 273 vehicles and pieces of equipment used to keep the city operating and provide fire protection.
What is the current condition of the City's general infrastructure?
Is Penticton the only city with an infrastructure challenge?
No.
The cost and challenges of providing infrastructure is something that
communities across Canada are facing. Canada’s municipal infrastructure deficit
is currently $123 billion and growing by $2 billion annually.
What is an infrastructure deficit? How much is Penticton's?
Infrastructure deficit is the value of the infrastructure that has passed its service life, but is still providing service to the community. The estimate of Penticton’s current infrastructure deficit is up to $175 million.
Does this mean we have to come up with $175 million?
No. We can continue to use some assets beyond their service life and reduce our infrastructure deficit over a period of years. For example, we may purchase a truck with a service life of 10 years and find that we can actually use it for 12 years. We still need to replace the truck at some point, but we can extend the time frame for replacement. A long-term and sustainable asset management and funding plan will ensure we have the ability to replace and upgrade facilities as their useful life comes to an end.
What community infrastructure is in the most need of upgrades?
How much do we need to address the infrastructure challenge?
Our water, sewer and electrical utilities are self-financed but underfunded. A review of utility rates is planned for 2018 which will take this in to account and plot a strategy for sustainability.
To begin to close our $76.8 million general infrastructure deficit we need to find approximately $8 million annually for the next 10 years. For context, a 1 per cent tax increase raises $250,000 annually.
What options are available?
Are any options off the table?
How have other communities addressed their infrastructure deficit?
Here are some of the ways other communities are addressing their infrastructure deficits:
Grand Forks introduced a 15% tax increase including 13.7% for asset management.
Vernon introduced a 3.4% tax increase every year for the next 10 years including 1.9% for asset management.
Victoria is using a large surplus from residential growth.
Revelstoke is still in the early stages and is funding asset management planning.
What is the total replacement value of Penticton's infrastructure?
Why not extend the timeframe 20 years or longer?
The more you delay replacing your infrastructure, the more you increase the deficit and the risks associated with failure.It is anticipated that the City’s deficit will continue to grow over time to $197 million by 2026.
Is this a crisis?
No, and the provision of essential services is not in question. The primary reason for undertaking this challenge is to ensure that we don’t find ourselves in a crisis situation. Tracking the health of our assets and planning for adequate funding for repairs and replacement in the future is a critical step in avoiding any sort of crisis scenario.
What infrastructure is in the most need of upgrade?
How much does Penticton need each year to address the infrastructure deficit?
Our water, sewer and electrical utilities are self-financed but underfunded. A review of utility rates is planned for 2018 which will take this in to account and plot a strategy for sustainability.
To begin to close our $76.8 million general infrastructure deficit we need to find approximately $8 million annually for the next 10 years. For context, a 1 per cent tax increase raises $250,000 annually based on our current population.
Why can't the federal or provincial governments do more to pay for our infrastructure needs?
Why can't we use reserves to pay for our infrastructure?
Doesn't the City bring in enough revenue from our utilities to pay for the infrastructure?
What is the City doing to promote growth and expand our tax base?
The
City has an aggressive economic development strategy to attract new businesses,
citizens, and visitors to Penticton that is aimed at increasing annual
revenues. Certainly, the growth of our City and tax base is an important part
of funding future infrastructure needs and can help to solve the problem over
the longer term.
Why can’t business and tourism pay higher taxes instead of residents always having to shoulder the burden?
What is an asset management plan?
How did we get into the current situation? Hasn’t the City been planning all along for future infrastructure needs?
Asset Management work completed in 2016 brought into clear focus the magnitude of the problem.
The issue in Penticton is especially acute due to stagnant growth in population and tax revenues amid continually increasing costs for maintaining our infrastructure. Had the population grown as projected, the tax base would likely be broad enough today to address future infrastructure investment needs. The 2010 to 2015 period was also characterized by minimal tax increases which led to less funds being available for infrastructure.
What is the next step?
Over the next few months, the City needs to develop a long-term asset management strategy that will provide sustainable funding well into the future. In the coming weeks, we will be reaching out to inform residents about the actual situation and gathering their input and ideas to help us make some tough decisions. As part of the 2017 budget process, we will be finalizing and implementing a five-year asset management plan early in the new year.