Unfunded Infrastructure Upkeep - Will Cost Comox Valley Taxpayers

by Jamie Bowman

While the over-borrowing problems of Greece and Italy are making headlines, Comox Valley BC taxpayers are learning they will have some very big bills in the near future – to pay the upkeep on past development. 

Termed “unfunded infrastructure liability,” the bills coming due will be for fixing and replacing worn out pipes and streets. Local governments don’t often speak about this big bill, but Town of Comox public works superintendent Glenn Westendorp says Comox alone is facing costs of about $160 million. In contrast, the entire annual budget for the Town in 2010 was a mere $16 million. “When those figures are extrapolated to the rest of the Valley, it suggests a community liability of $300-400 million,” says Jack Minard, local government coordinator for the Comox Valley Conservation Strategy. “No governments here have that kind of money.” 

It’s an issue that did not hit the radar in the BC fall municipal elections. Infrastructure – roads, curbs, gutters, sidewalks, storm-water drains and pipes, water lines, and sewer pipes, as well as dykes, dams and levees – are costly budget items. 

In new developments, the cost of engineering and construction is borne almost fully by the developer. But once built, the developer’s responsibility ends. A few years later come the expenses of maintenance and eventual replacement. Only 20 per cent of the lifetime costs of infrastructure are paid by new development, so the remaining 80 per cent must be funded by the community, according to information presented at Convening for Action Vancouver Island (CAVI), a meeting last summer of engineering representatives from the four Comox Valley governments, where Westendorp revealed Comox’s infrastructure liability. 

“Like most of us faced with an aging car, we have to borrow money to pay for a replacement unless we’ve put money aside to cover it,” says Minard. “But few of us do such financial planning and neither do most municipalities. If we keep approving development at the current rate and type we have now, the coming costs will continue to grow exponentially.” 

The situation in the Comox Valley is typical of most other BC communities. According to CAVI, most local governments have not set aside sufficient funds to replace aging infrastructure. The typical life span of municipal infrastructure is 20 -o- 75 years and the provincial government has stated that it will not fund the “infrastructure gap” created by municipalities not planning for funding replacement costs. Locally, municipalities have funded some of the maintenance and upgrading work by using fees (development cost charges or DCCs) that municipalities charge developers for new building units. 

“The problem with using DCCs to pay infrastructure replacement costs is the need for continual development to collect fees,” said Minard. “Currently most of the development is low density on raw land. This sprawl development results in much more infrastructure in the ground, per taxpayer, which will require more money in the future for repairs.” 

A whopping tax increase – an estimated 50 per cent, according to CAVI – to cover the costs of fixing infrastructure like streets and pipes, is an idea not likely to fly at any elected council meeting. The current practice – approving new developments and then using the resulting income from Development Cost Charges to pay for replacing infrastructure in other locations – is not sustainable. 

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Written for the Comox Valley Conservation Strategy Community Partnership

[From WS summer 2012]

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