December 14 Special Meeting of Council

Trent Ernst, Editor

Present: Mayor McPherson, Councillors Caisley, Howe, Krakowka, Scott, Mackay

COUNCIL PROCEDURE

AMENDMENT BYLAW

Council gave final reading to the Tumbler Ridge Council Procedure Amendment Bylaw. The new bylaw changes the meeting schedule, moving to two meetings per month, with a Policy and Priority Meeting happening beforehand. Councillor Scott opposed. She says PPC meetings are quite lengthy, and she’s worried that there isn’t enough time to think about issues between the discussion and the vote. The mayor says if people feel that way on a specific issue, Council isn’t going to force a vote. Councillor Krakowka says that is his concern: “majority rules, so that vote can still happen, even though I may not be ready to vote.”

CAO Jordan Wall says Council has gone beyond what the scope of Committee Meeting should do. “The only decision that should be made at a PPC meeting is to forward a motion to the Committee of the Whole meeting. If that happens, and you want to schedule it for that meeting, it would need a unanimous decision of Council.”

Councillor Mackay says if Council isn’t ready to bring it forward that night, then they don’t have to bring it forward. “Nothing should go ahead without consensus,” he says.

2017 COUNCIL MEETING SCHEDULE

Council approved the District of Tumbler Ridge 2017 Council Meeting Schedule.

KPMG – CORE SERVICES REVIEW

Oscar Poloni and Chris Calder from KPMG came before Council for an rather long discussion of the Core Services Review. “The reason why I’m here,” says Poloni , who comes out of the Sudbury, Ontario office, “is that I’ve done a number of core reviews in Eastern Canada, and was requested by the Prince George office. I’ve probably done a good 40 or 50 of these. I’m a small town municipal guy. One of my smallest municipalities has 400 people. The purpose of my presentation is to provide with an overview of the draft review of the Core Service Review.”

He stresses the report is a draft. “This is not the end of the process, but the beginning,” he says.

When you do reviews like this, there are efficiencies, financial and customer service, that can be found, he says.

One of the things that they looked at was the delineation between services that they are obligated to do, versus things that they choose to do. “For example, under the Community Charter, you have to have a Corporate Officer. You have to maintain the roads.”

In terms of key themes, says Poloni, one of the big ones is the cost of providing services. “I focus on residential taxes,” he says, “And one of the reasons I do is because residents are the ones who vote. I appreciate that taxes are significant for the commercial sector, but they are generally way down on the list of costs.”

He says Tumbler Ridge is an interesting community. It is a planned community that is built for 10,000 people, but only has a third of that. “When I think about the communities your size, they don’t have a lot of the infrastructure you do.”

This leaves Tumbler Ridge facing a choice: either offer the service or shutter it. “And what I would suggest is, if you have it, you might as well use it.”

He points to service level decisions. Where he lives, he says, garbage pick-up is very Machiavellian. If the bag isn’t on the curb when the truck goes by, it’s not getting picked up. In Tumbler Ridge, he says, the truck will go back. “That might not be a lot of cost, but that is a service level.” He says the road clearing program is very generous. In communities of this size, they usually let the snow build up, because, he says, it fills the potholes.

He points out there are large investments that you wouldn’t see in a community of this size. The museum. The library. The golf course.

KPMG has run a per household cost comparing Tumbler Ridge to four other municipalities that are similar to Tumbler Ridge. “You’re municipality is fourth from the left on all these bars. Your municipality has the highest operating costs per household. What is driving that is your parks, recreation and culture cost.” He points to the Recreation Centre, which is overbuilt for a community of this size, and the Grant in Aids.

Despite this, though, Tumbler Ridge is also an extremely inexpensive place to live. The average municipal taxes are in the range of $600 per household.

The reason Tumbler Ridge can get away with this is because of “the cross-subsidization” from the industrial tax base. “Some people will say you’re using non-residential tax base to subsidize the true cost of municipal services. For the level of service you are providing, your residents are not paying the cost they would normally be paying.”

He points to Smooth Rock Falls, a community in Ontario, where the mill cross-subsidized services. In June of 2006, the mill shut down. The town basically lost 20 percent of its budget. He says the residents were paying $600, where all the other communities were paying $1200. “You have that here,” he says. “What this does is camouflages the cost. You have high service level and low taxes. Your average residential tax rate is so low, in some cases its less than the grant that people get to pay taxes. They make money off taxes.”

He says this is very appealing situation, and great from an affordability standpoint.

The mayor says they tax the mines because they don’t put a whole lot in the town. “We give it back to the people by way of the Recreation Centre. I don’t think that’s wrong.”

Poloni agrees to a point. “I don’t think any arena should pay for itself through user fees,” he says. “If you make arenas recover their full costs through user fees, only rich kids will skate, and that is fundamentally unfair.”

From a purely financial point of view, he says, the town is actually better off with the mines closed, because the District continues to collect taxes, but without the people that need the services. “That’s why you have $27-million in reserves. If you moved 10,000 people into this community, you’d still be collecting the same amount from the mines, you’d be getting a little more from residential, but your costs are going to go from $9-million to $30-million. That’s where the disconnect is. I’m not saying it’s wrong. Think about what your day is like. If you are like me, the first thing you do is go to the washroom. Dirty water goes away, clean water comes back. You shower, you brush your teeth. You don’t have to worry about the quality of the water, because you know the municipality is looking after that. You put garbage out on the street. When you get back, it has miraculously disappeared. You drive to work because someone has paved the roads. My son has to go to the arena. There’s ice time. If my house catches on fire, I call the fire department. You come home. What’s the last thing you do? If you’re like me, you go to the washroom. Dirty water goes away, clean water comes back.

“Everything you do touches members of your municipality, from the moment they get up until the moment they go to sleep. My point here is, there is value to that service. And right now, you’re not charging for it. You don’t have to charge for it, but you need to recognize that you are giving it away. It’s not my place to dictate policy to the District, but in the case of Smooth Rock Falls, once that camouflage goes away, they discovered what the true cost of that value is. And good times end.”

Four years ago, he says, he gave a presentation in Alberta about financial sustainability. “I had a councillor stand up and say: ‘I don’t have to care about this because oil will always be high.’ I hope that the price of coal comes up. I hope demand from China is strong. I hope they continue to operate the mines under care and maintenance polices. I hope that’s the case. But if that isn’t the case, you’ve forgone the opportunity to charge a little more to reflect the value your providing to build up your reserves for when the mines aren’t being taxed.”

He points to Elliot Lake. “It is a community built for 30,000 people, they lost $460-million in industrial assessment overnight. If you have a water treatment plant built for 30,000 people, but you only have 10,000, you can’t close two thirds of it down. From a sustainability perspective, if you see the value of a service, you may charge a little more just to be able to make sure when times aren’t good, you are able to adjust accordingly.”

One of the things he has heard is the line between governance, which is Council’s role, and operations, which is staff’s role, is becoming blurred. “Some staff have left because that blurring is causing them to be uncomfortable, and morale is low.”

When Council starts taking too much of a role in operations, says Poloni, it’s because of a couple different things. “It’s either because you don’t trust staff, or when you have big disruptions from an economic benefit is you have Council wanting to make the change. It is the circumstance. A third option is that you get people who are in the business sector who try and manage municipal government akin to their business. You can’t fault them for that, but the private sector and the public sector are different.”

There are two issues with this, he says. By crossing the line, you are going off-side of the intended role of Council, as defined by the province. If it goes on too long, you’ll start to lose staff, and it becomes a revolving door. You won’t get qualified candidates. I know this aspect is being addressed. We’re not here to beat a horse, but if we hear it, we bring it to the table.”

He presents three examples. First, he says, Council is bringing bylaw infractions forward to staff. Second, he says, Council has been getting too involved in marketing activities, and Council has been getting too into the weeds in capital projects in terms of site selection, engineering plans, etc. These are operational decisions that should be left to staff.”

He says he’s not telling Council to abdicate their responsibility, but you are getting a little too far into the weeds.

One of the challenge the District may face is, if the mines come back, key people in the organization may move there, as the District’s wages are not competitive.

He says the District needs a strong policy environment. In terms of budgeting, you want to have a process that defines time frame. “The reality is that, from a budgeting perspective, time is of the essence.”

He says strong policies also gives the District protocol for making decisions, so decisions are consistent. “Where we see this the most is reserve policy and grants to the community.” Councils will want to build a reserve, then they raid the reserves. From a grant perspective, you establish a policy, a group comes in that doesn’t fit it, and council choose to give the grant anyway. That’s Council’s discretion, but by doing so, you are breaking trail and establishing a precedent.”

Finally, Poloni says, it lays the groundwork for financial sustainability. “It allows you to say ‘these are the rules of the game’. Good paper makes good business. It helps you with decision making.”

He says Tumbler Ridge has nearly double the reserves per household as the next nearest community. “My question is, do you have a policy to manage those reserves? I already know the answer. It’s no.”

There are aspects of the District that are subject to inefficiencies. Generally speaking, he says, where costs are higher, it’s generally due to service level. “Pound for pound, you’re as efficient as all the other municipalities. If you’re going to make cuts to your budget, it’s going to be due to service level reductions.”

Poloni says it’s process issues. Capacity issues. There are duplication of efforts. There are places where the District is doing things manually, and it could be automated. He points to the municipal work order process. If a resident has an issue, they call the District, it’s recorded on paper. One copy goes to the resident, one goes to the department, one stays at the front desk. “You’re using manual pages to track customer requests. If you want to track this, can you do that? What if three years from now you need to go back and check the work. This can be done automatically. Also, there’s no prioritization to the work order. Why is this important? It’s not inefficiency, it doesn’t change the cost, but it’s customer service. Every call of a certain type should be responded to in the same way.”

This is not unique to Tumbler Ridge, he says. “I don’t want people thinking that staff doesn’t know what they’re doing. But municipalities develop over time. You bolt stuff on. It doesn’t coordinate as well as it should. Or you outgrow the system. A lot of the issues we’ve seen have nothing to do with your staff, it has to do with the system. Your finance department treats it like its their own money. They take tremendous responsibility for what they do. It has nothing to do with their performance.”

Infrastructure investment is an upcoming issue, he says, but compared to many municipalities, Tumbler Ridge’s infrastructure is in tremendous shape. “You’re in a good position to sustain the infrastructure.”

But now is the time to start spending money on infrastructure. He says the District needs management tools and policy tools so that they are not simply paving for the sake of paving.

He says that, there are three categories that spending falls into: legislated services, expected services and discretionary spending. About 85 percent of spending falls into the first two categories. While costs can be tweaked, but most of that has to be spent. Only about $1.5 million is discretionary spending.

Poloni says one of the things he’s seen is the municipality has a tendency to run equipment into the ground. This leads to higher maintenance costs. “At some point, it becomes cheaper to replace than repair. Run to failure strategies have lower capital costs, but higher operation costs.”

He says Council doesn’t need to implement any of the changes suggested, but at least the questions got asked.

At the end of the day, he says Council needs to trust staff. “You’ve got great people.”

After a closed meeting, Council rose and reported that the District of Tumbler Ridge and Summit Brooke have reached a mediated settlement of $250,000 to avoid a potential law suit of approximately $1.4 million against the District, and that the District is seeking approximately $57,000 in damages against Mr. Graham Johnson in BC Provincial Court in relation to his operating of the Tumbler Ridge Golf and Country Club.