Downtown Rehabilitation
Next week Council will be undertaking its 2018 budget deliberations. The biggest question we will be considering: whether or not to go ahead with the next phases of the Downtown Rehabilitation in the spring.
I am leaning towards supporting beginning phase three as soon as possible. However, Council will not be hearing detailed reports and recommendations from administration until later this week. I am not deciding how I will vote until I have full information. I do have hesitation, mostly to do with funding.
Following is some background information and my current thinking. I’m still reading, researching and talking to everyone I can. I am going into these discussions with a very open mind. So I would love to hear your thoughts!
An important note: Council has time later this week to discuss Downtown Rehabilitation with administration. We have not had detailed discussions yet. All opinions expressed here are my own, not those of Council. Should there be any inaccuracies, they belong to me and not to administration.
THE SHORT VERSION
The next phases of Downtown Rehabilitation are 100 Ave from 214 Place to Co-op. This work is needed to replace underground infrastructure. It will save us from sewer pipes failing and will encourage put in larger pipes to encourage higher density redevelopment downtown. Development is important because it will directly increase City revenue, enhance resident quality of life, and contribute to our local economy. This work needs to happen eventually. However, we need to decide when and how to do it and figure out how it will get paid for.
Currently, I want to see us proceed with construction next year. I’ve heard concerns about our current design, and I share many of them. However, I also don’t think it would be wise to change course at this time. I also need to be confident in our revised construction processes before voting to approve the project. I have questions I will be asking administration about construction management; I suspect that I will be satisfied with their answers.
Funding is my biggest hesitation. This project could require us to put our debt on the upper range of my comfort level. At the same time, I think that this investment in downtown will eventually pay for itself in direct increased revenues from redevelopment. We also do need to do this project at some point. I want to dig into potential revenue sources besides debt. But if we will be taking on debt eventually for this, I want to take it on now. This will be more expensive if we need to wait for emergency repairs. I’d also prefer us to take on debt and start on recovery of the investment now rather than in the future.
I am still researching, thinking about, and talking to people about Downtown Rehabilitation. My mind is far from made up. I would love to hear your thoughts.
THE LONG VERSION
What is Council Discussing Now?
The current discussion before Council is whether or not to go ahead with phases 3 and 4 of the project in 2018. These are on 100 Ave from 102 St up to 98 Ave (from 214 Place to the end of the Co-op parking lot). There is also the option to do 100 St from 100 Ave to 101 Ave.
Why Invest in Downtown?
I have had a few people ask me “why invest more into downtown than other parts of the city?” The reason: it is unique. Downtown deserves special attention for the following reasons:
It is our geographic core. Unlike many other municipalities, most people need to regularly drive through our downtown. Everyone in town regularly uses or passes through it.
It is a competitive advantage. I strongly believe in regional partnerships. Our focus needs to be working with our municipal neighbours to grow our regional economy. At the same time, there is an element of competition inherent to how the province structures municipalities. Our downtown is one thing no other nearby community has. We need to strengthen this aspect of economic advantage.
It is a social centre. We have parades, the Street Performers Festival, and other large events downtown. Many people also have smaller gatherings downtown over a meal, a day of window shopping, a class, a show, or board games. Connection is vital to a thriving community--we need to create spaces for it to happen.
We get evaluated by it. When I was considering moving here in 2010, downtown looked a lot different. It was also the first place I visited. One of my first thoughts was, “I’m not investing my life into a shabby place like this.” I know I wasn’t alone. Today, I am happy to see that a visitor’s impression would be much different. Whether they should or not, potential residents and investors make judgements about our community based on our downtown.
It has strong potential for increased revenue. As downtown is rehabilitated, we will see redevelopment happen. This will increase property values and density. This will in turn increase tax revenue. Increasing our tax base is key to getting our tax rates down.
What are We Rehabilitating Downtown?
The point of the work downtown is to replace underground sanitary, storm, and water networks.
This underground work is vital. For example, see the following picture. This is from the 101 Street sanitary trunk line that services downtown and Avondale. The green pipe is a section of 750mm PVC. It replaced a 375mm clay pipe installed in 1938- the orange circle represents the original’s size.
Eventually, the existing infrastructure will fail. It is much better to proactively replace it before that happens.
We also have landowners who would like to redevelop their properties. They want to create higher density commercial and residential space. This density is important for both them and for the City of Grande Prairie to maximize revenue. More residential and commercial activity will also help create a downtown that feels vibrant and exciting. However, redevelopment cannot happen with existing infrastructure- bigger buildings require bigger pipes.
Since the streets have to be ripped up to do this underground work, surface upgrades are also being made as they are re-installed.
All of this has to be done eventually. The discussion is not about if we need to replace the downtown infrastructure. Instead, the discussion is about how and when we do the work.
When to Go Ahead?
There has been a lot of discussion about when to proceed. Should we get right into phases 3 and 4 or should we let the project breathe for a year or more?
Right now, I lean towards going ahead next year. Of course, I would only vote this way if I was satisfied with our design, process planning, and funding sources. My top priority is doing this project properly. But I also want to get it done as soon as possible.
Following are the reasons I want to see it happen soon:
We have institutional memory. We learned a lot of lessons during the first two phases. They will be best applied to the next phases if we start work while memories are fresh and before staff have moved onto other jobs.
It will maximize investment. We appear to be heading into a time of economic upswing. Potential investors will be visiting Grande Prairie. We will also have workers arriving with plans to leave in a few years. We want them to become long-term investors and residents. A thriving downtown will help. I want to get it done so that our returns on the investment can start arriving sooner.
It is what business owners have expressed. I spent two afternoons this week dropping in on random businesses. I’ve also set up coffee meetings with downtown owners and managers. Every single one I talked to told me that if we can get organized enough to do a good job, they want us to go ahead with this project next year.
It is what residents have expressed. Over the past week, I have been asking almost everyone I talk to what they think about downtown. They do not have anywhere near the consensus of our downtown owners. However, a clear majority are also telling me they want us to proceed right away.
People are used to downtown construction. They have learned how to adapt. If we delay, they will have to re-learn how to live with it in a few years. Additionally, when there is no more work happening downtown, we need to put resources into getting people to come check it out again. We shouldn’t be thinking about making a marketing push only to shut roads down again in a couple of years.
The economy is picking up. If the economy was declining or staying steady, it would be a lot easier to delay this project for a year. However, I am optimistic that we are heading into a booming economic time. As contractors get busy elsewhere, the costs of their work will increase and their quality could decrease. We are likely to get better value in 2018 than in 2019.
Surface Design Work
There has been a lot of discussion about the surface design of Downtown Rehabilitation. Everyone I have talked to agrees that the work done on 101 St and 101 Ave looks incredible. However, they wonder if the extra features were worth the extra money and construction time. There are also some concerns about road widths, intersection curb extensions, and other engineering elements.
Our previous Council commissioned the design work for phases three and four in the spring. It is mostly completed. It is in the same style of the work already accomplished. I know some people in our community would like us to redo the design. They want the next phases to have simpler surface features so that they can have a lower budget and a quicker construction time. Some people have other changes they would also like to see put into the design.
Council does have the ability to order a new design. My personal preference would be to have less expensive surface finishes. I'm also not completely convinced on narrowing the road. This has led me to put a lot of thought into whether I would support a motion to go back to the drawing board for these next phases. Currently, I would not support it. Here is why:
I doubt that we could get a redesign done in time to begin work in 2018.
We have already spent money on design work. Having to pay for a new design lessens the savings we may realize. Furthermore, these savings may turn out to be a complete wash if the redesign causes construction to be done in a busier economy.
We had a robust engagement process. The City did a good job of engaging residents and businesses and incorporating their feedback with wider best practices into the design. I have personal opinions about elements that could be better. But I am confident that our opinions were properly captured and applied. Redesign might save us time and money, but it won’t lead to a design that our community is more excited about.
Stability is important. Drastic change every time a new Council is elected is not good for our community. It is certainly our Council’s right and responsibility to change course if we are convinced it is necessary. However, when in doubt about this necessity, we should lean towards staying consistent with past vision and decisions.
These are the reasons that I do not currently support a redesign. That being said, I am still very open to having my mind changed as I gather more information and other perspectives. I would especially be open to discussing redesign if Council decided to delay the project beyond 2018.
Concerns About The Construction Process
Many people have expressed to me concerns about the actual process of construction. I know that we had hiccups in the first phases.
I will not be voting to approve this project until I am satisfied that administration is prepared enough to go forward with minimal disruption. That being said, we have learned from our already completed work. We also have new senior management at the City who have impressed me. I will be asking questions about project management. At the same time, I will be surprised if administration has not already worked to address the concerns I have gathered.
Here are the issues and concerns I have had brought up to me. Please let me know if the City should be aware of any others:
Communication. We need to effectively and personally communicate with both business owners and building owners.
Marketing. We need to make sure customers know that downtown is open during construction. Just as importantly, they need to know how to get to every single business.
Water mitigation. We need to make sure that rainfall doesn’t flood buildings throughout construction.
Private hookups. We need to make sure that business owners are given the opportunity to update the water and sewer infrastructure they own while the ground is torn up.
Staging, traffic, and access. We need to make sure that construction is keeping disruptions as minimal and as short as practical.
Funding
Funding is my biggest hesitation with this project. I know this needs to get done and I think it should get done as soon as possible. I can live with the design. I am confident that administration will handle construction well. But it is a lot of money we are talking about.
Right now, my information comes from the upcoming meeting agendas; you can read them here. Administration will be providing more information this week, and I already have a list of clarification questions I will be asking. My knowledge is not complete. However, here is my current understanding:
The next phases are estimated to cost $24,000,000 just to do 100 Ave or $27,000,000 to also do 100 St from 100 Ave to 101 Ave. I am told that phases 1 and 2 are coming in on budget. If that is true, I have confidence in the accuracy of the estimates for phases 3 and 4.
Our previous Council already funded $1,700,000 for design and construction supervision work. Aquatera has committed an additional $870,000.
This means that the City needs to fund an additional $21,500,000 or $24,500,000. I am not aware of any available funding from senior levels of government. I’ll know more later in the week, but I assume that most of this funding would need to come from borrowing.
I am not opposed to borrowing in principal. Borrowing can let us make infrastructure investments that will not only enhance quality of life but that will also pay for themselves. Borrowing also allows future residents to be paying for the facilities they enjoy rather than the entire cost being put on current residents. Borrowing certainly has its place in municipal development.
At the same time, borrowing needs to be approached with caution. We need to make sure we are putting it into investments which make economic sense. And we need to make sure that we are making investments we can afford.
Grande Prairie’s Debt
The BIG question wrapped up with Downtown Rehabilitation: can we afford the debt?
The province legislates how much debt the City can carry. In 2017, this limit is estimated to be $267,440,304. Currently we have $130,441,062 in debt. However, the borrowing needed to pay for Bear Creek Pool and the CKC Grandstands has not been approved yet (it is being discussed at the next Council meeting). These will bring our debt to approximately $139,000,000. If we borrowed $21,500,000 for Downtown Rehabilitation, we would be at $160,500,000 of debt.
This would put us at about 60% of our debt limit. From my quick look at Alberta Municipal Affairs data, I believe this puts us at a higher than average but not way out of line when comparing us to similar sized municipalities. I think it is still a manageable level. I’ve also asked some of our biggest local investors about this, and they haven’t expressed undue concern about our debt level. I don’t think this debt would put us in a precarious situation long term. However, it would take our debt level to the upper limits of what I am comfortable with. I am especially leery because we may be looking at debt funding to improve the current bypass once the province gives it to the City.
Another question is whether or not we can afford to service this debt. My rough math suggests that the debt needed for downtown would cost us approximately $750,000/year to service. Within 5-10 years, it is realistic to expect the bulk of this to be balanced out by increased revenue from redevelopment downtown. But in the short term, this works out to a tax rate increase of approximately 0.75%. Our ratepayers are already feeling a high burden. If this debt is taken on, we need to find savings elsewhere.
I do not like the debt that this project will entail. At the same time, the debt is manageable. And once again, this project needs to get done. I want to see it done before a pipe fails and we are digging up the ground making costly and poorly planned emergency repairs.
I plan to investigate potential funding sources besides debt. But if they cannot be found, the debt will need to be taken on eventually. If this is likely to happen anyway, I would prefer we take it on now. I would like us to begin recovering our investment sooner rather than later.
Where I Stand
Right now, I am leaning towards support of going ahead with downtown rehabilitation in 2018 using our current design. It isn’t a vote I am excited to make. But it is what I currently think is best. Here are pieces of information that would be most likely to change my mind:
A large number of people telling me “we need to slow down on this.”
Learning about significant potential funding sources we can access if we hold off the start date.
Council approving a substantial rate increase during budget deliberations. If we cannot realize savings elsewhere in the corporation, we should not be adding to our debt servicing costs.
Information which makes me suspect that we need more time to prepare in order to do the best job possible with the construction process.
I still have a very open mind. Please let me know what you think, especially if you have differing thoughts. Give me a call or email. Stop me to chat if we run into each other. Or come on over to the GP Round Table group on Facebook and chime in.
Thanks for caring enough about our community to read this very long post!
-Dylan