Can We Trust Council to Get It Done?
The Crystal Pool Replacement Project is the project of our generation
Last Thursday, we received a staff report stating that the replacement of the Crystal Pool will cost the city over $200 million. The final figure appearing on a referendum ballot in early 2025 will depend on various factors such as the site location, continuity of service options, amounts drawn from relevant reserve funds, and the actual date of breaking ground.
Another factor to consider is whether this current council is even capable of successfully completing such a large and complex project, given their track record. I certainly have my doubts.
Council heard from staff that alongside the $200 million plus price tag, they had options to draw funds from a Debt Reduction Reserve Fund. You can see the breakdown in the figure below. Each option is broken down with its respective cost, and staff has recommended drawing $30 million from the debt reduction fund, which represents the total remainder of funds while factoring in planning in the 5-year corporate plan.
By law, the council has to either hold a referendum or engage in an alternative method to get public consent to borrow such a large amount of money for this project. Taking $30 million from the reserve fund means the final figure on a referendum question will be lower. The lowest figure on the question is expedient for several reasons.
Reserve funds are governed through the Community Charter and locally through Victoria's Reserve Funds By-Law. There are regulations for specific funds, and the council can create particular reserve funds. All funds have a defined purpose, and all money gained through interest must be directed toward that purpose. The Charter permits councils to repurpose reserve funds to another reserve fund, but the council must repay the repurposed amount plus interest.
The Charter mentions explicitly that reserve funds can only be repurposed by the council for other reserve funds, not for different projects. During last Thursday's discussion, Councillor Jeremy Caradonna raised the possibility of drawing funds from a Parking Reserve Fund. This was addressed by staff, who informed the council that they could draw from the fund under the idea that the parkade being built was under the purpose of the parking reserve fund. But here's the problem: there is no parking reserve fund, at least not one I can find in Schedule A of the Reserve Fund By-Law. There is a Local Amenities Reserve Fund, which is fees collected through the various amenities managed by the city.
If staff and Councillor Caradonna meant the Local Amenities Reserve Fund, then there would be more implications—this isn't just a matter of spending from that fund for a new parkade. First, the by-law defines the fund's purpose as "paying the cost of public amenities" and not the capital building of new amenities. Staff did mention this during the meeting in questioning from Councillor Dave Thompson and stressed that it may not be possible to draw from the fund because it is for maintaining existing facilities (and not just parkades).
Second, the Charter specifically mentions reserve funds created using amenities fees and requires ministerial approval to repurpose money from these funds. There is more to using this money than just passing a motion from the council floor.
And this is when the discussion shifted to drawing from the fund for another purpose. The staff explained that this was possible but that the money had to be, at most, what was earmarked in the 5-year corporate plan and repaid before the fund would be required for specific use in the future. What should have been mentioned was that said money also needs to be repaid with interest, much like a loan. Staff also should have noted that the Charter states reserve funds can only be repurposed to other reserve funds. There is a giant question mark as to whether they can be repurposed for new capital projects.
The long and the short is that not only does a Parking Reserve Fund mentioned in the motion that passed last Thursday not exist, but during a nearly two-hour discussion during Committee-of-the-Whole, staff gave inaccurate information to a council more than willing to introduce new ideas on the fly.
All of this fuels my fears that this council is perhaps not fit to approve such a project without further issues and increased costs.
And if you still think things will be okay, consider that staff recommended drawing $30 million from the Debt Reduction Reserve. However, such a reserve fund again cannot be found within Schedule A of the Reserve Fund By-Law. It, too, does not appear to exist.
There is a Financial Stability Reserve Fund that among debt reduction is for "funding operating and environmental emergencies, […] and liability claims, for stabilizing the temporary impact of cyclical revenue downturns and cost increases and for funding innovations within City Departments that create efficiencies and enhance the effectiveness of programs." The fund's purpose is not just to reduce debt; it includes many items not presented to the council last Thursday.
Here's the rub to end this newsletter: This project has many legal hurdles, given its hefty price tag and the requirement to borrow money and get consent from the public in a referendum. During Thursday's discussion, the City Clerk mentioned that the city had to be careful to avoid a legal challenge down the road in crafting its referendum question and proposal to the public. And he is right.
I am certainly not against a new pool. We need a new pool. My son or daughter will learn to swim in this pool someday. I get that. But I am worried that this council and this staff are unprepared to take on this challenge. What will happen, along with their own professional and political careers being tarnished, will be an empty site, higher cost, and a lack of needed amenities for our future generations. We need to pay attention to this issue all the way through.
