Don Quixote Tip of the Day

Do you get annoyed when you receive unsolicited requests from Credit Card, merchandise or even Political contribution requests. They sometime enclose a prepaid self addressed envelope inside to help you return your application, cheque etc.If you want you can seal the empty envelope and return it by dropping into the Postal Mail Box and they will have to pay the postage on the returned empty envelope. Maybe if they got enough returned this way they would stop sending out these obnoxious unsolicited requests. Originally Posted April 07, 2007

"Harper Government" gets credit for investing our money only in B.C. ?

Don Quixote Note: I expect the following headlines in a Political Party announcement or even in the media but I do not accept these headlines from a Government of Canada (taxpayer paid) website. The money used for these grants and investments come from the Canadian Government NOT the Harper Government.The use of the Prime Ministers name used in this manner as a headline on any of the Canadian Government's announcements or advertisements etc. should never occur. ( I would say the same if any Party's Prime Minister's name was used in this self serving way on a Canadian Government website.)

If you share these concerns Feel free to E-mail: news@canada.gc.ca

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Recent Announcements Western Economic Development Website

• Harper Government Invests in Recreational Infrastructure at the University of British Columbia – Okanagan read more
  

• Federal, Provincial and Municipal Government Investment Creates Jobs and Benefits Historic Site in Medicine Hat
  

• Governments of Canada and B.C. invest $14m in jobs

• Government of Canada Invests in Southern Alberta’s Recreational Infrastructure

• Harper Government invests in Vernon’s Recreational Infrastructure

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The first Article and all others are also available on Canada News Centre website. (A Gov. of Canada website. The contact point for the News Centre is:

E-mail: news@canada.gc.ca

Original posting Sept 4 2009:Harper Government gets free Plaudits and Publicity on GOVERNMENT OF CANADA WEB
Note that the Government of Canada Invests in Alberta and Saskatchewan BUT it is the HARPER Government that invests in the B.C. Communities !!

Harper Government gets free Plaudits and Publicity on GOVERNMENT OF CANADA WEBSITES !!

Canada News Centre:

Harper Government invests in Vernon's Recreational Infrastructure

September 04, 2009
Vernon, British Columbia

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Don Quixote Rant: This site where the above headline occurs is the Canada News Centre run and controlled by the Government of Canada.

The money used for these grants come from the Canadian Government NOT the Harper Government.

The use of the Prime Ministers name used in this manner as a headline on any of the Canadian Government's announcements or advertisements etc. should never occur. ( I would say the same if any Party's Prime Minister's name was used on a Canadian Government website.)

If one goes to the department involved that produced this headline namely the Western Economic Diversification Canada

you will see some of their recent announcements listed:

• Government of Canada Invests in Southern Alberta’s Recreational Infrastructure
  

• Governments of Canada and Saskatchewan invest in St. Benedict’s Recreational Infrastructure
  

• Harper Government invests in Vernon’s Recreational Infrastructure
  

• Harper Government Invests in Salmon Arm’s Recreational Infrastructure

• Governments of Canada and Saskatchewan Invest in Wakaw’s Recreational Infrastructure

Note that the Government of Canada Invests in Alberta and Saskatchewan BUT it is the HARPER Government that invests in the 2 B.C. Communities !!
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The contact point for the News Centre is:

E-mail: news@canada.gc.ca

The real effects of the 1.99% budget !!

Click on Image To Enlarge:
This presentation is the comparison between what the average property valued at $418,676 ($149,811 Land & $ 268,865 Improvements) would have paid in actual taxes in 2008 and proposed taxes in 2009.

2008 taxes are calculated with the fire tax levy separate as it was only charged on improvements while the 2009 taxes are charged on a full integrated fire tax that is assessed on both Land AND improvements.

Because there were 2 different fire specified areas in 2008 Okanagan landing AND the rest of the City the comparision is naturally broken out that way.

A comparison for the same valued property (i.e $418,676) that is bare land is also shown.
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Tax Caveat:
Every property is effected by the tax rates in a different manner and is dependent usually on the amount that its assessment is up as compared to the average assessment increase. As the Province froze assessments this year (in most cases) this should not be a major factor in this years calculation . The major difference this year is how much Land you have in comparison to the average Land component of the average property. (The average $418,676 property has 35.78% Land and 64.22% Improvements) As fire taxes will now be charged on Land also your taxes will rise or fall dependent on your deviation from the average.

As an illustration of the above my particular property has 46% land assessment and I will expect that my tax increase consequently will be higher than the average increase.
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An article in the Morning Star has some of the comments from Council about the 1.99% tax solution.
A Posting of yesterday shows the City's Presentation of the 1.99% Tax Increase for the average House.

The 1.99% City Tax PRESENTATION

You can click on both images to enlarge.
The first Chart is the presentation by the City of Vernon's financial department of the budget effect on the average house for the so called "1.99%" or only $20 per average house Tax Solution that passed three readings on Friday 13th by a 5-1 vote.

The second Chart is the presentation by the City of Vernon's financial department of the budget effect on the average house for the so called "-0.33%" or -$3.25 saving per average house Tax Solution that rescinded the original 5-2 favourable vote of Monday and defeated it on Friday 13th by a 5-1 vote.

I have made notations of what each figure represents on both charts.

These presentations are based on a comparison of what would the effect be on an average house IF the average house in 2008 had been charged for the fire portion of the City's taxes on the new basis that is been put into effect for 2009, namely 'Fire taxes integrated fully into city taxes and charged on LAND and Improvements rather than just improvements as was actually the case in 2008.

I will be posting later a more valid comparison to show the taxes on the average property of $418, 676 (Land $149,811 and Improvements $268,865) located both in the Okanagan Landing AND the rest of the city. I will also show a comparison for this average property and the resultant tax effect IF the property is land only. This comparison will be based on the actual taxes for 2008 being split by general and fire and compared to the full tax integration formula of 2009.

Tax Caveat:
Every property is effected by the tax rates in a different manner and is dependent usually on the amount that its assessment is up as compared to the average assessment increase. As the Province froze assessments this year (in most cases) this should not be a major factor in this years calculation . The major difference is how much Land you have in comparison to the average Land component of the average property. (The average $418,676 property has 35.78% Land and 64.22% Improvements) As fire taxes will now be charged on Land your taxes will rise or fall dependent on your deviation from the average.

As an illustration of the above my particular property has 46% land assessment and I will expect that my tax increase consequently will be higher than the average increase.

An article in the Morning Star has some of the comments from Council about the 1.99% tax solution.

A Brave New World 1 year later.

Aug 31,2007
Don Quixote has entered the Darkside. My son the computer Geek has persuaded me to move to an Apple Computer which arrived yesterday afternoon. As I stumble along jumping from Safari browser to Firefox browser to ensure that I can post correctly to Blogger I say farewell to Windows and Internet Explorer, never looking back as I venture into the brave new world of Apple.

I will have to relearn how to navigate on the information superhighway finding the shortcuts that I knew so easily on my old system. After 15 years of PC's, Windows and Internet explorer not to mention a change from Telus to Shaw I will learn new curse words to describe this $%^&&*ing so called technological progress but I know I will emerge shortly as an Apple expert who will look disdainfully down on lowly PC users.

Who says you can't teach an old dog new tricks. They say once you done 'Mac' you'll never go back. (We'll see !)
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Update: Sept 1/08 Still learning new Mac tricks but I would not go back to a PC and especially the Wonderful World of Windows. I've come a long way from programing in COBOL and FORTRAN and sitting on my Commodore 64 being excited by a game of Pong or Pac-Man. There is a brave New World out there and the original computer pioneers have to keep up with the ever changing and improving technology. As I enter the first stage of CRS (Can't remember Shit), the challenge is to persevere and to use our brains to do in a couple of hours or days what these young kids seem to be able to do with in about 2 minutes of keyboarding. (Youth is wasted on the young !)

He who pays the piper calls the tune ! (A Don Quixote Rant)

I Don't care what you call it, whether Commission, Committee or Committee of the Whole or NORD Board, the decision on who taxes the people to pay for the service involved should be the prerogative of those who participate in the function and have to pay for it and no one else.

This is accomplished in a Regional District by a Stakeholders vote as described in the B.C. Governments Booklet: Introduction Regional Districts: Communities in Partnership

Stakeholder Vote. Stakeholder votes are used to make decisions related to the administration and operation of regional district services. Only Directors representing jurisdictions that participate in the service in question are entitled to vote. All stakeholder votes are weighted votes; as such, each participating Director receives a number of votes that is proportional to the size of the population he or she represents.
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In a recent Morning Star article that Jerry Oglow denies NORD will dictate how Greater Vernon activities are handled and it will largely be Vernon, Coldstream and Areas B and C voting on them because they fund the three functions. “The vast majority will be stakeholder issues,”

Now if I can get a clarification of what 'vast' means and a concurrence that any vote on a function that involves a money vote (one that could affect my tax level -up or down.) (with the exception of the annual financial plan which is by definition a Weighted Corporate Vote.) will ALWAYS be a Stakeholder Vote (always weighted) then I have no objection to the final dissolution of GVSC in its present emasculated state.

I dislike some of the tax levels imposed by NORD on behalf of the Parks and Rec. Function (especially the building up of future reserves for capital replacement of Multiplex and Performing Arts without taxpayer referendum or counter petition concurrence) but these decisions on money matters must only be voted on by those Directors who participate and pay for the function.

If Weighted Stakeholder Votes is the way all votes of this nature will be held in the future then let's put the GVSC out of its misery!

If not, and people that have no tax ramifications continue to vote on money issues affecting me , then Vernon should take over its own Parks and Rec. Function and run it in cooperation with any other municipality or Area that wishes to join it.

Hesperia Questions to be answered to determine Taxpayer Subsidy to attainable housing ! Answers today at 4:30 at City Hall ??

Fill in the missing number and it can be easily determined if the subsidy we will be giving is a wise use of our money or whether it can be better leveraged elsewhere to obtain more units of affordable housing.

Maximum Return = X (market value of 69 acres)
Return Now Projected = $19,970,649
Subsidy Implied = Difference.

When we are informed of the real value that these lands would realize on the open market if sold to developers and the number of units of attainable housing that are projected for the Hesperia Development, we can stop this speculation and be in a position to make an informed decision about whether this project should proceed.

Basically the taxpayer of the City will receive a total of $22,578,000 ($19,578,000 in 'dividends' and $3,000,000 for Land). (Present value of this deal in 2008 $'s is $19,970,649). (Dividend present value at 2% is $17,253,457 at 3% is $16,212,881 Land Present value at 2% is 2,717,192 at 3% is 2,587,826.) This is our return from the initial cash flow projections.

The sales value of 69 acres on the open market with the same highest use zoning as is envisioned on the Hesperia Land Project now is the Taxpayers maximum return on this taxpayer's asset.

The # of attainable housing units is the number of units that would not have been built in the medium 1/3 (Lowest scale of medium, moderate and high) if the Land was not controlled by the Vernon controlled subsidiary the Hesperia Land Corp.

When the average person can clearly say, we will give up "x" number of dollars if we develop that land rather than sell it to developers BUT we will get "y" number of attainable housing units and I think that is fair, then the deal should be made. When the average Councillor can actually say and understand that, than then and only then should they actually vote on this deal.

This is a political decision regarding the use of taxpayers assets and Council should assure themselves that can defend their decision by explaining the financial benefits that we will gain and this can only be done if all these facts are debated in an open Council Meeting with all financial projections made available to the public.
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PROVINCE FUNDS AFFORDABLE HOUSING IN VERNON

At the above posting it is indicated that the 2.348 acres of land that was contributed by the city was valued at $900,000. This would make each acre worth $383,304. The 40 units of affordable housing would make each unit's land cost to the city's taxpayers to be $22,500. (Sounds like a good deal because City is leasing this land to this project and will retain ownership and any further capital appreciation !) (The city will provide a 60-year lease to the society for a nominal amount)


WHAT WILL BE THE DIFFERENCE IN SUBSIDY BETWEEN "AFFORDABLE" HOUSING AND "ATTAINABLE " HOUSING ??

Hesperia Lands valued in excess of $26.4 Million ??

PROVINCE FUNDS AFFORDABLE HOUSING IN VERNON

At the above posting it is indicated that the 2.348 acres of land that was contributed by the city was valued at $900,000. This would make each acre worth $383,304. The 40 units of affordable housing would make each unit's land cost to the city's taxpayers to be $22,500. (Sounds like a good deal because City is leasing this land to this project and will retain ownership and any further capital appreciation !) (The city will provide a 60-year lease to the society for a nominal amount)

If the same cost per acre was used this would set a value of $26,448,040 for the 69 acres that the City of Vernon has turned over to their 100% owned subsidiary Hesperia Corporation for their use in attainable housing development.

Hesperia has recently hired an economist and hopefully more refined cash flow projections will be forthcoming and the actual gross subsidy that the taxpayers will be providing and the number of units of attainable houses that will be realized will be released to the Council and to the Public.

A Public Input meeting on this business plan and the agreement to provide the subsidy is not a legal requirement and since over a $1 million dollars has been already authorized to be drawn down by Hesperia to start the ball rolling I don't expect that we will see any such meeting called.

Basically the taxpayer of the City will receive a total of $22,578,000 ($19,578,000 in 'dividends' and $3,000,000 for Land). (Present value of this deal in 2008 $'s is $19,970,649). (Dividend present value at 2% is $17,253,457 at 3% is $16,212,881 Land Present value at 2% is 2,717,192 at 3% is 2,587,826.)

The net subsidy for the Hesperia project using the land values of the above sewer plant project will be $26,448,040 minus the present value of the dividends and land appraisal cost of $19,970,649. This indicated subsidy amount of $6,477,391 will provide 125 attainable housing units (based on a calculation obtained from DCC's in cash flow statement.) or $51,819 per unit.

Naturally when we are informed of the real value that these lands would realize on the open market if sold to developers and the number of units of attainable housing that are projected for the Hesperia Development, we can stop this speculation and be in a position to make an informed decision about whether this project should proceed.
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A viewpoint from a real estate agent about this project can be found at : Hesperia - Why is the City involved in developing attainable housing and just what is attainable housing?

Hesperia Debate That Should Happen on Monday

Don Quixote Rant: Following is an excerpt from a June 5 Posting.

So it appears that the City's Lawyers, Administration and Financial Department have followed the letter of the Community Charter so that the decision to provide a $5,000,000 loan and 69 acres of City Owned Land to Hesperia for an announced repayment of $6,410,186 at the end of 5 years (subject to rate adjusted quarterly, presently BMO prime +1/4 = 5%) is correct.

Part of this agreement reads " C- The City Transferred the Lands herein defined to Hesperia for the sum of $3 million, purchased by Hesperia with a portion of the loan monies referred to in section 3 of this agreement." (Attributed value of $43,478 per acre ?)

Now it is obvious that there is much more to this deal that must have been discussed at DARKSIDE Meetings (in camera) about the risk and reward and the financial benefit that will be returned to the taxpayer for the use of $5,000,000 and the transfer of 69 acres of land that will be shortly zoned for development under the control, direction and restrictions of the Hesperia Corporation for the purpose of meeting the Key Objective "To develop the Hesperia Lands with a significant proportion of attainable housing".

I trust that this Political Decision (as laudable as it may be) that will be finalized by vote by the 7 Council Members on Monday(?) will only be taken after the full details of the financial return to the Vernon Taxpayers is revealed, including cash flow projections to determine viability of loan repayment, expected subsidy to attain this attainable housing rather than selling off the 69 acres to free market development, expected proportion of estimated 1000 units to be attainable housings, expected dividends from the Corporation to City, and all other details that one would expect to be debated when taxpayers money is being put on the line.

There appears to be no legal requirement for Electoral approval but the Council always has the right if not the obligation to so submit this for full Public Input on the financial merits of this subsidy and or return before the actual deal is consummated.

I would expect the same details and input re the hangers to be built with a $2,000,000 taxpayers loan at the Airport.

When the average person can clearly say, we will give up "x" number of dollars if we develop that land rather than sell it to developers BUT we will get "y" number of attainable housing units and I think that is fair, then the deal should be made. When the average Councillor can actually say and understand that, than then and only then should they actually vote on this deal.

This is a political decision regarding the use of taxpayers assets and Council should assure themselves that can defend their decision by explaining the financial benefits that we will gain and this can only be done if all these facts are debated in an open Council Meeting with all financial projections made available to the public.

I own 1/2 acre of land on the East Hill. The assessment for this land is $232,000 as of July 1, 2007. If I had 69 acres at this rate it would be worth $32,016,000.

Don Quixote replies to point 4. of City's reply on Civic Complex Questions !

From the City's reply to my questions
4. "Without knowing precisely what you mean by "overruns", the capital cost of the building is $32,435,708. The Library is committed, by contractual agreement, to financing $9 million of that cost , and the City , the remaining $23.4 million. totalling $32.4 million. Therefore, the City portion of $23.4 million is well within the $30 million borrowing limit."

My Response: (Quit blowing smoke )
The City's figures of a $917,631 Net Debt Servicing Financing is the first schedule on left. It is based on a financing of $20,756,000. ($30,000,000-$9,244,000 for Library). This is the figure that their $55.86 as the Estimated Maximum Annual Tax for a $400,000 property is based upon.

The second schedule is for a financing of $23.4 million at the same interest rate and for the same term and the Net Debt Servicing Financing is $1,110,675. The difference of $193,044 (21.037%) would raise the Estimated Maximum Annual Tax for a $400,000 property to $67.61.

This is accepting the rental income as being realistic and attainable which I do not accept. I post this reply to point 4 of the City's reply to me as one of "those handful of folks who love to crunch numbers "and 'do so for their own amusement.'

The City has screwed up its own basic numbers that they have used in their ads. There numbers are based on a $20.756 million financing not a $23.4 million dollar financing. Or their reply to me on question 4 is wrong and the difference has to be made up from asset sales, reserves, taxes or possible future casino revenues ?

If nothing else this reply does indicate that it is possible that this project could be financed by the $30 million borrowing power of this authorization for the city and the Library financing their $9 million. That seems to correspond to a possible $39 million dollar project that a maverick councilor and a prominent local accountant referred to.

I based my original cheat sheet on their original number based on a $30 million cost less the library coming in with their $9.244 million. I questioned where the extra $2.436 million was coming from but until this answer assumed it was coming from reserves, land sales etc. I will have to adjust my cheat sheet and increase all my numbers by 21.037%

I will post a new revised cheatsheet after tomorrow's Radio Broadcast on 107.5 KISSFM at 11 AM. Hopefully I will hear realistic and a full range of numbers presented by the City Reps. that will make any more nagging and badgering from me unnecessary.

Don Quixote critiques Civic Complex brochure !

Click on Images to enlarge or Print:

Not having the budget for advertising that the City of Vernon will use to persuade you to vote "YES", Vernonblog and Don Quixote INC. will present a critique of the brochure that has been available at City Sponsored events, at City Hall, Library, Art Gallery and was enclosed with your recent Utility Bill.

Some of these images you may have seen before but I am putting them in one posting so you can judge the Maximum Tax that you may incur. Feel free to print them out as all copy write is waived. It is my contention that the City should have included the Actual Capital Cost per property as well as a recap of expected rental revenue and operating costs so the taxpayer both Business and residential could best judge their financial commitment that they were agreeing to after a full evaluation of impartial financial information. Since the City will not publish this info, this posting becomes necessary for full disclosure and transparent evaluation.

Additional Data and research:
You can also see the 25 year amortization schedules detailing the interest costs atSinking Funds for financing either $21 million or $30 Million An analysis of potential rentals atAnalysis of potential rental income at new Library/Civic Complex. (Publish the true MAXIMUM Capital Costs)And a 20 year sinker schedule at$30,000,000 Sinkers for a 25 and 20 year Amortization. (For my bean counting readers)andHopes for rental income from RCMP may be optimistic ?

In the last paragraph of the Brochure the City states: "We sincerely hope that your decision will be based, not on the the politics surrounding the project, but on your own research and the facts that will be presented to you over the next three weeks."

Consider this posting some research and additional facts that I humbly offer for your consideration.

On Jan 26th Vote with all the financial facts.

Civic Centre Clarification ad on range of tax burdens needed ?

I agree with the City of Vernon's CFO that his numbers that he gave council are correct and while some of the parameters used for the rental recoveries are debatable, enough detail was available for the Council to accept, request clarification or change if the subsequent debate on the presentation warranted such changes. The interest rate used is still baffling but in the scheme of things is relatively minor. It accounts for $196,000 annual difference while the potential rental projections add up to $597,000. Council accepted the report and there is enough detail from the messenger (the CFO) that a full and comprehensive range of possible tax burdens could have been presented to the public.

The City chose to run ads, produce pamphlets, have storyboards where the only reference to the Cost Per Household is a presentation for 3 properties that describes the Estimated MAXIMUM Annual Tax. They chose to ignore the presentation of previous referendum approved discretionary projects like the Performing Arts Centre and Multiplex that provided a separate estimated cost per property for the Capital Component of the financing and the operating cost net of revenue as a another separate estimation.

This form of information to the public is biased and if this was a retail product being sold could be dismissed as "slick advertising" or more cynically "Bait and switch".

All I requested is that the City present a range of possibilities from a 25 year financing with the Capital Costs ($1,515,436) shown as a charge for the 3 valued properties and a separate projection for the (597,805) worth of potential rental recoveries. They could have had a third column that showed these two items netted. That they chose only to use this third column and label it as 'Estimated MAXIMUM annual tax' is misleading and opaque. (antonym for transparent). (I also requested the City to do the same full presentation for a 20 year financing as I believe that is the same term for those 2 other discretionary projects that were approved by the public in a referendum.)

I ask the City to present this information in a clarification ad in the local newspapers and acknowledge it at their public information sessions including their radio show on Jan 23 at 11-12 on 107.5 KISSFM.

I feel that this would give the maximum circulation possible in the most effective way of this information that will be part of some people's decision making process on the upcoming Jan 26 referendum.

By this request I am acknowledging that Rolke's reporting does exceed the circulation of the Vernonblog readership. (for now!)

Analysis of potential rental income at new Library/Civic Complex. (Publish the true MAXIMUM Capital Costs)

CLICK ON IMAGE TO ENLARGE:
Update:
One of the Blogreaders has left a valid comment that I have decided to post in the body of this blog: "one can discuss the numbers for a long time, but one comment you missed was that our estimates do not allow for any tax revenue for new growth (this figure is some $700,000 for 2008). New growth will have the effect of reducing the burden on the average home (potentially significantly)."

This comment and my reply are also in the comments section to this post.
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The Estimated Maximum Annual Tax for a $400,000 property is $55.86.

The word "Maximum" is in the City's handout and every ad that has run in both local newspapers. At one of the meetings I told the Mayor and 3 other councilors that were there that if this indeed was the maximum then I would reconsider my vote if they would guarantee this figure.

This figure is based on a 25 year term, includes potential rent recoveries and a 4.90% rate.

Potential Flaws in figure used by City:

• The capital cost of this project for this $400,000 property is $85.78 before any potential rental recoveries.
  
• There are $29.92 (85.78-55.86) in rental income that may or may not be recovered. There are no costs allocated for running the building etc. that would offset the potential rental income if realized.
  
• The interest rate used is 4.90% while the interest rate used for a 25 year term according to MFA today is 5.75%.
• The term is 25 years but the more likely borrowing term is 20 years. (Indeed if we project it on a 20 year term which is the more likely financing method the tax to be charged annually for this theoretical $400,000 property would be $112.22.)
• When the Greater Vernon Area voted on the Multiplex and the Performing Arts the City gave out the Capital Financing Costs and the effect on the average property and a separate listing for the net operating costs projected and the effect on that same property.

Potential problems and questions re the rental recoveries used to establish the Estimated Maximum Annual Tax :

• Art Gallery $47,028. The City has wisely only included the rent they get from GVSC for the present Art Gallery and not the actual rent that is proposed to be charged of 11388 sq.ft x $25 = $284,700. The actual rental cost needed to pay for the 25 year capital financing of the $4,822,000 Art Gallery is actually $30.91 per Sq. ft. Even the estimated $47,028 the City might continue receiving is not new money and will not come close to the operating costs of the new area.
• RCMP 6000 Sq. Ft $186.648 ($31.10 Sq.ft. ?) How much of this money is new rental income from outside the existing RCMP budget?
  
• Rent out extra Floor. $235,588 (9210 sq ft @ $31.19 x 82 % occupancy.) Is office space needed at this price in Vernon and will we not be competing with our own business taxpayers? How long will this space be rented out before the City needs it. The effect on the maximum annual tax to the taxpayer will be greatly underestimated if the space is taken up by the city in the first 10 years or sooner of a 25 year term borrowing.
• Main Floor Tenant $89,600 (3500 sq ft. at $31.22 at 82% occupancy) Looks good if we can get a tenant and I would think 82% occupancy is actually a little low.
• Parking 59 stalls at $55 monthly. Well below the economic cost of a $44,000 capital cost per stall with a 4.9% return which would return a parking rental monthly of $179.67. Hopefully even the lower rate will be charged to not only the public but to staff members etc.
• There are no operating costs offsetting these revenues for janitorial, utilities and all the new furniture that will be needed to make these offices operational. (Furniture costs are always be closely watched by Beardsell so lets get these potential costs upfront.)

Advice to City Council:
THE CITY SHOULD accept the Capital COSTS figures for this complex and this is the figure that SHOULD BE PRESENTED to the voters of Vernon as the Maximum Annual Tax and publish this figure both for a 25 year financing and a 20 year financing. Furthermore they should examine their 4.90% rate and decide if it would not be more prudent and transparent to update the figure to a more current rate of 5.75% which is the present rate both for a 20 and a 25 year borrowing.

Don't sugarcoat the financial details and put a best light on these details with advertisements that are paid from my pocket. Sell this project on its merits and in a transparent manner and enough people may come to the polls and vote for it.

Kelowna does an Annual DCC review. (Vernon's out of date DCC rates highlighted by Wastewater interest charge omission!)

KELOWNA DCC PROPOSAL

Kelowna City Council used the last meeting of 2007 to do their annual review of DCC rates. The full staff report and recommendation can be found at the above link. One of the items that caught my eye is produced below.You can click on the image to enlarge but basically it says that under certain conditions interest charges on major capital projects can be included as a cost in the DCC formula. This would mean that the Wastewater Plant could be included in the DCC inventory at cost plus projected interest costs.

I have been asking for at least 2-3 years for an annual DCC review, a consultant to update our project costs and to recommend DCC rate adjustments. I realize that the City will be investigating sector DCC's and reduced DCC's for secondary suites etc. but the first step and one that can be implemented is a readjustment of DCC's to more realistic levels based on up to date cost accounting.

Sept 11 Posting:
At Council Cow meeting in July Council passed a resolution to have a workshop on DCC's . Hopefully this will occur immediately and a consultant hired to recommend new DCC levels in conjunction with the ongoing OCP review. After all if GVSC could have a study done and recommend Parks DCC increases of up to 32% then the City is more than capable of ascertaining that our DCC's must be out of date and probably underfunded.As an illustration the cost assigned in 2005 for the Treatment Plant (which is a 50% DCC project) was $27,500,000. Now the last I heard the sewer plant came in thanks to a GST break at around $29,000,000. This $1 1/2 million difference should be reflected in the DCC calculation.

Now if we consider the outstanding debt on the sewer system is $21,875,979 as at Dec. 31/2006 most of it due 2012 and beyond according to the financial statements of the City then we can easily see that the DCC project cost basis should be much higher than what is reflected in the out of date 2005 figure..

Will Vernon get a Residential Taxpayer on the Super Regional District Committee ?

Today at 2 pm the NORD Board will meet. Resolution No. 38 “That the Regional Board appoint one more representative to the Valley Wide Governance Committee.”

This resolution will be late in the meeting and it will decide if the fourth rep from NORD comes from the City of Vernon or another area.

The major Cities of Penticton and Kelowna have 2 reps each on the Super Regional Committee and the City of Vernon is represented by our Mayor Lippert (who happens to be an area C taxpayer) but who was picked in the first go around to represent the large sized community.

The medium sized community is represented by Mayor Gerry Oglow of Armstrong and Area C Director Stan Field represents the rural community.

The City of Vernon was not asked for a recommendation in the first go around and the Vernon's NORD representatives, Lippert, Cunningham, Gilroy (NEW) or Nicol (OLD) did not seek a council resolution on direction in this decisive vote.

An Editorial by the now departed Scott Neufeld of the Vernon Courier at NORD committee is a slap in the face gives the history and background of the original appointments.

It is imperative that Vernon speaks clearly and forcefully to ensure that this fourth representative be a taxpaying resident of Vernon. To disenfranchise the more than 35,000 residents of Vernon would be asinine !

NORD to appoint 4th rep for Super Regional Committee. (Vernon Council Silent on selection)

The Regional District Board will consider who the fourth representative from the North Okanagan will be at their next regular meeting on Wednesday December 5th, 2007 at 2:00 p.m. The cost to convene a Board meeting prior to November 26th to consider this one item could not be justified. RDNO will send 3 representatives until the fourth is decided at the December 5th Board Meeting.

The above information was published Nov 22 but despite this it was not added to the Agenda of the Vernon City Council for their meeting of Nov. 26.

It is obvious by this oversight that the NORD members from Vernon will be voting without Council direction once again as they make this important decision. I argued at my posting of Nov 21 Coun. Gilroy or Cunningham to be appointed to Super Regional Committee appointment ? that the representative must be a Vernon Residential taxpayer.

'As both the Mayors of Penticton and Kelowna actually sit on their respective boards then it is obvious that either rookie Gilroy or rookie Coun. Cunningham will get some more valuable experience representing Vernon on this elite team who will forge the Valley's future. Our only veteran Councillors with Vernon Residency status Coun. Nicol and Coun. Beardsell will have been relegated to the sidelines by recent committee shuffles.'

Let us hope that our representatives insist on a Vernon Residential representative on this Super Regional Board and not get snookered by appointing someone else.

With all due respect to the other NORD members, the province has insisted on representatives from the 3 largest cities in the valley and as Penticton and Kelowna have 2 members each then it seems obvious that the residential taxpayers of Vernon should have at least one representative !

Building Permit Fees too high ? (Reader questions rate )

A comment posted below by a blogreader is interesting, informative and correct as to its references to the Community Charter. However the article to which he refers did not basically talk about whether building fees are too high or too low.

The thrust of the article was that there had been a large project that appeared to have received bargain rate building fees because of its undervaluation on the building permit application. This situation was brought to the attention of Council and the City last November 2006 and a report was requested of staff. In early Feb 07 (Posting ) it was reported that 'one of the recommendations staff are considering is a provision to go back and charge an additional fee if the permit value turns out to be too low.' “We don’t currently have an explicit back charge,” he said. “We’re looking at equitable distribution of charges to people using the service.

We are now in November and there appears to be another building permit where the valuation on application appears to be low and still no report from staff about this situation. This was the thrust of the article.

If the fees for one developer are undercharged because of their valuations that are accepted by the City then all other developers including an average person who correctly states the real cost of his new self -erected garage or addition are being shortchanged.

When the fees are justified if and when the bylaw is amended (and it has not being amended each year) then the vast majority of honest developers are indeed subsidizing the few developers that will not submit a fair evaluation of their building costs. This is why an applicable back charging mechanism is needed and should be implemented now.

Some municipalities have gone to market value building permits and applicants are charged based on declared market values and reassessed (or back charged )if these proved incorrect by actual sales etc. Naturally since projected market values are higher than actual building costs then the municipality must adjust their fees downwards if and when this type of building permit system is instituted.

My astute blogreader is absolutely correct in that the fees charged must be justified by the city and not simply be a cash cow. From time to time a building boom may occur that causes the building permit fee reserve to climb but this will only be prudent to maintain to subsidize those inevitable years of inactivity when the service costs will remain with no offsetting revenue coming in.

I urge him to question the fees charge and I hope that he sees the merit of weeding out and back charging those applicants that try to skirt the fees.

An example of a fee that is a cash cow is the 3% franchise fee on your Terasen Gas bill. Over $570,000 this year is collected by Terasen and remitted to the city in November . This was originally implemented in 1957 to cover the damage caused by the gas company to the roads of Vernon etc. If this fee was actually based on the real costs it would be any where close to this amount. But that is another story you can check out at .A HIDDEN TAX in your GAS BILL.
And that pales when compared to the Coquihalla toll fees that are still being charged by the Province long after the costs have been paid ..

Thank you anonymous blog reader for the comment !
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Blogreaders Comment on Posting Price Check:

Councillor Beardsell is right that these are mega dollars we are talking about. The amount a community is allowed to collect for a fee or charge for the provision of a municipal service must be substantiated by report of how the fee is established. (When requested by the public)
As noted in the Community Charter and addressed in the following Ministry Web Site http://www.cserv.gov.bc.ca/lgd/finance/fees_charges.htm....
The amount of a fee or charge is chosen to provide enough money to recover costs and ensure the service will continue in the future… Fees are generally applied on a user-pay basis so that those who benefit from the service, bear the cost of it.

What concerns me about the building permit fee is;
If the cost of construction has increased by 15% -25% on average for the past 2 to 3 years due to construction price increases, can the city argue that the same level of price increases have occurred on their permit issuance and process costs. The costs related to issuing and monitoring building permits may have increased since the past rate review, but I suspect at a rate more reminiscent of the consumer price index, which has hovered around 2.0% over the past several years.

So what councillor Beardsell is saying is true major, tax impact is in play here but it is that the permit fees are too high not too low as he talks about. Developers have been over charged in this case and as a result taxpayers have been subsidized. Unless the City can prove that the cost of delivering this service has increased at the same rate of the cost of construction over the past several years, I suggest that Council Beardsell has it backwards, the developer has been screwed not the taxpayer.

New Building Permit Policy to be addressed by Council soon ?

On Nov. 19 almost a year to the day of the situation described below a building permit has been issued for 14 units of a 60 unit complex for a value of $3,010,000. This works out to an average of $225,000 per unit. All the units are being presold and 4 have been sold so far, 3 at $397,500 and 1 at $424,500. Now this might not be a problem and I'm sure that City staff has vetted this permit using the existing policies re building permits. However the new policy that was under review in Feb. of 2007 has still not made it to council so this problem can be addressed? We are entering into the 2008 budget cycle and an estimation of impact on future building fee revenues is needed quickly !

History of this Problem:

Luxury condos for $100,000? Not likely.

On Nov 22, 2006 the above posting brought a problem to the scrutiny of Council: Highlights from that article are:

City staff are reviewing how a luxury condo development got away with a bargain basement building permit.A permit worth $2.8 million was issued on Nov. 6 for a 28-unit condominium complex on Centennial Drive in downtown Vernon. Valued at only $100,000 per unit on the permit, the two and three bedroom condos are being sold off at prices starting from $239,000 per unit. But according to some city councillors this is not the first time a developer has secured a building permit for less than market value, said Coun. Juliette Cunningham. “I know there has been an issue in the past, that when you apply for a building permit it’s not reflective of the actual value,” said Cunningham. “If it’s being undervalued we have to look at why that’s happening.”In 2005, building permits brought in more than $1.1 million into the city’s coffers. Coun. Barry Beardsell said that if developers don’t pay proper value for permits, then residential taxes will have to be raised to make up for any budget shortfalls.

From CITY MAY REVAMP BUILDING PERMIT PROCESS posted Feb 16/07 :

Staff at Vernon City Hall are preparing a report that may recommend an overhaul of the building permit process. As reported in the Vernon Daily Courier in November, a review was launched after a 28-unit condominium development received an undervalued building permit from the city. “What we’re doing right now is a revision of the bylaw governing how fees are charged,” said planning, development and engineering manager Jeremy Kinch. Kinch said that the goal of the review is to ensure that developers are charged equally. One of the recommendations staff are considering is a provision to go back and charge an additional fee if the permit value turns out to be too low.

“We don’t currently have an explicit back charge,” he said. “We’re looking at equitable distribution of charges to people using the service.” A development of a project on Centennial Drive was given a building permit based on a $2.8 million construction value, but with the developer estimating a market value of $100,000 per unit some councillors felt that developers were getting away with too much of a bargain. The units were later sold at prices starting from $239,000 per condo. “If it’s being undervalued we have to look at why that’s happening,” said Coun. Juliette Cunningham in November.
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EDITORIAL By Wylie, Vernon Courier same day:
The issue of undervaluing a project came to light in November, when we reported that a developer was given a building permit under the assumption the project was worth $2.8 million – placing a value of $100,000 on each condo. The units were later sold at $239,000 or higher, meaning the city charged far less for the building permit than what it was worth. Some city councillors said the developer was given too big a bargain. We agree. Permit fees are an important revenue source for the city. As Vernon grows, so too do the costs for things such as policing, fire protection, sewers, water, garbage removal, etc., and those costs fall on us, the taxpayers. Fees collected from developers are a way to offset those costs, so when the city loses out on money from permits because the project was undervalued, it will cost you more money in the long run. If the city can come up with a fair way to back charge where need be, taxpayers will be the beneficiaries of keeping developers honest.
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at a Feb 20/07 posting Construction Value for Building Permits
Some cities described how they addressed this problem:
Among the 6 cities described were 3 that stood out:
Nanaimo
Building Permit Fees The charge for building permit is based on market value of the finished project
Sidney
The value of construction excluding land shall be the greater of:
(a)The contract price including taxes and a reasonable allowance for extras, or,
(b)The value as determined by the Authority having Jurisdiction based on fair market
value.
New Westminster
9.5 Each application for a building permit shall state the estimated market value of the proposed construction.

Local Newspaper gets downsized !

If you read the The Daily Courier and look forward to the 8 page Vernon Edition that fronted the remaining sections which essentially are the Kelowna Courier you will be sadly disappointed with what has been imposed on the Vernon content of this fledging newspaper. The Vernon section of this newspaper has continually and constantly endeavored to function as investigative journalists and provide us with more behind the scenes and under the rocks viewpoints on our local city, especially on the Political Beat. Their candid and provocative editorials that caused our local MP to suggest sending all the reporters to the hoosegow and the honorariums for Land Corps appointees controversy that they broke are classic and worthy of applause. Their recent skewering of our Mayor in relationship to his appointment to the Super Regional Governance committee may have caused some consternation in the hallowed chambers of City Hall but it was fair political comment and worthy of debate. With a minimum of resources and backup the small number of employees raised the competitive and investigative reporting level in this town. They must have been effective as they inspired their cross town rival The Morning Star to raise their reporting and editorial skills to new heights over the last several years.

Now it appears that the Vernon component of the new 12 page front section of the paper purportedly labeled The Vernon Edition has been reduced to 2 pages. The First page and page 3 are all that seem to be left from the original 8 pages. The traditional editorial and opinion page of this newspaper now bears the Kelowna imprint and the managing editor is Kelowna based Tom Wilson. It looks like we can kiss goodbye the local content of Vernon on the editorial pages of this newspaper. Page 3 still bears the CITY page moniker and our local shit disturbing editor Scott Neufeld gets credit on top of this page only. For how long only time will tell.

I am a subscriber (and you know how hard it is to pry money from my stingy hands) and an advid reader of this newspaper. The decision to downsize the local content which may see some of your more proficient and readable columnists get less space boggles the mind. I would have suggested more reporting resources rather than less be used to increase the local coverage and increase circulation. Their head office decision last year to increase the daily papers cost was the first nail in the coffin and this reorganization is another nail.

It is my intention to write to both the local and the head office Kelowna editors of this paper next week to make my concerns expressed above known to them. (If they are blog readers they will have advanced warning of the content of this letter and the frustration that I feel. I do not want to go back to a one newspaper town and the resultant complacency that will ensue.)

If the Blog readers wish to write to these EDITORS to express their views, the e-mail addresses are:

• scott.neufeld@ok.bc.ca (260-4004) Vernon
  
• tom.wilson@ok.bc.ca (470-0741) Kelowna