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Letter: Financial information related to the future of the Hinton Recreation Centre*

"When we are discussing options for the Hinton Recreation Centre we really need to focus on our financial situation."

Dear Editor:

When we are discussing options for the Hinton Recreation Centre we really need to focus on our financial situation. Particularly that the Town of Hinton has too many competing financial obligations in the future to borrow more than $35,000,000 in today’s dollars on the Recreation Center, and although it sounds like a lot, it actually means we can afford very little new construction.

Both Jasper and Edson faced similar constraints and both opted, at least in part, for renovations as opposed to new builds. And we must remember that Edson holds a significant funding advantage over Hinton in that Yellowhead County’s contribution to such projects is proportional to the county versus town population levels, meaning they get a contribution from the county of around 50% of costs whereas we get about 8%.

There are three particular funding obligations that I ask everyone to keep in mind in our Recreation Center discussions:

  1. According to our new water agreement with Mondi the town is required to build a new water treatment plant in 15 years. It’s likely to cost around $80 million total and after potential county and provincial grants the town will still have to provide roughly $52,000,000. One way to pay for this obligation is utility rate increases but if we go that route we’re looking at additional long-term cost increases of about $500 to $700 per year for the average citizen. Which is the equivalent of about a 10 - 15% property tax increase depending on what your current property taxes are;
  2. While we will not have to build our own waste treatment plant we will be required to pay for our proportional costs of a new Pulp Mill mechanical waste treatment plant, and our share could be as large as $10,000,000 of which some will likely be borrowed since, again, the alternative is to raise fees and taxes sharply; and
  3. Our town’s infrastructure is aging and costs will continue to increase. Our current asset management plan recommends more than doubling the $1.1 million we are currently putting into the water and sewer reserve alone, and right there you’re looking at a potential tax increase of at least 8%.

By my calculations, once you take these obligations into account, we have about $35,000,000 in borrowing or tax increase funding room. I’m assuming that we leave 25% of our debt limit untouched for future emergencies and that citizens will still have to pay increased utility fees of $500 to $700 per year. If you make more optimistic assumptions you might seem to have more spending room, but when governments make optimistic fiscal assumptions it doesn’t normally end well.

Even if the Town of Hinton limits itself to borrowing $35,000,000 over 20 years to fund a Recreation Center Project, the likely tax increase would be more than 15%. So the question for Hinton ratepayers isn’t just whether there are attractive options for a Rec Centre. It’s how much tolerance you have for future tax increases for all our obligations and projects.

Regards, Stuart Taylor, Member of Hinton Council

*The numbers provided in this letter are based on a number of assumptions the author thinks reasonable but the future is uncertain so they are necessarily just estimates.