Councillors want region to invest more into municipalities

By Chris Jones/The Oshawa Express

Regional staff has laid out Durham’s long-term financial planning goals on the table.

According to commissioner of finance Nancy Taylor, the region’s vision for the future is to address strategic service delivery and infrastructure priorities, as well as to commit to financial sustainability, flexibility, and affordability.

The long-term financial goals include maintaining and enhancing service levels and infrastructure, accommodating growth, funding strategic investments and priorities, and having stable taxes and user rates.

The reserve and reserve fund strategy includes the establishment of new funds, and the topping up of others.

The new reserves are for economic development ($3.8 million), innovation and modernization initiatives ($5 million), servicing of employment lands and key locations ($19.4 million), Vision Zero initiatives ($5 million), and climate mitigation ($5 million).

The existing reserve funds being topped up include the regional revitalization reserve fund ($5 million), Durham Region forest reserve ($1 million), and the regional roads reserve ($0.4 million).

The funding for the topped up reserves and the new reserves will come from multiple sources.

The general levy stabilization reserve fund is providing seed money to other reserve funds, with what’s leftover being divided between a capital impact one-time reserve fund, and an operating impact one-time reserve fund.

There was much debate over the complicated names of the reserves, but after a motion from Whitby councillor Chris Leahy, the names were simplified and had “one-time” added.

Of the remaining $204.7 million in the general levy stabilization reserve, the capital impact one-time reserve fund will get $50 million, and the operating impact one-time reserve fund will get $154.7 million.

Several other reserve funds will also be repealed and have their funds transferred elsewhere.

The regional share of non-residential development – water and sewer reserve ($8.9 million), the foreign exchange reserve fund ($4.8 million), industrial land reserve ($0.5 million), Highway 2 reserve fund ($0.4 million), and police service capital reserve fund will all be repealed and have their funds transferred.

Taylor told council the next steps include the modernization of business planning and the budget process, further review of current financial policies and recommended  policy updates, the further development of performance metrics to measure the financial health of the region, and to further develop a target range for applicable reserve funds.

These plans drew numerous questions from members of Durham’s finance committee.

With the police capital reserve being repealed, Pickering councillor and chair of the Durham Police Services Board Kevin Ashe pointed out there’s no new reserve funds, and there are significant requirements for DRPS over the next couple of years.

He pointed out comments previously made about the general levy stabilization reserve by Oshawa resident Greg Milosh, a constant visitor to regional council chambers, have made a stir on social media.

“Mr. Milosh’s comments have kind of caused a dialogue on social media about the region being flush with cash, and there’s some truth to greater fiscal capacity, I’ll say that, than to the lower-tier [municipalities],” said Ashe.

He asked Taylor if she agreed with the statement, and if indeed the region has a fiscal capacity much greater than lower-tier municipalities.

“My observation is, I think we should… put money away for a rainy day,” he added.

Ashe believes the region needs to be more aggressive with its spending.

“I’m a conservative guy by nature. But having said that, I think we have to pick our spots in regards to infrastructure renewal and it’s really hard at the local [level],” Ashe stated. “We’ve just gone through the process of knocking on doors… and people don’t understand that for their [tax] dollar that they’re paying, in the City of Pickering, for instance, gets 26 cents on the dollar, and the region gets I think it was 57 cents.”

The lower-tier municipalities are hurting according to Ashe, and he asked Taylor to comment about finding a happy medium between the region’s fiscal capacity and the needs of its municipalities.

Taylor said she believes the region has a once-in-a-lifetime chance to “effect some real change.”

“There is capacity to look at transformational issues at the region, one of which [CAO Elaine Baxter-Trahair] and I have had a number of discussions on is our human services side of things,” she said. “That’s not to say the rest isn’t valid either, but there is an opportunity now, because of status of where we are financially, to make some very important and critical decisions going forward that could be transformational.”

She also pointed out the region has an interest in creating more collaboration with the lower-tier municipalities.

“I’ve been through the trenches on that side of things, and would like to suggest I’m quite aware of what some of those challenges are, and that we very much need to partner with the local levels to move as many things forward as we can,” she said.

Ajax Mayor Shaun Collier questioned what the impact is to take the funds from the general levy stabilization reserve and move it to the other two reserves.

“So, essentially we’re taking money from operating and moving it to capital?” he asked.

Taylor said the point is to clarify the usage of the funds.

“Our goal here isn’t to take money away from one issue and give it to another, it’s to actually clarify why the funds are sitting there and what they should appropriately be used for. Council still has ultimate discression on approval for how reserve funds are utilized,” she explained.

Oshawa’s representative on the committee, Ward 5 city and regional councillor Brian Nicholson, questioned this.

“I tend to echo some of the comments that Mayor Collier has brought forward, and Councillor Ashe is absolutely correct. I find the program timid. I find it’s simply rearranging the deck chairs on the account, and we don’t see many to be targeting aggressively any of our real issues,” said Nicholson said.

He believes the region is simply moving the funds around and renaming the reserves.

“The problem I’m having in dealing with these estimates, is you’re not telling us how much of the funds are actually currently allocated, and how much is not allocated. So, we’re trying to get a handle on what funds are available.”

Nicholson also pointed out the region has invested little into existing neighbourhoods, and has been mainly focused on growth.

“Simcoe Street, which is what we call in Oshawa ‘the spine of our city,’ in the southern half of the city is in abysmal shape, and it has been for 20 years,” he said.

He said the problem is a bigger return when using development charge revenue to build new roads instead of fixing older ones.

“Well you can’t use a whole lot of development charge money in older neighbourhoods, and they tend to become lower priority when you’re trying to get the best bang for your buck,” he said.

He noted he’d hoped to see a reserve set up which would address the infrastructure deficiencies in older neighbourhoods.

“Is that what you’re looking to do with your capital impact stabilization fund, or am I again [correct] that we’re just not addressing that issue again?” he asked.

Taylor pointed out there are reserve funds already in place for existing road systems.

“Those have annual significant contributions to them, and they are drawn on in a significant way to deal with our asset management backlog, and so you will see that again coming forward there is a strategic issues report that will come before you for transportation [in November].”

“One of the priorities that we’ve established in our long-term financial goals is to maintain and enhance service levels and infrastructure,” said Nicholson. “I submit to you respectfully, we’ve failed most of our traditional neighbourhoods that way. We have not invested anywhere near the amount necessary to maintain services, let alone enhance.”

Nicholson explained he is concerned more of the same policies which “got them in this mess,” will not get them out of it.

He believes there needs to be targeted capital funding to go into renewing roads and infrastructure in older neighbourhoods around the region.

Nicholson also expressed concern the region isn’t doing enough to address housing.

“Looking through all of these priorities, the one thing I see absolutely missing is the word ‘housing.’ It’s almost like we’ve become allergic in Durham Region to being aggressive in trying to deal with the housing crisis we have in our community. There’s simply no money being set aside for housing and support.”

Taylor noted there are a number of initiatives in place, pointing out there will be a     master housing strategy coming down the road.  The strategy will look at the region’s housing stock, and what needs to be done to improve it.

“In some cases we may be dispensing with some [housing units] and building new [units] that have greater densities,” she said.

Baxter-Trahair chimed in, noting council will be hearing a great deal about housing soon, with the initial focus being on affordability and social housing in Oshawa.

In addition to working with not-for-profit partners, they’re also consulting with other municipalities to look at how they financed revitalization and renewal initiatives.

“That will all form part of the housing master plan,” said Baxter-Trahair.

However, Nicholson was more worried about the hard numbers.

“I’m really not interested in hearing what you’re encouraging other developers to do. How much money is the region going to put directly into housing stock rehabilitation and growth?” he asked.

Baxter-Trahair noted there is funding for housing in the budget already.

“And when we come forward with the master plan, you will see numbers attached to that,” she said. However, Nicholson pointed out there is a reserve designated for employment lands, but not for housing lands.

“That’s always the difficulty. Housing always seems to be the end of the list, and if we don’t have dedicated reserves aimed at that particular problem, then it’s got to fight through budget and taxation, all those things, then there’s no money set aside,” he said.

Baxter-Trahair once again pointed out there may be money set aside for what Nicholson is looking for in the master plan.

“But as I said, there are a number of ways of financing this that we’re looking into now,” she said.

As they further discussed the issue, Baxter-Trahair stressed investments will be coming forward.

Nicholson said he will be keeping an eye on the housing situation.

“I guess we’re going to have this debate many times in the coming months,” he said.

The long-term financial planning framework will now be presented to regional council later this month.