Council voted unanimously to proceed with an alternative approval process to fund a now-$90 million public works upgrade on Labieux Rd. The vote is expected this fall. (City of Nanaimo)

By Alex Rawnsley

one and done

Council moving ahead with $90m version of new Nanaimo Operations Centre

Jul 23, 2024 | 11:50 AM

NANAIMO — For the third time in less than a year, the City of Nanaimo will seek elector approval to borrow money to fund a new public works yard.

An alternative approval process is scheduled for the fall to borrow upwards of $90 million for a revised and scaled back Nanaimo Operations Centre along Labieux Rd., comprising of a new fleet maintenance building and administrative offices.

Councillors on Monday, July 22, voted unanimously to proceed with borrowing the entire amount and repaying the money through property taxation over a suggested period of 20 years.

Making assumptions based on projected interest rates and the average Nanaimo home value of $783,888, the project would cost the average taxpayer an additional $139 per year.

City general manager of corporate services Laura Mercer presented four options to councillors, ranging from using all borrowing to offsetting some costs using reserves.

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“We’re trying to keep some resilience in that reserve. There are a lot of projects, we have billions of dollars in assets that at some point need to be renewed, updated, replaced. [The City] needs as many options as [it] can.”

A fleet maintenance building is sorely needed for the City to ensure continued smooth operations in the event of an earthquake or other major disaster. (City of Nanaimo)

The use of reserves was largely a non-starter from most on Council, who objected to tying up valuable City money in a long-term project and being less able to respond to emergencies.

Coun. Tyler Brown said just because the City has cash on hand in various reserve funds doesn’t mean it’s free money.

“As appealing as it can be to suggest we use that fund, something else has to give and that’s going to be going a couple of years longer and hoping another pipe doesn’t burst. As much as it might be tempting, that pain might not be felt by this Council but it sets future Council’s up in an irresponsible way.”

Other councillors agreed, citing recent infrastructure failings in Nanaimo and elsewhere.

A water main break along Bowen Rd. in April 2020 cost the City tens of millions of dollars to repair, while the City of Calgary continues to struggle with its infrastructure.

“[Reserve funds] should be more for emergencies than for something we know we’re having to build,” coun. Sheryl Armstrong noted. “I’m seeing in Calgary where they just had another break in a water main. When you’re adding aging infrastructure to it, I’m very concerned about eliminating those funds.”

The current public works facility on Labieux Rd. in Nanaimo is badly outdated and undersized, according to the City. (Fire photo/NanaimoNewsNOW)

The main dissenter to financing the project entirely through borrowing was coun. Ian Thorpe.

He worried committing to borrowing upwards of $90 million for a new public works yard now may jeopardize other projects, including the recently advanced South End Community Centre.

“I know our City is in a very healthy position regarding our ability to borrow, but to me the more we borrow for this project, reduces Council’s comfort level to borrow for other projects.

Staff assured Council the City’s borrowing capacity remains well in check, and both projects are feasible through long-term borrowing.

Should a fall 2024 AAP finally give the City the elector approval it needs to borrow funds, the money would start to be borrowed in fall 2025.

In most cases, interest rates are locked in for a period of 10 years, then renewed in five-year increments after.

Borrowing can also be staggered, ensuring the City does not pay interest on funds it hasn’t used.

City staff also noted parts of the original concept for the Nanaimo Operations Centre, including a walkway component and upgrades to parks and recreation facilities, would be instead folded into the regular capital project schedule over time.

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