Greater Vernon Restructure Study

Prepared for: The Greater Vernon Local Government Restructure Committee

Prepared by: Sussex Consultants Ltd with C.L. Woodward, PCIS, P. Admin. R.A. Rabnett & Associates Doug Mackay, P. Eng.

July 1991 ITable of Contents

Chapter 1 Introduction 1.1 Purpose 1-1 1.2 Assumptions 1-2 1.3 Report Structure 1-3

Chapter 2 Current Situation 2.1 Introduction 2-1 2.2 Service Providers 2-1 2.3 Population 2-1 2.4 Tax Base 2-3 2.5 Total 1991 Property Taxes 2-4 2.6 Average 1991 Property Taxes 2-4

Chapter 3 Community Growth

Chapter 4 Candidate Service Shifts

Chapter 5 Economies of Scale 5.1 Introduction 5-1 5.2 General Government 5-2 5.3 Road Transport Spending 5-3 5.4 Environmental Development 5-4 5.5 Capital Spending 5-4 5.6 Transfers to Reserve Accounts 5-5 5.7 City of Vernon Spending 5-5 5.8 Summary 5-8

Chapter 6 Regional Municipality Option 6.1 Introduction 6-1 6.2 Growth and Tax Base 6-2 6.3 Grants and Capital Spending 6-2 6.4 Regional District Services 6-6 6.5 Municipal Expenses 6-8 6.6 Municipal Revenues 6-16 6.7 Tax Impacts 6-21 6.8 Uncertainties 6-25

Chapter 7 Large Vernon Option 7.1 Introduction 7-1 7.2 Growth and Tax Base 7-2

Contents 7.3 Grants and Capital Spending 7-2 7.4 Regional District Services 7-5 7.5 Municipal Expenses 7-6 7.6 Municipal Revenues 7-8 7.7 Tax Impacts 7-10 7.8 Uncertainties 7-12

Chapter 8 Expanded Vernon 8.1 Introduction 8-1 8.2 Growth and Tax Base 8-2 8.3 Grants and Capital Spending 8-2 8.4 Regional District Services 8-4 8.5 Municipal Expenses 8-5 8.6 Municipal Revenues 8-8 8.7 Tax Impacts 8-10 8.8 Uncertainties 8-12

Chapter 9 North Municipality 9.1 Introduction 9-1 9.2 Growth and Tax Base 9-2 9.3 Grants and Capital Spending 9-2 9.4 Regional District Services 9-3 9.5 Municipal Expenses 9-6 9.6 Municipal Revenues 9-12 9.7 Tax Impacts 9-15 9.8 Uncertainties 9-17

Chapter 10 Okanagan Landing Municipality 10.1 Introduction 10-1 10.2 Growth and Tax Base 10-2 10.3 Grants and Capital Spending 10-2 10.4 Regional District Services 10-4 10.5 Municipal Expenses 10-5 10.6 Municipal Revenues 10-8 10.7 Tax Impacts 10-8 10.8 Uncertainties 10-10

Chapter 11 Summary of Results 11.1 Vernon's Perspective 11-1 11.2 Coldstream's Perspective 11-4 11.3 Okanagan Landing's Perspective 11-6 11.4 North and East Areas 11-9 11.5 Regional District Perspective 11-12 11.6 Conclusion 11-13

Chapter 12 Framework for Analyzing Restructure Options

Contents ii IList of Tables

2.1 1991 Study Area Population 2-1 2.2 Responsibility for Local Services 2-2 2.3 Municipal Tax Base 2-3 2.4 Total 1991 Property Taxes 2-4 2.5 Taxes Paid by an Average Home 2-6

3.1 Population and Housing Changes 3-2 3.2 Annual Growth Projections 3-3

5.1 City of Vernon Spending Per Person 5-6

6.1 Municipal Population 6-2 6.2 Total Assessments 6-2 6.3 Short-Term Grants 6-4 6.4 Incorporation Capital Fund 6-6 6.5 N.O.R.D. Requisition 6-7 6.6 Municipal Expenses 6-15 6.7 Municipal Revenues 6-21 6.8 Tax Rates 6-22 6.9 Impacts on Swan Lake Properties 6-27 6.10 Impacts on Keddleston Properties 6-28 6.11 Impacts on Okanagan Landing Properties 6-29 6.12 Impacts on Vernon Properties 6-30 6.13 Impacts on Coldstream Properties 6-31 6.14 Tax Impacts on an Average House 6-32

7.1 Municipal Population 7-2 7.2 Total Assessments 7-2 7.3 Short-Term Grants 7-3 7.4 Incorporation Capital Fund 7-4 7.5 N.O.R.D. Requisition 7-6 7.6 Municipal Expenses 7-7 7.7 Municipal Revenues 7-10 7.8 Tax Rates 7-11 7.9 Impacts on Swan Lake Properties 7-13 7.10 Impacts on Keddleston Properties 7-14 7.11 Impacts on Okanagan Landing Properties 7-15 7.12 Impacts on Vernon Properties 7-16 7.13 Tax Impacts on an Average House 7-17

Contents iii 8.1 Municipal Population 8-2 8.2 Total Assessments 8-2 8.3 Short-Term Grants 8-3 8.4 Incorporation Capital Fund 8-4 8.5 N.O.R.D. Requisition 8-5 8.6 Municipal Expenses 8-7 8.7 Municipal Revenues 8-10 8.8 Tax Rates 8-11 8.9 Impacts on Swan Lake Properties 8-13 8.10 Impacts on Keddleston Properties 8-14 8.11 Impacts on Vernon Properties 8-15 8.12 Tax Impacts on an Average Home 8-16

9.1 Municipal Population 9-2 9.2 Total Assessments 9-2 9.3 Short-Term Grants 9-3 9.4 Incorporation Capital Fund 9-5 9.5 N.O.R.D. Requisition 9-6 9.6 Municipal Expenses 9-11 9.7 Municipal Revenues 9-15 9.8 Tax Rates 9-15 9.9 Impacts on Swan Lake Properties 9-18 9.10 Impacts on Keddleston Properties 9-19 9.11 Tax Impacts on an Average Home 9-20

10.1 Municipal Population 10-2 10.2 Total Assessments 10-2 10.3 Short-Term Grants 10-3 10.4 Incorporation Capital Fund 10-4 10.5 N.O.RD. Requisition 10-5 10.6 Municipal Expenses 10-7 10.7 Municipal Revenues 10-8 10.8 Tax Rates 10-9 10.9 Impacts on Okanagan Landing Properties 10-11 10.10 Impacts on an Average Home 10-12

11.1 Tax Impacts on a Vernon House 11-3 11.2 Tax Impacts on a Coldstream House 11-5 11.3 Tax Impacts on a Okanagan Landing House 11-8 11.4 Tax Impacts on a Swan Lake House 11-10 11.5 Tax Impacts on a Keddleston House 11-11 11.6 Impacts of Altered RCMP Costs after 11-14 Restructure

Contents iv IList of Charts

2.1 1991 Municipal Tax Base Per Person 2-3 2.2 1991 Property Taxes Per Person 2-5

3.1 Average Household Size 3-2

5.1 Per Capita Legislative Expenses 5-9 5.2 Per Capita Administrative Expenses 5-10 5.3 Per Capita Other General Government 5-11 Expenses 5.4 Per Capita Total General Government 5-12 Expenses 5.5 Transportation Spending per Kilometer 5-13 5.6 Per Capita Environmental Development 5-14 Services 5.7 Per Capita Capital Spending from Taxes 5-15 5.8 Per Capita Transfers from Reserve Accounts 5-16

6.1 Projected Spending per Capita 6-14 6.2 Extra Taxes Due to Restructure 6-24

7.1 Projected Spending per Capita 7-8 7.2 Extra Taxes Due to Restructure 7-12

8.1 Projected Spending per Capita 8-6 8.2 Extra Taxes Due to Restructure 8-12

9.1 Projected Spending per Capita 9-10 9.2 Extra Taxes Due to Restructure 9-16

10.1 Projected Spending per Capita 10-6 10.2 Extra Taxes Due to Restructure 10-10

Contents v ",- j-

Chapter 1 IIntroduction

1.1 iPurpose This study examines the impacts of substantial changes in the local government structure of the Greater Vernon area. It was prepared for the Greater Vernon Local Government Restructure Committee: • Mayor Wayne McGrath, City of Vernon • Mayor Ernie Palfrey, District of Coldstream • Director Alan Hill, Electoral Area A • Director Mike Kowaluk, Electoral Area B • Director Joan Yardley, Electoral Area C

In conjunction with this committee there was also a technical committee consisting of: • Peter Mackiewich, Administrator, Regional District of North Okanagan • Blake Kimura, Administrator, City of Vernon • Greg Betts, Administrator, District of Coldstream

The study was funded by a grant from the Organization Policy Branch of the provincial Ministry of Municipal Affairs, Recreation and Culture.

This report concentrates on five main forms of restructuring: • Creating a regional municipality of 40,000 people that includes Vernon, Coldstream, Okanagan Landing, and the area immediately north and east of the existing city boundary (BX and Pottery Road areas); • Creating a large Vernon of 32,000 people, the same as the first option except that Coldstream would not be part of the large municipality; • Creating an expanded Vernon that includes the north and east areas next to the existing city boundary; • Creating a brand new municipality in Okanagan Landing • Creating a brand new municipality in the north and east areas combined.

A map showing the study area and its components is included in a pocket at the end of this report.

Introduction 1-1 1.2 JAssumptions A great number of assumptions are a necessary part of a study like this. The major ones are described below. Others are identified as they are encountered in the text. , All dollar amounts are stated in terms of constant 1991 dollars. Inflation will affect almost all of the numbers in this report.

A low-to-moderate growth rate has been assumed. This is not intended to be a prediction. A low growth rate is selected because the goal is to isolate and identify the impacts of local government restructuring, not the impacts of rapid community growth and development. A high growth assumption would make it difficult to identify the changes associated with an altered government structure, as opposed to changes resulting from community growth.

Water costs have been assumed in this report to be essentially unaffected by municipal restructuring. Talks are underway now to see if a regional water system or a regional water supply authority can be developed in Greater Vernon. The assumption is that changes to the water system will take place with or without the changes to the local government jurisdictions and service responsibilities examined in the report. Some of the restructure options examined here would clearly affect a regionalization of the water system, but it is felt that changes to the water system would occur significantly before the major restructuring examined here could take place.

Sewer costs have essentially been treated as specified area charges - that is, the prime beneficiaries and users of the system will pay for the sewer collection, treatment, and disposal whether in a single large municipality, in multiple municipalities, or under the current structure. Decisions about major restructuring would not have an immediate effect on sewer rales.

It is assumed that the current RCMP financing arrangement will continue, with the exception that municipalities will face a 5% increase in their share (from 90% of cost to 95% for Vernon, and from 70% to 75% for others). This mayor may not hold true as discussions continue between the province and the federal government over the RCMP contract.

It is assumed that the province would phase in local responsibility for policing costs over several years for rural areas that are restructured into municipal status.

Another assumption is that no special RCMP tax would be applied in rural areas as a result of changes in the federal-provincial RCMP agreement.

Introduction 1~2 ;;-'-".-,------.-- ---.-,---.-.-.---,-.-, -':-~-~--.=----

It is assumed that rural areas will continue to pay the provincial rural tax at the current rate ($1.75 per $1000 assessment). This is, at best, a tenuous assumptions, given the increases in this tax over the past decade.

In all the restructure options examined here, it is assumed that the assent of the electors would be obtained before any changes could occur. The testing of options in a study like this does not imply acceptance of any option.

The study area map shows two smaller areas identified as "possible municipal expansion areas". One is at Vernon's southern extreme on Kalamalka Lake; the other lies between Vernon and Coldstream south of Pottery Road. A potential change to their status does not require the same type of major restructuring as examined in this report. They are identified to indicate the potential for including them as part of Vernon or Coldstream pending further specific discussions among the parties involved. Any decision on these two areas would not have a significant effect on the findings of this restructure study.

1.3 Report This report is laid out as follows: Structure • Chapter 2 describes the current situation (taxes, assessments, services, etc) • Chapter 3 presents the demographic assumptions for the study • Chapter 4 presents candidate services for shifting as part of restructuring • Chapter 5 deals with economies of scale in the delivery of services • Chapter 6 outlines the impacts of the Regional Municipality options • Chapter 7 outlines the impacts of the Large Vernon option • Chapter 8 outlines the impacts of the Expanded Vernon option • Chapter 9 outlines the impacts of a new municipality north and east of Vernon • Chapter 10 outlines the impacts of a new Okanagan Landing municipality • Chapter 11 summarizes the impacts • Chapter 12 presents a framework for assessing the restructure options

Introduction 1-3

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Chapter 2 Icurrent Situation

2.1 IIntroduction This chapter describes the current system of services, assessments, and taxes in the study area. This provides background information to help put into perspective some of the fiscal characteristics that might be affected by restructuring. It also identifies differences among the various sub-areas in Greater Vernon.

2.2 Service Table 2.2 on the following page shows who provides services and makes Providers service decisions under the current system. Note that this table is limited to primarily local services. Broader social services such as national defence and federal legislation are excluded.

2.3 IPopulation Table 2.1 below shows the estimated 1991 population in the study area. The estimates are based on 1986 Census enumeration area data and on building permits issued since 1986. Note that the 1991 Census data, not yet available, will provide valuable population information that is more accurate than the figures used in this study.

Table 2.1 1991 Study Area Populations

Percent Occupied Percent Population Share Dwellings Share North/BX 6,541 16% 2,228 14% Okanagan Landing 4,377 11% 1,656 10% Coldstream 7,916 19% 2,739 17% Vernon 22,449 54% 9,652 59% Totals 41,283 100% 16,275 100%

Current Situation 2~ 1 Table 2.2 Responsibility for Local Services

District of Okanagan SWan LakeJ ax, CiIv of Vernon Coldstream Landing Keddleston, Pottery Rd Local roads (capital • Municipality • Municipality • Prey Min of Trans + • Pr~y Min of Trans + and maintenance) Hwys Hwys Highways (capital • Provincial Min of • Provincial Min of • Provincial Min of • Provincial Min of and maintenance) Trans + Hwys Trans + Hwys Trans + Hwys Trans + Hwys Transit • Urban Transit • U.T A. (contract), • NORD (grant only) • NORD (grant only) Authority (contract) DART service Drainage • Municipality • Municipality • NORD (minor) • NORD (minor) Airport • NORD • NORD • NORD • NORD

Water • Municipality. Vernon • Municipality, Vernon • VID, smaller • VID, private users Irrig. District (VID) Irrig. District (VID) improvmnt districts, private users Sewer • Municipality • Munio (contract with • None • None Vernon)

Fire protection • Municipality • Municipality • NORD specif area • NORD specif area Policing • RCMP munic force • RCMP munic force eo RCMP rural force e RCMP rural force 911 telephone serv • NORD • NORD • NORD • NORD Building inspection • Municipality • Mun contract with • NORD • NORD and fire inspection NORD . Building permits • Municipality • NORD contract • NORD • NORD Emergency plans • NORD • NORD • NORD • NORD Animal control • NORD • NORD • NORD • NORD Noxious insect ctrl • NORD • NORD • NORD • NORD Jaws of life • NORD • NORD e NORD • NORD

Okanagan Basin • Requisition to OBWS • Requisition to OBWB • Requisition to OBWB • Requisition to OBWB Water Board via NORD via NORD via NORD via NORD Garbage collection • Municipal • Private • Private • Private Landfill • NORD • NORD • NORD • NORD Recycling grant • NORD • NORD • NORD • NORD Sterile insect release • NORD • NORD • NORD • NORD Cemetery • Municipality • Municipality • None • None

Parks + recreation • NORD • NORD • NORD • NORD Community • Municipality, some • Municipality, some • NORD • NORD organization grants through NORD through NORD

Zoning bylaws • Municipality • Municipality • NORD • NORD Land use planning • Municipality • MUn contract with • NORD (all members • NORD (all members technical work NORD participate) participate) Subdivision approval • Municipality • Municipality • Provincial Min of • Provincial Min of Trans + Hwys Trans + Hwys Tourism/Ec Develop • NORD • NORD • NORD • NORD

Library • North Okan Region • North Okan Region • North Okan Region • North Okan Region Library Dist Library Dist Library Dist Library Dist Hospital • Regional hosp dist • Regional hosp dist • Regional hosp dist • Regional hosp dist Schools • School dist #22 • School dist #22 • School dist #22 • School dist #22 Property assessment • BC Assessment • Be Assessment • Be Assessment • Be Assessment Authority Authority Authority Authority Debt financing • Munic Finance Auth • Munic Finance Auth • Munic Finance Auth • Munic Finance Auth

Current Situation 2-2 2.4 ITax Base Table 2.3 below shows the taxable assessments -- the tax base -- for each part of the study area. The tax base serves as a crude indication of a community's ability to pay for local services that are financed by property taxes.

Table 2.3 MuniCipal Tax Base in $OOOs

Okanagan District of City of North/BX Landing Coldstream Vernon 1 Residential $181,274 $165,136 $291,264 $596,176 2 Utility' $760 $649 $2,276 $2,324 3 Unmanaged forest $82 $0 $0 $0 4 Major industry $0 $0 $16,238 $0 5 light industry $1,017 $19 $1,361 $5,427 6 Business $6,995 $3,147 $1,977 $197,466 7 Managed forest $11 $0 $0 $0 8 Ree'n + non~profit $328 $343 $439 $2,816 9 Farm land $3,431 $1,442 $9,626 $373 TOTALS $193,898 $170,736 $323,181 $804,582

* Includes values taxable under municipal status only

The tax base is not homogenous across the entire study area -- some areas have more non-residential assessed property than others. Vernon is the only area with a notable business property tax base, and Coldstream has the only major industry assessments.

Chart 2.1 below shows how the areas compare in terms of tax base per capita. Coldstream has the highest average, followed by Okanagan Landing and then Vernon.

Chart 2.1 1991 Municipal Tax Base Per Person

$50,000 o Residential LEJ Other properties

$40,000 I-- f----- I---- $30,000 I,U',;,;/ f----- I-- f-- I---- $20,000 I-- I-- f-- I- $10,000

J...-.-- ~ L- J...., $ 0 I North/BX OK Landing Coldstream Vernon

CUrrent Situation 2-3 2.5 Total 1991 Table 2.4 shows the total property taxes generated in each area for 1991, Property Taxes stated in terms of how much was paid to each taxing authority. Note that the table shows the 5.25% provincial tax collection fee as a separate charge. On the actual tax notices, this fee is built into the tax rates and is not visible as a separate charge. The collection fee is levied only in rural areas and applies to regional district and library district taxes in the case of Greater Vernon.

Table 2.4 TOlal1991 Property Taxes

North OK Landing Coldstream Vernon TOTAL Regional District: Fire $163.184 $131,818 $0 $0 $295,002 Regional District: Rec'n $348,176 $238.695 $560.112 $1,594,804 $2,741,787 Regional District: Landfill $85,481 $56,410 $95,687 $281,904 $519,482 Regional District: Others $215,320 $179,712 $256,203 $766,514 $1,417,749 Total Regional District $812,161 $606,635 $912,002 $2,643,222 $4,974,020 Library district $71,717 $64,898 $122,634 $311,061 $570,310 Prey Tax Collection Fee $46,404 $35,255 $0 $0 $81,659 Provincial Aural Taxes $349,587 $316,469 $0 $0 $666,056 Municipal Taxes* $0 $0 $936,900 $6,451,484 $7,388,384 Total Affected by Restructuring $1,279,869 $1,023,257 $1,971,536 $9,405,767 $13,680,429 Not Affected by Restructuring: School Taxes $1,413,994 $1,277,828 $2,599,271 $7,442,009 $12,733,102 Hospital Taxes $190,562 $172,443 $293,786 $952,447 $1,609,238 MFA + Assmnt Taxes $32,785 $29,668 $54,376 $174,789 $291,618 TOTAL PROPERTY TAXES $2,917,210 $2,503,196 $4,918,969 $17,975,012 $28,314,387

* Vernon landfill cost has been moved from municipal taxes to the regional district category

It can be seen from Table 2.4 that not all taxes would be affected by restructuring. School taxes, hospital taxes, BC Assessment Authority taxes, and Municipal Finance Authority taxes would not be affected. These taxes would be collected by a municipal government after restructuring (rather than by the provincial government as is the case now), but the amounts would not change at all.

The table shows that total taxes in the City of Vernon accounts for almost two-thirds of all the property taxes in the study area.

2.6 Average 1991 Chart 2.2 shows the average 1991 property taxes per person measured in Property Taxes terms of total taxes divided by total population. It is clear from the chart that, on this limited basis, the City of Vernon has the highest average tax. However, it must be remembered that the city also has business properties to help pay these taxes; the total burden does not fall onto the homeowners directly.

Current Situation 2·4 Chart 2,2 1991 Property Taxes Per Person

D Affected

North OK Landing Coldstream Vernon Average

A more meaningful way to measure taxes is to state them in terms of the taxes paid by an average home. This is shown in Table 2.5. The taxes are stated for a home with a taxable assessment of $75,000. It is recognized that there is a wide range of assessments in each of the four study areas, and so later in this report the impacts of restructuring are presented for properties with assessments ranging from $50,000 to $175,000.

Table 2.5 shows that the average house taxes are higher in the City of Vernon than in the other areas. Second on this scale are homes in Okanagan Landing, where taxes under rural status are actually higher than the taxes in Coldstream.

Again, note that the 5.25% provincial tax collection fee is shown as a separate item in Table 2.5; this charge is actually built into the tax rates used to determine taxes for regional district and library district purposes.

Current Situation 2~5 Table 2.5 Taxes Paid By An Average Home

Swan Keddlestonl Okanagan District of City of Lake/BX Pottery Rd Landing Coldstream Vernon NORD· Land only $3 $3 $3 $0 $0 NORD· Bldg only $202 $191 $203 $0 $0 NORD· Land + bldg $67 $64 $65 $178 $174 Total Regional District $272 $258 $271 $178 $174 Library district tax $28 $28 $28 $24 $20 Provincial collection fee $16 $15 $16 $0 $0 Provincial rural tax $131 $131 $131 $0 $0 Mun icipal tax $0 $0 $0 $192 $449 School district tax $547 $547 $547 $547 $547 Hospital district tax $70 $70 $70 $70 $70 MFA + Assmnt tax $12 $12 $12 $12 $12 Sewer tax (eligible) $0 $0 $0 $65 $12 Gross Tax (no grant) $1,076 $1,061 $1,075 $1,088 $1,284 Homeowner grant ·$430 -$430 ·$430 -$430 ·$430 School supplmnt grant .$59 -$59 ·$59 -$59 -$59 Net Tax, under 65 yrs $587 $572 $586 $599 $795

65 Yrs+Over: Gross Tax $1,076 $1,061 $1,075 $1,088 $1,284 Homeowner grant ·$700 ·$700 -$700 ·$700 -$700 School supplmnt grant $0 $0 $0 $0 $0 Net Tax, 65 yrs+over $376 $361 $375 $388 $584

Current Situation 2-6 Chapter 3 ICommunity Growth

The Greater Vernon area has experienced rapid growth over the past few years. It is possible that this rate of growth could even accelerate. If this happens, various service costs will have to rise to meet the community needs of a larger population. The tax base will also grow. The balance between higher costs and higher tax bases will determine what happens to taxes for local services.

While recognizing that there are a variety of "cost of growth" issues of importance, this restructure study is designed to measure the impacts of changing the form of local government, not the impacts of growth. The two subjects are related but certainly not identicaL

If a very rapid growth rate is assumed when developing the financial projections after restructuring, it will be extremely difficult to assess which projected impacts are due to rapid growth, which are due to restructuring, and which are due to both. On the other hand, if no growth is assumed, some financial thresholds -- certainly minor ones, and perhaps major ones -- would not be revealed.

As a compromise, this study assumes rates of growth generally consistent with the lower end of the official community plan projections for the study areas. These population and housing projections are assumed only for purposes ofthis restructuring study. They are not intended to be predictions.

Chart 3.1 shows the shrinking household size in Greater Vernon. This trend is expected to continue. This falling household size reduces the population impacts of adding more housing. The population will grow as residents move into the new homes, but while this is happening the number of people in all the existing homes is falling. The assumed decline for the 1991-2000 period is less than the observed fall from 1981 to 1986.

Community Growth 3-1 Chart 3, 1 Average Household Size

Vernon Coldstream North/BX Okanagan Whole Area Landing

Table 3,1 shows the historical and projected growth in dwellings and population assumed in this study. Table 3.2 shows the population and occupied housing by year. While the demographic projections extend to the year 2000, the financial projections later in this report extend only to 1999,

Table 3,1 Population and Housing Changes

Total Pct 1986-91 Pct Total Pct 9~Year Pct Total Pct 1986 Share Growth Share 1991 Share Growth Share 2000 Share

POPULATION Vernon 20,241 55% 2,208 50% 22,449 54% 873 21% 23,322 51% Coldstream 6,872 19010 1,044 23% 7,916 19% 1,071 25% 8,987 20% North/BX 5,764 16% 777 17% 6,541 16% 1,935 46% 8,476 19% Okanagan Landing 3,949 11% 428 10% 4,377 11% 360 8% 4,737 10% Total Population 36,826 100% 4,457 100% 41,283 100% 4,239 100% 45,522 100%

HOUSING Vernon 8,650 60% 1,002 55% 9,652 59% 900 39% 10,552 57% Coldstream 2,371 16% 368 20% 2,739 17% 441 19% 3,180 17% North/BX 1,950 13% 278 15% 2,228 14% 792 34% 3,020 16% Okanagan Landing 1,497 10% 159 9% 1,656 10% 189 8% 1,845 10% Total Occup. Housing 14,468 100% 1,807 100% 16,275 100% 2,322 100% 18,597 100%

Community Growth 3-2 ------:_-1

Table 3.2 Annual Growth Projections

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

POPULATION Vernon 22,449 22,546 22,643 22,740 22,837 22,934 23,031 23,128 23,225 23,322 Coldstream 7,916 8,035 8,154 8,273 8,392 8,511 8,630 8,749 8,868 8,987 North/BX 6,541 6,756 6,971 7,186 7,401 7,616 7,831 8,046 8,261 8,476 Okanagan Landing 4,377 4,417 4,457 4,497 4,537 4,577 4,617 4,657 4,697 4,737 Total Population 41,283 41,754 42,225 42,696 43,167 43,638 44,109 44,580 45,051 45,522

HOUSING Vernon 9,652 9,752 9,852 9,952 10,052 10,152 10,252 10,352 10,452 10,552 Coldstream 2,739 2,788 2,837 2,886 2,935 2,984 3,033 3,082 3,131 3,180 North/BX 2,228 2,316 2,404 2,492 2,580 2,668 2,756 2,844 2,932 3,020 Okanagan Landing 1,656 1,677 1,698 1,719 1,740 1,761 1,782 1,803 1,824 1,845 Total Occup. Housing 16,275 16,533 16,791 17,049 17,307 17,565 17,823 18,081 18,339 18,597

Community Growth 3-3

Chapter 4 !Candidate Service Shifts

This chapter presents a list of services that are reasonable candidates for shifting from one jurisdiction to another as part of local government restructuring. The list forms the basis for the changes in budgets described in more detail in chapters 6, 7, 8, 9, and 10.

Candidate Service Shifts 4·1 Shifts in Service Responsibilities

3 Municipalities 4 Municipalities 1 Municipality 2 Municipalities Enlarged Vernon, Vernon, Coldstream, CURRENT SITUATION All four areas large Vernon, Coldstream Coldstream, OK Landing North Mun, OK Landing

General Government Legislative · NORD Board (12 members) · NORD Board (5 mun, 4 · NORD Board (6 mun, 4 · NORD Board (7 mun, 4 · NORD Board (8 mun, 4 · Vernon council (J rural) rural) rural) rural) members) · 1 municipal council (9?) · Vernon council (7) · Vernon council (7) · Vernon council (7) · Coldstream council (7 mem) · (interim ward system?) · Coldstream council (7) · Coldstream council (7) · Coldstream council (7) · OK Landing council (5) · OK Landing council (5) · North mun council (5) Administration · NORD (all 12 members) · Reduced NORD admin · Reduced NORD admin · Reduced NORD admin · Reduced NORD admin · Vernon admin · Expanded municipal admin · Expanded Vernon admin · Expanded Vernon admin · Vernon: No change · Coldstream admin · Coldstream: no change · OK Lndg: Expanded admin · OK Lndg: Expanded admin Coldstream: no change · North: Expanded admin · Coldstream: No change

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f~ ~ if ;(; : :':i!

il Shifts in Service Responsibilities ,';:1 ,,:.: :,:!!'j 3 Municipalities 4 Municipalities ",,-, 1 Municipality 2 Municipalities Enlarged Vernon, Vernon, Coldstream, CURRENT SITUA nON All four areas Large Vernon, Coldstream Coldstream, OK Landing North Mun, OK Landing Hi:

Protective Services Police force •• contract · Vernon-90% share · 1 municipal force (all areas · Large Vernon - 90% share ' Large Vernon - 90% share · Vernon: 90% share · Coldstream:::: 70% share pay 90% share) · Coldstream = 70% share · OK Landing: 0% share · OK Landing: 0% share · Rural=rural tax only · Cold stream = 70% share · North: 70% share · Coldstream: 70% share Police - civilian staffing · Vernon-100% cost · Municipality - 100% cost · Large Vernon: 100% cost ' Large Vernon: 100% cost · Large Vernon: 100% cost ::::1 · Coldstream = 0% cost · Coldstream: 0% cost · OK Landing: 0% cost · OK Landing: 0% cost · Rural=O% cost · Goldstream: 0% cost · North: 0% cost ::.;: · Goldstream: 0% cost :ii Fire protection · NORD BX/Swan (25 vol's) · 1 municipal department · 2 municipal departments · 3 municipal departments · Vernon: 25 paid, 24 vol · NORD OK Lndg (25 vol's) 25 paid, 125 volunteer · Vernon: 37 paid, 75 vol · Vernon: 31 paid, 50 vol · Coldstream: 25 Volunteer · Vernon (25 paid, 24 vol's) · Coldstream: 25 Volunteer · Goldstream: 25 Volunteer · OK Landing: 25 Vol >1 / ::: · Coldstream (50 volunteers) · OK Landing: 25 Volunteers · North: 25 volunteers :'i Fire inspection · NORD (rural, Coldstream, · 1 municipal department · Enlarged Vernon: Mun · Enlarged Vernon: Mun · Vernon: Mun dep't Armstrong, Lumby, and (NORD buys from munic?) dep't dep't · Coldstream, OK Landing, Enderby) · Coldstream: Buy from · Goldstream: Buy from North: Buy from NORD or ,. , Vernon Vernon Vernon Vernon ~ .;: · NORD services other areas · OK Landing: Buy from · NORD services other areas Vernon or NORD · NORD services other areas Building inspection · Vernon · Enlarged Vernon · Enlarged Vernon · Enlarged Vernon · Vernon · NORD (all except Vernon) · NORD (all except Vernon) · NORD (all except Vernon) · NORD (all except Vernon) · NORD (all except Vernon) Animal control · NORD (Coldstream, Lumby, · Municipal department · Enlarged Vernon depl · Enlarged Vernon de pI ' NORD . Vernon, A,B,G, defined, 0, · NORD (all except large · NORD (all except Vernon) · NORD (all except Vernon) defined. F) mun) (Option: Vernon, not NORD) (Option: All Nord)

(Option: Vernon, not NORD) ••••• § Bylaw enforcement · NORD (rural areas) · 1 municipal department · Enlarged Vernon: Own depl · Vernon, OK Landing, · Vernon, OK Landing, ,I, · Vernon · NORD (rural areas) · Goldstream: Own dep't Goldstream: Own Goldstream, North: Own 8, i g. · Goldstream · NORD (rural areas) department department · NORD (rural areas) · NORD (rural areas) g> " Emergency planning · NORD (all members) · 1 municipal plan · Enlarged Vernon: Own · Enlarged Vernon, OK Enlarged Vernon, OK ~. · Vernon · NORD (rural areas) plan Landing, Goldstream: Landing, North mun, ~ g1 · Goldstream · Goldstream: Own plan Own plan Goldstream: Own plan ~ · NORD (rural areas) · NORD (rural areas) · NORD (rural areas) ':i; Ambulance -- jaws of life · NORD (Vernon, Goldstream, · NORD (no change) · NORD (no change) · NORD (no change) · NORD (no change) ':i: t Lumby, A,B,C,D,E) 911 Telephone · NORD (aU but E + F) · NORD (no change) · NORD (no change) · NORD (no change) · NORD (no change) ::1

Chapter 5 !Economies of Scale

5.1 !Introduction Depending on the restructure option being considered, the City of Vernon's population could rise from roughly 22,000 to over 40,000 as a result of extending the municipal boundary. There is no question that the larger municipality will incur greater costs in its operations as a result of having to expand the delivery of services to residents.

One of the key questions is the degree to which a larger municipal population will result in increased costs. While costs will obviously rise, the key question is whether costs would rise in proportion to the expanded municipal population (or the expanded length of roads).

To help shed light on this, an analysis of municipal statistics was undertaken using material provided by the Province of British Columbia in its publication entitled Municipal Statistics Including Regional Disuicts.

The latest available copy of this publication, which includes a variety of financial data on all municipalities and regional districts in British Columbia, is 1989. The figures shown for 1989 have been increased by 12% to reflect inflation and bring these figures up to 1991 levels.

The use of this publication ensures a reasonable degree of reporting consistency from municipality to municipality. It should be noted that municipalities vary to a considerable degree in the categories used in their annual budgets. While using the individual budgets from each municipality would allow more detail to be observed, there would be a continuing problem of inconsistency from municipality to municipality when looking at numbers for particular departmental spending.

For example, in many municipal budgets there is an internal recovery of finance costs applied to each of the departments, and so the budget for general administration, which includes finance, would be lower in these municipalities because some of the finance costs have been built into the department budgets for recreation, protection, and other municipal departments. The provincial Municipal Statistics book ensures a much greater degree of consistency in accounting terminology.

The charts at the end of this chapter present the information in terms of department spending per resident -- that is, costs per capita. The exception to

Economies of Scale 5-1 this is road transport costs, which are shown as a cost per kilometer of road length. The road lengths for each municipality are taken from the Municipal Statistics book. The populations used in the per capita costs are estimates used by the Ministry of Municipal Affairs, Recreation and Culture in the calculation of the annual Revenue Sharing Act grants given to all municipalities.

5.2 General There are three components to the general government costs: Government • Legislative expenditures • Administrative expenditures • Other general government expenditures

Chart 5.1 shows the legislative costs per resident. It can be seen from Chart 5.1 that as municipalities grow in population, the legislative costs decrease when measured on a per person basis. In other words, there are some economies of scale associated with the costs of mayor, council and their disbursement budgets for travel, telephone and so on. Moving from 20,000 to 40,000 population shows a reduction in legislative cost per resident of about $3 per person.

The general rate of decline in spending per person that is associated with increasing the population is steeper for legislative spending than it is for most other municipal departments.

Chart 5.2 shows the general administrative costs per resident. Administration costs vary more than legislative costs for municipalities between 5,000 and 10,000 people. However, the trend line still decreases as population rises. As before, this suggests that there are economies of scale associated with the administrative costs of a municipality. This category includes a wide array of administrative services including municipal hall maintenance, liability insurance, administrative staff salaries, office equipment costs, audit and legal costs, telephone and utility costs and many other municipal expenses.

Other general government expenditures are much less consistent in terms of their content than either the legislative or the general administrative categories discussed above. Many municipalities have no costs in this category, as can be seen from Chart 5.3. The range of spending between 4,000 population and 20,000 population ranges from $0 per person to $80 per person. Trends observed in this category cannot be viewed as confidently as the preceding two categories because the range is so great and so inconsistent. As can be seen from Chart 5.3, the trend line is almost horizontal, indicating that there are relatively few economies of scale associated with expenditures in this category. However, the slope of this line

Economies of Scale 5-2 is strongly influenced by the number of municipalities that have no costs in this category.

Chart 5.4 shows the total general government expenditures expressed on a per capita basis. This is the sum of the three categories discussed above. Once again it can be seen that there is a decline in the cost per person as the population rises, strongly suggesting that an increase in population could bring about some economies of scale in general government spending.

5.3 Road Transport The municipal costs of maintaining roads, drainage and other transportation Spending related services is measured in a much more meaningful way using the length of road rather than population. In general terms, of course, the larger the population, the greater the road length. However, this is not a universal occurrence. There are some municipalities with much more dense development that would show a lower average road length per person than would other municipalities that are more rural.

As an example of the variance in this regard, Coldstream's road length (105 kilometers) works out to about 75 people per kilometer of road maintained by the municipality (excluding highways). Vernon, on the other hand, has an average of 125 people per kilometer of road.

Chart 5.5 shows the trend line for municipal spending on road transport measured on a per- kilometer basis. It can been seen from the chart that there is a slight decrease in the costs of road maintenance as the population increase. However, the slope of the line is not as steep as it was for general government services. In other words, a larger municipal population would probably not result in economies of scale for road maintenance as great as those involved in general government services.

In the Greater Vernon area, there is quite a difference in the cost of road maintenance per kilometer between Vernon and Coldstream. Vernon's 1991 budget produces an average road transport cost of $16,600 per kilometer of municipal road; Coldstream, however, spends an average of only $5,100 per kilometer of municipal road. There are many municipalities below 10,000 population that spend between $4,000 and $6,500 per kilometer on road transport spending, so Coldstream's costs are not entirely unusual. To put Vernon's spending in perspective, it is noted that Kelowna's budget indicates spending of about $13,000 per kilometer of municipal road. It is clear from the Vernon and Kelowna cases that denser, more urbanized developments clearly require a considerable increase in the intensity of road transport spending.

Economies of Scale 5-3 The greater spending in Vernon is at least in part related to having to maintain a high density downtown area and heavy traffic volumes on a number of busy streets. This high volume is due in significant measure to residents who live just outside Vernon's boundaries. These residents -- that is, Coldstream, BX, Okanagan Landing, Swan Lake and Keddleston residents - make no direct payments to the higher costs associated with maintaining urban infrastructure in Vernon. It is thus a bit unfair to speak of Vernon's road maintenance costs purely in terms of its own municipal roads and its own municipal population when it so clearly serves a regional function.

5.4 Environmental Chart 5.6 shows the trend line for municipal spending on environmental Development development services -- predominantly land use planning and economic development.

Planning costs tend to rise with population increases, as can be seen from the chart.

In the Greater Vernon case, regionalized planning costs are already in place to a significant degree, and so this study does not rely on evidence extrapolated from other municipalities when projecting planning costs for a larger Vernon municipality. The actual regional costs provide a better basis for the projections.

5.5 Capital All municipalities use a portion of the current year's tax revenues to finance Spending the acquisition of large assets or to undertake major projects such as road improvements. The amount varies considerably from year to year and from municipality to municipality. Chart 5.7 shows the trend line for capital spending from taxes measured on a per capita basis. It can be seen from the chart that there is a noticeable decline in the per capita costs as population increases. It can also be noted from the chart that there is considerable variation around this trend line both at the small population end and at the large population end.

Recognizing that there is some variation in the per person spending, it is nonetheless fair to conclude that larger municipalities spend less of residents' tax dollars on capital items than smaller municipalities do when viewed on a per person basis. An increase in population may not bring about a proportionate increase in capital spending from taxes.

Because municipalities alter their capital spending patterns from year to year, it is safer to examine the capital spending figures using the average of 1988 and 1989 figures, rather than relying solely on a single year which could turn

Economies of Scale 5-4 out to be an unusual one. For this reason, the results shown in the chart were produced from the 1988 and 1989 capital spending figures.

5.6 Transfers to Most municipalities use a portion of the current year's taxes to build up Reserve reserves for known, future expenses; one of the most common of these is the equipment replacement reserve fund used to replace vehicles and machinery Accounts as they wear out. It can be seen from Chart 5.8 that some municipalities do not put money in these reserve accounts, at least not in 1988 or 1989 as recorded in the provincial publication. This mayor may not be a permanent feature for the financing of these particular municipalities. It can also be noted from Chart 5.8 that there is quite a cluster of municipalities spending $50 or less per person in transfers to reserve accounts. The chart shows a trend line that decreases as population increases. This suggests that there might be some economies of scale associated with the financing of equipment and machinery replacement as population rises.

5.7 City of Vernon The preceding discussions deal with observations of 48 municipalities in BC, Spending and the trend lines show the changes from smaller populations to larger populations, which really means from one set of municipalities to another set of municipalities. This is not quite the same thing as an increase in population in one municipality over time.

To shed light on the departmental spending changes that have occurred with population increases in Vernon, the city's budgets were analyzed for the years 1986 and 1991, and the results are shown in Table 5.1 below. The 1986 budgets have been increased up to 1991 dollar amounts by using an inflation factor of 5.5% per year. The table shows the total amount spent in 1986 versus 1991 as well as the per capita amounts in 1986 and 1991. The last column in the table shows a percentage change in real dollars between 1986 and 1991.

The population rose 10% between 1986 and 1991 -- from 20,241 to just over 22,000.

The changes in Vernon's spending that might be associated with a 10% increase in population are not the same as those observed in the trend lines for other municipalities. Note again that the fundamental difference here is that the earlier analyses compared different municipalities; Table 5.1 compares the same municipality for different years.

Spending on legislative services -- mayor, council and their expenses--actually rose 12% on a per capita basis over the last five years. Administration costs

Economies of Scale 5-5 did not change very much -- some of the costs rose 28% but finance costs fell 23% on a per resident basis during the period. There was a 20% rise in the per capita spending on other general government services, but this number is significantly skewed with the inclusion of unusual items such as the Expo legacy spending. On balance, the total general government spending rose 9% when measured on a per person basis between 1986 and 1991.

Table 5,1 City of Vernon Spending Per Person, 1986-1991

Budgets in 1991 Dollars 1991 Dollars Per Person 1986 1986 1991 1986 1991 Pct Budget Budget Budget Budget Budget Change

Legislative $100,130 $130,866 $162,500 $6.47 $7,24 12% Administration $311,119 $406,620 $576,911 $20,09 $25.70 28% Finance $285,605 $373,274 $316,741 $18.44 $14,11 -23% Other Gen Gov't $266,379 $348,147 $465,010 $17,20 $20,71 20% Subtotal, Admin $963,233 $1,258,907 $1,521,162 $62,20 $67,76 9% Industrial Dev. $60,223 $78,709 $101,754 $3,89 $4,53 16% Police $1,597,148 $2,087,409 $2,805,248 $103,13 $124,96 21% Fire Protection $1,272,220 $1,662,741 $1,621,128 $82,15 $72,21 -12% Other Protection $148,022 $193,459 $237,080 $9,56 $10,56 10% Transportation $2,074,187 $2,710,879 $2,959,279 $133,93 $131,82 -2% Environ. Health $709,577 $927,389 $1,127,192 $45,82 $50,21 10% Environ Development $103,139 $134,799 $130,265 $6,66 $5,80 -13% Subtotal $6,927,749 $9,054,291 $10,503,108 $447,32 $467,87 5%

Fiscal Services $1,253,776 $1,638,635 $1,390,595 $80,96 $61.94 ·23% Transfers to Own Funds $460,121 $601,360 $443,286 $29.71 $19,75 ·34% Capital Expenditures* $741,394 $968,972 $681,126 $47,87 $30,34 -37%

GRAND TOTAL """",,. $9,383,040 $12,263,258 $13,018,115 $605,86 $579,90 ·4%

* Total capital spending + Transfers to own funds c Transfers from GRF reserves Notes: Annual inflation rate of 5.5% used to convert 1986 budget to 1991 dollars 1986 population = 20,241 1991 population = 22,200

Police costs have risen 21 % per person over the past five years. However, the costs associated with this service are not really in municipal control, and trend lines cannot be used as any sort of indication about future spending as long as they involve provincial decisions about police cost sharing. It is important to note, however, that the City of Vernon incurs a very high police cost a per person basis compared with smaller municipalities not only because of the provincial-federal RCMP cost arrangement (which shifts more costs onto Vernon taxpayers than occurs in other municipalities such as Coldstream), but also because the commercial focal point of the region is in Vernon, and there are a number of police costs associated with that kind of urbanization. Police costs are another example of the City of Vernon facing costs that are generated in part by residents of the surrounding areas.

Economies of Scale 5+$ Fire protection has actually decreased on a per person basis over the past five years. The 12% decline shown in Table 5.1 strongly indicates that once a certain level of fire protection is maintained, and a certain amount of professional fire fighting is in place, some increases in population can be accommodated with virtually no increase in spending.

The same statement can be made for road transport costs. Between 1986 and 1991, the City of Vernon's costs -- expressed per person -- for road maintenance fell by 2%. Part of this stability is due to the fact that many of Vernon's road costs are associated with the downtown core, where new roads are not added. Another part of this stability is due to the fact that a significant part of Vernon's growth takes the form of higher density housing, where roads are shorter compared with low density housing such as single family subdivisions where road lengths are longer.

Environmental health -- predominantly garbage collection and landfill costs - have increased a bit over the past five years on a per person basis in the City of Vernon. Increases in the regional landfill costs are a significant reason for this increase, as opposed to increases in garbage collection costs.

Environmental development -- mainly land use planning -- has seen a decline of 13% in the per person costs over the past five years.

While some of the costs mentioned above have increased over the past five years, some fiscal services have decreased significantly when measured on a per person basis. For example, debt payments have decreased 23% since 1986. Transfers to reserves and other accounts have decreased 34% over the past five years.

In addition, the use of property tax revenue to pay for capital has also declined significantly on a per person basis over the past five years. The table shows that per person capital spending from taxes has fallen 37%.

On balance, the total municipal spending since 1986 has fallen 4% when measured on a per person basis using constant 1991 dollar values. This reinforces the notion that an increase in population does not necessarily mean an increase in the spending level when measured on a per person basis. From year to year there will be fluctuations in the changes from one department to the other department, with some having an increase and some having a slight decrease, but overall it is a reasonable conclusion that municipal spending per person need not rise with population.

Economies of Scale 5-7 5.8 ISummary An analysis of the spending habits of 48 municipalities in BC between 4,000 people and 70,000 people indicates a significant and consistent trend of decreasing municipal costs in larger municipalities when viewed on a per person basis. While the absolute amount spent increases, the relative spending per person does not

The particular history of the City of Vernon supports this notion in a limited sense. Total municipal spending from all departments has fallen by 4% on a per capita basis since 1986. During this time, there was a 10% increase in the City's population. It is a reasonable conclusion that extending the boundaries of the City of Vernon to include other areas would bring about economies of scale in some municipal departments' spending. Some per capita spending levels now experienced in the City of Vernon would decline as more people are added to the City's service base. This is particularly true for many services that do not require "urban level" qualities and services beyond those now provided in the city's core area. Examples here include road maintenance and fire protection.

Economies of Scale 5-8 :-::.--

5 • trend line a • a 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chart of 48 BC municipalities over 4,000 population, excluding GVRO and CRD Source: 1989 Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-9 Chart 5.2 Per Capita Administrative Expenditures $ Per Capita $lS0 • $160 Spending per capita gradually decreases $140 ,.. __ ._._ .. _...... _._._._._ ...... _.. _.... _._._ .. _ ...... _._._._ ..... _... _.. _. __ ._ ...... _.. as the population increases. • $120 ...... •..• _... _...... Cold stream ._._._._ ..... _...... _...•... _._ .. $100 •• • • Vernon $SO

$60 • • • $40 ...... -... -.-..... ~.-.-.-.-. • •• • trend line $20------•

$0 • • o 10,000 20,000 30,000 40,000 50,000 60,000 70,000 SO,OOO Population

Chart of 48 BC municipalities over 4,000 population, excluding GVRO and CRO Source: 1989 Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-10 Chart 5.3 Per Capita Other General Government Expenditures $, Per Capita ----_._ ... _... _._._._.- ....•..... __ ._-_ ... _.. _._._ ...... _... _._. __ ._ ...... _.. -.-_...... •.. _._ ...... _...... __ .__ ._ ...... __ .... - $80 +

$70 Spending per capita slightly decreases 8S the population increases . $60 ...... •.• -.-.-.-.. -.. -.. -- •. ~-.-.----- $ 5 0 ._. __ ._ ...... _._._._._ ...... _...... _._._._. __ .. _... _.-._.- ..... _... _._._._.-.. _.... __ .__ ..... _. __ ._._- ...... -. __ .__ ... __ .. _. __ ._ ..... _.... _._._._._ ...... -.. -._.- + + + $40 + Coldstream ...... _._ .... _._ ...... __ .__ ._ .. $30 +

$20

+ $10 trend line + + $0 o 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chart of 48 Be municipalities over 4,000 population, excluding GVRO and CRD Source: 1989 Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-11 Chart 5.4 Per Capita Total General Government Expenditures $ Per Capita

$180 •• Spending per capita gradually decreases $1 60 _.-.-•..... _._._._ ...... _.... __ ._._ ...... _.. __ ._-_._ .. - ····_· ___ ···.··.·_._._.~._._ ...... _.. H_. as the population increases .

$140 _._-_.-_ ..... •_._. __ ... _...... •. _._. __ .. _...... _._--._._- .. " ..... -.-.-... -.. -..... --.-.~.-... -.... ---.-.--. • f· Coldstream $120 ...... •...... •...... • • $100 ...... •..... _•.••...•....••.•...•...... •...... •.••.•....•....••.•.••...... • Vernon $80 ...... •...... •.•.••.•.• ...... •.•.•.• ...... •...•.•.•.•.•.•.... . •• • • $60 ...... •..• . ..·············.········0·• ...... _ ...... • • o • .trend line $40 -.-.-.. -.-.. --.-.... ~-.... -.-.-... -.. -.. --.-.-.-..... -._ ... _._._._ .. _.. _...• _.-._._._ ... _._._._-_ ..• __ .... _.-. __ .... - ..... _-_._ .....•...... _._._._.-

$ 2 0 ......

$0 o 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chart of 48 Be municipalities over 4.000 population, excluding GVRD and eRD Source: 1989 Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-12 Chart 5.5 Transportation Spending Per Kilometer $ Per Kilometer $45,000 ...... --._.-._ .. - ..... -.-.-.-• ...... __ ._._._ ...... _._. __ .... _._ .... _._. __ ..... __ ._ .... _.- ...... • _._._ ...... _._._ .... -...... _._ ...... _.. .. • $40,000 Spending per capita slightly decreases $35,000 ._._._.. _. __ .__ .... _...... __ .... _.... _... _.. _._._._ .... _...... _._._._ .. _.... as the population increases.

$30,000 Coldstream Vernon $25,000 • ~------·-----f------

$20,000 ...... -..•... _._ ... ~ .. _.. _... ./-._ ...... - . _.. _._... . . --- - .... _.. -- - ...... _.... _.... _-.. ~ . ~ $15,000 • • • • $10,000 ._._._.-,:'~_'_ ...... _._._.:_ ... _._._~ ...... _._._. __ .. _•. _.... _. __ ._ .. _._._._._._ ...... _._._._ .... _._ .. _._•. __ ..... _._._._._._.lr.• •. ndlin. • • $5,000

$0 o 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chart of 48 BC municipalities over 4.000 population. excluding GVRO and eRO Source: 1989 Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-13 Chart 5.6 Per Capita Environmental Development Services $ Par Capita .... _._. __ .__ .. _.... __ .__ ._ .... _._._._. __ .. _.. - .. _._._-_._ .. _. __ ._._ ... _.. _-_._._ .... _.. _ .... _._ .... _-...... _. __ ._ ...... _._._. __ ... . $120 •

$100 ._._._ ...... _.... _._ .... _..... _...... _._._._ ... _.-.-_ .... __ .. '-"'-'-'-"'-"_."-'-'-'_.'_... _'-_._. Spending per capita gradually increases ... as the population increaseso

_._. __ ...... _._. __ .. _.. _..... _.... __ .....• _.. _._._._._ ...... _.... __ ._. __ .. _.... _. __ .__ ...... __ ._._ ..... _... -_._ .... - ...... -._._.-.. " .. _._._._._ ... _.•..... __ ._._ ... . $SO •

$60 •• • Cold stream

$40 .. _...... _.•.•...... _...•.....•.....•.•.•.•...••...... •...... •• trend line •• Vernon • •• $20 _... _.+;.:.... ::: ...... •..~ •...... z: ...... ::::: ...... - .... ~...... - ...... ~...... • ...... •...... •.•....••...... ~ .. . • #. ·0 • $0 a 10,000 20,000 30,000 40,000 50,000 60,000 70,000 SO,OOO Population

Chart of 48 Be municipalities over 4,000 population, excluding GVRO and eRO Source: Municipal Statistics (12 percent added for inflation)

Economies of Scale 5-14 ~,,~~--~~~=~~~-'------~------'""-~-.-----

L- __,

Chart 5.7

Per Capita Capital Spending from Taxes $ Per Capita $ 2 00 ...... -...... _ ...... _...... _ ...... _ ...... • $180 Spending per capita gradually decreases $1 60 ...... - ...... _ ...... __ ._._ .. _.. _._._. as the population increases . • $140 ~ ...... ~...... _......

$120 • • Coldstream $100 • • • Vernon $80 ...... • ~ ...... • _. .* ...... -...... _...... _...... \+.- • $60 ...... ~ ...... •• o • • $40 ...... - • o trend line $20 ...... _._._._ .. _... • ·_··_· __ .__ ·... ~ ... _._.N. __ ... _..... _~_ ...... _... __ ._._ ...... _... __ ._~_ ...... _._. __ ._ • • • $0 o 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chart of 48 Be municipalities over 4.000 population, excluding GVRO and CRD Source: Municipal Statistics (Average of 1988 and 1989 figures. 1988 adjusted by 18 percent inflation, 1989 by 12 percent inflation)

Economies of Scale 5·15 Chart 5.8 Per Capita Transfers to Reserve Accounts $ Per Capita $400 •......

$350 ~ ...... I pe, capita slightly I.~ tho increases. $300

$250 .....

$200 .... + / Coldstream I Vernon $150 .. + ~/ $100 / ...... + ++ +. i $50 I ...... • + .- • trend lin~ !··75 . + • . $0 * • • • • • ° 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Population

Chan of 48 BC municipalities over 4,000 population, excluding GVRD and CRO Source: Municipal Statistics (Average of 1988 and 1989 figures, 1988 adjusted by 18 percent inflation, 1989 by 12 percent inflation)

Economies of Scale 5-16 1----

Chapter 6 IRegional Municipality Option

6.1 IIntroduction This chapter examines the impacts of the largest restructure option -- that is, the creation of a regional municipality that includes the City of Vernon, the District of Coldstream, Okanagan Landing, Swan Lake, BX, Keddleston and Pottery Road areas.

This option would be the most complex to bring about because it involves not only the greatest number of residents but also the greatest number of government jurisdictions.

This chapter is organized as follows: 6.2 Growth and Tax Base 6.3 Grants and Capital Spending 6.4 Regional District Services 6.5 Municipal Expenses 6.6 Municipal Revenues 6.7 Tax Impacts 6.8 Uncertainties

Regional Municipality Option 6-1 6.2 Growth and The regional municipality option would produce an initial municipal Tax Base population of 41,300 which would rise to 44,600 by the year 1999. This is a total population growth of 8% over the eight years. Bearing in mind the decreasing household size in the area, the increase in housing units would have to be higher than 8% to produce this population increase. In order to generate an average population increase of about 470 people per year, a total of almost 260 new housing units per year is needed. Table 6.1 shows the population growth assumed for this option.

The tax base under this option would grow by a total of 13% during the projection period used in this study. This is stated in constant 1991 dollar values. Table 6.2 shows the municipal assessments. The table also shows the weighted assessment for municipal taxation purposes, which is determined using the total assessed values and the current City of Vernon tax rate multiples as per the 1991 City budget. These tax rate multiples shift some of the tax burden from residential properties onto non-residential properties - in Vernon's case, the business category (assessment class 6) is the predominant non-residential property category. The 1991 budget uses a tax rate for this property class that is 2.55 times the residential rate. This ratio is used in determining the total "effective" tax base when calculating the residential tax rate.

Table 6.1 Table 6.2 Regional Municipality: Municipal Regional Municipality: Total Population Assessments

Actual Weighted Year Population Year Total Total 1992 41,283 1992 $1,492,397,000 $1,922,359,000 1993 41,754 1993 $1,520,350,000 $1,953,974,000 1994 42,225 1994 $1,548,309,000 $1,985,609,000 1995 42,696 1995 $1,576,275,000 $2,017,267,000 1996 43,167 1996 $1,604,248,000 $2,048,950,000 1997 43,636 1997 $1,632,228,000 $2,080,656,000 1998 44,109 1998 $1,660,215,000 $2,112,386,000 1999 44,580 1999 $1,688,209,000 $2,144,139,000 Constant 1991 dollars

6.3 Grants and The regional municipality would receive an annual, ongoing Revenue Sharing Capital Act grant from the Province of BC of about $2 million per year (rising with population). This is more than is received under the current situation, where Spending only the City of Vernon and the District of Coldstream receive this grant (the smaller grant to the regional district would remain unchanged). Under the

Regional Municipality Option 6·2 current system two "basic" grants are given -- one to each municipality. Under a regional municipality, only one basic grant would be given.

The second part of this annual grant is based on population. An average of $46 per person is used in this study to project this portion of the grant. Under the current situation, Vernon receives approximately $49 per person, but Coldstream receives only $43 per person.

There would also be short-term assistance grants from the Province of Be to help the restructured municipality manage the shift in services from other jurisdictions to municipal jurisdiction.

The first of these short-term grants is based on population. A grant of $150 per person in the restructured area is used here. Note that this excludes the populations of Vernon and Coldstream; it is applied only to the populations in the existing rural areas. The funds would be paid in the first three years, with $819,000 in the first year, $446,000 in the second year and $273,000 in the third year, for a grand total of $1.638 million. This grant has not yet been confirmed in writing by the province.

The second major short-term assistance grant is a grant based on road length in the rural areas. Under rural status, these roads are maintained by the provincial contractor. This assistance is designed to ease the shift in responsibility for rural roads to the municipality. The province would give a grant, assumed here to be $460,000 per year, for each of the first five years that the municipality maintains the new rural roads. However, the province would probably have its contractor continue to maintain the rural roads until the end of 1992. For 1992, it is assumed the province would not make the road assistance grant because the municipality would incur no cost in maintaining these roads for the year. This means the province would give a grant for years 2, 3, 4 and 5 following incorporation. The province would discount each year's grant and pay it upon incorporation. The total for the regional municipality would be $1,631,000.

It is assumed the province would also assist with grants for updating or preparing bylaws and planning regulations for the rural areas under municipal status following restructuring. A total of $50,000 is assumed to be made available to the enlarged municipality by the province in the first two years, split equally at $25,000 per year.

In the case of major restructuring, which the Vernon situation would be, the province may also rebate a portion of the preceding year's rural tax to the municipality. This portion can be 50% or 100% of the previous year's rural tax, depending on when in the year the restructuring takes place. One hundred percent of the net rural tax would be approximately $600,000.

Regional Municipality Option 6-3 However, the province is not obligated to give this rebate, and for purposes of conservatism it is assumed in this study that the rebate is not given.

Table 6.3 shows these short-term assistance grants.

Table 6.3 Regional Municipality: Short-Term Grants Per capita Road mtce Year grants grant 1992 $818,850 $1,631,000 1993 $545,900 $0 1994 $273,000 $0 1995 $0 $0 1996 $0 $0 1997 $0 $0 1998 $0 $0 1999 $0 $0

The province has identified a number of roads that would quality for 75% funding under an 8-year program available only to new municipalities or to significantly restructured municipalities. Note that the commitment here is only that these roads are eligible, not that the funding is guaranteed. A total of $4.5 million is assumed for these projects here. It is further assumed that the restructured municipality would in fact receive 75% funding on all the projects. The municipal share would thus be $1.125 million.

It is also assumed the province would phase in the local share of RCMP costs associated with the current rural areas. The phase-in would involve a five-year delay in any local taxes for rural RCMP costs; in the sixth year, 33% of the local share would apply; in the seventh year, 67% of the local share would be payable; and finally, in the eighth year, the full local cost of RCMP services would be paid by the municipality.

Capital Spending The original municipality would face a number of capital costs associated with taking on the added responsibilities for services to such a large area. It is expected that the municipal hall would have to be expanded, as would the public works facilities (including equipment and machinery). In addition, the municipality would be responsible for improving, upgrading and rebuilding a number of roads now in the rural areas.

The municipality would no doubt develop a financial plan to make use of the short-term transitional assistance grants from the province to help in obtaining the new assets and infrastructure. While the nature of these financial plans varies among the recent restructure cases, virtually all of the new municipalities that have been incorporated over the past few years have developed some sort of plan to balance the need for future expenses with the immediate grants they get upon incorporation. Municipalities want to ensure

Regional Mun;dpality Option 6·4 the benefits of those short-term grants are received over a number of years rather than being consumed in just the first or second year.

Such a plan is assumed here. The plan developed in this analysis may not be the plan eventually used by the regional municipality, but it is a reasonable plan to balance off the timing of grants and capital expenditures to smooth any changes that might occur in taxes as a result of financing the infrastructure. The plan operates over an eight year period, with the eighth year being a "normal" year from a capital perspective -- that is, the capital spending in the eighth year (which in this case is the year 1999) would also apply to later years. This incorporation capital fund has been worked to minimize tax changes from year to year during the first eight years.

The capital costs associated with restructuring involves the following items. Municipal hall $1.2 million Public works building and equipment $1.7 million Municipal share of eligible roads $1.1 million

The province has a program for assistance with the cost of improving and upgrading rural roads. This program, which runs for eight years, applies only to new municipalities and major restructuring. The Vernon case would be eligible under this program. It is assumed here that a total of $4.5 million in road costs in the rural areas would be eligible under this program.

There is no guarantee that 75% of this cost would be paid for by the Province of Be under this program. Certain roads are eligible for the program, but the funds are not guaranteed. However, there have not been a large number of new municipalities or major restructures in the past several years, and so it is reasonable to expect that Vernon's chances of obtaining 75% funding for these projects are good. It is assumed here that the total cost of these projects is $4.5 million and that the province would fund $3.375 million of this.

The incorporation fund assumes this work would actually be done in the first seven years, not eight years. This allows the eighth year to be a normal year after the special provisions of this program no longer apply.

Table 6.4 shows the mechanics of the incorporation capital fund. Money going into the fund consists of short-term restructure assistance grants (per capita grants and road maintenance grant), "normal" general revenue fund ("GRF') capital spending every year (starting at $720,000) and special transfers from the general fund for rural roads, municipal hall and public works expenses. Expenditures from the fund are made on public works building and equipment, municipal hall, "normal" capital projects and the municipality's 25% share of the eligible road improvements. In addition, after the first year, some interest is transferred from the incorporation capital fund back to the general revenue fund to stabilize property taxes.

Regional Municipality Option 6·5 The use of the fund allows the regional municipality to finance $6 million in capital projects without any new debt In addition, the province's share of road improvements would total $3.4 million, for a total of $9.4 million, over 8 years, with no new debts.

Table 6.4 Regional Municipality: Incorporation Capital Fund (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 STARTING BALANCE * $2,449,987 $3,352,099 $1,071,324 $674,114 $685,110 $695,658 $705,775 $715,479 ADDITIONS TO FUND: Per capita grants $545,900 $272,950 $0 $0 $0 $0 $0 $0 Road mtce grant (in starting balance) $0 $0 $0 $0 $0 $0

Tsfrfrom GAF c Normal $719,728 $727,248 $734,768 $742.288 $749,808 $757,328 $764,848 $772,368 Tstr from GAF ~ Rural roads $290,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $0 SPENDING FROM FUND: Public works bldg + equip $0 -$1,700,000 $0 $0 $0 $0 $0 $0 Municipal hall $0 -$800,000 -$400,000 $0 $0 $0 $0 $0 Projects funded by taxes -$719,728 -$727,248 -$734,768 -$742,288 -$749,808 -$757,328 -$764,848 -$772,368 25% share eligible roads -$160,714 -$160,714 -$160,714 -$160,714 -$160,714 -$160,714 -$160,714 $0 Subtotal $3,125,173 $1,164,335 $710,610 $713,400 $724,396 $734,944 $745,061 $715,479 Interest earned $226,926 $186,021 $72,992 $56,580 $57,476 $58,337 $59,163 $58,383 Int used to reduce taxes $0 -$279,032 -$109,488 -$84,870 -$86,214 -$87,506 -$88,745 -$107,322 CLOSING BALANCE $3,352,099 1071324 $674,114 $685,110 $695,658 $705,775 $715,479 $666,540

• 1992 starting balance has per capita grant of $818,850 and road mtce grant of $1 ,631,137

6.4 Regional In keeping with the candidates for service shifts as described in chapter 4, District responsibility for the following services is assumed to shift to the regional municipality. Services • Recreation area #1 • BX/Swan Lake fire protection • Okanagan Landing fire protection • Building and fire inspection • Emergency programs • Animal control • Transit • Drainage • Miscellaneous grants • Queen's Committee grant • Street lights for specified areas A, B, C • Street lights for defined areas • Tourism and economic development

Regional Municipality Option 6~6 __ -=-T-~--

generate the amount needed to pay this requisition by using a single ad valorem tax using the hospital base (rather than the municipal tax base).

Table 6.5 shows the North Okanagan Regional District requisitions under the current system and after restructuring. Note that the electoral area requisition would faU to zero as the municipality would be responsible for costs associated with the municipal director on the regional board.

The "general government" requisition component has been increased to reflect the loss of cost recoveries that would result from shifting such NORD services as planning and building inspection to the municipality. These NORD service budgets include a share of the NORD building debt and building operations. Shifting these to the municipality would mean these shares of the building costs would have to be recovered some other way. Increasing the general government requisition does this.

Table 6.5 Regional Municipality: N.O.R.D. Requisition

Current ReqJn After N.O.A.D. Services Requisition Restructure

Land Only: Sterile insect release $79,436 $79,436

Building Only:

Recreat'n area #1 (Core) $2,577,485 0> Recreat'n area #2 (East) $164,302 -- Fir. (BX/Swan, OK Lndg) $295,002 -- Recycling $153,312 $153,312 Sanitary landfill $519,482 $519,482

Land and Building: General governmer.t $227,249 $249,974 Electoral area services $8,416 .. Development services $126,438 $12,644

Bldg + fire inspection $0 0> Emergency programs $12,254 -- Ambulance· Jaws $935 $935 Animal control $51,240 -- Transit (rural area contract) $11,526 -- Drainage $9,118 -- Miscellaneous grants $2,305 -- Noxious insects $1,186 $1,186 O.B. Water Board $342,603 $342,603 Queen's Committee $4,910 .. Airport $36,504 $36,504 St. John society $1,846 $1,846 OK Symphony grant $3,043 $3,043 5t lights: spec areas A,B,C $3,804 -- St lights: defined A,B,C $12,144 -- T ourism/Ec Devel $111,901 -- 911 Telephone $206,707 $206,707 Feasibility reserve $33,583 $33,583

Total N.O.R.D. Requisition $4,996,731 $1,641,255

Regional Municipality Option 6-7 The regional district requisition is assumed to grow at the same rate as the hospital tax base over the projection period of eight years used in this study. It can be seen from Table 6.5 that approximately $3.3 million in service costs would shift from the regional district responsibility to the municipality responsibility -- that is, the current requisition of almost $5 million from the study area would fall to a requisition of $1.6 million.

6.5 Municipal General Government Expenses Legislative expenses include remuneration for the mayor, council members and their disbursements. Costs are projected on the basis of the City of Vernon's current $163,000 plus $5 for each new person in the municipality. This would result in a generally declining cost per person for legislative services. Table 6.6 several pages on shows the expenses.

Administration Wages The City of Vernon's administration costs for 1991 works out to $25.70 per resident in the City. Coldstream's works out to roughly $15 per Coldstream resident, but a direct comparison is not appropriate because of different accounting principals used to reflect internal recoveries between the two municipalities. No economies of scale are assumed for administration costs in this study, and the City of Vernon rate of $25.70 per person is applied to all residents in the municipality to determine this cost.

There would be some economies of scale in the finance department. To reflect this, the projections here are based on the City of Vernon's 1991 budget of $317,000 (net of recoveries) plus an additional $10.60 per person in all other areas. This $10.60 figure is roughly 75% of the observed cost in Coldstream and it is assumed that the 75% ratio is appropriate when applied to Coldstream .and the rural area populations combined.

It is expected that the municipal hall would have to be expanded to accommodate the new and enlarged services the municipality would have to provide. However, not all of the costs at the municipal hall would increase in direct proportion to the population. The current city budget of $134,000 is used as the starting point and is increased each year by an average of $3 per person for people living outside the municipality. The actual expansion to the hall could occur in the second or third year, but every year -- including the first -- there would be an extra cost associated with administering the increased service levels.

Regional Municipality Option 6·8 --~:J. ~--;:-:---:------

Grants are projected on the basis of the current city level of $94,000 plus $.50 per person elsewhere; this $.50 figure is approximately 25% of the city rate after excluding grants for the O'Keefe ranch.

Insurance costs are based on municipal population, as per the current Municipal Insurance Association plan offered through DBCM.

The 1991 Vernon budget includes $181,000 as an expense associated with Expo grant funds. This grant will not occur in 1992 and later years, but to reduce it to zero would be unfair when comparing current situation taxes with the post-restructure taxes. To ensure consistency in this analysis, it is assumed here that some special projects would be undertaken that would account for $181,000 in expenses each year after restructuring. This will allow an appropriate comparison between the "before" and "after" tax impacts.

Miscellaneous administrative costs for sundry items are projected on the basis of $1.57 per person, which is based on 1991 budgets for the City of Vernon and Coldstream.

Industrial development expenditures are held constant throughout the projection period at $102,000. There is no reason to assume that an altered municipal boundary would require more or less spending on this service.

Protective Services RCMP costs associated with the boundary currently covered by the City of Vernon are projected to increase on the basis of the total study area's population.

RCMP costs in the other areas are based on the staffing levels currently in place: one officer per 1,900 people in Coldstream and one officer for 810 people in the rural areas. It is assumed that for the first five years the costs associated with the rural areas would be waived by the province as part of an incorporation assistance package. At the end of the fifth year, it is assumed that the RCMP costs would be phased in over the next three years, with 33% being paid locally in the sixth year, 67% in the seventh year and finally 100% of the local costs in the eighth year and thereafter. Coldstream costs are assumed to continue more or less as is on a per capita basis, with the exception of some increase in civilian costs that now are not billed to Coldstream as part of its extended contract.

At the end of the fifth year, the police costs to be phased in are based on the municipality paying 95% of the cost of the officers plus an additional 8% for civilian costs. At the end of eight years, the total bill for RCMP services in the restructured municipality would be $4.6 million.

Regional Municipality Option $-9 Fire Protection The regional municipality would run four current fire departments -- one in Vernon, one in Coldstream, one at Swan Lake!BX and one in Okanagan Landing. There is no reason why the nature of fire protection in the Greater Vernon area need change as a result of changing the municipal boundary. The largely volunteer departments could remain largely volunteer; the Vernon department could remain part volunteer, part professional.

However, as time goes on, Vernon management of these four departments will require some increase in costs over and above the costs associated just with those departments now. For one thing, volunteer pay should be stabilized among all of the departments, and it is expected that this would generate an additional $25,000 in costs per year. Secondly, the management of a greatly expanded department will require an increase in management salaries and administrative effort, and another $25,000 has been added for this feature alone. Finally, the overall coordination and increasing urbanization of the area suggests that costs will increase a bit more than might otherwise have been reflected in the budget figures even after the extra two sums of $25,000, and so an extra 1% increase is added over and above the population-related increase to reflect this added complexity and responsibility. On this basis the fire protection costs would rise from $2.1 million in 1992 up to $2.35 million in 1999 (as always, stated in 1991 dollars).

Building inspection and permit costs are projected on the basis of population and new dwelling units in general accordance with the 1991 budgets for the City of Vernon, the District of Coldstream and the regional district. In all three cases, the building inspection budget works out very closely to $7 per person. Projections based on $7 per person produce figures very close to the costs under the current system.

Bylaw enforcement is projected on the basis of $3.20 per person in the City of Vernon boundary, which is based on the 1991 city budget, plus $1 per person in all other parts of the study area.

Animal control is based predominantly on the regional district budget for 1991, which works out to about $2.10 per person. This $2.10 per person figure is used to project expenses in this option.

Emergency planning costs are based mainly on the existing regional district budget of $29,000. After removing the building debt cost from this, the net cost of emergency planning works out to about $.44 per person. This $.44 per person figure is used in the projections here.

Regional Municipality Option 6-10 !;~---~--~--'

Road Transport Common services for the regional municipality are projected on the basis of both the current Vernon and Coldstream costs. The City of Vernon's costs ($295,000) are increased as its population increases; for Coldstream and rural areas, common costs are projected on the basis of $1,600 per kilometer of road.

The costs of maintaining streets (including street cleaning) are projected using the City of Vernon's costs of $4,387 per kilometer and increasing that as the population of the city increases, plus $2,500 per kilometer for all other areas. For comparison, the District of Coldstream spends approximately $1,700 on this service. Rural roads simply require less upkeep and maintenance than urbanized roads, and the City of Vernon's budgets reflect this. Sidewalk costs relate almost entirely to the City of Vernon area and are projected on the basis of the population in that area alone.

Storm drainage costs for the City of Vernon are projected on the basis of the current $519 per kilometer. For the other areas, a rate of $200 per kilometer is used for miscellaneous storm drainage costs. This $200 per kilometer figure compares closely to Coldstream's $193 in its 1991 budget.

Snow and ice removal costs are projected at $1,385 per kilometer in Vernon, plus $750 per kilometer in all other areas. In 1991, Coldstream has budgeted $476 per kilometer for this. Weed control costs are projected on the basis of $233 per kilometer in Vernon and $125 per kilometer everywhere else.

The costs of traffic control and signage are based on $650 per kilometer in Vernon and $400 per kilometer in the remaining areas of the regional municipality. Parking control costs are projected on the basis of $4.42 per person in the City of Vernon plus $1.25 per person in all other rural areas.

Street light costs are based on the current level of street lighting. Currently, these costs amount to $317,000 in Vernon, $31,000 in Coldstream and a total of $17,000 in the rural areas. These amounts are increased at half the rate of population growth on the grounds that some population growth can occur without the addition of any new lights.

Public transit costs are projected using the 1991 City of Vernon costs and increasing these in accordance with the study area population. The costs of Coldstream's DART system are included.

The parkade cost of $76,000 is increased at the rate of population growth for the study area as a whole.

In 1992, not all of these costs would apply to the municipality because it is assumed the provincial contractor would maintain the roads in the rural areas

Regional Municipality Option 6-11 during the first year. The full costs to the municipality would not start until 1993. The major costs affected by having the province maintain roads for a year would be common services, road maintenance, snow and ice removal and traffic control. The regional municipality would be immediately responsible for roads now in the City of Vernon and in the District of Coldstream. Table 6.6 shows that the total cost for road transport jumps considerably from 1992 to 1993 as the municipality absorbs the full cost of maintaining all roads in the municipality (except for numbered highways).

On balance, the total road maintenance budget by 1999, excluding transit, would work out to $8,068 per kilometer of municipal road. This is less than the city's current level of just $12,290 per kilometer (again, excluding transit costs), but this is expected because most of the roads added to the city's responsibility would be rural roads requiring much less attention and expenditure.

Environmental Health In 1991, Coldstream has budgeted approximately $77,000 for landfill costs. These are projected to grow in accordance with the population increase, although it should be noted that it may be more appropriate to consider these costs as being part of an increasing requisition from the regional district for landfill in general. Note that the regional district's requisition for landfill costs is not listed as a municipal item; instead, it is shown under the regional district requisition that was discussed in section 6.4 earlier.

Garbage collection costs are projected on the basis of the 1991 budget and grow in proportion to the number of dwelling units built within the current city boundary. North Okanagan Board of Health costs are minor and are projected on the basis of the 1991 levels, adjusted for population growth. Cemetery costs are based on 1991 budgets for Vernon and for Coldstream, and are held constant across the entire study period.

Environmental Development The short-term costs of updating bylaws and land use planning materials to reflect the restructure status were earlier estimated at $50,000 based on a grant expected from the Province of Be. The costs shown here match the grants discussed in the revenue section. These grants are associated with restructuring in particular.

Planning costs other than these special start-up costs are projected on the basis of $7 per person in the whole study area. In Chapter 5 it was shown that larger municipalities tend to spend proportionately more on planning than smaller municipalities. However, for this study it is assumed that the planning efforts now made by the regional district, the City of Vernon and the District

Regional Municipality Option 6-12 of Coldstream serve as an adequate expression of this cost after restructuring into a regional municipality. The regional district budget, based on the number of hours worked, indicates a planning cost of $6.70 per person. Vernon's costs, excluding its share of regional district costs, works out to $5.81 per resident. Finally, Coldstream's 1991 budget includes costs that amount to about $8.84 per person. The consistency of these numbers supports the use of an average $7 per person for land use planning costs in the regional municipality.

The tourism/economic development function from the regional district is assumed to be shifted to the regional municipality. The costs of this function work out to $2.75 per person, and this is used as the basis for projecting costs during the study period.

Recreation The costs of administering and operating recreation area #1 are $3.6 million in 1991. Not all of these costs will grow as the population increases, but most will. The costs shown in Table 6.6 are based on 25% of the costs being fixed throughout the study period (for example, debt payments) and 75% of the costs increasing at half the rate of the population increase for the study area.

Fiscal Services Bank charges and interest on operating loans are projected at $4 per person, based on the City of Vernon's 1991 budget and the District of Coldstream's budget.

Transfers to reserves are projected holding Vernon's specified area levy constant ($229,000), as well as holding its local improvement levies' constant at $14,000. Vernon's other transfers to reserves -- mainly the equipment replacement reserve -- are projected on the basis of the current $200,000 budget, adjusted for population growth. For Coldstream and the rural areas, transfers to reserves are budgeted at $5 per person.

Normal capital spending using tax dollars is projected at the current levels of $17.50 per Vernon resident, $27.50 per Coldstream resident and an estimated $10 per resident in the rural areas. In addition to this normal capital spending, there would be contributions to the rural road improvement program as mentioned earlier in the section on the incorporation capital fund. This is projected at $290,000 in the first year, $200,000 for each year for the next six years, and then nothing after that because the road improvement program will be finished.

Note that the spending on improving rural roads is assumed to be cost-shared with the province, with the municipal share at 25%. The annual contributions

Regional Municipality Option 6-13 discussed here are not the 25% share exactly, but rather annual amounts that, when combined with the other financial mechanics of the incorporation capital fund, would over a seven year period finance a total of $ L 125 million as the municipality's share of road improvements. This municipal expense would be matched with a $3.375 million contribution from the Province of BC under the new municipalities road improvement program.

Existing debt payments for the City of Vernon and Coldstream total $1.3 million and are held constant across all years in the study period.

Collections for Other Governments Collections for the regional district, the library district, the Municipal Finance Authority, the BC Assessment Authority and the hospital district are all shown precisely as shown on the revenue side (see Table 6.7).

Chart 6,1 Projected Spending per Capita

Vernon 1991 Coldstream i 991 Regional Municipality

$0-"-= General Government Protective Services Capital Spending Road Transportation

Regional Municipality Option 6·14 Table 6,6 Regional Municipality: Municipal Expenses (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999

Legislative (incl expenses) $257,170 $259,525 $261,880 $264,235 $266,590 $268,945 $271,300 $273,655 Admin wages and benefits $1,060,973 $1,073,078 $1,085,183 $1,097,287 $1,109,392 $1,121,497 $1,133,601 $1,145,706 Finance $516,640 $521,633 $526,626 $531,618 $536,611 $541,603 $546,596 $551,589 Municipal hall $190,502 $191,915 $193,328 $194,741 $196,154 $197,567 $198,980 $200,393 Grants $103,517 $103,753 $103,988 $104,224 $104,459 $104,695 $104,930 $105,166 Insurance $37,155 $37,579 $38,003 $38,426 $38,850 $39,274 $39,698 $40,122 Expo grant/special projects $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 Miscellaneous $64,814 $65,554 $66,293 $67,033 $67,772 $68,512 $69,251 $69,991 Industrial development $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 Total Administration $2,411,771 $2,434,037 $2,456,301 $2,478,564 $2,500,828 $2,523,093 $2,545,356 $2,567,622

ReMP - Existing Vernon $2,805,248 $2,837,253 $2,869,258 $2,901,264 $2,933,269 $2,965,274 $2,997,279 $3,029,285 ReMP - Other areas $271,098 $275,173 $279,248 $263,324 $287,399 $518,527 $1,058,682 $1,617,320 Fire protection $2,101,290 $2,135,037 $2,169,326 $2,204,165 $2,239,564 $2,275,531 $2,312,076 $2,349,208 Inspections and permits $288,981 $292,278 $295,575 $298,872 $302,169 $305,466 $308,763 $312,060 Bylaw enforcement $90,671 $91,355 $92,040 $92,724 $93,408 $94,093 $94,777 $95,462 Animal control $86,694 $87,734 $88,787 $89,852 $90,930 $92,021 $93,125 $94,149 Emergency measures $18,165 $18,372 $18,579 $18,786 $18,993 $19,201 $19,408 $19,615 Total Protective $5,662,147 $5,737,202 $5,812,813 $5,888,987 $5,965,732 $6,270,113 $6,884,110 $7,517,099

Common services (net) $463,204 $784,480 $788,539 $792,599 $796,659 $800,718 $804,778 $808,637 Road maint (inel cleaning) $1,138,235 $1,642,019 $1,650,153 $1,658,287 $1,666,421 $1,674,555 $1,682,689 $1,690,823 Sidewalks $22,000 $22,264 $22,531 $22,801 $23,075 $23,352 $23,632 $23,892 Storm drainage $113,265 $153,664 $154,586 $155,514 $156,447 $157,386 $158,330 $159,280 Snow and ice removal $325,689 $476,756 $479,128 $481,500 $483,872 $486,244 $488,616 $490,988 Weed control $55,778 $80,962 $81,448 $81,937 $82,429 $82,924 $83,422 $63,923 Traffic control + signs $157,837 $238,337 $239,767 $241,206 $242,653 $244,109 $245,574 $247,047 Parking control $122,767 $123,663 $124,560 $125,456 $126,352 $127,248 $128,145 $129,041 Street lights $364,791 $366,980 $369,182 $371,397 $373,625 $375,867 $378,122 $380,391 Public transit $778,700 $787,584 $796,468 $805,353 $814,237 $823,121 $832,005 $640,890 Parkade $75,800 $76,665 $77,530 $78,394 $79,259 $80,124 $80,989 $81,854 Total Transport $3,618,066 $4,753,374 $4,783,892 $4,814,444 $4,845,029 $4,875,648 $4,906,302 $4,936,966

Coldstream landfill costs $76,810 $77,732 $78,665 $79,609 $80,564 $81,531 $82,509 $83,417 Garbage colieclion (City) $721,916 $729,436 $737,034 $744,711 $752,468 $760,306 $768,226 $776,228 N.C. Union Bd of Health $2,500 $2,530 $2,560 $2,591 $2,622 $2,653 $2,685 $2,715 Cemetery $134,710 $134,710 $134,710 $134,710 $134,710 $134,710 $134,710 $134,710 Total Environ Health $935,936 $944,408 $952,969 $961,621 $970,364 $979,200 $988,130 $997,070

Updates funded by grants $25,000 $25,000 $0 $0 $0 $0 $0 $0 Ordinary planning $288,981 $292,278 $295,575 $298,872 $302,169 $305,466 $308,763 $312,060 Tourism/eeon development $113,528 $114,890 $116,269 $117,664 $119,076 $120,505 $121,951 $123,292 Total Environ Develmnt $427,509 $432,168 $411,844 $416,536 $421,245 $425,971 $430,714 $435,352

Redn area #1 (inel capital) $3,588,322 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469 Total Rec'n and Culture $3,588,322 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469 $3,604,469

Bank charges + interest $165,132 $167,016 $168,900 $170,784 $172,668 $174,552 $176,436 $178,320 Transfers to reserves $497,663 $499,801 $501,940 $504,078 $506,216 $508,355 $510,493 $512,631 Normal capital spending $719,728 $727,248 $734,768 $742,288 $749,808 $757,328 $764,848 $772,368 Contrib to rural road improv. $290,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $0 Existing debt payments $1,329,807 $1,329,807 $1,329,807 $1,329,807 $1,329,807 $1,329,807 $1,329,807 $1,329,807 Total Fiscal Services $3,002,330 $2,923,872 $2,935,415 $2,946,957 $2,958,499 $2,970,042 $2,981,584 $2,793,126 . Total MuniCipal (all above) $19,646,081 $20,829,530 $20,957,703 $21,111,578 $21,266,166 $21,648,536 $22,340,665 $22,851,704 Collection for Reg Dist servo $1,641,255 $1,666,711 $1,694,499 $1,722,300 $1,750,112 $1,777,937 $1,805,774 $1,833,623 Coli for Library District $581,682 $585,172 $588,683 $592,215 $595,768 $599,343 $602,939 $606,557 Coli for MFA, SCM, Hosp $2,085,760 $2,098,275 $2,110,865 $2,123,530 $2,136,271 $2,149,089 $2,161,984 $2,174,956 Total Expenses $23,954,778 $25,179,688 $25,351,750 $25,549,623 $25,748,317 $26,174,905 $26,911 ,362 $27,466,840

, , RegIonal MUniCipality OptIon 6~ 15 6.6 Municipal This section describes the revenues the restructured municipality can Revenues anticipate. As always in this report, the figures are shown in terms of constant 1991 dollar values. Inflation will increase most of them over time.

Table 6.7 shows the annual projections for each of the municipal revenues. The text below discusses these in the order they are found in the table.

Municipal Property Taxes The projected municipal taxes are determined as the difference between total expenses and all other revenues. The taxes amount to whatever is needed to balance total municipal revenues with total municipal expenses. The total amount of property taxes required are used later to determine the tax rates that eventually help form the property tax impacts for houses in the study area. In order to determine these rates, the existing City of Vernon tax multiples are used. These mUltiples are as follows: ResidentiaL...... index of 1 Class 2 utility ...... 3.56 times residential rate Industry ...... 1.96 times residential rate Business/other ...... 2.55 times residential rate Farm properties ...... fIXed at 052 per $1,000 assessment

1 % Utility Tax Under section 407 of the Municipal Act, these taxes are set at 1 % of the previous year's local consumption (ie, sales) on telephone, natural gas, hydro and cable television. For Vernon residents, this is projected at $8.26 per person based on the 1991 budget. For all the other residents in the restructured municipality, this is based at $3 per person. This $3 rate is found in Coldstream and is representative of the consumption levels found throughout the area other than the highly urbanized core of Vernon.

Grants in Lieu of Taxes The existing City of Vernon receives grants in lieu of taxes that amount to about $8.60 per person; this is used in projecting the future year's figures. The Coldstream ratio of $4.50 per person is used for all the rural population in the regional municipality.

Provincial Revenue Sharing Grant This grant has two components. The first, which is based on assessment levels, can go up to a maximum of $110,000. Under the existing formula, this would amount to about $70,000 for the regional municipality. The larger part of the

Regional Municipality Option 6·16 ,--':-:---:--,---

grant is based on $46 per person. This is less than Vernon's current $49 per person but more than Coldstream's $43 per person.

Emergency Planning Grant Each year the province gives grants to most municipalities for the preparation of emergency plans. A figure of $.22 per person is assumed in this study.

Franchise Revenue This revenue comes from the franchise rights given to the natural gas company. Based on current City of Vernon and City of Coldstream franchise revenues, the figures in Table 6.7 are based on $8.30 per person in the City of Vernon and $4 per person for Coldstream and the rural areas.

Business Licences Business licence revenues are based mainly on the current City of Vernon level, which works out to $9.20 per person. For those businesses located in the rural areas, a figure of $1 per person is used. This lower level is experienced in Coldstream now.

Other Licences (including dogs) This revenue is projected at $.70 per person in the study area and is based on the current regional district revenue estimates.

Building Permits and Subdivision Fees These fees are based on the current City of Vernon estimate, which totals $150,000, plus an average of $600 per new dwelling unit in all other areas of the regional municipality. This average includes renovation and building addition permits.

Fines Revenues from fines for such things as traffic infractions are projected on the basis of the current Vernon budget, which works out to $1.30 per person in the City, plus $.20 per person for all other areas.

Parkade and Meters Revenue from these sources is projected on the basis of the current City of Vernon budget ($346,000) of $8.40 per person when expressed in terms of the entire study area population. This is a reasonable basis because parking activity and parkade activity in the City of Vernon are a function of all residents in the area.

Regional Munic;pality Option 6-17 Transit Fees and Subsidies The current City of Vernon transit fees and Urban Transit Authority subsidies are used as the basis for projecting this revenue; the 1991 budget revenue is increased over time in direct proportion to the total study area population, again on the basis that all area residents use the core facilities in Vernon. However, the regional district grant of $12,500 for electoral areas A, Band C is reduced because the vast majority of these areas would now be within the regional municipal boundary.

Garbage Collection Fees Garbage collection fees are projected in direct proportion to the increase in the population within the current City boundaries. It is not expected that garbage collection would have to be provided outside the current City boundary until the economics and finances of extending the service would warrant such an expansion.

Property Rentals Revenue from the rental of miscellaneous municipal properties is projected based on the current 1991 City of Vernon budget of $250,000 plus an additional $.70 per person for all other areas within the regional municipality. This lower rate is based on the 1991 Coldstream budget revenue.

Recreation Area #1 Even though responsibility for the facilities in recreation area #1 would be shifted to the municipality, the regional district would, or should, make a contribution towards this facility in keeping with the current boundary limit now used to raise taxes for recreation area #1. This boundary includes all of electoral areas A, Band C, and since there would a small portion of each area left outside a regional municipality, the properties left outside would contribute a small amount toward the continued operation of recreation area facilities.

In addition, the municipality, having responsibility for the operation of the facilities, would receive revenues in the form of user fees and other operating items from the facilities. Based on the 1991 regional district budget, these revenues are based on a fIXed amount of $35,000 for interest on investments, plus $60,000 surplus, plus an increasing amount from user fees that would grow at the same rate as the population.

Regional Municipality Option 6-18 Tax Penalties and Interest Revenues in the form of penalties and interest on overdue taxes are projected on the basis of $10 per person in the current city limits and $2.75 per person in all other areas; this is based on 1991 budget levels.

Interest on Investments The 1991 budgets for Vernon and Coldstream show an average of $7.50 per person in revenue from this source, and this amount is used in the projections here.

Interest on Incorporation Fund This short-term revenue source is based on transfers from the incorporation capital fund back to the general revenue fund each year to help reduce taxes when there is a surplus in the incorporation capital fund.

Miscellaneous Revenue Revenue from sources such as RRAP services, cemetery revenue, special provincial grants and assorted other items amount to $441,000 in Vernon and Coldstream according to their 1991 budgets. An additional $35,000 in miscellaneous revenue is assumed to be generated in the existing rural areas outside Vernon and Coldstream. In the first year, the total would thus be $476,000. This is increased in proportion to the population growth over the projection period.

Initial Planning Grants It is assumed in this study that the Province of Be would make available to the restructured municipality grants totalling $50,000 in the first two years for the updating and preparation of bylaws and land use planning documents. Half of this is assumed to be received in 1992, and the other half the following year.

Transfer from Own Accounts This category includes a total of $1.98 million for both Vernon and Coldstream and encompasses items such as transfers from general reserves, transfer from equipment replacement reserves, funds from a land reserve and so on. This amount is not expected to grow at all as a result of incorporation and is held constant across the entire study period.

Regional Municipality Option 6-19 Collection for Regional District Services This requisition from the regional district was discussed earlier in section 6.4. It would start out at $1.6 million and rise to $1.8 million over the projection period.

Collection for Library District The larger municipality would have a larger requisition from the library district. In the first year this would amount to $582,000, based on the 1991 requisition schedule from the library district. This requisition is assumed to grow at half the rate of the population increase. Half the rate is used because other areas in the library district will also be growing in population, and so changes in this requisition will stem from two things: first, changes in the actual cost of delivering library services, which should grow as the whole population increases; and second, shifts in the assessment base of the region, which is used to apportion each member's share of the total costs.

Collections for Other Governments This category includes collections for the Municipal Finance Authority, Be Assessment Authority and the hospital district. Based on the 1991 tax rates, these three collections would start out at $2.1 million and are projected to rise to $2.2 million over the study period. The projection is based on one-half of the growth rate in population, as for the library district above.

Summary Table 6.7 below shows the projected municipal revenues for each year of the study period. It can be seen that the municipal tax revenues required to balance the books would have to rise from $10 million in 1992 to $12.4 million in 1999. Note again that these figures are stated in constant 1991 dollar values; inflation will increase them over time.

Municipal property taxes would amount to just over one-half of the total revenues needed for municipal services -- $12.4 million out of $23 million.

Regional Municipality Option 6-20 1-7

Table 6.7 Regional Municipality: Municipal Revenues (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 Municipal property taxes $10,022,080 $10,852,936 $11,102,126 $11,183,526 $11,225,880 $11,480,679 $12,027,726 $12,356,421 1% Utility tax (s. 407) $241,931 $244,834 $247,772 $250,745 $253,754 $256,799 $259,881 $262,740 Grants in lieu of taxes $279,161 $282,511 $273,512 $275,396 $277,280 $279,164 $281,048 $282,932 Prov. Rev Sharing grant $1,968,868 $1,990,534 $2,012,200 $2,033,866 $2,055,532 $2,077,198 $2,098,864 $2,120,530 Emergency planning grant $9,082 $9,186 $9,290 $9,393 $9,497 $9,600 $9,704 $9,808 Franchise revenue $262,336 $264,220 $266,104 $267,988 $269,872 $271,756 $273,640 $275,524 Business licences $224,000 $226,688 $229,408 $232,161 $234,947 $237,766 $240,619 $243,256 Other licences (incl dogs) $34,311 $34,645 $34,980 $35,314 $35,649 $35,983 $36,317 $36,652 Bldg permits, subdiv fees $268,500 $268,500 $268,500 $268,500 $268,500 $268,500 $268,500 $268,500 Fines $53,255 $53,863 $54,470 $55,078 $55,685 $56,293 $56,901 $57,508 Parkade + parking meters $346,000 $349,948 $357,933 $370,184 $387,078 $409,159 $437,168 $472,082 Transit fees + subsidy $667,500 $675,116 $690,521 $714,156 $746,747 $789,345 $843,379 $910,734 Garbage collection fees $928,000 $937,667 $947,434 $957,303 $967,275 $977,351 $987,532 $997,819 Property rentals $262,807 $263,127 $263,448 $263,768 $264,088 $264,409 $264,729 $265,049

Ree'n area 1 a NORD A,B,C $51,198 $51,710 $52,227 $52,749 $53,276 $53,809 $54,347 $54,890 Ree'n area #1 op revenues $960,102 $969,675 $979,544 $989,412 $999,281 $1,009,150 $1,019,019 $1,028,888 Tax penalties + interest $276,284 $278,282 $280,281 $282,279 $284,278 $286,276 $288,275 $290,273 Interest on investments $309,623 $313,155 $316,688 $320,220 $323,753 $327,285 $330,818 $334,350 Interest on Ineorp'n Fund $0 $279,032 $109,488 $84,870 $86,214 $87,506 $88,745 $107,322 Miscellaneous $476,410 $479,268 $482,144 $485,037 $487,947 $490,875 $493,820 $496,783 Initial planning grants $25,000 $25,000 $0 $0 $0 $0 $0 $0 Transfer from own accounts $1,979,633 $1,979,633 $1,979,633 $1,979,633 $1,979,633 $1,979,633 $1,979,633 $1,979,633 Total Municipal (all above) $19,646,081 $20,829,530 $20,957,703 $21,111,578 $21,266,166 $21,648,536 $22,340,665 $22,851,704 Collection for Reg Dist servo $1,641,255 $1,666,711 $1,694,499 $1,722,300 $1,750,112 $1,777,937 $1,805,774 $1,833,623 Coli for Library District $581,682 $585,172 $588,683 $592,215 $595,768 $599,343 $602,939 $606,557 Coli for MFA, SCM, Hosp $2,085,760 $2,098,275 $2,110,865 $2,123,530 $2,136,271 $2,149,089 $2,161,984 $2,174,956 Total Revenues $23,954,778 $25,179,688 $25,351,750 $25,549,623 $25,748,317 $26,174,905 $26,911,362 $27,466,840

6.7 ITax Impacts The restructure tax impacts are shown as the difference between the current rnral situation taxes and the regional municipality property taxes. The property taxes for the regional municipality are the ones projected for the first normal year -- that is, the eighth year (1999). The tax rates required to generate the needed annual revenue in the eighth year are shown in Table 6.8.

Regional Municipality Option 6-21 TableS.8 Regional Municipality: Tax Rates ($ per $1000)

Current Situation After Swan Okano Restruct Lake Kedlstn Landing Vernon Coldstm Affected Taxes NORD· Land only - $0.126 $0.126 $0.126 - - NORD· Bldg only - 4.2521 $4.021 $4.264 - - NORD· Land + Bldg' $0.890 $0.942 $0.898 $0.909 $2.316 $2.376 Library District $0.300 $0.394 $0.394 $0.394 $0.273 $0.319 Aural tax - $t .750 $1.750 $1.750 - - Municipal tax $5.990 - - - $5.985 $2.558

Taxes NOT Affected School district #22 $7.287 $7.287 $7.287 $7.287 $7.287 $7.287 Hospital district $0.930 $0.930 $0.930 $0.930 $0.930 $0.930 Mun Finance Authority $0.004 $0.004 $0.004 $0.004 $0.004 $0.004 Be Assess. Authority $0.151 $0.151 $0.151 $0.151 $0.151 $0.151

NB: All rates include 5.25% tax collection fee where applicable; these fees are shown separately in all other tax and impact tables i< Rural areas: 'Current situation' includes fire, Okan Basin Water Board, A-B-C street lights

Tables 6.9 through 6.13 present the property tax impacts for properties with various assessments in each of the five main study areas. These five areas are: • SwanLake • Keddleston and Pottery Road • Okanagan Landing • City of Vernon • District of Coldstream

For each of these five areas, the tables show the taxes before and after restructuring for houses with assessed values ranging from $50,000 to $175,000. The $75,000 house assessment can be used as an average in each case. In addition to the. taxes on houses, the tables also show the tax impacts on a vacant lot, on the typical business property and on a farm.

Rural Properties For properties in the rural areas -- BX, Swan Lake, Keddleston and Okanagan Landing -- homes at the lower end of the assessment scale would see no tax increase as a result of restructuring. While the gross tax would rise slightly, owners of these properties cannot take full advantage of the provincial home owner grant. The unused portion of this grant is sufficient to cover the increase in the gross taxes, and the residents of these properties would pay the same net tax before and after restructuring.

For an average $75,000 home in the rural areas, the tax increase would be between $90 and $110. Properties with this assessment are already taking full

Regional MunicipaHty Option 6~22 ~-~-~---=------

advantage of the annual homeowner grant, and so any increase in the gross property taxes results in an equal increase in the net taxes to the owners.

Vacant lots would see an increase of about $100 in property taxes. This is due mainly to the fact that under the current system, many regional district services are financed on taxes applied only to buildings, not to land. This means vacant lots do not make any payments towards these services. After restructuring, however, these services would be financed by taxes applied equally to land and improvements, and so these lots would face new taxes for the first time.

Similarly, farm properties would face increases of just under $100. It was assumed in the development of the tax rates that the City of Vernon policy to hold farm land taxes at the rural rate would apply after major restructuring. However, under rural status farm improvements are exempt from the rural tax; in the municipality, farm improvements lose this exemption. This means farm houses in particular pay more taxes under municipal status than under rural status.

Finally, a typical business assessed at $500,000 in the rural areas would face an increase of about $2,300 per year as a result of restructuring.

Vernon Properties For Vernon homes, the creation of a regional municipality would mean tax savings. These savings stem from a sharing of the RCMP costs and the costs of the professional fire staff among residents of the rural areas. As can be seen in Table 6.12, the savings per house start at $60 for a small house, amount to $104 for an average home and range all the way up to $243 for a home assessed at $175,000.

A vacant lot within the city boundary would also see a tax savings, amounting to $35 per year. A typical farm property would save $94. A business assessed at $500,000 would save about $1,700 in property taxes as a result of restructuring.

Coldstream Properties Coldstream residents would face steeper tax increases than the rural residents. On the lower assessed homes, the unused portion of the homeowner grant is not as large, and so an increase in the gross taxes on these properties cannot be fully absorbed by the unused portion of the homeowner grant. This is shown in Table 6.13. For the average home, assessed at $75,000, residents would see a tax increase of $145 as a result of restructuring. The higher the assessed value, the greater the extra taxes due to restructuring.

Regional Municipality Option 6-23 Balance It is interesting to note that the average savings by Vernon homes -- $104 -- is very close to the tax increase faced by the other residents in the study area. A more careful examination of the tax rates, assessed values and municipal revenues and expenses indicates that it would be mathematically possible for the 1991 tax rates to be applied individually within each area and still generate the total amount of municipal revenue needed to balance the books. This means, in effect, that the total gains enjoyed by Vernon properties more or less equal the total tax increases faced by all the other properties.

This would ordinarily not be an intuitive conclusion, due mainly to the expectation that the extra police costs associated with being in the City of Vernon would require more of a tax increase. However, there are some economies of scale involved in increasing the size of the municipality. Furthermore, the rural properties already pay roughly $600,000 in rural taxes that could in essence be redirected toward the municipality without a tax increase. Finally, it should be noted that adding the rural people to the municipality would also generate about $500,000 in unconditional grants from the province each year.

While it is interesting to note that the total tax rates under the current system would in fact generate the total revenue needed under the regional municipality structure, there is no mechanism to achieve this. If a larger municipality is formed, it would be possible to phase in tax increases during a transitional period but, in the end, a single set of municipal tax rates would have to apply for almost all services within the municipal boundary.

Chart 6.2 Regional Municipality: Extra Taxes Due to Restructure $75,000 House Assessment $50 $0 Swan lake Keddleston Coldstream ·$50 f.------J i.·· .. ··.··· .. ··· .f__ Lan(;ing ______-$150'$100C====~;[==

Regional Municipality Option 6-24 6.8 IUncertainties There are a number of assumptions made in the course of preparing these estimated tax impacts that may prove incorrect as time progresses. Some of the major uncertainties are discussed here.

RCMP The District of Coldstream at the moment pays for roughly one officer per 1,900 residents, which is a very low ratio of RCMP staff as compared to Okanagan Landing or Swan LakelEX. More importantly, the RCMP agreement currently being used by the province exempts rural areas from making any special payment towards policing costs other than what might be included as part of their rural tax (which also has to cover road maintenance costs). In many areas of the province, the rural tax is not sufficient to cover both RCMP and road maintenance budgets. The current RCMP agreement actually expired at the end of March, 1991 and police services are now provided in anticipation of a new contract (currently being negotiated). It is possible that when a new agreement is finally reached between the province and the federal government, rural areas will have to pick up a larger share of the local policing costs. If this happens, then restructuring would produce smaller impacts on rural houses than shown here.

An additional assumption about the RCMP costs is that the province would in fact allow a five year delay in any local costs for police service in the rural area, followed by a three year phase-in until the full local share is reached in the year 1999. This has not been verified by the province.

Rural Tax In 1991, the province reduced the rural tax rate from $2.30 down to $1.75 per $1,000 assessment. This 24% reduction, however, was more than offset by increases in Okanagan property assessments and, as a result, rural taxpayers actually paid more in 1991 than they did in 1990, even though the tax rate itself has been reduced. Since 1987, the rural tax rate in the Okanagan region has risen by approximately 100% on an average house. This kind of tax increase has not been experienced for any other property taxes of magnitude in the area. School taxes, for example, have not risen nearly as quickly as their rural tax. If the province decides over the next few years to once again start increasing the rural tax rate, then restructuring will appear more attractive because the "before restructure" taxes will rise, and the "after restructure" taxes will thus appear lower in relation to the before case. This uncertainty has no bearing for residents of Coldstream or Vernon, since they do not pay the rural tax, but it may be an important feature for rural residents to consider in light of possible restructure options.

Regional Municipality Option 6-25 Municipal Council Priorities It is not possible to predict the municipal service levels and priorities that a future municipal council might choose. This is especially true for services to rural residents, who could request a number of service changes after they became part of a large municipality. While the cost projections used in this study are reasonable, they cannot be definitive.

Regional Municipality Option 6~26 ~ ::! i

Table 6.9 Regional Municipality: Impacts on Swan Lake Properties

/1 'I ':iij : :':'i ::::1 ::!

$684 $779 $1,076 $1,168 -$584 -$679 -$700 -$700 $0 $0 $0 $0

~25,OOO Vacant Lot $75,000 farm $500,000 Business ':::i Current Restruct Change Current Restruct Change Current Restruct Change NO~D - Land only $3 $0 -$3 $1 $0 -$1 $59 $0 -$59 !:il NORD - Bldg only $0 $0 $0 $242 $0 -$242 $2,969 $0 -$2,969 NORD - Land + bldg $22 $22 $0 $60 $60 $0 $1,096 $1,090 -$6 Total Regional District $25 $22 -$3 $303 $60 -$243 $4,124 $1,090 '$3,034 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $241 $0 -$241 "'1'! Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipal tax $0 $150 $150 $0 $367 $367 $0 $7,607 $7,607 i): School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 f Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 :::: MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 Gross Tax (no grant) $293 $393 $100 $878 $972 $94 $13,253 $15,494 $2,241 i Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 ~ Net Tax, under 65 yrs $293 $393 $100 $437 $531 $94 $13,253 $15,494 $2,241 g' 65 Yrs+Over: Gross Tax $293 $393 $100 $878 $972 $94 $13,253 $15,494 $2,241 1 Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 , ::: ~ School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 >i! Net Tax, 65 yrs+over $293 $393 $100 .178 .272 $94 $13,253 .15,494 $2,241 Tabl.s.l0 Regional Municipality: Impacts on Keddleston Properties

$50,000 Home Asmnt $75,000 Home Asmnt $100,000 Home Asmnt $125,000 Home Asmnt $150,000 Home Asmnl $175,000 Home Asmnt Current Restruct Change lIurrent Aestruct lIhange lJurrent Aestruct Change Current Restruct Change gurrent Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $4 $0 -$4 $0 :$4 $5 -$5 -$S NORD - Bldg only $96 $0 -$9S $191 $0 -$191 $267 $0 -$267 $3!! $0 -$344 $420 ;g -$420 $4~~ :g -$478 NORD - Land + bldg $43 $45 $2 $64 $67 $3 $85 $89 $4 $107 $111 $4 $128 $134 $6 $149 $156 $7 Total Regional District ~~42 ~45 -~~7 $258 $67 -~191 $356 ~~9 -$267 $455 $111 -$344 $553 $134 -$419 $633 $156 -$477 Library district tax $19 $15 -$4 $28 $23 -$5 $38 $30 -$8 $47 $38 -$9 $56 $45 -$11 $66 $53 -$13 Provincial collection fee $8 $0 -$8 $15 $0 -$15 $21 $0 -$21 $26 $0 -$26 $32 $0 -$32 $37 $0 -$37 Provincial rural tax $88 $0 -$88 $131 $0 -$131 $175 $0 -$175 $219 $0 -$219 $263 $0 -$263 $306 $0 -$306 Municipal tax $0 $300 $300 $0 $449 $449 $0 $599 $599 $0 $749 $749 $0 $899 $899 $0 $1,048 $1,048 School district tax $364 $364 $0 $547 $547 $0 $729 $729 $0 $911 $911 $0 $1,093 $1,093 $0 $1,275 $1,275 $0 Hospital district tax $47 $47 $0 $70 $70 $0 $93 $93 $0 $116 $116 $0 $140 $140 $0 $163 $163 $0 MFA + Assmnt tax $8 $8 $0 $12 $12 $0 $16 $16 $0 $19 $19 $0 $23 $23 $0 $27 $27 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Gross Tax (no grant) ~676 $779 ~103 $1,061 $1,168 $107 $1,428 $1,556 $128 $1,793 $1,944 $151 $2,160 $2,334 $174 $2,507 $2,722 $215 Homeowner grant -$326 -$429 -$103 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant $0 $0 $0 -$59 -$59 $0 -$150 -$150 $0 -$241 -$241 $0 -$332 -$332 $0 -$423 -$423 $0 Net Tax, under 65 yrs $350 _1350 $0 $572 ~79 $107 $848 $976 $128 $1,122 $1,273 $151 $1,398 $1,572 $174 $1,654 $1,869 $215

65 Yrs+Over: Gross Tax $676 $779 $103 $1,061 $1,168 $107 $1,428 $1,556 $128 $1,793 $1,944 $151 $2,160 $2,334 $174 $2,507 $2,722 $215 Hom-eowner grant -$576 -$679 -$103 -$700 -$700 $0 -$700 -$700 $0 -$700 -$700 $0 -$700 -$700 $0 -$700 -$700 $0 School supplmnt grant $0 $0 $0 $0 $0 $0 -$15 -$15 $0 -$106 -$106 $0 -$197 -$197 $0 -$288 -$288 $0 Net Tax, 65 yrs+over ~100 ,,100 ,,0 ~361 ,,468 ~107 ,,713 ~841 ,,128 ,,987 ,,1,138 ,,151 "1,263 ,,1,437 ,,174 _11,519 $1,734 $215

,,25,000 Vacant Lot ~75,OOO Farm ~500,OOO Business CUrrent Restruct Change urrent Restruct Change Current Restruct Change NORD - Land only -~3 :$1 $24 $0 -$24 NORD - Bldg only :~ :~ $0 $2:~ :~ -$242 $2,969 $0 -$2,969 NORD - Land + bldg $21 $22 $1 $58 $60 $2 $1,045 $1,090 $45 Total Regional District $24 $22 -$2 $301 $60 -$241 $4,038 $1,090 -$2,948 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $236 $0 -$236 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipal tax $0 $150 $150 $0 $367 $367 $0 $7,607 $7,607 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 i MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 Gross Tax (no grant) -0'f $292 $393 $101 $876 $972 $96 1$13,162 $15,494 $2,332 Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 -& I Net Tax, under 65 yrs $292 Ji393 $101 $435 $531 $96 $13,162 $15,494$2,332 go ~ 65 Yrs+Over: Gross Tax $292 $393 $101 $876 $972 $96 $13,162 $15,494 $2,332 Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 !~t_ Tax, 65 yrs+over ~292 $393 $101 ,,176 ,,272 ~96 I ~13,162 .15,494 $2,332 ,i!: TableS.ll Regional Municipality: Impacts on Okano Landing Properties J ',1

':;1 • Bldg only - Land + bldg Regional District district tax IProvincial collection fee ~::

~:!i

$682 $779 $1,075 $1,168 $1,817 $1,944 $127 $2,189 -$582 -$679 -$700 -$700 -$700 -$700 $0 -$700 $0 $0 $0 $0 -$106 -$106 $0 -$197

:t)25,OOO vacant lot $75,000 Farm $500,000 Business l.Jurrent Restruct Change Current Restruct Change l...Iurrent Restruct Change NuRD - Land only $0 -$3 :$1 $24 $0 -$24 NORD - Bldg only :~ $0 $0 $2:~ :g -$243 $2,977 $0 -$2,977 NORD - Land + bldg $22 $22 $0 $58 $60 $2 $1,058 $1,090 $32 Total Regional District $25 $22 -~3 $302 ~60 -$242 $4,059 $1,090 -$2,969 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $237 $0 -$237 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipal tax $0 $150 $150 $0 $367 $367 $0 $7,607 $7,607 : School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 ::il f Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 -5.f Gross Tax (no grant) $293 $393 $100 $877 $972 $95 . $13,184 $15,494 $2,310 ~ Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 il ~ Net Tax, under 65 yrs $293 $393 $100 $436 $531 $95 $13,184 $15,494 $2,310 ":: g' ":! 65 Yrs+Over: Gross Tax $293 $393 $100 $877 $972 $95 $13,184 $15,494 $2,310 'I' Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 til School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 I ~et Tax, 65 yrs+over " $293 $393 $100 $177 $272 $95 I $13,184 $15,494 $2,310

':"j Table 6.12 Regional MuniclpalHy: Impacts on Vernon Properties

- Bldg only I NORD - Land + bldg Regional District district tax IProvincial collection fee IProvincial rural tax tax

IHospital district tax

- Bldg only - Land + bldg Regional District tax i f ij' ~ ~ g' -$35 $0 ~ $0 Table 6.13 Regional Municipality: Impacts on Coldstream Properties

>: ;:::

:i!

l :::j Homeowner : School :::i :::1

$25,000 Vacant Lot $75,000 Farm ---.!500,OOO Business CUrrent Restruct Change urrent Hestruct Change Current Restruct Change NORD - Land only NORD - Bldg only ;~ :~ ;~ :~ ;~ :~ :~ :~ :~ NORD - Land + bldg $59 $22 -$37 $160 $60 -$100 $2,911 $1,090 -$1,821 :;,~ Total Regional District ~59 ~22 -~37 ~160 ~60 -~100 ~2,911 ~1 ,090 -~1 ,821 Library district tax $8 $8 $0 $22 $20 -$2 $391 $368 -$23 Provincial collection fee $0 $0 $0 $0 $0 $0 $0 $0 $0 Provincial rural tax $0 $0 $0 $0 $0 $0 $0 $0 $0 Municipal tax $64 $150 $86 $204 $367 $163 $2,733 $7,607 $4,874 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 f Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 f Sewer tax (eligible) $22 $22 $0 $0 $0 $0 $0 $0 $0 -;;- Gross Tax (no grant) $366 $415 ~~9 ~911 ~972 ~61 I ~12,464 .15,494 .3,030 Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 ~ Net Tax, under 65 yrs ~366 ~415 ~49 ~470 ~531 ~61 I ~12,464 ~15,494 .3,030 g' 65 Yrs+Over: Gross Tax $366 $415 $49 $911 $972 $61 $12,464 $15,494 $3,030 Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 ~ :;:1. ~ School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 ·I~ Net Tax, 65 yrs+over ~366 .415 ~49 ~211 ~272 ~61 I ~12,464 .15,494 ~3,030

·:1 '!j Table 6.14 Regional Municipality: Tax Impacts on an Average House

$75,000 Assessment

Swan Lake Home Keddleston Home Okano landing Home Vernon Home Coldstream Home

Current Restruct Change Current Restruct Change Current Restruct Change Current Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 $0 $0 $0 $0 $0 $0 NORD - Bldg only $202 $0 -$202 $191 $0 -$191 $203 $0 -$203 $0 $0 $0 $0 $0 $0 NORD - Land + bldg $67 $67 $0 $64 $67 $3 $65 $67 $2 $174 $67 -$107 $178 $67 -$111 Total Regional District $272 $67 -$205 $258 $67 -$191 $271 $67 -$204 $174 $67 -$107 $178 $67 -$111 Library district tax $28 $23 -$5 $28 $23 -$5 $28 $23 -$5 $20 $23 $3 $24 $23 -$1 Provincial collection fee $16 $0 -$16 $15 $0 -$15 $16 $0 -$16 $0 $0 $0 $0 $0 $0 Provincial rural tax $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 $0 $0 $0 $0 $0 $0 Municipal tax $0 $449 $449 $0 $449 $449 $0 $449 $449 $449 $449 $0 $192 $449 $257 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $12 $12 $0 $65 $65 $0 Gross Tax (no grant) $1,076 $1,168 $92 $1,061 $1,168 $107 $1,075 $1,168 $93 $1,284 $1,180 -$104 $1,088 $1,233 $145 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 Net Tax, under 65 yrs $587 $679. $92 $572 $679 $107 $586 $679 $93 .$795 $691 -$104 $599 $744 $145

Tax Impacts on an Average Home

ili' 1 f ".m ~ Swan Lake Home Keddleston Home Okan Lndng Home Vernon Home Coldstream Home ~g o Currently ~ Restructured ~ __ J:------.... -,

Chapter 7 ILarge Vernon Option

7.1 \ Introduction This chapter examines the impacts of the creating a larger Vernon by amalgamating the City of Vernon with the Okanagan Landing, Swan Lake, BX, Keddleston and Pottery Road areas. It is referred to as the "Large Vernon" option. The difference between this option and the "Regional Municipality" option discussed in Chapter 6 is that Coldstream is excluded from the large municipality.

Many of the costs and revenue assumptions used in the development of tax projections for this option are the same as those used in the preceding option.

This chapter is organized as follows: 7.2 Growth and Tax Base 7.3 Grants and Capital Spending 7.4 Regional District Services 7.5 Municipal Expenses 7.6 Municipal Revenues 7.7 Tax Impacts 7.8 Uncertainties

Large Vernon Option 7·1

------".-:-::-.-:-:-'.:-':- .-·-.----01 i_-_-·-n_-_-_-. ---

7.2 Growth and The regional municipality option would produce an initial municipal Tax Base population of 33,400 which would rise to 35,830 by the year 1999. This is a total population growth of 7% over eight years. Bearing in mind the decreasing household size in the area, the increase in housing units would have to be higher than 7% per year.

The tax base for this option would grow by a total of 13% during the projection period used in this study. Table 7.2 shows the municipal assessments, stated in constant 1991 dollar values. The table also shows the weighted assessment for municipal taxation purposes, which is determined using the total assessed values and the current City of Vernon tax rate multiples. The 1991 City budget uses a tax rate for business properties that is 2.55 times the residential rate. This ratio is used in determining the total effective tax base.

Table 7.1 Table 7.2 large Vernon: Municipal Population Large Vernon: Total Assessments

Actual Weighted Year Population Year Total Total 1992 33,367 1992 $1,169,216,000 $1,922,359,000 1993 33,719 1993 $1,191,441,000 $1,953,974,000 1994 34,071 1994 $1,213,666,000 $1,985,609,000 1995 34,423 1995 $1,235,891,000 $2,017,267,000 1996 34,775 1996 $1,604,248,000 $2,048,950,000 1997 35,127 1997 $1,632,228,000 $2,080,656,000 1998 35,479 1998 $1,660,215,000 $2,112,386,000 1999 35,831 1999 $1,688,209,000 $2,144,139,000 Constant 1991 dollars

7.3 Grants and The "Large Vernon" municipality would receive an ongoing Revenue Sharing Capital Act grant from the Province ofBC of about $1.7 million per year by 1999. Spending There would also be short-term assistance grants from the Province of BC to help the restructured municipality manage the shift in services from other jurisdictions to municipal jurisdiction. These grants are identical to the grants described earlier in chapter 6 for the regional municipality option. They are the same because the grants are based on the rural areas and the rural roads, and these are the same for both options.

As before, it is assumed that the province would continue to maintain rural roads during 1992; after that the municipality would be responsible for these roads.

Large Vernon Option 7-2 The province has identified a number of roads that would quality for 75% funding under an 8-year program available only to new municipalities and to significantly restructured municipalities. Note that the commitment here is only that these roads are eligihle, not that the funding is guaranteed. A total of $4.5 million is assumed for these projects here. It is further assumed that the restructured municipality would in fact receive 75% funding on all the projects. The municipal share would thus be $1.125 million.

It is assumed the province would also assist with grants for updating of bylaws and planning regulations for the rural areas that would be under municipal status following restructuring. A total of $40,000 is assumed to be made available to the enlarged municipality by the province in the first two years, split equally at $20,000 per year.

It is also assumed the province would phase in the local share of RCMP costs associated with the current rural areas. The phase-in would involve a five-year delay in any local taxes for rural RCMP costs; in the sixth year, 33% of the local share would apply; in the seventh year, 67% of the electoral share would be payable; and, finally, in the eighth year the full local cost of RCMP services would be paid by the municipality.

Table 7.3 shows these short-term assistance grants.

Table 7.3 Large Vernon: Short-Term Grants

Per capita Road mtce Year grants grant 1992 $818,850 $1,631,000 1993 $545,900 $0 1994 $273,000 $0 1995 $0 $0 1996 $0 $0 1997 $0 $0 1998 $0 $0 1999 $0 $0

Capital Spending The municipal hall would have to be expanded, as would the public works facilities (including equipment and machinery). In addition, the municipality

Large Vernon Option 7-3 --':-:.-.:----,--- i.-_-. "--,-:, ~-~-----:;-:;----

would be responsible for improving, upgrading and rebuilding a number of roads now in the rural areas.

The same type of incorporation capital plan that was assumed in Chapter 6 is also assumed for the Large Vernon municipality.

The capital costs associated with restructuring involves the following items. Municipal hall $0.8 million Public works building and equipment $1.3 million Municipal share of eligible roads $1.1 million

It is assumed that a total of $4.5 million in road costs in the rural areas would be eligible under the program for restructured or new municipalities. Again, it should be noted that there is no guarantee that 75% of this cost would be received. For this study it is assumed that the total cost of these projects is $4.5 million and that the province would fund $3.375 million of this.

Table 7.4 shows the mechanics of the incorporation capital fund.

Table 7.4 large Vernon: Incorporation Capital Fund (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 STARTING BALANCE' $2.449,987 $3.133,699 $1.502,010 $1.107,879 $1,016,268 $925,592 $835.840 $747,004 ADDITIONS TO FUND: Per capita grants $545,900 $272,950 $0 $0 $0 $0 $0 $0 Road mtce grant (in starting balance) $0 $0 $0 $0 $0 $0 Tsfr from GRF - Normal $502,038 $506.285 $510,533 $514,780 $519,028 $523,275 $527,523 $531,770 Tsfr from GRF ~ Rural roads $80.000 $80,000 $80,000 $80,000 $80,000 $80,000 $80.000 $0 SPENDING FROM FUND: Public works bldg + equip $0 ·$1,300,000 $0 $0 $0 $0 $0 $0 Municipal hall $0 ·$500,000 ·$300,000 $0 $0 $0 $0 $0 Projects funded by taxes ·$502,038 ·$506.285 ·$510,533 ·$514.780 ·$519.028 -$523,275 -$527,523 ·$531.770 25% share eligible roads ·$160,714 ·$160.714 ·$160.714 ·$160,714 -$160.714 ·$160,714 -$160,714 $0 Subtotal $2,915,173 $1,525.935 $1,121,296 $1,027,165 $935.554 $844,878 $755,126 $747,004 Interest earned $218,526 $191,399 $107.335 $87,174 $79.699 $72,300 $64,976 $60,955 Int used to reduce taxes $0 ·$215.324 ·$120,752 ·$98,071 ·$89,661 ·$81,338 -$73.098 ·$112,051 CLOSING BALANCE ...... $3,133,699 $1,502,010 $1,107,879 $1.016,268 $925,592 $835,840 $747.004 $695,908

11 1992 starting balance has per capita grant of $818,850 and road mtce grant of $1 ,631,137

Large Vernon Option 7-4 7.4 Regional Responsibility for the following services is assumed to shift to the large District municipality: • B)(jSwan Lake fire protection Services • Okanagan Landing fire protection • Building and fire inspection • Emergency programs • Animal control • Transit • Drainage • Miscellaneous grants • Street lights for specified areas A, B, C • Street lights for defined areas

Under the current rural status these are financed in a combination of ways using taxes applied to land only, building only, and both land and building combined. After restructuring, the municipality would receive a single requisition from the regional district and the municipality is assumed to generate the amount needed to pay this requisition by using a single ad valorem tax using the hospital base (rather than the municipal tax base).

Table 7.5 shows the North Okanagan Regional District requisitions under the current system and after restructuring.

The regional district requisition is assumed to grow at the same rate as the hospital base over the projection period of eight years used in this study. It can be seen from Table 7.5 that approximately $400,000 in service costs would shift from the regional district responsibility to the municipality responsibility. The current requisition of $4 million from the study area would fall to the requisition of $3.6 million.

Large Vernon Option 7-5 ---''-'J-:::------_~'::-c_--:------

Table 7.5 Large Vernon: N.O.R.D. Requisitions

Current Req'n After N.O.A.D. Services R~~uisltlon Restructure

Land Only: Sterile insect release $65,729 $65,729

Building Only: Recreat'n area #1 (Core) $2,181,675 $2,181,675 Recreat'n area #2 (East) $0 · . Fir. (BX/Sw.n, OK Lndg) $295,002 · - Recycling $120,754 $120,754 Sanitary landfill $423,795 $423,795

land and Building: General government $182,642 $200,906 Electoral area services $8,416 .. Development services $117,080 $11,708 Bldg + fire inspection $0 · - Emergency programs $9,849 .. Ambulance - Jaws $763 $763 Animal control $41,800 .. Transit (rural area contract) $11,526 · - Drainage $9,118 .. Miscellaneous grants $2,305 .. Noxious insects $953 $953 O.B. Water Board $275,153 $275,153 Queen's Committee $3,946 $3,946 Airport $29,339 $29,339 St. John society $1,483 $1,483 OK Symphony grant $3,043 $3,043 8t lights: spec areas A,B,C $3,804 .. St lights: defined A,B,C $12,144 -- T ourism/Ec Devel $91,285 $91,285 911 Telephone $166,134 $166,134 Feasibility reserve $26,991 $26,991

Total N.O.A.D. Requisition $4,084,729 $3,603,657

7.5 Municipal Virtually all of the municipal expenses are projected here on the same basis as Expenses described in Chapter 6 earlier. Most are based on population and road lengths, and so the costs here are lower than the regional municipality option.

The details of the municipal spending are shown on an annual basis in Table 7.6. As always, these figures are expressed in constant 1991 dollars; inflation will raise them over time.

Note that no municipal costs are shown for recreation area #1, since this would remain a regional district service in this restructure option. The costs are included as part of the regional district requisition.

Large Vernon Option 7-6 Table 706 Large Vernon: Municipal Expenses (1991 DQllars)

Legislative (incl expenses) $217,590 $219,350 $221,110 $222,870 $224,630 $226,390 $228,150 $229,910 Admin wages and benefits $857,532 $866,578 $875,625 $884,671 $893,718 $902,764 $911,810 $920,857 Finance $432,731 $436,462 $440,193 $443,924 $447,656 $451,387 $455,118 $458,849 Municipal hall $166,754 $167,810 $168,866 $169,922 $170,978 $172,034 $173,090 $174,146 Grants $99,559 $99,735 $99,911 $100,087 $100,263 $100,439 $100,615 $100,791 Insurance $30,030 $30,347 $30,664 $30,981 $31,298 $31,614 $31,931 $32,248 Expo grant/other projects $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 Miscellaneous $52,386 $52,939 $53,491 $54,044 $54,597 $55,149 $55,702 $56,255

RCMP - Existing Vernon $2,805,248 $2,837,253 $2,869,258 $2,901,264 $2,933,269 $2,965,274 $2,997,279 $3,029,285 RCMP -- Other areas $0 $0 $0 $0 $0 $399,612 $817,163 $1,250,229 Fire protection $1,941,130 $1,972,305 $2,003,980 $2,036,164 $2,068,865 $2,102,091 $2,135,851 $2,170,153 Inspections and permits $233,569 $236,033 $238,497 $240,961 $243,425 $245,889 $248,353 $250,817 Bylaw enforcement $82,755 $83,320 $83,886 $84,451 $85,016 $85,582 $86,147 $86,713 Animal control $70,071 $70,982 $71,905 $72,840 $73,714 $74,599 $75,494 $76,400

Common services (net) $295,204 $616,480 $620,539 $626,007 $631,203 $636,446 $641,738 $647,077 Road maint (inel cleaning) $875,735 $1,379,519 $1,387,653 $1,397,987 $1,407,896 $1,417,880 $1,427,939 $1,438,073 Sidewalks $22,000 $22,286 $22,576 $22,869 $23,143 $23,421 $23,702 $23,986 Storm drainage $92,265 $132,664 $133,460 $134,261 $135,067 $135,877 $136,692 $137,512 Snow and ice removal $246,939 $398,006 $400,378 $403,410 $406,315 $409,242 $412,191 $415,163 Weed control $42,653 $67,837 $68,244 $68,653 $69,065 $69,479 $69,896 $70,315 Traffic control + signs $115,837 $196,337 $197,515 $198,700 $199,892 $201,091 $202,298 $203,512 Parking control $112,872 $113,620 $114,367 $115,115 $115,862 $116,610 $117,357 $118,105 Street lights $334,291 $336,297 $338,315 $340,345 $342,387 $344,441 $346,508 $348,587 Public transit $778,700 $787,584 $796,468 $805,353 $814,237 $823,121 $632,005 $640,890 Parkade ,124

Bank charges + interest $133,468 $134,876 $136,284 $137,692 $139,100 $140,508 $141,916 $143,324 Transfers to reserves $497,663 $499,801 $501,940 $504,078 $506,216 $508,355 $510,493 $512,631 Normal capital spending $502,038 $506,285 $510,533 $514,780 $519,028 $523,275 $527,523 $531,770 Contrib to rural road improv. $80,000 $60,000 $80,000 $80,000 $80,000 $80,000 $80,000 $0 debt I

Total Municipal (all above) $13,762,371 $14,999,094 $15,111,161 $15,248,125 $15,384,808 $15,921,892 $16,477,719 $16,969,874 Collection for Reg Dist servo $3,603,657 $3,662,664 $3,722,496 $3,782,330 $3,842,165 $3,901,999 $3,961,834 $4,021,666 Coli for Library District $459,048 $461,802 $464,573 $467,360 $470,164 $472,985 $475,823 $478,678 Coli for

Large Vernon Option 7~7 Chart 7.1 Projected Spending per Capita

$250 Vernon 1991 Ii Coldstream 1991 Large Vernon

$200

$150

$100

$50

General Government Protective Services Capital Spending Road Transportation

7.6 Municipal This section presents the revenues the restructured municipality could Revenues anticipate. As always in this report, the figures are shown in terms of constant 1991 dollar values. Inflation will increase most of them over time.

Table 7.7 shows the annual projections for each of the municipal revenues.

The following revenues are calculated on the same basis as described in Chapter 6 earlier. • 1 % Utility tax • Grants in Lieu of Taxes • Provincial Revenue Sharing Grant • Emergency Planning Grant • Franchise Revenue • Business Licences • Other Licences (including dogs) • Building Permits and Subdivision Fees • Fines • Parkade and Meters • Transit Fees and Subsidies • Garbage Collection Fees • Property Rentals • Tax Penalties and Interest • Interest on Investments • Interest on Incorporation Fund • Transfer from own accounts

Large Vernon Option 7-8 Those based on population will be lower than in Chapter 6 because Coldstream was a part of the regional municipality option in Chapter 6 but is not part of the option examined here. Refer to Chapter 6 for details.

Municipal Property Taxes The projected municipal taxes are determined by the difference between total expenses and all other revenues. In order to determine these rates, the existing City of Vernon tax multiples are used. These multiples are as follows: ResidentiaL...... Index of 1.00 Class 2 utility ...... 3.56 times residential rate Industry ...... 1.96 times residential rate Business/other ...... 2.55 times residential rale Farm properties ...... Fixed at 0.52 per $1,000 assessment

The following revenues are slightly different than in Chapter 6.

Miscellaneous Revenue Revenue from miscellaneous sources is projected starting at $402,000 and rising with population.

Initial Planning Grants It is assumed that the Province of BC would make planning grants totalling $40,000 in the first two years, with half received in 1992 and the other half in the following year.

Collection for Regional District Services This requisition from the regional district was discussed earlier in section 7.4. It would start out at $3.6 million and rise to $4.0 million over the projection period.

Collection for Library District In the first year this would amount to $459,000, based on the 1991 requisition list from the library district This requisition is assumed to grow at half the rate of the population increase.

Collections for Other Governments This category includes collections for the Municipal Finance Authority, BC Assessment Authority and the hospital district.

Large Vernon Option 7~9 Summary Table 7.7 shows the projected municipal revenues for each year of the study period. It can be seen that the municipal tax revenues required to balance the books would have to rise from $6.2 million in 1992 to $8.8 million in 1999. Note again that these figures are stated in constant 1991 dollar values; inflation will increase them over time.

Municipal property taxes would amount to about half of the total revenues needed for municipal services -- $8.8 million out of $17 million.

Table 7.7 Large Vernon: Municipal Revenues (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 Municipal property taxes $6,196,191 $7,162,452 $7,337,542 $7,433,850 $7,511,798 $7,984,591 $8,469,830 $8,837,007 1 % Utility tax (s. 407) $218,183 $221,019 $223,892 $226,803 $229,525 $232,279 $235,066 $237,887 Grants in lieu of taxes $243,539 $246,705 $240,896 $242,304 $243,712 $245,120 $246,528 $247,936 Prey, Rev Sharing grant $1,605,282 $1,621,474 $1,637,666 $1,653,858 $1,670,050 $1,686,242 $1,702,434 $1,718,626 Emergency planning grant $7,341 $7,418 $7,496 $7,573 $7,651 $7,728 $7,805 $7,883 Franchise revenue $230,672 $231,692 $232,712 $233,732 $234,752 $235,772 $236,792 $237,812 Business licences $216,000 $218,808 $221,653 $224,534 $227,228 $229,955 $232,714 $235,507 Other licences (incl dogs) $28,691 $28,940 $29,190 $29,440 $29,690 $29,940 $30,190 $30,440 Bldg permits, subdiv fees $231,750 $231,750 $231,750 $231,750 $231,750 $231,750 $231,750 $231,750 Fines $53,255 $53,863 $54,470 $55,078 $55,685 $56,293 $56,901 $57,508 Parkade + parking meters $346,000 $349,948 $357,933 $370,184 $387,078 $409,159 $437,168 $472,082 Transit fees + subsidy $667,500 $675,116 $683,893 $692,784 $701,097 $709,510 $718.024 $726,640 Garbage collection fees $928,000 $937,667 $947,434 $957,303 $967,275 $977,351 $987,532 $997,819 Property rentals $257,424 $257,664 $257,903 $258,142 $258,382 $258,621 $258,860 $259,100 Rec'n area 1 - NORD A,B,C $0 $0 $0 $0 $0 $0 $0 $0 Ree'n area #1 op revenues $0 $0 $0 $0 $0 $0 $0 $0 Tax penalties + interest $254,515 $256,186 $257,857 $259,528 $261,200 $262,871 $264,542 $266,213 Interest on investments $250,253 $252,893 $255,533 $258,173 $260,813 $263,453 $266,093 $268,733 Interest on Incorp'n Fund $0 $215,324 $120,752 $98,071 $89,661 $81,338 $73,098 $112,051 Miscellaneous $400,000 $402,400 $404,814 $407,243 $409,686 $412,144 $414,617 $417,105 Initial planning grants $20,000 $20,000 $0 $0 $0 $0 $0 $0 Transfer from own accounts $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 Total Municipal (all above) $13,762,371 $14,999,094 $15,111,161 $15,248,125 $15,384,808 $15,921,892 $16,477,719 $16,969,874 Collection for Reg Dist servo $3,603,657 $3,662,664 $3,722,496 $3,782,330 $3,842,165 $3,901,999 $3,961,834 $4,021,666 Coli for Library District $459,048 $461,802 $464,573 $467,360 $470,164 $472,985 $475,823 $478,678 Coli for MFA, SCM, Hosp $1,665,141 $1,675,132 $1,685,183 $1,695,294 $1,705,466 $1,715,699 $1,725,993 $1,736,349 Total Revenues $19,490,217 $20,798,692 $20,983,413 $21,193,109 $21,402,603 $22,012,575 $22,641,369 $23,206,567

7.7 ITax Impacts The restructure option tax impacts are shown as the difference between the current I1Iral situation taxes and the large municipality property taxes; the property taxes for the Large Vernon municipality are the ones projected for the first normal year -- that is, the eighth year (1999). The tax rates required to generate the needed annual revenue in the eighth year are shown in Table 70S.

Large Vernon Option 7-1d Table 7.8 Large Vernon: Tax Rates ($ per $1000)

CUrrent Situation After Swan Okano Restruct Lake Kedlstn LandlnQ Vernon Coldstm Affected Taxes NORD - Land only - $0.126 $0.126 $0.126 - not NORD - Bldg only - 4.2521 $4.021 $4.264 -- in this NORD - Land + Bldg' $2.400 $0.942 $0.898 $0.909 $2.316 munic. Library District $0.300 $0.394 $0.394 $0.394 $0.273 - Rural tax - $1.750 $1.750 $1.750 - - MuniCipal tax $5.270 - - - $5.985 -

Taxes NOT Affected School district #22 $7.287 $7.287 $7.287 $7.287 $7.287 - Hospital district $0.930 $0.930 $0.930 $0.930 $0.930 - MUn Finance Authority $0.004 $0.004 $0.004 $0.004 $0.004 -- Be Assess. Authority $0.151 $0.151 $0.151 $0.151 $0.151 -

NB: All rates include 5.25% tax collection fee where applicable; these fees are shown separately in all other tax and impact tables * Rural areas: ·Current Situation" includes fire, Okan Basin Water Board, A·8·C street lights

Tables 7_9 through 7_12 present the property tax impacts for properties with various assessments in each of the affected parts of the study area. These four areas are: • Swan LakeIBX • Keddleston and Pottery Road • Okanagan Landing • City of Vernon

For each of these areas, the tables show the taxes before and after restructuring for houses with assessed values ranging from $50,000 to $175,000_ In addition to the taxes on houses, the tables also show the tax impacts on a vacant lot, on the typical business property and on a farm.

For an average $75,000 home in the rural areas, the tax increase would be between $151 and $166 per year.

For Vernon homes, the creation of a large municipality would mean tax savings of about $45 on an average home_

Large Vernon Option 7-11 -=-~--,~--

Chart 7.2 Large Vernon: Extra Taxes Due to Restructure $75,000 House Assessment $200

$150

$100

$50

$0 Swan Lake :I..-....I.:;.:K~e~d~d:le:s~to:n..J.--w""V:;;;~lBr-o:.ka:nagan Landing -$50

-$100

-$150

7.8 I Uncertainties There are a number of assumptions made in the course of preparing these estimated tax impacts that may prove incorrect as time progresses. The major uncertainties are the same as discussed at the end of Chapter 6 and deal with RCMP costs. the provincial rural tax. and the service choices of future municipal councils under restructured status_

Large Vernon Option 7-12 Table 7.9 Large Vernon: impacts on Swan Lake Properties

~25,OOO vacant Lot ~75,OOO t-arm ~500,000 Business I gyrrent Restruct Change Current ~estruct Change I Current Restruct Change NORu - ~and only ~O -$3 ~O :$1 $59 $0 -$59 NORD - Bldg only ~~ $0 $0 $2!~ $0 .$242 $2,969 $0 -$2,969 NORD - Land + bldg $22 $60 $38 $60 $162 $102 $1,096 $2,940 $1,844 Total Regional District $25 $60 $35 $303 $162 -$141 $4,124 $2,940 -$1,184 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $241 $0 -$241 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 .$2,000 Municipal tax $0 $132 $132 $0 $324 $324 $0 $6,693 $6,693 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 i Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 ;;;: Gross Tax (no grant) $293 $413 $120 $878 $1,031 $153 $13,253 $16,430 $3,177 :3 Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 g School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 ~ Net Tax, under 6S yrs ~293 $413 $120 $437 $590 $153 $13,253 $16,430 .$3,177 g 65 Yrs+Over: Gross Tax $293 $413 $120 $878 $1,031 $153 $13,253 $16,430 $3,177 ";'J Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 <;) School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Tax, 65 yrs+over $293 $413 ~120 ~178 ~331 ~153 ~13,253 ~16,430 ~3,177 Table 7.10 large Vernon: Impacts on Keddleston Properties

INORD - Bldg only - Land + bldg Regional District district tax Provincial collection fee IProvincial rural tax

$676 $818 $1,061 $1,227 $1,428 $1,635 -$576 -$700 -$700 -$700 -$700 -$700 $0 $0 $0 $0 -$15 -$15

~25.000 Vacant lot lIt75,OOO Farm :jt500,OOO Business Current Hestruct vhange l.Jurrent Aestruct Change l,;urrent Restruct Change NuRD - Land only $0 -$3 $0 :$1 $24 $0-$24 NORD - Bldg only :~ $0 $0 $2!~ $0 -$242 $2,969 $0 -$2,969 NORD - Land + bldg $21 $60 $39 $58 $162 $104 $1,045 $2,940 $1,895 Total Regional District ~24 $60 $36 $301 $162 -~139 $4,038 $2,940 -~1 ,098 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $236 $0 -$236 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipal tax $0 $132 $132 $0 $324 $324 $0 $6,693 $6,693 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 :;; MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0

Municipal tax School district tax Hospital district tax MFA + Assmnt tax

$818 $1,075 $1,227 $1,635 Homeowner -$700 -$700 -$700 -$700 School $0 $0 $0 -$15

$25,000 Vacant Lot $75,000 Farm $500,000 Business ; current Aestruct Chan e I current Restruct c..;han e I Liurrent Restruct change NORD - Land only $3 $0 -~3 $0 -$1 $24 $0 -$24 NORD - Bldg only $0 $0 $0 $2!; $0 -$243 $2,977 $0 -$2,977 NORD - Land + bldg $22 $60 $38 $58 $162 $104 $1,058 $2,940 $1,882 Total Regional District $25 $60 $35 $302 $162 -$140 $4,059 $2,940 -$1,119 Library district tax $9 $8 -$1 $25 $20 -$5 $459 $368 -$91 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $237 $0 -$237 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipa! tax $0 $132 $132 $0 $324 $324 $0 $6,693 $6,693 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 .MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 ~ Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 :f Gross Tax (no grant) ~293 ~413 ~120 ~877 ~1 ,031 ~154 ~13,184 ~16,430 $3,246 3 Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 g School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 ~ Net Tax, under 65 yrs ~293 ~413 ~120 ~436 ~590 ~154 ~13,184 $16,430 ~3,246 § 65 Yrs+Over: Gross Tax $293 $413 $120 $877 $1,031 $154 $13,184 $16,430 $3,246 ';'J Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 ~ School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 '" Net Tax, 65 yrs+over ~2g3 ~413 ~120 ~177 ~331 ~154 ~13,184 ~16.430 ~3,246 Table 7.12 Large Vernon: Impacts on Vernon Properties

- Bldg only - Land + bldg Regional District Library district tax $14 Provincial collection fee $0 Provincial rural tax $0 i,1 Municipal tax $299 School district tax $364 $47 $8 il • I .::!]

':::i $860 $830 ,'::! -$700 -$700 $0 $0

$25,000 Vacant Lot $75,000 Farm $500,000 Business l,;urrent Restruct Change LiUTrent Hestruct I,,;hange Gurrent Restruct Change NORD - Land only $0 $0 $0 $0 $0 $0 $0 $0 NORD - Bldg only $0 $0 $0 $0 $0 $0 fa $0 $0 NORD - Land + bldg $58 $60 $2 $156 $162 $6 $2,837 $2,940 $103 Total Regional District $58 $60 $2 $156 $162 $6 $2,837 $2,940 $103 Library district tax $7 $8 $1 $18 $20 $2 $334 $368 $34 Provincial collection fee $0 $0 $0 $0 $0 $0 $0 $0 $0 Provincial rural tax $0 $0 $0 $0 $0 $0 $0 $0 $0 Municipal tax $150 $132 -$18 $367 $324 -$43 $7,623 $6,693 -$930 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 :;; MFA + Assmnt tax $8 $8 $0

$75,000 Assessment

Swan lake Home Keddleston Home Okano landing Home Vernon Home

Current Restruct Change Current Aestruct Change Current Restruct Change CUrrent Restruct Change: NORD - Land only $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 $0 $0 $01 NORD - Bldg only $202 $0 -$202 $191 $0 -$191 $203 $0 -$203 $0 $0 $0 NORD - Land + bldg $67 $180 $113 $64 $180 $116 $65 $180 $115 $174 $180 $6 Total Regional District $272 $180 -$92 $258 $180 -$78 $271 $180 -$91 $174 $180 $6 Library district tax $28 $23 -$5 $28 $23 -$5 $28 $23 -$5 $20 $23 $3 Provincial collection fee $16 $0 -$16 $15 $0 -$15 $16 $0 -$16 $0 $0 $0 Provincial rural tax $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 $0 $0 $0 Municipal tax $0 $395 $395 $0 $395 $395 $0 $395 $395 $449 $395 -$541 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $12 $12 $0 Gross Tax (no grant) $1,076 $1,227 $151 $1,061 $1,227 $166 $1,075 $1,227 $152 $1,284 $1,239 -$45 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 Net Tax, under 65 yrs $587 $738 $151 $572 $738 $166 $586 $738 $152 $795 $75~~45

Tax Impacts on an Average Home

:;;

~ $0 1/ I g Keddleston Home Okan Lndng Home Vernon Home ~ D Currently ~ Restructured "

Chapter 8 iExpanded Vernon Option

8.1 IIntroduction This chapter examines the impacts of the creating a larger Vernon by extending its boundaries to include the Swan Lake, Keddleston and Pottery Road areas. It is referred to as the "Expanded Vernon" option. The difference between this option and the "Large Vernon" option discussed in Chapter 7 is that Okanagan Landing is excluded from the Expanded Vernon.

Kalamalka Lake

Many of the costs and revenue assumptions used in the development of tax projections are the same as those used for the regional municipality option and the Large Vernon option in the preceding sections.

This chapter is organized as follows: 8.2 Growth and Tax Base 8.3 Grants and Capital Spending 8.4 Regional District Services 8.5 Municipal Expenses 8.6 Municipal Revenues 8.7 Tax Impacts 8.8 Uncertainties

Expanded Vernon Option 8-1 B.2 Growth and The regional municipality option would produce an initial municipal Tax Base population of 28,990 which would rise to 31,200 by the year 1999. Table 8.2 shows the municipal assessments, stated in constant 1991 dollar values. The table also shows the weighted assessment for municipal taxation purposes, which is determined using the total assessed values and the current City of Vernon tax rate multiples. The 1991 budget uses a tax rate for business properties that is 2.55 times the residential rate. This ratio is used in determining the total effective tax base when discussing taxes in terms of the residential tax rate alone.

Table 8.1 Table 8.2 Expanded Vernon: Municipal Expanded Vernon: Total Assessments Population

Actual Weighted Year Population Year Total Total 1992 28,990 1992 $998,480,000 $1,348,544,000 1993 29,302 1993 $1,018,443,000 $1,371,063,000 1994 29,614 1994 $1,038,406,000 $1,393,581,000 1995 29,926 1995 $1,058,369,000 $1,416,099,000 1996. 30,238 1996 $1,078,332,000 $1,438,618,000 1997 30,550 1997 $1,098,295,000 $1,461,136,000 1998 30,862 1998 $1,118,258,000 $1,483,655,000 1999 31,174 1999 $1,138,221,000 $1,506,172,000 Constant 1991 dollars

B.3 Grants and The "Expanded Vernon" municipality would receive an ongoing Revenue Capital Sharing Act grant from the province of BC of about $1.5 million per year by 1999. Spending The short-term assistance grants from the province of BC would be $981,000 based on the rural population, plus $1,060,000 based on a rural road length of 130 Ian.

As before, it is assumed the province would continue to maintain rural roads during 1992; after that the municipality would be responsible for these roads.

A total of $3 million in road improvement projects is assumed to be eligible for the 75% funding under the provincial program for restructured municipalities. The municipal share would thus be $750,000.

It is assumed the province would also assist with grants for updating bylaws and planning regulations for the rural areas that would change to municipal status following restructuring. A total of $30,000 is assumed to be made

Expanded Vernon Option 8-2 available to the enlarged municipality by the province in the first two years, split equally at $15,000 per year.

For purposes of conservatism it is assumed in this study that the rebate of the previous year's rural tax is not given to the enlarged municipality.

Table 8.3 shows these short-term assistance grants.

Table 8.3 Expanded Vernon: Short-Term Grants Per capita Road mtce Year grants grant 1992 $490,600 $1,060,200 1993 $327,050 $0 1994 $163,500 $0 1995 $0 $0 1996 $0 $0 1997 $0 $0 1998 $0 $0 1999 $0 $0

Capital Spending The municipal hall would have to be expanded, as would the public works facilities (including equipment and machinery). In addition, the municipality would be responsible for improving, upgrading and rebuilding a number of roads now in the rural areas.

The same type of incorporation capital plan that was assumed in Chapter 6 is also assumed for the Large Vernon municipality.

The capital costs associated with restructuring involves the following items. Municipal hall $400,000 Public works building and equipment $800,000 Municipal share of eligible roads $750,000

It is assumed here that a total of $3 million in road costs in the rural areas would be eligible under the program for restructured or new municipalities. Again, it should be noted that there is no guarantee that 75% of this cost would be received. The incorporation fund assumes this work would actually be done in the first seven years.

Expanded Vernon Option 8-3 -- -:-:;---~ ------

Table 8.4 shows the mechanics of the incorporation capital fund.

Table 8,4 Expanded Vernon: Incorporation Capital Fund (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 STARTING BALANCE * $1,550,814 $2,088,064 $1,053,241 $861,266 $770,749 $681,155 $592,475 $504,699 ADDITIONS TO FUND: Per capita grants $327,050 $163,525 $0 $0 $0 $0 $0 $0 Road mtce grant (in starting balance) $0 $0 $0 $0 $0 $0 Tsfrfrom GRF - Normal $458,268 $462,'15 $465,963 $469,810 $473,658 $477,505 $481,353 $485,200 Tsfrfrom GRF - Rural roads $175,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $0 SPENDING FROM FUND: Public works bldg + equip $0 ·$800,000 $0 $0 $0 $0 $0 $0 Municipal hall $0 ·$300,000 ·$100,000 $0 $0 $0 $0 $0 Projects funded by taxes ·$458,268 ·$462,115 ·$465,963 -$469,810 ·$473,658 ·$477,505 -$481,353 -$485,200 25% share eligible roads -$107,143 ·$107,143 ·$107,143 ·$107,143 -$107,143 ·$107,143 ·$107,143 $0 Subtotal $1,945,721 $1,069,446 $871,098 $779,123 $688,606 $599,012 $510,332 $504,699 Interest earned $142,343 $129,642 $78,659 $66,994 $59,607 $52,296 $45,060 $41,183 Int used to reduce taxes $0 ·$145,847 -$88,491 ·$75,368 -$67,058 ·$58,833 ·$50,693 ·$75,705 CLOSING BALANCE ...... $2,088,064 $1,053,241 $861,266 $770,749 $681,155 $592,475 $504,699 $470,177

* 1992 starting balance has per capita grant of $490,575 and road mtce grant of $1 ,060,239

8.4 Regional Responsibility for the following services is assumed to shift to the large District municipality: • BX/Swan Lake fire protection Services • Building and fire inspection • Emergency programs • Animal control • Transit • Drainage • Miscellaneous grants • Street lights for specified areas A, B, C • Street lights for defined areas

After restructuring, the municipality would receive a single requisition from the regional district and the municipality is assumed to generate the amount needed to pay this requisition by using a single ad valorem tax using the hospital base (rather than the municipal tax base).

Table 8.5 shows the North Okanagan Regional District requisitions under the current system and after restructuring.

The regional district requisition is assumed to grow at the same rate as the hospital base over the projection period of eight years used in this study. It can be seen from Table 8.5 that approximately $300,000 in service costs would

Expanded Vernon Option 8·4 shift from the regional district responsibility to the municipality responsibility. The current requisition of $3.5 million from the study area would fall to the requisition of $3.2 million.

TableS.5 Expanded Vernon: N.O.R.D. Requisitions

Current Req'n After N.O.R.D, Services Requisition Restructure

Land Only: Sterile insect release $58.542 $58,542

Building Only: Recreat'n area #1 (Core) $1,942,980 $1,942,980 Recreat'n area #2 (East) $0 .. Fire (BX/Swan, OK lndg) $163,184 · . Recycling $107,550 $107,550 Sanitary landfill $367,385 $367,385

Land and Building: General government $160,375 $176,413 Electoral area services $4,611 .. Development services $76,798 $7,680 Bldg + fire inspection $0 · . Emergency programs $8,648 · . Ambulance ~ Jaws $662 $662 Animal control $36,238 .. Transit (rural area contract) $6,360 · . Drainage $4,995 .. Miscellaneous grants $880 .. Noxious insects $838 $838 O.B. Water Board $241,484 $241,484 Queen's Committee $3,466 $3,466 Airport $25,762 $25,762 St. John society $1,303 $1,303 OK Symphony grant $2,638 $2,638 St lights: spec areas A,BiC $1,452 · . 6t lights: defined A,S,C $6,641 · . T ourism/Ec Devel $79,133 $79,133 911 Telephone $145,880 $145,880 Feasibility reserve $23,700 $23,700

Total N.O.A.D. Requisition $3,471,505 $3,185,416

8.5 Municipal Virtually all of the municipal expenses are projected here on the same basis as Expenses described in Chapter 6 earlier. The smaller the population, the lower the costs (although not necessarily in proportion). The details of the municipal spending are shown on an annual basis in Table 8.6. As always, these figures are expressed in constant 1991 dollars; inflation will raise them over time.

Expanded Vernon Option 8*5 Note that no municipal costs are shown for recreation area #1, since this would remain a regional district service in this restructure option, and its costs are included as part of the regional district requisition.

Chart 8.1 Projected Spending per Capita

General Government Protective Services Capital Spending Road Transportation

Expanded Vernon Option 8-6 Table 8.6 Expanded Vernon: Municipal Expenses (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999

Legislative (incl expenses) $195,705 $197,265 $198,825 $200,385 $201,945 $203,505 $205,065 $206,625 Admin wages and benefits $745,043 $753,061 $761,080 $769,098 $777,117 $785,135 $793,153 $801,172 Finance $386,335 $389,642 $392,949 $396,256 $399,563 $402,871 $406,178 $409,485 Municipal hall $160,164 $161,412 $162,660 $163,908 $185,156 $166,404 $167,652 $168,900 Grants $97,371 $97,527 $97,683 $97,839 $97,995 $98,151 $98,307 $98,463 Insurance $26,091 $26,372 $26,653 $26,933 $27,214 $27,495 $27,776 $28,057 Expo grant/other projects $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 $181,000 Miscellaneous $45,514 $46,004 $46,494 $46,984 $47,474 $47,964 $48,453 $48,943 Industrial development $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 $102,000 Total Administration $1,837,223 $1,852,283 $1,867,344 $1,882,403 $1,897,464 $1,912,525 $1,927,584 $1,942,645

RCMP - Existing Vernon $2,605,248 $2,837,253 $2,869,258 $2,901,264 $2,933,269 $2,965,274 $2,997,279 $3,029,285 RCMP - Other areas $0 $0 $0 $0 $0 $249,606 $514,075 $791,887 Fire protection $1,799,312 $1,830,026 $1,861,265 $1,893,037 $1,925,351 $1,958,217 $1,991,644 $2,025,641 Inspections and permits $202,930 $205,114 $207,298 $209,482 $211,666 $213,850 $216,034 $218,218 Bylaw enforcement $78,378 $78,903 $79,429 $79,954 $80,479 $81,005 $81,530 $82,056 Anima! control $60,879 $61,792 $62,719 $63,597 $64,487 $65,390 $66,305 $67,233 Emergency measures $12,756 $12,893 $13,030 $13,167 $13,305 $13,442 $13,579 $13,717 Total Protective $4,959,503 $5,025,981 $5,092,999 $5,160,501 $5,228,557 $5,546,784 $5,880,446 $6,228,037

Common services (net) $295,204 $504,480 $508,011 $511,543 $515,075 $518,606 $522,138 $525,669 Road maint (incl cleaning) $875,735 $1,204,519 $1,211,828 $1,219,137 $1,226,446 $1,233,755 $1,241,064 $1,248,373 Sidewalks $22,000 $22,330 $22,665 $22,982 $23,304 $23,630 $23,961 $24,296 Storm drainage $92,265 $118,664 $119,495 $120,331 $121,173 $122,021 $122,875 $123,735 Snow and ice removal $246,939 $345,506 $347,631 $349,755 $351,880 $354,004 $356,129 $358,253 Weed control $42,653 $59,087 $59,501 $59,918 $60,337 $60,759 $61,184 $61,612 Traffic control + signs $115,837 $168,337 $169,515 $170,702 $171,897 $173,100 $174,312 $175,532 Parking control $107,401 $108,098 $108,796 $109,493 $110,191 $110,888 $111,586 $112,283 Street lights $325,093 $327,369 $329,661 $331,969 $334,293 $336,633 $338,989 $341,362 Public transit $778,700 $787,584 $796,468 $805,353 $814,237 $823,121 $832,005 $840,890 Parkade $75,800 $76,665 $77,530 $78,394 $79,259 $80,124 $80,989 $81,854 Total Transport $2,977,627 $3,722,639 $3,751,101 $3,779,577 $3,808,092 $3,836,641 $3,865,232 $3,893,859

Garbage collection (City) $721,916 $729,436 $737,034 $744,711 $752,468 $760,306 $768,226 $776,228 N.O. Union Bd of Health $2,500 $2,538 $2,576 $2,612 $2,649 $2,686 $2,724 $2,762 Cemetery $121,310 $121,310 $121,310 $121,310 $121,310 $121,310 $121,310 $121,310 Total Environ Health $845,726 $853,284 $860,920 $868,633 $876,427 $884,302 $892,260 $900,300

Updates funded by grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Ordinary planning $202,930 $205,114 $207,298 $209,482 $211,666 $213,850 $216,034 $218,218 Tourism/econ development $0 $0 $0 $0 $0 $0 $0 $0 Total Environ Develmnt $217,930 $220,114 $207,298 $209,482 $211,666 $213,850 $216,034 $218,218

Rec'n area #1 (incl capital) $0 $0 $0 $0 $0 $0 $0 $0 Total Ree'n and Culture $0 $0 $0 $0 $0 $0 $0 $0

Bank charges + interest $115,960 $117,208 $118,456 $119,704 $120,952 $122,200 $123,448 $124,696 Transfers to reserves $475,778 $477,716 $479,655 $481,593 $483,531 $485,470 $487,408 $489,346 Normal capital spending $458,268 $462,115 $465,963 $469,810 $473,658 $477,505 $481,353 $485,200 Contrib to rural road $175,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $0 improv. Existing debt payments $1,272,575 $1,272,575 $1,272,575 $1,272,575 $1,272,575 $1,272.575 $1,272,575 $1,272.575 Total Fiscal Services $2,497,581 $2,354,614 $2,361,649 $2,368,682 $2,375,716 $2,382,750 $2,389,784 $2,371,817

Total MuniCipal (all above) $13,335,590 $14,028,915 $14,141,311 $14,269,278 $14,397,922 $14,776,852 $15,171,340 $15,554,876 Collection for Reg Dist serv. $3,185,416 $3,234,499 $3,288,694 $3,342,890 $3,397,085 $3,451,282 $3,505,478 $3,559,673 Coli for Library District $389,298 $392,023 $394,767 $397,530 $400,313 $403,115 $405,937 $408,779 Coli for MFA. BCM, Hosp $1,463,170 $1,473,412 $1,483,726 $1,494,112 $1,504,571 $1,515,103 $1,525,709 $1,536,389 Total Expenses $18,373,474 $19,128,849 $19,308,498 $19,503,810 $19,699,891 $20,146,352 $20,608,464 $21,059,717

Expanded Vernon OptIOn 8~7 :-:--':-c--.--:;--'---

8.6 Municipal This section describes the revenues the restructured municipality could Revenues anticipate. As always in this report, the figures are shown in terms of constant 1991 dollar values. Inflation will increase most of them over time.

Table 8.6 shows the annual projections for each of the municipal revenues.

Those revenues based on population will be lower than in Chapter 6 because Coldstream and Okanagan Landing were a part of the Regional Municipality option in Chapter 6 but are not part of the option examined here. Refer to Chapter 6 for details.

Miscellaneous Revenue Revenue from miscellaneous sources is projected starting at $385,000 and rising with population.

Expanded Vernon Option 8-8 Initial Planning Grants It is assumed that the Province of BC would make planning grants totalling $30,000 in the first two years, with half received in 1992 and the other half in the following year.

Collection for Regional District Services This requisition from the regional district was discussed earlier in section 8.4. lt would start out at $3.2 million and rise to $3.6 million over the projection period.

Collection for Library District In the first year this would amount to $389,000, based on the 1991 requisition list from the library district. This requisition is assumed to grow at half the rate of the population increase.

Collections for Other Governments This category includes collections for the Municipal Finance Authority, BC Assessment Authority and the hospital district.

Summary Table 8.7 below shows the projected municipal revenues for each year of the study period. It can be seen that the municipal tax revenues required to balance the books would have to rise from $6.1 million in 1992 to $7.8 million in 1999. Note again that these figures are stated in constant 1991 dollar values; inflation will increase them over time.

Municipal property taxes would amount to about half of the total revenues needed for municipal services -- $7.8 million out of $15.5 million.

Expanded Vernon Option 8-9 -:"~-,---

Table 8.7 Expanded Vernon: Municipal Revenues (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 Municipal property taxes $6,113,299 $6,607,015 $6,738,734 $6,817,890 $6,887,927 $7,202,633 $7,526,536 $7,799,076 1% Utility tax (s. 407) $205,052 $208,128 $211,250 $214,208 $217,207 $220,248 $223,331 $226,458 Grants in lieu of taxes $223,843 $227,201 $223,068 $224,316 $225,564 $226,812 $228,060 $229,308 Provo Rev Sharing grant $1,403,390 $1,417,742 $1,432,094 $1,446,446 $1,460,798 $1,475,150 $1,489,502 $1,503,854 Emergency planning grant $6,378 $6,446 $6,515 $6,584 $6,652 $6,721 $6,790 $6,858 Franchise revenue $213,164 $214,024 $214,884 $215,744 $216,604 $217,464 $218,324 $219,184 Business licences $212,000 $215,180 $218,408 $221,466 $224,567 $227,711 $230,899 $234,132 Other licences (incl dogs) $25,583 $25,804 $26,026 $26,247 $26,469 $26,691 $26,912 $27,134 Bldg permits, subdiv fees $216,000 $216,000 $216,000 $216,000 $216,000 $216,000 $216,000 $216,000 Fines $53,255 $53,863 $64,470 $55,078 $55,685 $56,293 $56,901 $57,508 Parkade + parking meters $346,000 $349,948 $357,933 $370,184 $387,078 $409,159 $437,168 $472,082 Transit fees + subsidy $667,500 $675,116 $685,243 $694,836 $704,564 $714,428 $724,430 $734,572 Garbage collection fees $928,000 $937,667 $947,434 $957,303 $967,275 $977,351 $987,532 $997,819 Property rentals $254,448 $254,660 $254,872 $255,084 $255,297 $255,509 $255,721 $255,933 Rec'n area 1 - NORD A,B,C $0 $0 $0 $0 $0 $0 $0 $0 Rec'n area #1 op revenues $0 $0 $0 $0 $0 $0 $0 $0 Tax penalties + interest $242,478 $244,039 $245,600 $247,162 $248,723 $250,284 $251,845 $253,407 Interest on investments $217,425 $219,765 $222,105 $224,445 $226,785 $229,125 $231,465 $233,805 Interest on Incorp'n Fund $0 $145,847 $88,491 $75,368 $67,058 $58,833 $50,693 $75,705 Miscellaneous $385,000 $387,695 $390,409 $393,142 $395,894 $398,665 $401,456 $404,266 Initial planning grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Transfer from own accounts $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 $1,607,775 Total Municipal (all above) $13,335,590 $14,028,915 $14,141,311 $14,269,278 $14,397,922 $14,776,852 $15,171,340 $15,554,876 Collection for Reg Dist serv. $3,185,416 $3,234,499 $3,288,694 $3,342,890 $3,397,085 $3,451,282 $3,505,478 $3,559,673 Coli for Library District $389,298 $392,023 $394,767 $397,530 $400,313 $403,115 $405,937 $408,779 Coli for MFA, BCAA, Hosp $1,463,170 $1,473,412 $1,483,726 $1,494,112 $1,504,571 $1,515,103 $1,525,709 $1,536,389 Total Revenues $18,373,474 $19,128,849 $19,308,498 $19,503,810 $19,699,891 $20,146,352 $20,608,464 $21,059,717

8.7 ITax Impacts The restructure option tax impacts are shown as the difference between the current rural situation taxes and the regional municipality property taxes; the property taxes for the Expanded Vernon municipality are the ones projected for the first normal year -- that is, the eighth year (1999). The tax rates required to general the needed annual revenue in the eighth year are shown in Table 8.8.

Expanded Vernon Option 8-10 Table 8.8 Expanded Vernon: Tax Rates ($ per $1000)

Current Situation After Swan Okano Restruct Lake Kedfstn Landing Vernon Coldstm Affected Taxes NORD - Land only - $0.126 $0.126 not - not NORD - Bldg only - $4.252 $4.021 in -- in NORD - Land + Bldg' $2.400 $0.942 $0.898 this $2.316 this Library District $0.290 $0.394 $0.394 munic. $0.273 munic Rural tax -- $1.750 $1.750 - - - Municipal tax $5.260 -- - - $5.985 -

Taxes NOT Affected School district #22 $7.287 $7.287 $7.287 -- - -- Hospital district $0.930 $0.930 $0.930 -- -- Mun Finance Authority $0.004 $0.004 $0.004 - - -- Be Assess. Authority $0.151 $0.151 $0.151 -- --

NB: All rates include 5.25% tax collection fee where applicable; these fees are shown separately in aU other tax and impact tables * Aural areas: 'Current Situation' includes fire, Okan Basin Water Board, AB-C street lights

Tables 8.9 through 8.11 present the property tax impacts for properties with various assessments in the affected study areas: • Swan Lake!BX • Keddleston and Pottery Road • City of Vernon

For each of these areas, the tables show the taxes before and after restructuring for houses with assessed values ranging from $50,000 to $175,000. In addition to the taxes on houses, the tables also show the tax impacts on a vacant lot, on the typical business property, and on a farm.

For an average $75,000 home in the rural areas, the tax increase would be between $150 and $165.

For Vernon homes, the creation of a large municipality would mean tax savings of about $46 on an average home.

Expanded Vernon Option 8-11 Chart B.2 Expanded Vernon: Extra Taxes Due to Restructure

$75,000 House Assessment $200

$150

$100

$50

$0 Swan Lake Keddleston ·$50

·$100

·$150

B.B IUncertainties There are a number of assumptions made in the course of preparing these estimated tax impacts that may prove incorrect as time progresses. The major uncertainties are the same as discussed at the end of Chapter 6 and deal with RCMP costs, the provincial rural tax, and the service choices of future municipal councils under restructured status.

Expanded Vernon Option 8-12 rable 8,9 Expanded Vernon: Impacts on Swan lake Properties

$2,857 Homeowner -$700 School -$288

- Bldg only - Land + bldg Regional District district tax IProvincial collection fee

~ ] g. Q ~ 3g %g $293 '1' $0 ;;; $0 :,;:~

':1 ,I TableS.10 Expanded Vernon: Impacts on Keddleston Properties

::}':1

'::,:::

, :i!:

Provincial rural tax Municipal tax School district tax ~ Hospital district tax § ;,,'::':1 g. MFA + Assmnt tax "",: Q ;;: 3 g ~ g $1,030 $16,404 ~ 'I' -$700 $0 ....~ $0 $0 I ';:i Table 8.11 Expanded Vernon: Impacts on Vernon Properties

Provincial collection fee IProvincial rural tax Municipal tax

$2,881 Homeowner -$700 School -$288

- Bldg only - Land + bldg Regional District district tax IProvincial collection fee

~ ] g. Q

Table 8.12 Expanded Vernon: Tax Impacts on an Average Home : : i;

$75,000 Assessment

:1 Swan Lake Home Keddleston Home Vernon Home i::::l

Current Restruct Change Current Restruct Change Current Aestruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $0 $0 $0 NORD - Bldg only $202 $0 -$202 $191 $0 -$191 $0 $0 $0 NORD - Land + bldg $67 $180 $113 $64 $180 $116 $174 $180 $6 ::::1 Total Regional District $272 $180 -$92 $258 $180 -$78 $174 $180 $6 ci Library district tax $28 $22 -$6 $28 $22 -$6 $20 $22 $2 Provincial collection fee $16 $0 -$16 $15 $0 -$15 $0 $0 $0 i Provincial rural tax $131 $0 -$131 $131 $0 -$131 $0 $0 $0 :::: Municipal tax $0 $395 $395 $0 $395 $395 $449 $395 -$54 :!i School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $12 $12 $0 Gross Tax (no grant) $1,076 $1,226 $150 $1,061 $1,226 $165 $1,284 $1,238 -$46 ~;'::! Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 :.:;\,'; ~~I_ax, un~er ~~y~~ __ ___$587 $737 $150 $572 $737 $165 $795 $749 -$46

Tax Impacts on an Average Home

~ $800 ] {!! is $600 Q ;;: $400 3 :il g $200 ~ $0 1/1 g Swan Lake Home Keddleston Home Vernon Home ~ '" [J Currently ~ Restructured 11

~, ':1'I Chapter 9 INorth Municipality

9.1 Jlntroduction This chapter examines the consequences of creating a new municipality north and east of the City of Vernon. The areas covered include Swan Lake, BX, Keddleston and Pottery Road. This is essentially the area covered by the Swan Lake!BX fire protection area of the regional district. There would be 130 km of local roads under municipal responsibility.

Kalamalka lake

The new municipality is assumed to be created in late 1991, with council taking control of the municipality in January, 1992.

This chapter is organized as follow: 9.2 Growth and Tax Base 9.3 Grants and Capital Spending 9.4 Regional District Services 9.5 Municipal Expenses 9.6 Municipal Revenues 9.7 Tax Impacts 9.8 Uncertainties

North Municipality 9-1 ------c.--.--:--'--- -

9.2 Growth and Table 9.1 shows the population of the new municipality. It is important to Tax Base note that this municipality starts out with a population in excess of 5,000, which means that, under the current RCMP arrangement, the municipality would be liable for a significant share of policing costs. (The current arrangement exempts municipalities with populations under 5,000 people.)

The growth assumption for this new municipality is the same assumption that has been made for this area in all of the other restructure options.

Table 9.2 shows the municipal assessments and the "effective" taxable assessments based on the provincial tax rate mUltiples. Note that a municipal council would be free to use tax rate multiples as it sees fit. For example, the City of Vernon has a policy that farm land in the city should pay essentially the rural tax rate for farm land, whereas Coldstream has adopted a policy that farm land should pay a higher rate than that.

However, bearing in mind that most of the property in the north area is in the residential category, changes to the tax rate multiples would not have a significant impact on the property taxes as used in this study.

Table 9.1 Table 9.2 North Municipality: Municipal North Municipality: Total Assessments Population

Actual Weighted Year Population Year Total Total 1992 6,541 1992 $193,898,000 $208,838,000 1993 6,756 1993 $203,205,000 $218,253,000 1994 6,971 1994 $212,512,000 $227,667,000 1995 7,186 1995 $221,819,000 $237,082,000 1996 7,401 1996 $231,126,000 $246,497,000 1997 7,616 1997 $240,433,000 $255,911,000 1996 7,831 1998 $249,740,000 $265,326,000 1999 8,046 1999 $259,047,000 $274,740,000 Constant 1991 dollars

9.3 Grants and The new municipality would be eligible for essentially the same types of short Capital term assistance that would be made available to a restructured Vernon. There are four significant portions to this assistance. Spending First, the municipality would receive a grant calculated at $150 per person. This would be paid during the first three years.

Second, the municipality would receive assistance from the province to ease the shift in road maintenance costs from the provincial contractor to the new

North Municipality s-.2 municipality. This grant would be paid upon incorporation rather than spread over a number of years. The assistance from the province takes the form of a grant equal to five years' worth of the estimated road maintenance costs. However, the province would not make the grant for the first year because in the first year the provincial contractor would probably continue to maintain the roads. This means the grant would consist of essentially four years' worth of road maintenance costs. Since the amount is paid upon incorporation rather than spread over time, the province would discount each year's payments at a rate estimated here to be 5%. As shown in Table 9.3, this road maintenance assistance grant would amount to approximately $1,060,000.

Table 9.3 North Municipality: Short-Term Grants

Per capita Road mtce Year grants grant 1992 $490,600 $1,060,200 1993 $327,050 $0 1994 $163,500 $0 1995 $0 $0 1996 $0 $0 1997 $0 $0 1996 $0 $0 1999 $0 $0

A third major type of assistance involves eligibility for some rural roads in a program the province has for new municipalities. This program, which runs over an eight year period, allows the province to fund up to 75% of the costs of road improvements on eligible projects in that were formerly in rural areas. The goal of the program is to allow the municipality to improve roads that have become substandard over the course of time without incurring great financial hardship. It is assumed here that the north municipality would have projects with a total cost of about $3 million eligible for funding under this program. The municipal share -- 25% -- would amount to $750,000. Note that being eligible for funding is not the same thing as being guaranteed funding under this program. It is possible that the assistance would not amount to 75% of the cost.

The fourth significant transitional assistance from the province consists of exempting the new municipality from paying a share of the police costs for the first five years. This assumption is based on some recent restructure offers made by the province. Starting in the sixth year, it is assumed the municipality would be required to pay one-third of the normal local cost; in year 7, it would pay two-thirds of the normal cost; and finally in year 8 and thereafter, it would pay 100% of the normal local cost. For purposes here, the normal local cost is assumed to be 75% of the RCMP officers' share (as opposed to the 70% set out in the contract that expired in March, 1991).

North Municipality 9-3 i_-_-_U"_-___-' __ ----.--,----::-----:""------

A fifth grant, but much smaller than the assistance mentioned above, involves money given by the province for the preparation of municipal land use bylaws and planning documents. It is assumed here that a total of $30,000 in planning grants is offered by the province, spread equally over the first two years.

The new municipality would face a number of initial infrastructure requirements. These are assumed in this study to be as follows: Municipal hall $700,000 Public works building and equipment $900,000 25% share of road improvements $750,000

In recent years virtually all new municipalities have developed investment capital plans to use the short-term assistance grants to help pay for needed infrastructure over time, so that sudden tax increases do not result and the benefits of the grants are spread over a longer period than just the first one or two years. Table 9.4 shows what such a plan might resemble.

Additions to the fund come from short-term assistance grants related to population and road maintenance, plus spending on "normal" capital projects, plus special transfers from the general revenue fund ("GRF") for the improvement of rural roads. Monies from the fund are spent on the infrastructure mentioned above plus ordinary capital projects on an ongoing basis. Interest earned on the fund balance is transferred back to the general fund to help minimize the tax burden during the early years.

The use of this fund allows the municipality to finance a total of $3.3 million, plus another $2.3 million from the Province toward road improvements, without bO/TOwing money. If extra capital projects are undertaken, debt might be necessary. The working assumption in this document is that no significant new projects or infrastructure items other than the municipal hall, public works expenses and road improvements would be required as a result of incorporation.

North Municipality 9-4 Table9A North Municipality: Incorporation Capital Fund (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 STARTING BALANCE' $1,550,814 $2,530,064 $1,275,123 $1,064,862 $1,071,174 $1,077,872 $1,042,146 $1,005,691 ADDITIONSTO FUND: Per capita grants $327,050 $163,525 $0 $0 $0 $0 $0 $0 Road mtce grant (in starting balance) $0 $0 $0 $0 $0 $0 Tsfr from GRF· Normal $65,410 $101,340 $104,565 $107,790 $111,015 $114,234 $156,620 $160,920 Tsfrfrom GRF - Rural roads $600,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $0 SPENDING FROM FUND: Public works bldg + equip $0 ·$900,000 $0 $0 $0 $0 $0 $0 Municipal hall $0 ·$500,000 -$200,000 $0 $0 $0 $0 $0 Projects funded by taxes -$65,410 ·$101,340 -$104,565 -$107,790 ·$111,015 -$114,234 ·$156,620 -$160,920 25% share eligible roads ·$107,143 ·$107,143 ·$107,143 -$107,143 -$107,143 ·$107,143 ·$107,143 $0 Subtotal $2,370,721 $1,236,446 $1,017,980 $1,007,719 $1,014,031 $1,020,729 $985,003 $1,005,691 Interest earned $159,343 $154,709 $93,764 $84,607 $85,122 $85,669 $82,754 $82,065 lnt used to reduce taxes $0 ·$116,032 -$46,882 ·$21,152 -$21,281 ·$64,252 -$62,066 ·$150,854 CLOSING BALANCE ...... $2,530,064 $1,275,123 $1,064,862 $1,071,174 $1,077,872 $1,042,146 $1,005,691 $936,902

* 1992 starting balance has per capita grant of $490,575 and road mtce grant of $1 ,060,239

9.4 Regional Since this option involves the creation of more members within the regional District district, the option would see fewer regional district services shifted away from the regional district and onto the municipalities than in the earlier Services options. In this sense, this option is close to the status quo, with only a few of the regional district services being transferred to the new municipality.

The services that would be transferred are as follows: • BX/Swan Lake fire protection • Building and fire inspection • Emergency programs • Animal control • Transit • Drainage • Miscellaneous grants • Street lights for the portion in the municipality

The requisition for regional district services would be as shown in Table 9.5. Note that the municipality would probably generate the required revenues to meet the regional district requisition by an ad valorem tax applied equally to land and building, as opposed to the current system where the regional district levies certain taxes against buildings only.

The annual requisition from the regional district is increased on the basis of the increase of the municipality'S tax base over time.

North Municipality 9-5 Table 9.5 North Municipality: N.O.R.D. Requisitions

Current Req'n After N.O.A.D. Services Requisition Restructure

land Only: Sterile insect release $8,672 $8,672

Building Only: Recreat'n area #1 (Core) $348,176 $348,176 Recreat'n area #2 (East) $0 · . Fir. (BX/Swan, OK lndg) $163,184 · . Recycling $19,274 $19,274 Sanitary landfill $85,481 $85,481

Land and Building: General government $26,991 $29,690 Electoral area services $4,611 - Development services $48,821 $4,882 Bldg + fire inspection $0 · . Emergency programs $1,456 · . Ambulance - Jaws $154 $154 Animal control $8,430 -. Transit (rural area contract) $6,360 -. Drainage $4,995 -. Miscellaneous grants $880 · - Noxious insects $141 $141 O.B. Water Board $39,853 $39,853 Queen's Committee $584 $584 Airport $4,337 $4,337 St. John society $219 $219 OK Symphony grant $614 $614 8t lights: spec areas A,B,C $1,452 · . 8t lights: defined A,B,C $6,641 · . T aurism/Eo Devel $18,410 $18,410 911 Telephone $24,558 $24,558 Feasibility reserve $3,989 $3,989

Total N.O.A.D. Requisition $828,283 $589,034

9.5 Municipal This section outlines the expected municipal expenditures on an annual basis Expenses for the eight year study period. Table 9.6 shows the budget details. Many of the budget items discussed here are based on the current level of service as currently provided through the regional district. Many other expenses have been projected based on an analysis of budgets in municipalities such as Coldstream, Spallumcheen, Armstrong, Gibsons and Sechelt While there are no perfect matches to use when developing these projections .• that is, no municipality is exactly the same as the north municipality would be .- there is enough commonality in these municipalities to allow the development of reasonable projections here.

North Municipality 9-6 General Government Legislative costs (mayor, council and their expenses) are projected at $9.50 per person, rising at a rate roughly half the rate of population growth. Administration wages are estimated at $25 per person and would rise directly in proportion to population increases. Similarly, finance, audit and legal costs are estimated at $12 per person and would rise in proportion to the population growth.

Municipal hall operation, utilities and supplies are estimated to cost around $23,000 per year. The costs of legal, audit and professional fees are estimated at about $20,000 per year, rising with population. A relatively small amount is budgeted for grants to community groups and organizations each year.

Liability insurance is based on $2.90 per person, which is in accordance with the Municipal Insurance Association program through DBCM. The costs of advertising, training and staff travel are estimated at around $10,000 per year, as is the annual cost of office equipment, operation and maintenance.

Finally, miscellaneous costs are estimated at around $14,000 per year, rising with population. The total administration costs would reach $481,000 by the year 1999. This works out to about $60 per person, which is higher than the enlarged Vernon options (there are some economies of scale with the larger Vernon municipality).

Protective Service The costs of policing are estimated in accordance with the recently expired provincial arrangement for RCMP services. This involves the municipality paying 75% of the RCMP officer costs plus 100% of the civilian costs. However, it is assumed that the province would exempt the municipality for the first five years from making these costs as part of the short-term assistance package to ease the transition from rural status to municipal status. In addition, it is assumed the province would then phase in the RCMP costs at 33% per year, so that the full local share of RCMP costs is not paid until the year 1999.

Fire protection costs are based strictly on the costs now experienced for the Swan LakelBX Fire Department. There is no reason this service would cost more under municipal status than it does now. The cost is increased at one half the rate of population increase.

Building inspection costs are estimated at $8 per person, slightly higher than for the options involving an enlarged Vernon. These costs are projected to rise directly in proportion with population as community development continues in accordance with the assumption for moderate growth as used

North Municipality 9-7 ------,-:,-----:--,---

here. The costs of bylaw enforcement and animal control are projected to start out around $16,000 per year, rising to $20,000 per year by the year 1999.

Road Transport There are 130 km of local roads that the municipality would be responsible for. Note that, as always, the province would continue to be responsible for highways such as No. 97.

It is assumed that for the first year the provincial contractor would maintain the local roads. This means the costs of road transport services would be very low in the first year. However, these costs would rise to a more normal level starting in 1993.

As shown in Table 9.6, the total costs of road transport after the first year would rise from $757,000 up to $818,000 by the year 1999. This works out to approximately $5,850 per kilometer of road. To put this in perspective, it should be noted that Coldstream has budgeted $5,100 per kilometer for 1991; Spallumcheen spends $4,200 per kilometer; Armstrong spends $6,450 per kilometer; Gibsons spends $6,050 per kilometer; and Sechelt spends $4,500 per kilometer. The projection used here for the north municipality would put it higher than most of these municipalities. This is a conservative cost estimate, especially in light of the fact that the incorporation capital fund includes budgeting for the upgrading of a number of rural roads. Presumably this upgrading should result in lower maintenance costs than those in communities where roads are not in such good shape.

Environmental Health A minor amount -- $500 -- is budgeted as a contribution to the North Okanagan Union Board of Health. This amount is held constant over the study period.

Environmental Development It is assumed the province would make available $30,000 in planning grants so the new municipality could update and revise a number of bylaws and land use planning documents to help it manage the development process on its own. An amount of $15,000 is budgeted for each of the first two years. These amounts are also shown as revenues in the next section. Ordinary planning work has been estimated on the basis of $7 per person, which is the observed rate for the regional district, the City of Vernon and Coldstream in 1991.

Recreation and Culture No costs are assumed for recreation and culture, as involvement in recreation area #1 is via the regional district requisition mentioned earlier.

North Municipality 9-8 Fiscal Services Bank charges and interest are estimated to start out at around $16,000 and, as the population rises, reach about $20,000 by the year 1999. Transfers to reserves are projected at a rate of $7 per person over the study period. This amount essentially is into reserves for the replacement of public works equipment, vehicles and machinery.

Capital spending on "normal" items is assumed to start out at $10-$15 per person for the first six years. This would include work on drainage improvements, for example, as well as improvements to the new municipal hall, or equipment for it. By 1997, however, it is assumed that capital spending will rise slightly to $20 per person and stay at that level thereafter. The municipality would also make annual payments into the incorporation capital fund to help finance the infrastructure it would face as a new municipality.

One of the dominant features here is the improvement of rural roads via the incorporation capital fund. This contribution would be very high in the first year because in the first year, without any road maintenance to face, it would be appropriate for the municipality to use the savings this year to help build up the incorporation capital fund for expenses it knows will be arriving in the future. After the first year, such a large transfer to the incorporation capital fund would cause a great rise in taxes, so a figure of $50,000 is used for years 2 through 7.

Note that no debts are needed by the new municipality to finance the infrastructure and thus there are no debt payments on annual basis. If, however, additional capital is spent, new debts might be required.

Collections for Other Governments The municipality would collect funds for regional district services, for the library district, for the Municipal Finance Authority. the BC Assessment Authority, and the hospital district. The regional district services were mentioned earlier in section 9.4. The library district requisition is based on the current library tax rate times the hospital base for the new municipality. The library district requisition is assumed to rise at one-half the population increase rate. Municipal Finance Authority, BC Assessment Authority and hospital taxes are based on the current tax rates and on future assessments.

North Municipality 9-9 -.- -'-'-.-. ~i

Chart 9.1 Projected Spending per Capita

Vernon 1991 II Coldstream 1991 North Municipality

General Government Protective SelVices Capital Spending Road Transportation

North Municipality 9-10 Table 9.6 North Municipality: Municipal Expenses (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999

Legislative (incl expenses) $62,140 $63,134 $64,144 $65,106 $56,083 $57,008 $57,946 $68,897 Admin wages and benefits $163,525 $168,921 $174,326 $179,730 $185,122 $190,491 $195,825 $201,112 Finance, audit, legal, etc $78,492 $81,082 $83,677 $86,271 $88,859 $91,436 $93,996 $96,534 Mun hall, utilities, supplies $22,894 $23,260 $23,632 $23,986 $24,346 $24,687 $25,033 $25,383 Legal, audit, professional $19,623 $20,268 $20,913 $21,558 $22,203 $22,848 $23,493 $24,138 Grants $3,000 $3,099 $3,198 $3,297 $3,396 $3,494 $3,592 $3,689 Insurance $18,969 $19,595 $20,222 $20,849 $21,474 $22,097 $22,716 $23,329 AdvertiSing, training, travel $10,000 $10,160 $10,323 $10,478 $10,635 $10,784 $10,935 $11,088 Equipment + maintenance $10,000 $10,160 $10,323 $10,478 $10,635 $10,784 $10,935 $11,088 Miscellaneous $13,082 $13,514 $13,946 $14,378 $14,809 $15,238 $15,665 $16,088 Total Administration $401,725 $413,193 $424,704 $436,131 $447,562 $458,867 $470,136 $481,346

ReM? contract $0 $0 $0 $0 $0 $182,460 $375,786 $578,865 Fire protection $163,184 $165,795 $168,448 $170,975 $173,540 $175,970 $178,434 $180,932 Inspections and permits $52,328 $54,055 $55,785 $57,514 $59,239 $60,957 $52,664 $64,356 Bylaw enforcement $6,541 $6,757 $6,973 $7,189 $7,405 $7,620 $7,833 $8,044 Animal control $9,812 $10,136 $10,460 $10,784 $11,108 $11,430 $11,750 $12,067 Emergency measures $2,878 $2,973 $3,067 $3,162 $3,256 $3,351 $3,446 $3,540 Total Protective $234,743 $239,716 $244,733 $249,624 $254,548 $441,788 $639,913 $847,804

Engineering + admin $30,000 $131,410 $132,820 $134,230 $135,640 $137,050 $138,460 $139,870 Public works yard + shop $5,000 $35,000 $36,120 $37,240 $38,357 $39,469 $40,574 $41,669 Road maint (incl equip) $0 $328,525 $332,050 $335,575 $339,100 $342,625 $346,150 $349,675 Sidewalks $0 $0 $0 $0 $0 $0 $0 $0 Storm drainage (incl equip) $13,141 $26,282 $26,564 $26,846 $27,128 $27,410 $27,692 $27,974 Snow + ice (incl equip) $0 $98,558 $99,615 $100,673 $101,730 $102,788 $103,845 $104,903 Boulevards + planting $0 $16,426 $16,603 $16,779 $16,955 $17,131 $17,308 $17,484 TraffiC control + signs $0 $52,564 $53,128 $53,692 $54,256 $54,820 $55,384 $55,948 Street lights $8,093 $8,222 $8,354 $8,479 $8,606 $8,726 $8,848 $8,972 Public transit $7,500 $7,748 $7,996 $8,244 $8,491 $8,737 $8,982 $9,225 Miscellaneous $0 $52,564 $54,246 $55,928 $57,606 $59,277 $60,937 $62,582 Total Transport $63,734 $757,299 $767,496 $777,686 $787,869 $798,033 $808,180 $818,302

Garbage collection (City) $0 $0 $0 $0 $0 $0 $0 $0 N.O. Union 8d of Health $500 $500 $500 $500 $500 $500 $500 $500 Cemetery $0 $0 $0 $0 $0 $0 $0 $0 Total Environ Health $500 $500 $500 $500 $500 $500 $500 $500

Updates funded by grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Ordinary planning $45,787 $47,292 $48,797 $50,302 $51,807 $53,312 $54,817 $56,322 Tourism/econ development $0 $0 $0 $0 $0 $0 $0 $0 Total Environ Develmnt $60,787 $62,292 $48,797 $50,302 $51,807 $53,312 $54,817 $56,322

Rec'n area #1 (incl capital) $0 $0 $0 $0 $0 $0 $0 $0 Total Rec'n and Culture $0 $0 $0 $0 $0 $0 $0 $0

Bank charges + interest $16,353 $16,890 $17,428 $17,965 $18,503 $19,040 $19,578 $20,115 Transfers to reserves $45,787 $47,298 $48,812 $50,325 $51,835 $53,338 $54,831 $56,311 Normal capital spending $65,410 $101,340 $104,565 $107,790 $111,015 $114,234 $156,620 $160,920 Contrib to rural road $600,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $0 improv. Existing debt payments $0 $0 $0 $0 $0 $0 $0 $0 Total Fiscal Services $727,550 $215,528 $220,805 $226,080 $231,353 $236,612 $281,029 $237,346

Total Municipal (all above) $1,489,039 $1,688,528 $1,707,035 $1,740,323 $1,773,639 $1,989,112 $2,254,575 $2,441,620 Collection for Reg Dist selV, $589,034 $614,763 $641,313 $667,861 $694,411 $720,961 $747,509 $774,059 Coli for Library District $78,237 $79,489 $80,761 $81,972 $83,202 $84,367 $85,548 $86,746 Coli for MFA, SCM, Hosp $226,589 $230,214 $233,897 $237,405 $240,966 $244,340 $247,761 $251,230 Total Expenses $2,382,899 $2,612,994 $2,663,006 $2,727,561 $2,792,218 $3,038,780 $3,335,393 $3,553,655

North Municipality 9-11 -----~----~,:-----7-- --

9.6

Municipal Municipal Property Taxes Revenues Municipal taxes are calculated as the amount necessary to balance total municipal expenses and total municipal revenues. The amount needed each year is converted into a tax rate via the municipal tax base. While a municipal council is free to use whatever tax rate multiples it may choose, the provincial multiples are used here. These provincial multiples use a business property tax rate 2.45 times the residential rate and use a farm land tax rate of $.50 per $1,000 of assessed value.

1 % Utility Tax Municipal revenue in the form of the s.407 taxes is estimated at $3 per person. Note that for 1992 there is no revenue from this source as the Act says that utility companies pay this tax on the basis of the preceding year's consumption of their services. In 1992, the first year of the municipality, there would have been no preceding year consumption in a municipality, and so zero revenue is used.

Grants in Lieu of Taxes These grants in lieu of taxes are projected on the basis of $4.50 per person.

Provincial Revenue Sharing Grant The province's formula for calculating the Revenue Sharing grant has been used to determine that the starting year grant for the north municipality would be about $400,000. This would rise to $472,000 over the eight year span of the study period due to the increase in population.

Emergency Planning Grant As with the other restructure options, it is assumed that the Province would make available a minor grant to assist the municipality in the formulation of emergency plans.

Franchise Revenue It is assumed that the municipality would not enter into a franchise arrangement with the natural gas company. This is a conservative assumption in that it tends to underestimate municipal revenues, rather than overstate them by assuming that the franchise agreement would in fact materialize.

North MuniCipality 9-12 Business Licences There are relatively few businesses in the north municipality, and a minor amount, about at $5,000 per year, is assumed here.

Other Licences Revenue from the sale of other licences is estimated on the basis of $.71 per person (as it was in the other restructure options). This amount would grow as the population grows.

Building Permits and Subdivision Fees Revenue from these fees is based on the rate of growth. It is assumed here, under a moderate growth scenario, that revenue of about $66,000 would be generated. This is based on revenue estimated at $750 per new dwelling unit, which also includes renovation and building addition permits.

Fines A minor amount has been budgeted for fines related to parking infractions, dog bylaw violations and so on.

Property Rentals Revenue from the rental of municipal properties and facilities to organizations and groups is projected on the basis of $.68 per person, which is the observed rate in Coldstream.

Recreation No recreation revenues are assumed because recreation area #1 would remain a service responsibility of the regional district.

Tax Penalties and Interest Municipal revenue in the form of penalties and interest on unpaid taxes is projected on the basis of $2.75 per person. The greater the population, the greater the revenue from this source.

Interest on Investments Revenue from current bank balance and other deposits is estimated on the basis of $2 per person.

North Municipality 9-13 Interest on Incorporation Fund As mentioned earlier in section 9.3, the municipality would operate an incorporation capital fund. A portion of the annual interest earned in the fund is transferred back to the general revenue fund to help minimize taxes.

Miscellaneous Miscellaneous costs are estimated on the basis of $1 per person.

Collections for Regional District Services These amounts are the annual requisitions from the regional district for services it provides. They were presented in more detail in section 9.4 earlier on. The revenue amount shown here exactly matches the expense amount discussed earlier.

Library District Collections for the library district are as discussed earlier in the municipal expense section.

Collections for Other Governments Collections for the Municipal Finance Authority, Be Assessment Authority and hospital district are as discussed earlier in section 9.5. The amounts shown here are exactly the same as the municipal expenses discussed earlier.

Summary The total revenue for municipal uses would reach $2.4 million (stated in constant 1991 dollars) after eight years. The municipal property tax portion of this -- $1.6 million -- amounts to 67% of the total requirements the municipality has to make ends meet each year. Smaller municipalities are often more reliant on property taxes than are larger municipalities.

North Municipality 9-14 Table 9.7 North Municipality: Municipal Revenues (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 Municipal property taxes $921,518 $972,056 $1,061,409 $1,107,125 $1,127,013 $1,286,226 $1,540,599 $1,625,595 1% Utility tax (s. 407) $0 $20,268 $20,917 $21,565 $22,212 $22,856 $23,496 $24,130 Grants in lieu of taxes $29,435 $30,406 $31,379 $32,352 $33,323 $34,289 $35,249 $36,201 Provo Rev Sharing grant $402,636 $412,526 $422,416 $432,306 $442,196 $452,086 $461,976 $471,866 Emergency planning grant $1,439 $1,486 $1,534 $1,581 $1,628 $1,676 $1,723 $1,770 Franchise revenue $0 $0 $0 $0 $0 $0 $0 $0 Business licences $5,000 $5,165 $5,330 $5,495 $5,660 $5,824 $5,987 $6,149 Other licences (incl dogs) $4,644 $4,797 $4,951 $5,104 $5,257 $5,409 $5,560 $5,710 Bldg permits, subdiv fees $66,000 $66,000 $66,000 $66,000 $66,000 $66,000 $66,000 $66,000 Fines $1,308 $1,351 $1,394 $1,437 $1,480 $1,523 $1,566 $1,609 Parkade + parking meters $0 $0 $0 $0 $0 $0 $0 $0 Transit fees + subsidy $0 $0 $0 $0 $0 $0 $0 $0 Garbage collection fees $0 $0 $0 $0 $0 $0 $0 $0 Property rentals $4,448 $4,594 $4,740 $4,886 $5,033 $5,179 $5,325 $5,471 Ree'n area 1 - NORD A,B,C $0 $0 $0 $0 $0 $0 $0 $0 Ree'n area #1 op revenues $0 $0 $0 $0 $0 $0 $0 $0 Tax penalties + interest $17,988 $18,579 $19,170 $19,762 $20,353 $20,944 $21,535 $22,127 Interest on investments $13,082 $13,512 $13,942 $14,372 $14,802 $15,232 $15,662 $16,092 Interest on Incorp'n Fund $0 $116,032 $46,882 $21,152 $21,281 $64,252 $62,066 $150,854 Miscellaneous $6,541 $6,756 $6,971 $7,186 $7,401 $7,616 $7,831 $8,046 Initial planning grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Transfer from own accounts $0 $0 $0 $0 $0 $0 $0 $0 Total Municipal (all above) $1,489,039 $1,688,528 $1,707,035 $1,740,323 $1,773,639 $1,989,112 $2,254,575 $2,441,620 Collection for Reg Dist servo $589,034 $614,763 $641,313 $667,861 $694,411 $720,961 $747,509 $774,059 Coli for Library District $78,237 $79,489 $80,761 $81,972 $83,202 $84,367 $85,548 $86,746 Coli for MFA, SCM, Hosp $226,589 $230,214 $233,897 $237,405 $240,966 $244,340 $247,761 $251,230 Total Revenues $2,382,899 $2,612,994 $2,663,006 $2,727,561 $2,792,218 $3,038,780 $3,335,393 $3,553,655

9] ITax Impacts Table 9.8 shows the tax rates for a "normal" year's operation of the municipality -- that is, operations in the year 1999, after the benefits of the short-term assistance grants have been used.

Table 9.8 North Municipality: Tax Rates ($ per $1000)

CUrrent Situation After Swan Okan. Restruct Lake Kedlstn Landing Vernon Coldstm Affected Taxes NORD· Land only - $0.126 $0.126 not - not NORD· Bldg only - $4.252 $4.021 in .. in NORD - Land + Bldg' $2.820 $0.942 $0.898 this $2.316 this Library District $0.370 $0.394 $0.394 munio. $0.273 munio. Rural tax - $1.750 $1.750 .. - - Municipal tax $5.920 - .. .. $5.985 -

Taxes NOT Affected School district #22 $7.287 $7.287 $7.287 .. - .. Hospital district $0.930 $0.930 $0.930 - .. - Mun Finance Authority $0.004 $0.004 $0.004 -- - Be Assess. Authority $0.151 $0.151 $0.151 - .. -

NB: All rates include 5.25% tax collection fee where applicable; these fees are shown separately in all other tax and impact tables * Aural areas: ·Current Situation' includes fire, Okan Basin Water Board, A-8-C street lights

North Municipality 9-15 These tax rates can be used to calculate taxes for the new municipality system. Tables 9.9 and 9.10 show this.

As can be seen from Tables 9.9 and 9.10, incorporation of a new municipality in the north is projected to bring about significant tax increases. Looking at the average house -- with a property assessment of $75,000 -- incorporation would mean an increase of $237 for a home in the Swan Lake and EX area, and an increase of $252 for a home in Keddleston and Pottery Road areas. Proportionate increases would apply to properties with higher assessments.

The largest single reason for this tax increase is that the north municipality, having a population greater than 5,000 people, would be responsible for police services. This adds almost $600,000 to the tax bill by 1999. This single cost accounts for 36% of the property taxes collected for municipal purposes (ie, excluding school taxes, hospital taxes, and so on). If it were not for the RCMP costs, the average home would see a tax increase of about $80 as a result of incorporation as a new municipality.

Chart 9.2 North Municipality: Extra Taxes Due to Restructure $75,000 House Assessment $300

$250

$200

$150

$100

$50

$0 Swan Lake Keddleston

North Municipality 9-16 9.8 IUncertainties The major uncertainties that would affect the impact projections made here , involve the RCMP costs, the rural tax and the municipal service priorities.

The RCMP cost has been assumed for the new municipality, but there is some uncertainty as to whether or not any new agreement between the province and the federal government will also result in rural communities having to pay considerably more towards their policing costs than they do now. If this happens -- that is, if new taxes are levied in rural areas to help recover a greater share of the RCMP costs -- then the tax impact of incorporation mentioned above would be lessened. It would be lessened because the "before" case would rise while the "after" case would remain stable.

The province recently reduced the rural tax by 24%, but this was more than offset by the higher property assessments in the Okanagan, and so most taxpayers saw their rural tax bill rise for 1991 despite the decrease in the tax rate. Since 1987, the combination of higher assessments and increasing rural tax rates has produced a rural tax on an average house that is double the figure from 1987. If the province, over time, reinstitutes a policy of increasing the rural tax rate in increments as it did prior to 1991, then rural properties - especially in the Okanagan -- can expect further increases in taxes under rural status. This reduces the impact of incorporation by increasing the "before" case in the before-and-after comparison.

It is difficult to predict what an unknown municipal council might choose in the way of service priorities and service levels. It is entirely possible that a municipal council could choose to be more lavish than the assumptions used in this report, just as it is possible that municipal council could be more frugal than assumed here. While the assumptions and levels assumed in this report are reasonable and supportable, it must be noted that they are projections only, not predictions, and they are certainly not binding on any future municipal council.

North Municipality 9-17 Table 9.9 :,:;~ North Municipality: Impacts on Swan Lake Properties

::'::il NORD - Bldg only :::!1 NORD - Land + bldg 'otal Regional District Library district tax ,',':':1 Provincial collection fee I Provincial rural tax :1 Municipal tax ~j' district tax Hospital district tax MFA + Assmnt tax

Homeowner School

NORD - Bldg only NORD - Land + bldg Regional District Library district tax Provincial collection fee

!J if S- o·~ ":i '0' :': .,': ~ $441 $13,253 $17,589 ii ""I 'P $0 $0 $0 $0 $0 $0 ::1 '" .:.:::

I :.':, I Table 9.10 North Municipality: Impacts on Keddleston Properties

IMunicipal tax district tax Hospital district tax MFA + Assmnt tax

$676 $875 $1,061 $1,313 $2,623 -$576 -$700 -$700 -$700 -$700 $0 $0 $0 $0 -$197

:ji25,OOO Vacant lot ~75,OOO farm $500,000 Business Current Restruct Change \"Jurrent Restruct l,;hange I.,..;urrent Restruct I..Ihange NORD - Land only $0 -$3 $1 $0 -$1 $24 $0-$24 NORD - Bldg only ~~ $0 $0 $242 $0 -$242 $2,969 $0 -$2,969 NORD - Land + bldg $21 $71 $50 $58 $190 $132 $1,045 $3,455 $2,410 Total Regional District $24 $71 $47 $301 $190 -$111 $4,038 $3,455 -$583 Library district tax $9 $9 $0 $25 $25 $0 $459 $453 -$6 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $236 $0 -$236 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $5,100 $0 -$5,100 Municipal tax $0 $148 $148 $0 $363 $363 $0 $7,252 $7,252 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 t' Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 S- Gross Tax (no grant) $292 $441 $149 $876 $1,103 $227 I $16,262 $17,589 $1,327 Homeowner grant $0 $0 $0 -$430 -$430 $0 $0 $0 $0 School supplmnt grant $0 $0 $0 -$11 -$11 $0 $0 $0 $0 Net Tax, under 65 yrs $292 $441 ~149 $435 ~662 ~227 I $16,262 ~17,589 $1,327 -0'f ~ ~ 65 Yrs+Over: Gross Tax $292 $441 $149 $876 $1,103 $227 $16,262 $17,589 $1,327 Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 ~ School supplmnt grant <0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Net Tax, 65 yrs+over ~292 $441 $149 $176 $403 ~227 1$16,262 $17,589 $1,327 :::;

Table 9.11 North Municipality: Tax Impacts on an Average Home

$75,000 Assessment

Swan Lake Home Keddleston Home Tax Impacts on an Average Home Current Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 NORD - Bldg only $202 $0 -$202 $191 $0 -$191 ':i NORD - Land + bldg $67 $212 $145 $64 $212 $148 :!'I Total Regional District $272 $212 -$60 $258 $212 -$46 Library district tax $28 $28 $0 $28 $28 $0 Provincial collection fee $16 $0 -$16 $15 $0 -$15 Provincial rural tax $131 $0 -$131 $131 $0 -$131 i Municipal tax $0 $444 $444 $0 $444 $444 ::i

School district tax $547 $547 $0 $547 $547 $0 i Hospital district tax $70 $70 $0 $70 $70 $0 :::1 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 Swan Lake Home Keddleston Home :::! Sewer tax (eligible) $0 $0 $0 $0 $0 $0 :'!: Gross Tax (no grant) $1,076 $1,313 $237 $1,061 $1,313 $252 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 o Currently ~ Restructured School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 Net Tax, under 65 yrs $587 $824 $237 $572 $824 $252

:':~

~ [ 0' is' ~ ~ Chapter 10 Okanagan Landing Municipality

10.1 IIntroduction This chapter examines the consequences of creating a new municipality in the Okanagan Landing area. This is essentially the area covered by the Okanagan Landing fire protection area of the regional district.

The new municipality is assumed to be created in late 1991, with council taking control of the municipality in January, 1992. There would be 70 km of local roads under municipal responsibilities.

Kalamalka lake

This chapter is organized as follows: 10.2 Growth and Tax Base 10.3 Grants and Capital Spending lOA Regional District Services 10.5 Municipal Expenses 10.6 Municipal Revenues 10.7 Tax Impacts 10.8 Uncertainties

Okanagan Landing Municipality 10-1 10.2 Growth and Table 10.1 shows the population of the new municipality. It is important to Tax Base note that this municipality starts out with a population under 5,000, which means that, under the current RCMP arrangement, the municipality would be not liable for a share of policing costs. The growth assumption for this area is the same assumption that has been made for it in all of the other restructure options; the municipal population would not reach 5,000 by 1999.

Table 10.2 shows the municipal assessments and the effective taxable assessments based on the provincial tax rate multiples. Note that a municipal council would be free to use tax rate multiples as it sees fit.

Table 10.1 Table 10.2 OK Landing Municipality: OK Landing Municipality: Total Municipal Population Assessments

Actual Weighted Year Population Year Total Total 1992 4,377 1992 $170.736,000 $186,148,000 1993 4,417 1993 $172,998,000 $188,493,000 1994 4,457 1994 $175,260,000 $190,839,000 1995 4,497 1995 $177,522,000 $193,185,000 1996 4,537 1996 $179,784,000 $195,530,000 1997 4,577 1997 $182,046,000 $197,876,000 1998 4,617 1998 $184,308,000 $200,221,000 1999 4,657 1999 $186,570,000 $202,567,000 Constant 1991 dollars

10.3 Grants and The new municipality would be eligible for the same types of short-term Capital assistance described earlier in Chapter 9 for a new north municipality. There are four significant portions to this assistance. Spending First, the grant based on $150 per person would produce a total grant of $656,000, paid during the first three years.

Second, the municipality would receive road maintenance assistance grants totalling $571,000, as shown in Table 10.3. It is assumed the province would have its contractor maintain the local roads for the first year.

A third major type of assistance involves eligibility for some rural roads in a program the province has for new municipalities. It is assumed here that the Okanagan Landingmunicipality would have projects with a total cost of about $1.5 million eligible for funding under this program. The municipal share -- 25% -- would amount to $375,000. Note that being eligible for funding is not

Okanagan Landing Municipality 10-2 the same thing as being guaranteed funding under this program. It is possible that the assistance would not amount to 75% of the cost.

Table 10.3 OK Landing Municipality: Short-Term Grants

Per capita Road mtce Year grants grant 1992 $328,300 $571,000 1993 $218,850 $0 1994 $109,425 $0 1995 $0 $0 1996 $0 $0 1997 $0 $0 1998 $0 $0 1999 $0 $0

Exemption from RCMP costs would not be required because the projected population would not reach the 5000-population threshold. However, it is assumed the province would offer this assistance as a matter of course, especially bearing in mind the strong possibility that the municipality could surpass 5000 people within the study period.

The fourth significant transitional assistance from the province consists of exempting the new municipality from paying a share of the police costs for the first five years. Starting in the sixth year, it is assumed the municipality would be required to pay one-third of the normal local cost; in year 7, it would pay two-thirds of the normal cost; and finally, in year 8 and thereafter, it would pay 100% of the normal local cost.

A fifth grant, but much smaller than the assistance mentioned above, involves grants made by the province for the preparation of municipal land use bylaws and planning documents. It is assumed here that a total of $30,000 in planning grants is offered, spread equally over the first two years.

The new municipality would face a number of initial infrastructure requirements. These are assumed in this study to be as follows: Municipal hall $600,000 Public works building and equipment $650,000 25% share of road improvements $375,000

Table 10.4 shows an incorporation capital fund for the new municipality.

The use of this fund allows the municipality to finance a total of $2.1 million, plus another $1.1 million from the Province toward road improvements, without borrowing money. If extra capital projects are undertaken, debt might be necessary. The working assumption in this document is that no significant

Okanagan Landing Municipality 10-3 ------:- -~-';---~--

!.-

new projects or infrastructure items other than the municipal hall, public works expenses and road improvements would be required as a result of incorporation.

Table 10.4 OK Landing Municipality: Incorporation Capital Fund (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 STARTING BALANCE' $899,173 $1,352,436 $291,142 $177,763 $167,010 $156,696 $146,803 $137,314 ADDITIONS TO FUND: Per capita grants $218,850 $109,425 $0 $0 $0 $0 $0 $0 Road mtce grant (in starting balance) $0 $0 $0 $0 $0 $0 Tsfr from GRF ~ Normal $43,770 $44,170 $44,570 $44,970 $68,055 $68,655 $80,798 $93,140 Tsfr from GRF - Rural roads $200,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $0 SPENDING FROM FUND: Public works bldg + equip $0 -$650,000 $0 $0 $0 $0 $0 $0 Municipal hall $0 -$500,000 -$100,000 $0 $0 $0 $0 $0 Projects funded by taxes -$43,770 ·$44,170 ·$44,570 ·$44,970 ·$68,055 ·$68,655 ·$80,798 ·$93,140 25% share eligible roads ·$53,571 ·$53,571 ·$53,571 ·$53,571 -$53,571 ·$53,571 ·$53,571 $0 Subtotal $1,264,452 $308,290 $187,571 $174,192 $163,439 $153,125 $143,232 $137,314 Interest earned $87,984 $68,592 $19,615 $14,363 $13,485 $12,644 $11,836 $11 ,205 Int used to reduce taxes $0 ·$85,740 ·$29,423 -$21,545 -$20,228 ·$18,966 ·$17,754 ·$20,597 CLOSING BALANCE ...... $1,352,436 $291,142 $177,763 $167,010 $156,696 $146,803 $137,314 $127,922

* 1992 starting balance has per capita grant of $328,275 and road mtce grant of $570,898

10.4 Regional Since this option involves the creation of more members within the regional District district, the option would see fewer regional district services shifted away from the regional district and onto the municipalities. In this sense, this Services option is close to the status quo, with only a few of the regional district services being transferred to the new municipality.

The services that would be transferred are as follows: • Okanagan Landing fire protection • Building and fire inspection • Emergency programs • Animal control • Transit • Drainage • Miscellaneous grants • Street lights for the portion in the municipality

The requisition for regional district services would be as shown in Table 10.5. Note that the municipality would generate the required revenues to meet the regional district requisition by an ad valorem tax applied equally to land and building, as opposed to the current system where the regional district levies certain taxes against buildings only. The annual requisition to the regional

Okanagan Landing Municipality 10-4 district is increased on the basis of the increase of the municipality's tax base over time. Table 10.5 shows the requisition details.

Tablo10,S OK Landing Municipality: NORD Requisitions

Current Req'n After N.O.R.D. Services Requisition Restructure

Land Only: Sterile insect release $7,187 $7,187

Building Only: Recreat'n area #1 (Core) $238,695 $238,695 Recreat'n area #2 (East) $0 · . Fir. (BX/Swan, OK Lndg) $131,818 · . Recycling $13,204 $13,204 Sanitary landfill $56,410 $56,410

Land and Building: General government $22,267 $24,494 Electoral area services $3,805 .. Development services $40,282 $4,028 Bldg + fire inspection $0 · . Emergency programs $1,201 · .

Ambulance 4 Jaws $102 $102 Animal control $5,562 -- Transit (rural area contract) $5,165 -- Drainage $4,123 -- Miscellaneous grants $1,425 -- Noxious insects $116 $116 O.B. Water Board $33,669 $33,669 Queen's Committee $481 $481 Airport $3,577 $3,577 St John society $181 $181 OK Symphony grant $405 $405 St lights: spec areas A,B,C $2,352 -- St lights: defined A,B,C $5,503 -- Tourism/Ec Devel $12,152 $12,152 911 Telephone $20,254 $20,254 Feasibility reserve $3,291 $3,291

Total N.D.R.D. Requisition $613,227 $418,246

10.5 Municipal All of the municipal expenses are projected here on the same population and Expenses road length basis as described for the new north municipality in the preceding chapter. Refer to Chapter 9 for a detailed description of the expenses.

The smaller population would produce generally lower expenses than in the north municipality. The Okanagan Landing municipality would have 70 km of local roads to maintain.

Okanagan Landing Municipality 10·5 Chart 10.1 Spending per Capita

II Coldstream 1991 D Okanagan Landing

Table 10.6 shows the projected costs for the Okanagan Landing municipality.

Okanagan Landing Municipality 10-6 Tablol0,6 OK Landing Municipality: Municipal Expenses (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999

Legislative (incl expenses) $41,582 $41,707 $41,832 $41,957 $42,083 $42,209 $42,336 $42,463 Admin wages and benefits $113,802 $114,485 $115,172 $115,863 $116,558 $117,257 $117,961 $118,669 Finance, audit, legal, etc $56,901 $57,242 $57,585 $57,931 $58,279 $58,629 $58,981 $59,335 Mun hall, utilities, supplies $15,320 $15,366 $15,412 $15,458 $15,504 $15,551 $15,598 $15,645 Legal, audit, professional $13;131 $13,251 $13,371 $13,491 $13,611 $13,731 $13,851 $13,971 Grants $3,000 $3,018 $3,036 $3,054 $3,072 $3,090 $3,109 $3,128 Insurance $15,320 $15,460 $15,600 $15,740 $15,880 $16,020 $16,160 $16,300 Advertising, training, travel $10,000 $10,030 $10,060 $10,090 $10,120 $10,150 $10,180 $10,211 Equipment + maintenance $9,000 $9,027 $9,054 $9,081 $9,108 $9,135 $9,162 $9,189 Miscellaneous $8,754 $8,807 $8,880 $8,913 $8,966 $9,020 $9,074 $9,128 Total Administration $286,810 $288,393 $289,982 $291,578 $293,181 $294,792 $296,412 $298,039

RCMP contract $0 $0 $0 $0 $0 $0 $0 $0 Fire protection $163,184 $163,674 $164,165 $164,657 $165,151 $165,646 $166,143 $166,641 Inspections and permits $39,393 $39,629 $39,867 $40,106 $40,347 $40,589 $40,833 $41,078 Bylaw enforcement $4,377 $4,403 $4,429 $4,456 $4,483 $4,510 $4,537 $4,564 Animal control $6,566 $6,605 $8,645 $6,685 $6,725 $6,765 $6,806 $6,847 Emergency measures $1,926 $1,943 $1,961 $1,979 $1,996 $2,014 $2,031 $2,049 Total Protective $215,446 $216,254 $217,067 $217,883 $218,702 $219,524 $220,350 $221,179

Engineering + admin $20,000 $70,340 $70,680 $71,020 $71,360 $71,700 $72,040 $72,380 Public works yard + shop $5,000 $25,000 $25,150 $25,301 $25,453 $25,606 $25,760 $25,915 Road maint (lncl equip) $0 $175,850 $176,700 $177,550 $178,400 $179,250 $180,100 $180,950 Sidewalks $0 $0 $0 $0 $0 $0 $0 $0 Storm drainage (incl equip) $7,034 $14,068 $14,136 $14,204 $14,272 $14,340 $14,408 $14,476 Snow + ice (incl equip) $0 $52,755 $53,010 $53,265 $53,520 $53,775 $54,030 $54,285 Boulevards + planting $0 $8,793 $8,835 $8,878 $8,920 $8,963 $9,005 $9,048 Traffic control + signs $0 $28,136 $28,272 $28,408 $28,544 $28,680 $28,816 $28,952 Street lights $7,855 $7,879 $7,903 $7,927 $7,951 $7,975 $7,999 $8,023 Public transit $7,500 $7,545 $7,590 $7,636 $7,682 $7,728 $7,774 $7,821 Miscellaneous $0 $28,136 $28,305 $28,475 $28,646 $28,818 $28,991 $29,165 Total Transport $47,389 $418,502 $420,581 $422,664 $424,748 $426,835 $428,923 $431,015

Garbage collection (City) $0 $0 $0 $0 $0 $0 $0 $0 N.C. Union Bd of Health $500 $500 $500 $500 $500 $500 $500 $500 Cemetery $0 $0 $0 $0 $0 $0 $0 $0 Total Environ Health $500 $500 $500 $500 $500 $500 $500 $500

Updates funded by grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Ordinary planning $30,639 $30,919 $31,199 $31,479 $31,759 $32,039 $32,319 $32,599 Tourism/econ development $0 $0 $0 $0 $0 $0 $0 $0 Total Environ Oevelmnt $45,639 $45,919 $31,199 $31,479 $31,759 $32,039 $32,319 $32,599

Rec'n area #1 (incl capital) $0 $0 $0 $0 $0 $0 $0 $0 Total Rec'n and Culture $0 $0 $0 $0 $0 $0 $0 $0

Bank charges + interest $10,943 $11,043 $11,143 $11,243 $11,343 $11,443 $11,543 $11,643 Transfers to reserves $30,639 $30,823 $31,008 $31,194 $31,381 $31,569 $31,758 $31,949 Normal capital spending $43,770 $44,170 $44,570 $44,970 $68,055 $68,655 $80,798 $93,140 Contrib to rural road $200,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $0 improv. Existing debt payments $0 $0 $0 $0 $0 $0 $0 $0 Total Fiscal Services $285,352 $136,036 $136,721 $137,407 $160,779 $161,667 $174,099 $136,732

Total Municipal (all above) $881,136 $1,105,604 $1,096,050 $1,101,511 $1,129,669 $1,135,357 $1,152,603 $1,120,064 Collection for Reg Dist servo $418,246 $423,179 $428,713 $434,249 $439,786 $445,320 $450,857 $456,391 Call for Library District $69,750 $69,959 $70,169 $70,380 $70,591 $70,803 $71,015 $71,228 Call for MFA, SCM, Hasp $201,971 $202,577 $203,185 $203,795 $204,406 $205,019 $205,634 $206,251 Total Expenses $1,571,103 $1,801,319 $1,798,117 $1,809,935 $1,844,452 $1,856,499 $1,880,109 $1,853,934

Okanagan Land;ng Mun;c;paHty 10-7 ------~-----".~----

10.6 Municipal All of the revenues are projected here on the same population and road Revenues length basis as described for the new North Municipality in the preceding chapter. The smaller population would produce lower revenues than in the North Municipality.

Table 10.7 shows the projected revenues for the Okanagan Landing municipality.

Tablo10.7 OK Landing Municipality: Municipal Revenues (1991 Dollars)

1992 1993 1994 1995 1996 1997 1998 1999 Municipal property taxes $515,807 $639,008 $698,415 $709,398 $736,516 $741,106 $757,202 $719,457 1 % Utility tax (s. 407) $0 $13,251 $13,331 $13,411 $13,491 $13,572 $13,653 $13,735 Grants in lieu of taxes $19,697 $19,815 $19,934 $20,054 $20,174 $20,295 $20,417 $20,540 Prov, Rev Sharing grant $277,792 $279,632 $281,472 $283,312 $285,152 $286,992 $288,832 $290,672 Emergency planning grant $963 $972 $981 $989 $998 $1,007 $1,016 $1,025 Franchise revenue $0 $0 $0 $0 $0 $0 $0 $0 Business licences $4,000 $4,024 $4,048 $4,072 $4,096 $4,121 $4,146 $4,171 Other licences (incl dogs) $3,108 $3,127 $3,146 $3,165 $3,184 $3,203 $3,222 $3,241 Bldg permits, subdiv fees $15,750 $15,750 $15,750 $15,750 $15,750 $15,750 $15,750 $15,750 Fines $875 $883 $891 $899 $907 $915 $923 $931 Parkade + parking meters $0 $0 $0 $0 $0 $0 $0 $0 Transit fees + subsidy $0 $0 $0 $0 $0 $0 $0 $0 Garbage collection fees $0 $0 $0 $0 $0 $0 $0 $0 Property rentals $2,976 $3,004 $3,031 $3,058 $3,085 $3,112 $3,140 $3,167 Rec'n area 1 - NORD A,B,C $0 $0 $0 $0 $0 $0 $0 $0 Rec'n area #1 op revenues $0 $0 $0 $0 $0 $0 $0 $0 Tax penalties + interest $12,037 $12,147 $12,257 $12,367 $12,477 $12,587 $12,697 $12,807 Interest on investments $8,754 $8,834 $8,914 $8,994 $9,074 $9,154 $9,234 $9,314 Interest on Incorp'n Fund $0 $85,740 $29,423 $21,545 $20,228 $18,966 $17,754 $20,597 Miscellaneous $4,377 $4,417 $4,457 $4,497 $4,537 $4,577 $4,617 $4,657 Initial planning grants $15,000 $15,000 $0 $0 $0 $0 $0 $0 Transfer from own accounts $0 $0 $0 $0 $0 $0 $0 $0 Total Municipal (all above) $881,136 $1,105,604 $1,096,050 $1,101,511 $1,129,669 $1,135,357 $1,152,603 $1,120,064 Collection for Reg Dist serv. $418,246 $423,179 $428,713 $434,249 $439,786 $445,320 $450,857 $456,391 Coli for Library District $69,750 $69,959 $70,169 $70,380 $70,591 $70,803 $71,015 $71,228 Coli for MFA, 8CM, Hosp $201,971 $202,577 $203,185 $203,795 $204,406 $205,019 $205,634 $206,251 To1al Revenues $1,571,103 $1,801,319 $1,798,117 $1,809,935 $1,844,452 $1,856,499 $1,880,109 $1,853,934

10.7 ITax Impacts Table 10.8 shows the tax rates for a "normal" year's operation of the municipality -- that is, operations in the year 1999, after the benefits of the short-term assistance grants have been used.

Okanagan Landing Municipality 10-8 Table 10,8 OK Landing Municipality: Tax Rates ($ per $1000)

Current Situation After Swan Okano Restruct Lake Kedlstn Landing Vernon Coldstm Affected Taxes NORD" Land only - not not $0,126 not not NORD· Bldg only - in in $4,051 in in NORD· Land + Bldg' $2,360 this this $0,864 this this Library District $0,370 munio. munic. $0,394 munio. munic. Rural tax - - - $L750 - - Municipal tax $3,720 - - ". - -

Taxes NOT Affected School district #22 $7,287 - - $7,287 - - Hospital district $0,930 - - $0,930 - ". Mun Finance Authority $0,004 ". ". $0,004 - - Be Assess. Authority $0,151 .. $0,151 ".

NB; All rates include 5.25% tax collection fee where applicable; these fees are shown separately in all other tax and impact tables * Rural areas: "Current Situation" includes fire, Okan Basin Water Board, A-BDC street lights

These tax rates can be used to calculated changes in taxes from the current system, as shown in Table lD.9 and Table lD.lD.

As can be seen from the table, incorporation of a new municipality at Okanagan Landing is projected to bring about a minor tax increase -- $38 on an average house (assessment of $75,000). Proportionate increases would apply to properties with higher assessments.

However, a minor adjustment to the assumed growth rate would put Okanagan Landing's population over 5000 people, and therefore it could easily end up responsible for a share of its RCMP costs, just as the north municipality would.

A separate analysis was undertaken to see the impacts of crossing this RCMP threshold. It shows that the extra taxes would jump up to $173 on an average horne -- that is, the difference between rural status taxes and municipal status taxes would be $173, The RCMP costs would add $135 to the average tax bill, This tax increase would occur gradually over the eight years as the RCMP cost is phased in,

Okanagan Landing Municipality 10-9 Chart 10.2 Okanagan Landing: Extra Taxes Due to Restructure

$75,000 House Assessment 200 r------

[Tax increase,

ISO

100 ~------

50 ~------

Without RCMP With RCMP

10.8 I Uncertainties The major uncertainties that would affect the impact projections made here are the same as discussed in Chapter 9 for the North Municipality. They involve the RCMP costs, the rural tax and the municipal service priorities.

Okanagan Landing Municipality 10-10 rable 10.9 OK Landing Municipality: Impacts on Okanagan Landing Properties

$1,113 $1,483 -$700 -$700 $0 ·$15

~25,OOO Vacant lot ~75,OOO Farm ~500.000 Business I l,.;urrent Restruct Chan e I vurrent Restruct Change I...iurrent Restruct Change INORD - Land only $3 $0 -$3 $1 $0 -$1 $24 $0 -$24 NORD - Bid g only $0 $0 $0 $243 $0 -$243 $2,977 $0 -$2,977 NORD - Land + bldg $22 $59 $37 $58 $159 $101 $1,058 $2,891 $1,833 Total Regional District $25 $~9 $34 $302 $159 -$143 $4,059 $2,891 -$1,168 Library district tax $9 $9 $0 $25 $25 $0 $459 $453 -$6 Provincial collection fee $2 $0 -$2 $17 $0 -$17 $237 $0 -$237 Provincial rural tax $44 $0 -$44 $8 $0 -$8 $2,000 $0 -$2,000 Municipal tax $0 $93 $93 $0 $231 $231 $0 $4,557 $4,557 School district tax $182 $182 $0 $452 $452 $0 $5,100 $5,100 $0 i Hospital district tax $23 $23 $0 $63 $63 $0 $1,139 $1,139 $0 § MFA + Assmnt tax $8 $8 $0 $10 $10 $0 $190 $190 $0 ~ Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0

~ 65 Yrs+Over: Gross Tax $293 $374 $81 $877 $940 $63 $13,184 $14,330 $1,146 -:;: Homeowner grant $0 $0 $0 -$700 -$700 $0 $0 $0 $0 School supplmnt grant $0 $0 $0 $0 $0 $0 $0 $0 $0 - ,Net Tax, 65 yrs+over ~293 ~374 ~81 ~177 ~240 ~63 i ~13,184 ~14,330 ~1 ,146 Table 10.10 OK Landing Municipality: Tax Impacts on an Average Home

$75,000 Assessment

No local ReM? taxes Local ReM? taxes OK Landing Home OK Landing Home

Current Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 Tax Impacts on an Average Home NORD - Bldg only $203 $0 -$203 $203 $0 -$203 NORD - Land + bldg $65 $177 $112 $65 $177 $112 Total Regional District $271 $177 -$94 $271 $177 -$94 Library district tax $28 $28 $0 $28 $28 $0 Provincial collection fee $16 $0 -$16 $16 $0 -$16 Provincial rural tax $131 $0 -$131 $131 $0 -$131 Municipal tax $0 $279 $279 $0 $414 $414 School district tax $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 Ok Landing Home Ok Landing Home Sewer tax (eligible) $0 $0 $0 $0 $0 $0 No local RCMP Local RCMP Gross Tax (no grant) $1,075 $1,113 $38 $1,075 $1,248 $173 Homeowner grant -$430 $0 -$430 $0 -$430 -$430 o Currently ~ Restructured School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 Net Tax, under 65 yrs $586 $624 $38 $586 $759 $173

Q @" ~ ID ~ r- ID ~ ~ '"~ ~ -0.0" I ID ~ -? ;;; Chapter 11 ISummary of Results

11.1 Vernon's Chart 11.1 shows the tax impacts of the three restructure options that involve Perspective the residents of the existing city, stated in terms of a typical home assessed at $75,000.

It can be seen from Table 11.1 that city taxpayers would enjoy the greatest tax savings if the entire Vernon subregion, including the District of Coldstream, were restructured into one regional municipality. This option would be the most difficult to implement because it involves the greatest number of political agencies. In addition, Coldstream's long established identity and independence would impede acceptance by its residents.

Even without Coldstream, however, Vernon taxpayers would still enjoy a tax decrease if the city boundaries were expanded to include the north area and Okanagan Landing. The larger the boundary, the greater the tax savings to Vernon taxpayers.

A bigger Vernon -- the "Regional Municipality", "Large Vernon", or "Expanded Vernon" options examined in this report -- would provide a partial remedy to what might be considered an inequity in the Greater Vernon area. The inequity has to do with the cost-benefit balance of some services in Greater Vernon.

The City of Vernon is the focal point of the area's commercial, employment, and cultural activities. This requires an urban infrastructure more extensive - and more expensive -- than is found in the surrounding areas. Two obvious examples of this are police and fire protection. While the more rural and less densely developed areas can get by with fully-volunteer fire departments, the nature of the buildings and the density in Vernon's core requires a higher level of fire protection than could be attained with an all-volunteer department.

Property values in all of greater Vernon rely on a complex set of factors. Some of these factors are natural, such as lake access, views, and climate. Others rely on man-made constructs which include social and economic systems. The residents in all areas of Greater Vernon are affected by what happens in Vernon's core. The maintenance of a healthy, safe, and attractive economic center provides benefits to all residents and property owners.

Summary of Results 11-1 In addition, the City taxpayers maintain roads leading to areas such as Okangan Landing that are enjoyed by fringe area residents who commute to the core.

The extra service costs associated with maintaining the attractiveness and utility of Vernon's core are generally not shared equally among all the taxpayers who benefit. Much of this is due to the peculiarity of the RCMP financing arrangements. It should be noted that this principle also applies to urban fringe communities in general. The further from the core, the less the strength of the argument. Even close to the core, it is difficult (if not impossible) to measure the degree to which core services enjoyed by fringe area residents are funded by these residents. The flows of costs and benefits are murky.

While recreation facilities are shared more or less equally, police and fire protection costs are not. Under the current municipal finance system, there is no mechanism by which Vernon can recover police and fire protection costs from all the benefiting parties. It could transfer the fire department to the regional district to become a regionalized service, but this would require the regional board's approval and, as well, require that the City of Vernon relinquish substantial control over this vital service. There are no regional police forces in BC, although one wonders how much longer that situation will occur, especially in heavily urbanized centers such as Vancouver and Victoria.

Restructuring the subregion into a single large municipality would address this cost-benefit issue from Vernon's perspective.

The single municipality would also maximize the opportunities for increased use of sanitary sewers. There is no doubt that concerns about the environment will continue to increase. As with the urban amenities in Vernon's core, efforts made to protect, maintain, or improve the environment benefit all area residents. Better lake water quality benefits not just those who live on lakeshore property; home values everywhere in the Okanagan valley rely to some degree on lake water quality. The more new developments that connect to a proper sanitary sewer system, the greater the protection of the environment and the greater the protection of residents' property values. The larger the city's boundary, the greater the opportunity to influence the location of new growth towards sewered areas, or at least towards areas that could be more easily sewered.

In the case of the "Large Vernon" option and the "Expanded Vernon" option, the exclusion of Coldstream and/or Okanagan Landing weakens Vernon's influence on development matters compared to the "Regional Municipality" option.

Summary of Results 11-2 Table 11.1 Tax Impacts on a Vernon Home

$75,000 Assessed Home

Regional Municipality Large Vernon Expanded Vernon

Current Restruct Change Current Restruct Change Current Restruct Change NORD - Land only $0 $0 $0 $0 $0 $0 $0 $0 $0 NORD - Bldg only $0 $0 $0 $0 $0 $0 $0 $0 $0 NORD - Land + bldg $174 $67 -$107 $174 $180 $6 $174 $180 $6 Total Regional District $174 $67 -$107 $174 $180 $6 $174 $180 $6 Library district tax $20 $23 $3 $20 $23 $3 $20 $22 $2 Provincial collection fee $0 $0 $0 $0 $0 $0 $0 $0 $0 Provincial rural tax $0 $0 $0 $0 $0 $0 $0 $0 $0 Municipal tax $449 $449 $0 $449 $395 -$54 $449 $395 -$54 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $12 $12 $0 $12 $12 $0 $12 $12 $0 Gross Tax (no grant) $1,284 $1,180 -$104 $1,284 $1,239 -$45 .$1,284 $1,238 -$46,, Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0' School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 NetTax,under65yrs $795 $691 -$104 $795 $750 -$45 $795 $749 -$46

Tax Impacts on an Average Vernon Home j g, [ Regional Municipality large Vernon Expanded Vernon ;;; D Currently ~ Restructured ;:; ~_--_-"O-_------_-_-_-_-;-_~ -- -

11.2 Coldstream's The regional municipality is the only restructure option directly involving Perspective Coldstream. The creation of a regional municipality would mean a tax increase of $145 for an average Coldstream house, as shown in Table 11.2. For farm properties, a regional municipality could produce smaller tax increases than this, because the study assumes that a regional municipality would continue the current City of Vernon policy of charging the rural tax rate on farm land. However, there would be no guarantee that this policy would be extended if so many farm properties were added to the municipality.

The residents of Coldstream enjoy relatively low property taxes under the current system and thus may have a reduced incentive to see themselves brought into an umbrella municipality. Joining Vernon will mean an increase in their taxes as they start to make a greater contribution towards the costs of maintaining Vernon's core infrastructure and services.

In addition, Coldstream is an old, established municipality. Many residents would fear that the creation of a large municipality would diminish their sense of identity as well as reduce their influence over their own community.

The types of special considerations needed to protect or maintain Coldstream residents' independence would be substantial. Moreover, there are no apparent mechanisms readily available to achieve this. For example, there is no mechanism to allow for varying police taxes in different parts of a municipality.

The lower taxes in Coldstream are influenced to some degree by the Province of BC, especially in terms of Coldstream's share of local police costs. A change in provincial policies for the recovery of RCMP costs could have an effect on Coldstream, but no such change is yet apparent.

SummalY of Results 11-4 Table 11.2 Tax Impacts on a Coldstream Home

$75,000 Assessed Home

Regional Municipality

Current Restruct Change Tax Impacts on an Average Coldstream Home NORD - Land only $0 $0 $0 NORD - Bldg only $0 $0 $0 NORD - Land + bldg $178 $67 -$111 Total Regional District $178 $67 -$111 Library district tax $24 $23 -$1 Provincial collection fee $0 $0 $0 Provincial rural tax $0 $0 $0 Municipal tax $192 $449 $257 School district tax $547 $547 $0 Hospital district tax $70 $70 $0 MFA + Assmnt tax $12 $12 $0 Sewer tax (eligible) $65 $65 $0 Currently Restructured Regional Gross Tax (no grant) $1,088 $1,233 $145 Municipality Homeowner grant -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 Net Tax, under 65 yrs $599 $744 $145

Ig, [ 0;

~ '"~ 11.3 Okanagan Table 11.3 shows how the various restructure options would affect a typical Landing's home (assessed at $75,000) in Okanagan Landing. Perspective It is clear that the issue of local recovery of RCMP costs matters greatly when examining the impacts of restructure options form Okanagan Landing's perspective. The one option where the community might not face RCMP taxes -- the creation of a new municipality -- would produce the lowest tax change. The tax increases jump when Okanagan Landing residents start to pay a direct share of local RCMP costs, and they are worst when the Okanagan Landing taxpayers are required to make direct payments for both RCMP costs and road costs.

Becoming part of a larger Vernon municipality would produce a tax increase of $93-$152 on a typical house. In light of this, forming a new municipality appears entirely reasonable. This is especially true if the Okanagan Landing community would not be required to pay a share of local RCMP costs.

However, no such guarantee can be given. First of all, the provincial-federal agreement on RCMP costs has expired, and the form of a new contract cannot yet be predicted with certainty. No matter what its eventual population, it is possible that the artificial triggering point for local RCMP costs -- a population of at least 5000 people -- could be eliminated or lowered.

Secondly, even if the SOOO-population trigger point remains in effect under a new RCMP contract, there is a very good chance that Okanagan Landing would grow past this within a few years or so. The low growth scenarios tested in this study are not intended to be predictive. They were selected as low growth so that the impacts of changing local government could be seen; a rapid growth rate would obscure the effects of restructuring and make any conclusions difficult to interpret with confidence. However, even under the low growth scenario used here, Okanagan Landing would come close to 5000 people within eight years. A single large subdivision approval could raise the total beyond 5000 people.

While Okanagan Landing residents might look with interest at separate incorporation based on a $38 tax increase (as per Table 11.3), they should be aware that it is at least as likely that a $173 tax increase would materialize instead, as a result of losing an exemption from paying a direct share of local RCMP costs.

When viewed in this context, the options of becoming part of an expanded Vernon may look more attractive than they at might first appear. This is especially true if the province offers some special cost-sharing assistance to facilitate a restructuring into a larger Vernon. The ability to negotiate

Summary of Results 11-6 reduced RCMP costs could be greater as part of a larger Vernon than as a separate new municipality.

Summary of Results 11-7 "':

Table 11.3 Tax Impacts on an Okanagan Landing Home

$75,000 Assessed Home

Regional Municipality Large Vernon No RCMP Costs RCMP Costs OK Landing Municipality OK Landing Municipality Current Restruct Change Current Restruct Change Current Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 NORD - Bldg only $203 $0 -$203 $203 $0 -$203 $203 $0 -$203 $203 $0 -$203 NORD - Land + bldg $65 $67 $2 $65 $180 $115 $65 $177 $112 $65 $177 $112 Total Regional District $271 $67 -$204 $271 $180 -$91 $271 $177 -$94 $271 $177 -$94 : j Library district tax $28 $23 -$5 $28 $23 -$5 $28 $28 $0 $28 $28 $0 Provincial collection fee $16 $0 -$16 $16 $0 -$16 $16 $0 -$16 $16 $0 -$16 Provincial rural tax $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 Municipal tax $0 $449 $449 $0 $395 $395 $0 $279 $279 $0 $414 $414 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 ':'i'I Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 ., :: Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 "I· Gross Tax (no grant) $1,075 $1,168 $93 $1,075 $1,227 $152 $1,075 $1,113 $38 $1,075 $1,248 $173 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -i Net Tax, under 65 yrs $586 $679 $93 $586 $738 $152 $586 $624 $38 $586 $759 $173

::i Tax Impacts on a Average Okanagan Landing Home :~: ! :::

;:': ;-;,

Ig, Regional Large No ReM? costs ReMP costs Municipality Vernon ~ Ok Landing Municipality EO. i;; [J Currently Restructured ~ ~ ~ 00 11.4 North and Tables 1104 and 11.5 show the impacts of the restructure options on a typical East Areas home in the Swan Lake, BX, Keddleston, and Pottery Road areas. The tables show that all of the four restructure options involving the north, northeast, and east areas would produce higher taxes than residents now face under rural status. Even the lowest tax impacts -- an extra $92-$107 in the Regional Municipality option -- are too great to be called inconsequential.

For residents of the north and east areas, the tax impacts of becoming part of a larger Vernon are not much affected by including or excluding the Okanagan Landing area. However, the tax impacts would fall by about $55 if Coldstream were included in the large municipality.

From a tax point of view, creating a new municipality in this area would produce the worst impacts. With a population already over 5000 people, the municipality would have to use taxes to pay a share of RCMP costs. Where this is a possibility for Okanagan Landing, it is a certainty for the north municipality under the current system.

Summary of Results 11-9 I ,::!

:'. Table 11.4 Tax Impacts on a Swan Lake Home

$75,000 Assessed Home

Regional Municipality Large Vernon Expanded Vernon North Municipality

Current Restruct Change Current Restruct Change Current Restruct Change Current Restruot Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 NORD - Bldg only $202 $0 -$202 $202 $0 -$202 $202 $0 -$202 $202 $0 -$202 NORD - Land + bldg $67 $67 $0 $67 $180 $113 $67 $180 $113 $67 $212 $145 Total Regional District $272 $67 -$205 $272 $180 -$92 $272 $180 -$92 $272 $212 -$60 Library district tax $28 $23 -$5 $28 $23 -$5 $28 $22 -$6 $28 $28 $0 Provincial collection fee $16 $0 -$16 $16 $0 -$16 $16 $0 -$16 $16 $0 -$16 Provincial rural tax $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 Municipal tax $0 $449 $449 $0 $395 $395 $0 $395 $395 $0 $444 $444 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Ii Gross Tax (no grant) $1,076 $1,168 $92 $1,076 $1,227 $151 $1,076 $1,226 $150 $1,076 $1,313 $237 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 NetTax,under65yrs $587 $679 $92 $587 $738 $151 , $587 $737 $150 $587 $824 $237 ,il

Tax Impacts on an Average Swan Lake Home :1,

::1 :: ::i '/:

Ig, Regional Large Expanded North , Municipality Vernon Vernon Municipality Currently ~ Restructured ~ o o~ Table 11.5 Tax Impacts on a Keddleston Home

$75,000 Assessed Home

Regional Municipality Large Vernon Expanded Vernon North Municipality

Current Restruct Change Current Restruct Change Current Restruct Change Current Restruct Change NORD - Land only $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 $3 $0 -$3 NORD - Bldg only $191 $0 -$191 $191 $0 -$191 $191 $0 -$191 $191 $0 -$191 NORD - Land + bldg $64 $67 $3 $64 $180 $116 $64 $180 $116 $64 $212 $148 Total Regional District $258 $67 -$191 $258 $180 -$78 $258 $180 -$78 $258 $212 -$46 Library district tax $28 $23 -$5 $28 $23 -$5 $28 $22 -$6 $28 $28 $0 Provincial collection fee $15 $0 -$15 $15 $0 -$15 $15 $0 -$15 $15 $0 -$15 Provincial rural tax $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 $131 $0 -$131 Municipal tax $0 $449 $449 $0 $395 $395 $0 $395 $395 $0 $444 $444 School district tax $547 $547 $0 $547 $547 $0 $547 $547 $0 $547 $547 $0 Hospital district tax $70 $70 $0 $70 $70 $0 $70 $70 $0 $70 $70 $0 MFA + Assmnt tax $12 $12 $0 $12 $12 $0 $12 $12 $0 $12 $12 $0 Sewer tax (eligible) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Gross Tax (no grant) $1,061 $1,168 $107 $1,061 $1,227 $166 $1,061 $1,226 $165 $1,061 $1,313 $252 Homeowner grant -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 -$430 -$430 $0 School supplmnt grant -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 -$59 -$59 $0 NelTax,under65yrs $572 $679 $107 $572 $738 $166 $572 $737 $165 $572 $824 $252

Tax Impacts on an Average Keddleston Home

Ig, Regional Large Expanded North ~ Municipality Vernon Vernon Municipality ~ D Currently Th:1I Restructured ~

~ 11.5 Regional The creation of a regional municipality would significantly reduce the District regional district's role in the community's services, since many of its services should be shifted to the municipality under this option. Perspective However, any option that keeps at least two municipalities in the Greater Vernon area would also support the continuation of a number of regionalized services through the regional district. Foremost in this category are recreation facilities because they are so expensive. It is important that an equitable cost sharing arrangement be maintained across the Greater Vernon area for this service. Since Coldstream is a significant user of the facilities, as well as a contributor to their costs, the responsibility for recreation area #1 should remain with the regional district rather than be transferred to Vernon as long as Coldstream is separate from Vernon. Transferring the responsibility for this service while there are two or more municipalities would be counter productive, since a new cost-sharing provision would be required to replace the existing one. As long as there are significant numbers of residents in electoral areas A, B, or C, there will be a need for regional district involvement in the financing of this service.

It would be possible, but probably impractical, to entirely regionalize the fire protection service without restructuring the area into a regional municipality. Vernon might wish that Coldstream and the electoral areas should contribute to the costs of the Vernon fire department, but without a regional municipality this can occur only if the Vernon fire department becomes a regional district service. While this is possible, it might be difficult for the City of Vernon to relinquish control of this service and it might be even more difficult to get the regional board members to agree to such a shift in light of the high costs of the city's department relative to the BX/Swan Lake, Okanagan Landing, and Coldstream volunteer departments.

Sewage treatment and disposal could become a regionalized service provided by the regional district, especially if there are three (or more) members prepared to accommodate a significant amount of the region's community growth. For example, if Okanagan Landing incorporates on its own, an arrangement should be reached, prior to incorporation, on the responsibilities for sewage collection and disposal in the region. If the Okanagan Landing community chooses to remain in rural status after considering its options, the regional district should more actively consider the goal of regionalizing the sewage treatment and disposal function.

Continued community growth without a workable, comprehensive sewer collection and disposal plan is unwise for the long term. If a rural portion of the community wishes to grow in accordance with its own plans, there should be in place some assurance that this growth will not pre-empt possible

SummaI}' of Results 11·12 connection to a sewage system if the need for such connection can be predicted with some confidence.

Having one jurisdiction control zoning and another the sewage system promotes conflict. One approach would be to shift development control to the sewering agency. The regional municipality concept would achieve this. It would also allow the recovery of environmental protection costs across a broader spectrum of benefiting community members. This reflects the notion that all residents of greater Vernon benefit from the existence of a sewage system (although not all benefit equally).

A second approach -- this one possible without major restructuring, although certainly possible with it -- would be to shift the sewage treatment and ( disposal function to the regional district. Such an arrangement might be accomplished much more easily if the City of Vernon is assured of having an adequate supply of land for growth under its own control. It is impractical to expect the city to relinquish its sewage treatment and disposal service and, as well, accommodate minimal community growth. The city has little land for growth now, and it is inappropriate to continually extend the municipal boundary bit by bit. Improved environmental protection policies could be attained by reducing the constraints on the area's individual members. This \ ~eans assuring the city of room for the attainment of long-term development ~olicies.

11.6 IConclusion The restructuring of rural areas to municipal status would mean tax increases in most of the cases examined in this study. There are two basic reasons for this: (1) The rural taxes in place now do not cover the costs of road maintenance and police protection in the rural areas, and a change to municipal status would expose rural properties to more of these costs; and, (2) The rural taxes do not reflect the fire protection, police, and road costs now borne by taxpayers in the City of Vernon, and becoming part of a larger Vernon would expose rural taxpayers to a share of these urban core expenses.

In this sense, Coldstream is almost a rural status community. It does pay a share of its RCMP costs, but it does not pay a large share; in addition, it makes little contribution to the more intense urban expenses associated with providing services and maintaining the infrastructure of Vernon's core.

Okanagan Landing residents might look at the option of creating a new municipality because (among other reasons) the property tax impacts might be slight. However, it is as likely that the imposition of RCMP costs on the

Summary of Results 11 0 13 new municipality would raise this option's taxes beyond the levels associated with becoming part of a larger Vernon municipality.

Residents in the Swan Lake, BX, Keddleston, and Pottery Road areas face a more definite tax increase if they incorporate as a separate municipality, because this area is already past the population threshold for the imposition of local RCMP cost recovery.

The tax impacts of these municipal restructure options can all be strongly shaped by provincial policies regarding not just policing services but also the rural tax policies. A return to increases in the rural tax rate -- as experienced over the past decade -- would make municipal status more attractive by raising the costs of being a rural status community. While the province has announced no policies in this regard, it would be unwise to assume stability in rural taxes. They have risen very rapidly since 1987, despite the lower rate for 1991. It would seem more prudent to assume that rural taxes will continue to rise in the long term if not the short term.

The impacts of RCMP costs can be seen in Table 11.6. This table shows that if the rural share of RCMP costs were not recovered from local taxes -- that is, if the rural properties continued to be exempt from a direct cost-recovery charge even after restructuring -- the tax impacts of each restructure option would improve notably.

Table 11.6 Impacts of Altered RCMP Costs After Restructure

(Constant 1991 Dollars)

Rural Area Portion of Tax Saving if Rural Portion Restructure Option Municipal ReMP Costs Remains Exempt

Regional Municipality $1,250,000 $50 per house large Vernon $1,250,000 $57 per house Expanded Vernon $792,000 $40 per house New North Municipality $579.000 $158 per house New Okanagan Landing Municipality $365,000 $135 per house

Summary of Results 11-14 Chapter 12 Framework for Analyzing Restructure Options

The following pages present a framework to use when examining each restructure option.

A framework for analysis is needed because restructuring is such a complicated issue. While there are a number of universally accepted goals - for example, lower taxes -- many other aspects of restructuring have different importance to different people. Residents in one area might view a certain impact as undesirable, whereas other residents might view the same impacts as beneficial to their goals. The multi-faceted nature of the question precludes a simple, single assessment of whether an option is acceptable or unacceptable. The framework provides a consistent basis for comparing the multiple impacts of the options.

The framework consists of the eight major categories listed below; each has a number of related issues.

1. Administrative effICiency: What will be the impacts on the administration of local services? Will there be increases in efficiency due to restructuring? Will residents have better access to the administrative process?

2. Community impacts: What impacts will restructuring have on non-financial characteristics of life in the community? For example, will the type, amount, and location of community growth change as a result of restructuring local government?

3. Financial: Each restructure option would produce a different set of spending levels and property taxes. The financial impacts are usually the most important factors in ranking the attractiveness of changing the way local government works.

4. Representation: Each option will change the political structure of the area, including the

Framework for Analyzing Restructure Options 12·1 ----~.------~-';---~ --

elected representation in the sub-areas. Will residents' see their political strength increase or decrease?

5. Authority and Responsibility: Restructuring means shifts in who determines services, taxes, and community policies. How much accountability will there be? Will those with authority for changing services bear the financial responsibility for these changes?

6. Environment: Changing the local government structure might mean a shift in the power to protect the environment.

7. Local Services: Restructuring will mean a shift in how services are provided, but may also affect who decides what services are required and how they are to be delivered.

8. Implementation: Not all restructuring options can be implemented with consistent ease; some may require far more conditions than others.

Framework for Analyzing Restructure Options 12-2 Number of Municipalities = 2 2 3 4

Vernon, Increased Larger Vernon, OK landing, N.O.R.D. One big Larger Vernon, OK Landing, North Munic, Responsibilities Municipality Coldstream Coldstream Coldstream 1. Administrative Efficiency Will new staff be required? yes yes yes yes yes Will new or expanded facilities be no yes yes yes yes required? Will taxpayer access to moderately yes yes yes yes administrators improve? Will access to information yes yes yes yes yes improve? Will there be some economies of no yes yes yes no scale? Will there be some diseconomies no yes (RCMP) yes (RCMP) yes (RCMP) yes (RCMP) of scale? Will administrative duplication be yes yes yes yes + no yes + no reduced?

2. Community Impacts Can development costs be least likely most likely most likely less likely less likely minimized by restructuring? Will access to community services no yes yes yes yes be affected? Will lifestyles be affected equally little change possibly not possibly not probably not probably not across the community? Will economic development be probably not probably not probably not probably not probably not affected?

3 Financial Will property taxes be affected? minimally yes yes yes yes Will the ability to shift taxes no yes yes yes yes change? Will future financial risks be no no no no no greater because of restructuring? Will restructuring require new no no no no no debts? Will sewer and water grant yes yes yes yes yes eligibility be affected? Will options for the recovery of yes yes yes yes yes costs change? Is transitional assistance possibly yes yes yes yes available? Will transitional assistance be possibly yes yes yes yes needed? Will local share of ReMP costs no yes yes yes yes rise?

Framework for Analyzing Restructure Options 12~3 <, - ---:--.------~.-.--. :---' ------~-:------

Number of Municipalities = 2 1 2 3 4

Vernon, Increased Larger Vernon, OK Landing, N.D.R.D. One big Larger Vernon, OK Landing, North Munic, Responsibilities Municipality Coldstream Coldstream Coldstream

4 Representation Will elected representation depends decrease in Vernon: falls Vernon: falls Vernon and increase or decrease? Vernon and Coldstrm: no Coldstrm: no Coldstrm: no Coldstream; change change change increase in Rural: increase Rural: increase Rural: increase rural areas

Will inter-jurisdictional reduces reduces reduces possibly no competition change? reduces Will taxpayers notice any change possibly yes yes yes yes in political structLJre?

5. Authority and Responsibility Will residents' control over service possibly yes yes yes yes levels be affected? Will residents' control over taxes possibly yes yes yes yes and finances be affected? Will each jurisdiction bear moderate strong strong moderate moderate financial responsibility for its growth decisions? Will effective planning require no real change less less more more more or less harmony between jurisdictions? Will one jurisdiction's decisions no no no possibly possibly pre-empt or affect another's?

6 Environmental Will sewage collection and possibly yes yes yes possibly disposal be affected? Will the ability to protect water possibly yes yes depends depends supplies be improved? Will efficient water usage be possibly possibly possibly possibly possibly encouraged? Will transit and car travel be probably not possibly possibly possibly possibly affected? Will the ability to protect open possibly not yes yes possibly possibly space and farm land be affected?

7. Services Will services be easier or harder easier easier easier easier easier to change? Will new services be required as a no no no no no result of restructuring? Are some service quality changes yes (water) yes (water, yes (water, yes (water, yes (water, unavoidable as a result of roads) roads) roads) roads) restructuring? Will restructuring require no no no no no expanded local services?

Framework for Analyzing Restructure Options 12-4 Number of Municipalities = 2 1 2 3 4

Vernon, Increased Larger Vernon, OK Landing, N.O.R.D. One big Larger Vernon, OK Landing, North Munic, Responsibilities Municipality Coldstream Coldstream Coldstream 8 Implementation How many referenda will be not clear 1 1 2 (1 to join 2 (1 for OK required? Vernon; 1 for OK Landing; 1 for Landing) north mun) Is referenda wording difficult? not clear no no no no How many bodies must approve 5: Province, 4: Province, 3: Province, 3: Province, 3: Province, of restructuring? NORD, Vernon, NORD, Vernon, NORD, Vernon NORD, Vernon NORD, Vernon Coldstream, V.J.D. Coldstream What happens if one body fails to not clear could fail, could fail, could fail, could fail, approve of restructuring? depending on depending on depending on depending on who who who who disapproves disapproves disapproves disapproves Will new legislation be required no no no no no for implementation? Must assets be transfered? not clear yes (some yes (some yes (some yes (some NORD assets) NORD assets) NORD assets) NORD assets) Can local reserves be protected yes yes yes yes yes after restructuring? Are transitional political measures yes yes yes yes yes required?

Framework for Analyzing Restructure Options 12-5 ... -

...... ,

OKANAGAN INDIAN No.1 ...... a - , i ru•• / I

Okanagan Lake

Provincial for ••1

lIlI••• , ......

OKANAGAN INDIAN RESERVE NO. 1

Ekctor.& Area "D" Okanagan Landing

Okanagan Possible Municipal Lake Expansion Area

, . ,'" , ._1 c .. •••• GREATER VERNON Kalamalka .•. Lake "D' RESTRUCTURE STUDY

Sussex Consultants Ltd July 1991

Scale 1:50,000

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