With Penticton voters rejecting the prospect of bringing a proposed $200 million provincial correctional centre, many at the city are wondering where the municipality will find potential revenue to expand civic revenues along with economic activity.
According to the city’s CAO Annette Antoniak, despite two years of dramatic budgeting decisions by city council Penticton is facing growing operating costs.
“In addition to the (South Okanagan Events Centre) we are now operating an expanded community centre,” said Antoniak. “Both these facilities combine at an additional $3.7 million to the city’s bottom line in operating costs.”
Antoniak estimated next year the city is facing a deficit of approximately $2 million. A daunting reality, considering the city recently conducted a core services review which resulted in the implementation of most of the report’s 64 recommendations, including the elimination of 30 jobs over a two-year span.
“That is a reduction of 30 per cent of the management team and six per cent of the (CUPE) staff,” Antoniak said. “We have managed to maintain the core programs that the city offers residents through this major restructuring.”
But, stressed Antoniak, there is little development currently occurring.
Indeed, according to city manager of planning Anthony Haddad, as of May 31 the year-to-date value of construction in Penticton was only about $13.3 million, down from roughly $54 million by the same date last year.
Haddad said the 2011 depressed numbers are part of a longer trend — interrupted last year by the expansions of Okanagan College and the community centre — which began in 2008 during the world economic crisis.
City building permit reports show Penticton’s development sector booming in 2006 with an annual construction value of roughly $143.2 million, followed by $117.6 million in 2007. However, by 2009 that number had dropped to under $32.6 million.
Haddad said Penticton has seen a virtual freeze in larger project starts such as multi-storey apartment buildings or condos.
“The market is full of multi-family developments at the moment which are either under construction or built but unoccupied or unsold,” he said. “So until they disappear we probably won’t see some multi-family developments come in the door.”
Market experts have told him the situation could remain as the status quo for up to three to five years, he said.
“It really depends on a whole bunch of different things which are hard to predict,” Haddad said. “I guess they have to deal with their banks, and the numbers just aren’t there at the moment to come and take a risk and build a 10-storey apartment building, for example.
“However, we are seeing a lot of developers looking at rezoning their sites to set them up for the future when the market comes back.”
Haddad said in the meantime city staff will work on improving its services and policies while promoting its economic investment zone program which reduces taxes and city fees in order to encourage new construction or renovations.
“One of the biggest things I have found working over the last five or six years is that there is a whole bunch of regulations that tend to slow things down,” said Haddad, who worked for the City of Calgary prior to moving to Penticton. “We are always looking for ways to improve the processes that we have, whether it is through bylaws or reducing red tape, and make it a little friendlier to do business with the city.
“And we will continue to work on that so that when the market comes back and the housing market is booming again, things will be a little bit more simpler with local government.”