Iqaluit’s capital plan in disarray

GREG YOUNGER-LEWIS

Don’t expect Iqaluit’s legendary potholes to disappear soon.

The municipality’s much-touted $51-million plan to pave roads, improve water and sewage facilities, and revamp recreation facilities has been derailed about a year after it began.

Budget shortfalls have thrown the infrastructure plan into disarray, forcing administration and council to reconsider whether they will need to increase property taxes again, and make deep cuts to services, such as its costly recycling program, in order to get the plan back on track.

The repercussions of a failed – or salvaged – infrastructure plan in Iqaluit affect the entire territory, as the city’s $51 million joint-funding agreement with the government of Nunavut would have made the city more functional.

But, in this case, Nunavut communities require a thriving capital city for more than attracting investors and tourists.

They need Iqaluit to show the government of Nunavut, which funds most of the city’s five-year infrastructure plan, that municipalities can handle large-scale funding projects.

Chris Wilson, Iqaluit’s deputy mayor, said their infrastructure plan unraveled because the former council overestimated how much new revenue they would earn in property taxes from the city’s population boom.

Instead, the city ended up with a housing bust.

“Things are not as rosy as we thought they would be,” Wilson said. “What it’s ultimately going to mean is we won’t necessarily be able to do all the things we wanted to do.”

The Nunavut government approved more than $31 million for council’s long wish list of projects, called the “capital plan,” in December, 2003. The plan is intended to fix up Iqaluit’s infrastructure, strained under the massive increase in population over the past decade.

Under the plan, Iqaluit expected to pitch in around $20 million. But city administrators found during this year’s budget that they had raised less money than they needed to meet their end of the bargain – and are short by at least $10 million.

Administration said little in public about the capital plan’s problems, until Ian Fremantle, Iqaluit’s chief administrative officer, told a committee on June 24 that the city’s budgetary reserves are almost used up.

Millions of dollars contained in reserves were meant to help pay back the $4-million loan that council was planning to take out, as approved by Iqaluit’s 600 property owners in a referendum last fall.

Faced with the cash crunch, administration and council balked at following through with the loan, and have officially pressed the capital plan’s pause button until they can find a way to balance their books.

“We’re going to have to take a good hard look at where we’re going and how we’re going to fund programs,” Fremantle told the solid waste management committee last month.

Council has followed through with some projects under the original capital plan, including some paving, a

multi-million water treatment upgrade, design-work on a functioning sewage treatment plant, and switching houses from the expensive trucked water and sewage system to the utilidor system.

But projects approved so far have cost much more than expected. Most recently, the utilidor transfer for the Lower Base neighbourhood went about $700,000 over budget.

City hall also found it was losing money to unexpected emergencies, such as the new arena floor sinking into the permafrost last fall. The design flaw forced Iqaluit to spend hundreds of thousands of dollars on repairs.

Other infrastructure, such as water and sewage pipes, has broken before it could be replaced.

Wilson, the chair of Iqaluit’s finance committee, says council failed to anticipate the emergency expenses.

But the biggest enemy of Iqaluit’s capital plan turned out to be the economy.

Wilson said Iqaluit’s failure to raise enough funds comes, in part, from scaring off the city’s biggest developer, Northern Property Real Estate Investment Trust (formerly Urbco Ltd..)

The company hasn’t pursued any large-scale projects in Iqaluit since council rejected their 48-unit building two years ago on the grounds that the building wouldn’t fit the city’s look and feel.

Wilson, who also works for the Iqaluit Housing Authority, said city hall was further sabotaged by Iqaluit’s “weird” real estate market. In his view, the biggest problem in local development is that companies that lease land also build the housing.

He said the companies aren’t building as much as the previous council thought they would because they want to maintain a housing shortage, which keeps rents high and their profits large.

Wilson said the depressed housing market left council with much less new property tax revenue than was needed to make the capital plan work.

Although administration has insisted council will have to consider more tax hikes, Wilson said he will fight to make sure that doesn’t happen.

Councillors will begin their official re-writing of the capital plan at a finance committee meeting on July 19 at 11:30 a.m.