The Events Centre and Yara Centre are over a decade old and require regular upgrades, but city hall suggests it would be “very difficult financially” to create a fully funded building reserve to support their needs.
To create such an account would require the city to contribute roughly $780,000 annually for 10 years — for a total of $7.8 million — to address maintenance issues at both places, a budget report explained.
To fund this, however, would require the parks and recreation infrastructure levy to increase to $112 a year from $65 a year, the document continued. Or, city council could increase the municipal mill rate by roughly 2.2 per cent annually and dedicate that funding to the reserve.
It cost Moose Jaw roughly $61 million to construct both buildings, with the Events Centre opening in 2010 and the Yara Centre in 2011. The city had roughly $500,000 in leftover construction money that it put into a reserve for future building needs.
The downtown venue’s initial operations were so successful that city hall was able to fund some capital reserves there, the report said. However, “when circumstances changed in later years,” the city used that money to maintain operations.
City administration expects to use up that original 2011 reserve “in the near future” to support several capital projects at both sites.
Council received this report during its Dec. 11 budget meeting and voted to receive and file the document — essentially, to move on from the topic.
Finance director Brian Acker told council that parks and recreation has estimated that the yearly funding required to maintain the Yara Centre is $150,000 annually, with turf replacement every 15 years.
However, a reserve generating these investment earnings would need to be roughly $2.5 million. Therefore, annual contributions of about $180,000 for 10 years would be required to fund this reserve.
Acker noted that a similar reserve fund estimate for the Events Centre is unavailable since the city does not operate the building. However, administration estimates that the contribution would be about three times that of Yara Centre, or about $500,000 annually.
A reserve generating these investment earnings would need to be roughly $8.3 million. Therefore, annual contributions of about $600,000 for 10 years would be required to fund this reserve.
City hall could consider a “lesser reserve system” where only major repairs and replacements — like turf or roof and refrigeration systems — are covered, while other repairs and maintenance would come from the operating budget, Acker said.
If the city had started a reserve when it constructed these buildings, it would have had many years to build up that account and enjoy the benefits, but that time has passed, he added. Meanwhile, other city-owned buildings face similar underfunding challenges, such as the fire department and police service.
Coun. Crystal Froese agreed that the city should have created a reserve fund when it opened those buildings since that’s “wise advice.” Meanwhile, she thought there was still some remaining leftover money for a new fund and asked Acker to prepare a report about doing that.
Acker replied that city administration is directing the remaining money to turf replacement at Yara Centre in 2025. Also, it wasn’t feasible to create a new fund now unless council created a dedicated municipal tax hike or increased the parks and rec levy.
However, he suggested that when the city renovates a building or constructs a new venue, administration could start a reserve account using the leftover project revenues.
Coun. Heather Eby thought Acker’s report shone a spotlight on how useful the municipality’s investment reserve system is in supporting the budget. She noted that many people tell councillors to spend all the reserves so they don’t have to raise taxes.
“I say, read this report if we do that. You can sell the farm once, but it will never make you money ever again,” Eby added. “… the reserves are beneficial, not just now but into perpetuity.”
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