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A new computer software program has predicted Wood Buffalo`s financial future — and the draft shown to municipal councillors last night was described as "scary."
Darryl Howery, principal at Applications Consulting Management of Edmonton, and members of municipal administration have been working on a fiscal impact analysis model as a way to determine changes in costs, revenues and taxes of the municipality as a result of factors like population growth and oilsands development over the next 20 years.
Howery said the analysis model will help the municipality determine the "what ifs" of the region and addresses population aspects that are "unique to Wood Buffalo," like extreme population booms.
To meet the growing population and infrastructure needed to accommodate that growth, residential property taxes will skyrocket unless the municipality receives significant outside assistance from stakeholders, and the provincial and federal governments.
The cost of utilities like water per dwelling unit could hit more than $4,000 a year, and combined with property tax increases, the average home would see an annual cost increase of $7,000 by 2011.
Howery added the three critical variables affecting the region are growth both residential and non-residential, capital investment — the most critical cost pressure associated with growth — and machinery and equipment assessment, or the rate of completion of new oilsands projects and the associated machinery as the most important revenue variable.
Howery said the tool, fully funded by Alberta Municipal Affairs, can serve as a long-range planner "beyond three to five years." The draft example shown to council indicated outside financial assistance will be required to keep the region below their debt limit and residents` taxes at a reasonable rate.
The fiscal impact model`s draft results, using statistics from 2006, 2007 and 2008, predicted that capital expenditures could hit more than $1.2 billion by 2011, with some 1,300 capital projects identified as a priority in the region over the next 20 years, with a total cost of $9.63 billion.
Howery said had the model been based on the current economic situation, "there would be some adjustments."
Wood Buffalo Mayor Melissa Blake said she wouldn`t want the model to be based on 2009 because by 2010, 2011 or 2012 the region could be right back to the same population and development booms seen in 2006 and 2007.
"It certainly confirmed our instincts," Blake said following the presentation.
She described the presentation as "overwhelming."
"The model is helping to prove our financial needs and even in a base case scenario, where there is no more growth or very little growth, there are actions that need to be taken," she added.
The model predicted new neighbourhoods like Parsons Creek could reach population capacity by 2015 and Saline Creek by 2020. The municipality`s debt limit, currently set to hit no higher than 85%, will far surpass 100% by 2011 and hover just below and just above that line for the next 15 years.
Coun. John Vyboh questioned the debt, stating as an example that typically in a household over time one would want to pay off debt — not continue to accumulate it.
Read the full article here.
Darryl Howery, principal at Applications Consulting Management of Edmonton, and members of municipal administration have been working on a fiscal impact analysis model as a way to determine changes in costs, revenues and taxes of the municipality as a result of factors like population growth and oilsands development over the next 20 years.
Howery said the analysis model will help the municipality determine the "what ifs" of the region and addresses population aspects that are "unique to Wood Buffalo," like extreme population booms.
To meet the growing population and infrastructure needed to accommodate that growth, residential property taxes will skyrocket unless the municipality receives significant outside assistance from stakeholders, and the provincial and federal governments.
The cost of utilities like water per dwelling unit could hit more than $4,000 a year, and combined with property tax increases, the average home would see an annual cost increase of $7,000 by 2011.
Howery added the three critical variables affecting the region are growth both residential and non-residential, capital investment — the most critical cost pressure associated with growth — and machinery and equipment assessment, or the rate of completion of new oilsands projects and the associated machinery as the most important revenue variable.
Howery said the tool, fully funded by Alberta Municipal Affairs, can serve as a long-range planner "beyond three to five years." The draft example shown to council indicated outside financial assistance will be required to keep the region below their debt limit and residents` taxes at a reasonable rate.
The fiscal impact model`s draft results, using statistics from 2006, 2007 and 2008, predicted that capital expenditures could hit more than $1.2 billion by 2011, with some 1,300 capital projects identified as a priority in the region over the next 20 years, with a total cost of $9.63 billion.
Howery said had the model been based on the current economic situation, "there would be some adjustments."
Wood Buffalo Mayor Melissa Blake said she wouldn`t want the model to be based on 2009 because by 2010, 2011 or 2012 the region could be right back to the same population and development booms seen in 2006 and 2007.
"It certainly confirmed our instincts," Blake said following the presentation.
She described the presentation as "overwhelming."
"The model is helping to prove our financial needs and even in a base case scenario, where there is no more growth or very little growth, there are actions that need to be taken," she added.
The model predicted new neighbourhoods like Parsons Creek could reach population capacity by 2015 and Saline Creek by 2020. The municipality`s debt limit, currently set to hit no higher than 85%, will far surpass 100% by 2011 and hover just below and just above that line for the next 15 years.
Coun. John Vyboh questioned the debt, stating as an example that typically in a household over time one would want to pay off debt — not continue to accumulate it.
Read the full article here.