City savings to be hit by Kamloops arts venue, but tax impact unclear

The long-awaited Kamloops arts venue is set to cost millions more than the estimated price last year, and millions will come from city hall savings.

It means millions in funding will come from city hall reserves and previously approved projects will be delayed to prioritize the $211 million performing arts centre.

Taxpayers have been reassured it won’t cost them more than planned, but some city councillors aren’t so sure.

“If you have done what we have done with this project, which is drain some reserves to make sure that we don’t have a major tax hit to meet these costs, then at some point in the future there will be a tax hit,” Coun. Stephen Karpuk told iNFOnews.ca. “I’d be lying if I didn’t say that was the case.”

Staff still expect the project to land on budget, if not below.

“We are confident with our overall budget now and will ensure this project comes in on or under budget,” city finance manager Dustin Rutsatz said in an emailed statement to iNFOnews.ca.

Last year, taxpayers were told to expect an annual one per cent increase for five years to fund multiple projects, including the arts centre. That remains the plan, according to city staff.

While Karpuk said the reliance on reserves could have an impact in the future, Coun. Kelly Hall disagreed.

The $211 million funding plan includes $20 million from donations, but Hall expects that amount could reach $40 million while staff may find more grant funds to alleviate the burden on city hall coffers. The plan currently includes $8.4 million in grants.

Hall also said Kamloops has to catch up with other cities with big projects like the arts centre and the upcoming multiplex arena.

“Unfortunately, Kamloops is paying for 30 years of no development,” he said. “As the Tournament Capital of Canada. It’s required… on a more regular basis.”

The bulk of the project is funded through $140 million in debt. More than $27 million will come from money already in city hall accounts, with most of that from five separate reserve accounts. Some are reimbursed each year, and another $15.5 million from reserves will be funded after construction.

According to Rutsatz, the annual reimbursement to those reserves, along with planning and prioritization of other approved projects, will help avoid draining the accounts in the event of unexpected expenses.

The city’s finance manager added that there could be other costs to come up during its four-year construction, but those will “stand alone and not be tied to this fully-funded project.” He said council would have to decide how any surprise additions are funded.

The arts centre is one of a few upcoming projects under the so-called Build Kamloops moniker. Next up is the four-sheet multiplex arena, which is supported with a $135 million loan. It’s not clear how much it will cost, but it’s expected to break ground in the spring. That will eventually be followed by a new RCMP detachment with an estimated cost of at least $150 million.

Whether those will also include a reliance on city reserves isn’t known, but it’s a tactic that got West Kelowna into trouble when investments into city hall reserves, or savings accounts, didn’t keep up to capital projects.

The spending saw West Kelowna’s $44 million in reserves dwindling to $14 million this year.

Karpuk said he and other elected officials are moving cautiously as they dip into city hall savings.

“It is on my mind, and I’m not alone with my colleagues. Some of us have had this discussion,” the city councillor said. “From all the stuff I’ve learned as an elected official… and as a business owner, I’d be stupid to use up whatever bank savings I’ve got unless it was for the emergency they were saved for.”

While Kamloops council is looking to cut costs as it eyes a potential 10.7% tax increase next spring, that amount is unrelated to Build Kamloops projects.