Climate change has thrown the city a curve ball again with several major weather incidents causing a crowding at the plate on the second quarter bottom line.
Storm activity this year caused the city-owned Nelson Hydro budget to rise slightly ahead of where it should be at this time of the year, noted city deputy financial officer Chris Jury, but it was also aided and abetted by an increase in the storm repair budget.
He said the utility was first hit in 2021 with a storm on Jan. 13, causing significant damage to Hydro infrastructure. In response, an increase of $290,000 to the storm repair budget was approved by council, he explained in the Finance department second quarter financial update to city council recently.
Three months later on April 18, the Nelson area suffered another intense windstorm event “which lead to further widespread power outages.”
As a result, the city and Nelson Hydro are preparing to table its budget earlier this year in order to build in some cushion in the budget to allow for the increasing frequency of destructive major storms hitting the Nelson area, said Jury.
With that storm activity and the trend line that is happening, not just here but all over the world, is the city putting enough into that budget line to have the best-case, worst-case covered, asked Coun. Jesse Woodward during the last regular council business meeting.
“It just seems like to bet on instability is a good bet,” he said.
It is something the city will need to take a deeper look at, Jury replied.
“It’s so difficult to budget for a storm,” he said. “You might have a year with nothing, when other times you will have too much and go way over (budget).”
He suggested the city might want to create a storm reserve fund as climate change keeps stirring the weather pot and throwing more severe storms into the mix.
“In the past (storms) weren’t such an issue, but now it just seems to be quite obvious when you don’t budget for it,” said Jury.
The rest of the second quarter report was uneventful for the city’s bottom line, a fresh breath after the blast of financial turmoil from the COVID-19 pandemic.
Jury said city sales of service has rebounded substantially from a COVID-19-impacted 2020.
“Significant drivers are a $175,000 increase in parking and parkade income, $27,000 in additional campground revenues, and $24,000 more from the Youth Centre when compared to last year,” he said.
“We also have the first full year of the Farmers Market which bought in $11,000 of new revenue to the end of June. Some areas such as parking and the campground were slow to ramp back up, however, and are down slightly from 2019.”
City investment income is down noticeably from 2020, Jury pointed out, with “prior year investment income stemmed largely from unrealized capital gains in bond investments” as the interest rates fell during the pandemic.
“With interest rates expected to stay low for the foreseeable future, it is anticipated that the interest revenue from the bond portfolio and operating bank account will continue to be lower throughout the year,” he said in his report.
• Transit revenues are ahead of 2020 after seeing a significant decline as a result of the drop in ridership due to COVID-19 last year.
Overall, the city is managing its operating budget expenses as it predicted, said Jury.
• General government is in line with the prior year, with the by-election costs and an additional FortisBC grant funded staff member — working on the embodied carbon project — being some of the factors why expenses are higher this year.
“It is important to note that the main reason the budget is much higher this year ($3.6 million) is due to the COVID-19 restart grant funds being added in order to be available to fund any related expenses the city may incur this year,” said Jury.
Environmental health services expenses are higher with the addition of one employee to the resource recovery truck team of two. But, with the switch from the blue bags to the blue bins the city has collected 41 per cent more in recycling product by weight, while garbage weight is five per cent higher over the same period last year.
“This increase in recycling volume is creating a challenge for staff to pick up all the material during a regular work day, resulting in additional overtime costs,” said Jury.
“A complete review of the city's environmental health services program is needed to understand how to handle this additional volume, as well as incorporate organics collection in the future.”
• Recreation and cultural services are in line with the prior year and below budget, said Jury. The 2020 budget was reduced during the pandemic, so some areas such as the campground and parks maintenance were increased again for 2021.
• Implementation of the sidewalk upgrades and pavement resurfacing program is ongoing throughout the city;
• the paving of the Lakeside waterfront pathway is scheduled for September;
• the new Nelson Public Library building grant application was unsuccessful;
• no announcement yet on the city's Low Carbon Heritage Renewal for the Nelson Civic Centre grant application;
• staff have held off on purchasing one of the scheduled pick-up trucks and the used cargo van with the understanding that an electric version may be available in 2022;
• in September work on the grant-funded Cottonwood washroom will commence;
• work continues on the Daybreak Rotary lead phase two of their Rosemont playground project, with preparation of the new slide in process. Once the slide has been installed and the plan is for the paving of the path to be undertaken, which should happen near the end of September.
• installation of two Storage Area Network and Server hardware (SANS) has been completed, which has greatly increased the city's IT system stability;
• the library's new automated book check in/check out system has been ordered with the understanding it will be in service by October after all the library materials have been tagged;
• phase one of the primary bike route has been completed with the grand opening taking place a few weeks ago. A new bike storage facility has been constructed in the parkade.
• as of June 30 Public Works utility crew estimates that the Fourth Street watermain replacement was about two thirds complete with the expectation that the entire project will be finished by early September;
• the extension of the West Arm of Kootenay Lake emergency water source intake has been completed; and
• phase two of the source protection/secondary source capital project is moving ahead nicely with the piping from Anderson Creek to the Mountain Station reservoir, which is scheduled to be completed by fall of 2021.
Due to supply chain challenges it is expected that Anderson Creek control and pump station building will be finished by year end, however the pumps and electronics will not be installed until 2022.
Source: City of Nelson