Asset Managment, securing Golden's future.

“Local governments across the globe are becoming aware that they have been making short-term decisions about investments, maintenance, and the renewal of public assets and that it is not sustainable over the longer term” Mayor Christina Benty wrote in the Golden Star on August 27^th 2014. Golden is no different.

For a town of less than 4000 we have a significant and diverse number of facilities. Now we must find a way to pay for them all. 

The town of Golden is a corporation with over $60 million of assets. The town’s assets comprise of infrastructure (water, sewer and roads), land and buildings and equipment (furniture and vehicles). The services that the town provides and the economic prosperity of our community are based on the use of these assets.

Roads represent the town’s largest asset class reported at over $27 million, almost half of the total assets. You may be surprised to learn that the town has no money in a reserve fund for the maintenance of roads. None! 

Water and Sewer infrastructure is the second largest asset class reported at over $15 million. Water and Sewer appear to be adequately funded due in large part to the New Building Canada Fund (NBCF), a senior government grant program for water and sewer infrastructure renewal projects. However the NBCF will not support roads or buildings.

The town owns several buildings with an asset value of over $6 million. Without prudent and sustainable financial management, these buildings are at risk. There is insufficient money set aside in building reserve funds to make major repairs or to replace them.

The existing financial model is not working and without sufficient money in the reserve funds our roads will deteriorate slowly but surely and our building will fall into disrepair. To maintain the assets that everyone in the town and surrounding area enjoy, we need a new financial model, a model that requires full and fair partnership on shared services with Area A.

Going forward, the challenge for Golden is to find the money to support this infrastructure without reducing the services that make Golden such a great place to live and without astronomical increases in property taxes. 

I believe I can help meet that challenge and build a sustainable future for our children and grandchildren.

The opinions expressed in this blog are my personal opinions and may not represent the opinions of other Councillors nor the opinions of council.

Keith W Hern profile

The following profile will be posted on the Golden Star webpage covering the 2014 municipal elections. I thought it might be useful to post some of my background on my blog.

Frances, my wife of 42 years, and I were born and raised in Birmingham, England. I obtained a B.Sc. in Mining Engineering from Nottingham and a Masters in Petroleum Reservoir Engineering from Imperial College London. We moved to Calgary in 1973 and have three adult children and one adorable grandson.

After 20 years of engineering, operations, and management, I became the president of an oil/gas company listed on the TSE. I dealt with government agencies and was responsible for keeping multi-million-dollar projects on budget.

The leader-in-me became evident in my teens. At school, I was head boy, captain of the senior XV and coach for the U14 rugby teams, and captain of the swim team. 

In Canada I was a director of the Alberta Squash Rackets Association responsible for the original Calgary inter-club league, a volunteer Canadian Ski Patroller at Lake Louise, and the treasurer and president of Silver Springs Court Condominium Corporation.

 I volunteered with the Alberta Hobie Cat Association, was elected as president of the Canadian Hobie Cat Assoc., and represented Canada in two world championships.

While treasurer and commodore of the Calgary yacht club the finances improved, the membership grew and the club developed a strong junior program. I was briefly president of the Alberta Sailing Association and in 2000 Regatta Chairman for the Western Canada Intermediate Sailing Championships. Members of the Alberta sailing team still drop by to say hello.

When my children were in the Nancy Greene program at Lake Louise, I was part of the team that developed and hosted the skill awards festival attracting over 350 athletes and coaches  to Lake Louise for a weekend of skills training and testing.

I was elected president of Calgary's National Alpine Training Centre,  designed to help Canadian athletes  get onto the national team. I volunteered countless hours freezing my butt off for the Lake Louise World Cup and afterwards giving the provincial teams valuable training on the course.

Lured by the Columbia Valley's natural beauty, I moved to Golden and, in 2001, developed a small subdivision on Golden’s northeast bench. Semi-retired, I run a real estate brokerage from my home and love to spend blue-sky days at KHMR with fresh snow beneath my skis.

Active in the community, I've been an integral member of the Golden Air Quality committee raising over $100,000 for the wood-stove exchange program. I’ve also been a volunteer instructor at the college for several years. 

The opinions expressed in this blog are my personal opinions and may not represent the opinions of other councillors nor the opinion of council.

Why I voted against utility rate hikes.

At the Standing Committee on Finance meeting on Tuesday September 16^th, it was resolved, with Councillors Hern and Moss opposed, to recommend to council that water rates be hiked 2.5% per year and sewer rates be hiked 5% per year for the next 3 years.

For the 3 years 2012-14, the town of Golden council increased both water and sewer rates by 5% per year based on an intuitive belief that rates were too low. On Tuesday the committee was presented with a staff report supporting rate increases based on Asset Management principles; so why did I vote against the rate increases?

Both water and sewer rates provide sufficient revenue to cover annual operating expenses with an amount left over to fund future capital projects. The debate revolves around what is an adequate allowance for future capital projects.

Accountants calculate an amount of amortization based on the historical capital cost of the asset divided by the life expectancy of the asset. Due to inflation this amount may be inadequate and should be considered the minimum. Based on accounting principles, water and sewer rates are adequately funded.

Recognising that the amortization calculated by our accountants may be understating the future capital requirement, Asset Management tries to calculate the future replacement costs of the asset by estimating future capital replacement costs based on an assumed inflation rate. In periods of low inflation, this guesstimate may overstate the future capital requirements. Based on asset management principles, water and sewer future capital requirements are grossly under-funded.

The staff report did not take into account the New Building Canada Fund. Announced in 2014 by the federal government, the NBCF will provide grants of up to 2/3 of the capital cost for water and sewer projects. On the assumption that the town is successful in obtaining grants under the NCBF, the town will only be responsible for a third of the cost of major water and sewer infrastructure projects. On this basis, the town has more than enough funding for future asset replacement even under asset management principles.

The New Building Canada Fund will provide grants for water and sewer infrastructure but NOT road. Unfortunately most water and sewer infrastructure are located below roads which must be excavated in the process. Ironically the town has healthy reserve funds for water and sewer estimated to be $1.4 million by the end of 2014. 

The road reserve fund is empty! Nil! Zero! We need to focus on building the road reserve funds or we will not be in a position to take advantage of the New Building Canada Fund. 

I voted against the rates hikes as I believe the water and sewer are adequately funded with existing rates and that council needs to focus on building a reserve fund for roads.

The opinions expressed in this blog are my personal  opinions and may not represent the opinions of other councillors nor the opinions of council.

Keith Hern for Mayor

After much consideration and encouragement, today I filed nomination papers for the office of Mayor in the upcoming municipal elections. I was nominated by Miriam Elkington and Roy Nixon, both of whom are ex-councillors and stalwarts in our community.

In the weeks leading up to the election I shall be releasing discussion papers on topics of great importance for the town. If you have any question please email or phone(250-344-6090) and I will try to answer them as best as I can.

Flec Demmon (250-344-8451) and Bob Tegart (250-272-4321) have volunteered to locate my lawn signs. If you would like to display a sign please give either one a call.

Raymond Johnson has offered to be my financial agent (250-344-5566). Should you feel the urge to support my campaign with contributions, you can send cash or cheques to Ray.

Election Day is November 15^th with an early voting day on November 5^th 2014.

The opinions expressed in this blog are my personal opinions and may not represent the opinions of other Councillors nor the opinion of Council.

Economic Opportunity Fund allocations

As mentioned in an early blog, Kicking Horse Culture has secured funding of $120,000 per annum for the next three years (2015-2017) from the Economic Opportunity Fund. 

In addition, at the Town of Golden Special Open Council meeting on June 17^th 2014, council confirmed its support with the Area ‘A’ director in requesting the board of the CSRD allocate from the Golden and Area ‘A’ Impact Area EOF;

1.       $80,000 in the fiscal year 2014 to the early Learning and Care Stakeholder Action Group to leverage other funding toward the construction of an early learning and care centre in Golden and;

2.       $45,000 in fiscal 2014 and another $45,000 in fiscal year 2015 to the Golden Nordic Club Society toward its continuing infrastructure development.

The Economic Opportunity Fund (EOF) is derived from the Impact Area component of the BC Hydro payments in lieu of taxes (PILT) for the power generating facilities including dams, reservoirs and powerhouses and is available to the CSRD each and every year. In 2014, $273,000 was allocated to Golden and Area ‘A’ Impact Area EOF. This amount of EOF is expected to increase as more power generating facilities are developed by BC Hydro.

All monies extracted from the EOF must be approved by both the Golden Town Council and the Area ‘A’ regional director and ratified by the CSRD board.