Firehall Renovation and Expansion
The District of Sparwood is proposing to borrow $5 Million to rebuild Fire Hall #2 in Sparwood Heights. This borrowing is for 100% of the cost of construction, based on estimates. This amount is estimated to cost every residential property owner $110 (or more) a year for 30 years. That amount is based on the first 10 years and will go up if interest rates go up. It is also based on a house valued at $265,000. You could pay more or less. A house worth $500,000 would pay $210 per year x 30 years in extra taxes, or at around $6,300.00.
Fire Hall #1 is the main hall where all the training takes place. Fire Hall #2 has 3 bays with equipment located in it and Firefighters who live in Sparwood Heights to respond. In total, Sparwood currently has 9 bays to house Fire Apparatus. Fire Hall #2 received upgrades to improve the hall and bring it up to workplace standards in 2015-2016, at a cost of about $200,000. Previous Councils determined it was adequate to meet our needs, recognizing Fire Hall #1 has all the resources for a community our size.
I have concerns regarding borrowing $5 Million dollars over 30 years because:
• Present day economic forecasts all indicate that interest rates will go up in the next 1 to 2 years. At 3% interest rate, the total cost would be $7.5 Million over 30 years. Borrowing for the first 10 years is set at 2.34%. Over time, the proposed $5 Million build would cost far more than that amount.
• Historical cost overruns pose another topic of concern, especially given the speed at which this project has moved forward.
• Coal mining is our economic driver and we do not know what the future will bring. Fossil fuels are widely discouraged globally at the moment. We know that the proposed coal mine in the Crowsnest Pass has not received approval to proceed. More certainty around mining revenue is needed before entering into borrowing for a 30-year term.
• The present plan calls for a large area dedicated for a kitchen, an office, hose tower and a meeting room and laundry. All of this is available in Fire Hall #1 and would be redundant.
• In my recollection, the District of Sparwood has never had to borrow money for this kind of build. When projects have been identified, money has been saved in Reserve funds over a number of years and then paid for outright. No business plan, financial plan or Fire Service review have been presented for this project. The Capital budget was amended at a Council meeting on May 4, 2021 to approve a loan authorization. Approval would reduce the District’s borrowing capacity should emergencies arise.
In summary, there is no need to rush into the replacement of our Fire Hall #2. A better choice would be to do a business plan and fire service review, or give the community access to those if they are already done. Once a plan is made reserve funds can be saved and dedicated towards a Fire Hall #2 in Sparwood Heights in the future if it was determined that it is needed.
Having voiced my concern, I want to highlight that none of this is meant to disparage our District of Sparwood Firefighters. They are highly skilled, devoted, responsible and an important part of our community. They are also taxpayers who benefit from fiscal prudence for the care and improvement of our community as a whole.
All residents of Sparwood who are eligible to vote have the opportunity to object to the District of Sparwood borrowing $5 Million dollars to rebuild the Fire Hall in Sparwood Heights. The District is using a process whereby people need to object to the borrowing and if at least 276 people sign a form, they cannot proceed with the borrowing at that point. If at least 276 people sign the Electoral Response Form objecting to the borrowing, Council can then send the question to a referendum by voting, or simply not proceed. If you own property in Sparwood and live in BC, you can also sign as a resident property elector.
Electoral Response Forms can be picked up and signed at the District of Sparwood main office, faxed to 250.425.7277 or emailed to email@example.com no later than September 13th . You can follow this link to print out a form also:
Fire Hall Renovation and Expansion
I am taking the time to write to you in order to clarify and respond to some of the statements and opinions being expressed about this project in the public and media, as you are being asked to consider your support for borrowing $5 million towards the renovation and expansion of Fire Hall #2.
Fire Hall #2 was built in 1982 to provide garage space in support of enhanced fire protection of the expanding Sparwood Heights development. Since that time, only modest improvements and capital investments have been made to the facility, including the exhaust system, cold storage, mezzanine enclosure, and the communications radio tower with repeater equipment to provide increased communication coverage. Over the years, these small improvements have totaled less than $180,000 in capital expenditures, and at no time in the last decade was a one-time capital investment made in the facility totalling $200,000
Over the last 40 years, the suitability and useability of Fire Hall #2 has decreased. The ageing facility has been discussed by Council and Staff going back as far as 2009 in conjunction with the projected Whiskey Jack development. In 2010 there was a resolution to proceed with the Fire Hall #2 project (in 2011), which was ultimately deferred due to funding concerns. Although the need to address Fire Hall #2 has been considered and deferred on many occasions, it has been a part of the 20-year capital plan since that time.
The existing Fire Hall #2 is designed to serve as a garage type facility and does not meet modern day fire station design with respect to appropriate equipment isolation and cleaning facilities, washroom and shower facilities, adequate storage for larger fire apparatus, and having enough room around the vehicles to complete equipment and safety checks. As an example, a vehicle that is intended to be stored at Fire Hall #2 under agreement with the RDEK must currently be housed at Fire Hall #1. The proposed project will address these concerns and provide a safer exit and entry route for apparatus. Ultimately, it will allow for Fire Hall #2 to serve as a proper fire station. The importance of having both Fire Halls for reducing response and travel times is touched upon in the 2012 study conducted by Smith Brownlee & Associates.
If the proposed Fire Hall #2 project is approved to proceed, the intention of the District is to seek bids for Design-Build of the project and enter into a fixed price contract. The request of Design-Build bids, use of fixed price contracts, and inclusion of a reasonable project budget contingency will help mitigate any cost overrun concerns.
Given the size and nature of this project, as well as the reasonably low 10-year fixed interest rates available to the District (currently at 1.95%), it was deemed prudent to fund this project through long-term borrowing. Council acknowledged this when it approved budget “Guideline 11 – Debt” in October 2020. The budget guideline explains that the District currently has funds in the bank available for investment, and with a low-risk investment return estimated of 1-1.6% the cost of borrowing could essentially be offset by investment returns. Another important consideration is that this facility will serve the community needs well into the future, and if the community experiences any growth during that time individual tax bills will also decrease. So while the Ministry requires the municipality to estimate the cost of borrowing in the Loan Authorization Bylaw at an estimated 30-year interest rate, the actual term of borrowing, interest rates, and impact of borrowing can change.
As for overall debt, as of December 31, 2021 the District will only be paying for the Michel Creek Road water line extension, which has offsetting revenue from a parcel tax that was implemented when constructed. The annual debt servicing cost of the Fire Hall #2 project would amount to approximately 10% of the District’s total borrowing capacity, leaving significant room for other planned or emergency projects.
Finally, the suggestion that the regional coal industry is unstable and should prevent Council from considering borrowing long-term for any project is a scare tactic that does not negate the need for proper asset management and financial planning. There are many factors at play in the coal industry, and each company, project, and region is unique. The presence of existing mines, and the number of requests for new mines and expansions, speaks positively to the strength of the coal industry in this region.
I hope this provides further context with regards to the importance and feasibility of this project. However, should you have any questions regarding these matters, please contact Fire Chief Dean Spry at firstname.lastname@example.org.
Mayor David Wilks/Sparwood