OLDS — Olds council got a look at just how daunting the need is to replace facilities, vehicles and equipment Nov. 25 when administrative staff presented a proposed $5.35 million capital budget.
Council members learned, for example, that $1.8 million is expected to be needed to stem water loss, inflow and infiltration into its sewers.
“In 2024, the town has experienced average water loss of 30 per cent and an average rate of Inflow and infiltration into the sanitary system of 43 per cent,” an Olds budget document says.
“This has cost the town $1,700,000 as of the end of September and a projected $2,100,000 by the end of the year.”
The document noted that the Town of Olds has socked a lot of money into that problem during the past couple of years and is expected to need to do so for the next couple of years as well.
Corporate services director and finance director Sheena Linderman told council the plan is for this year’s project to be funded by a combination of transfers from operating ($530,750), the province’s Local Government Fiscal Framework (LGFF) grant ($682,761) and the Canada Community-Building Fund ($586,489).
Another projected spending priority is to replace a few vehicles, some of which are so old they literally spend more time in the shop than on the road.
The plan is to cover all the costs for these projects via a combination of federal or provincial grants as well as pulling funds from reserves.
However, the town's chief administrative officer, Brent Williams, said over time, provincial capital funding to the Town of Olds has been cut by $1 million.
“That's on top of downloading and other funding cuts from policing to medical responses to fine revenue to summer student funding to downloads, weed control, health care, physician recruitment costs, increased borrowing rates, and the list goes on,” he said.
Linderman noted that the provincial government has already let the Town of Olds know that its LGFF grant for 2026 will be cut by 2.5 per cent.
The closure of the SNDL (formerly Sundial) marijuana production plant in Olds announced in the fall of 2023 has also had a negative $750,000 impact on the municipality's finances: $450,000 in lost property taxes and at least $300,000 in franchise fees, the town says.
Franchise fees compensate a municipality for allowing a utility company to build, maintain, and run utilities on land in the community.
Williams said that lost money will have an effect on this year’s budget “because that was certainly above our projections, even with the 2024 increase in franchise fees.”
Another drain on the municipality's finances is the outstanding Olds Fibre Ltd. (OFL) debt.
Last month, the Town of Olds sold OFL, operating as O-NET, the local phone, internet TV business, to Telus Communications.
During a public meeting on that sale, Williams pegged O-NET’S total debt at $19 million, including a $4 million line of credit. He did not say how much the company was sold for, but projected that the Town of Olds' debt will end up being reduced to about $3.5 million.
Williams told council during the budget debate that the municipality is still “engaged” with the province’s Treasury department on that matter.
“At the very least, we are asking for favourable restructuring terms for what's on the remainder of the debt. And best-case scenario, we are hoping for some form of debt forgiveness,” Williams said.
Another big issue is that the town’s reserves have been dwindling over the years as successive councils have dipped into them to fund projects rather than increase taxes.
“Our reserves obviously are at a spot where we wish they were higher. We aren't replenishing them as quickly as we're drawing them down,” Williams said.
It was also pointed out that there are several aging facilities that will soon require major investment to repair or replace, including the Sportsplex.
Another example is a building currently used by parks staff that requires roof replacement.
Yet another expense is renovations to the Operations Centre in order to accommodate staff and town council chambers now that the current Town of Olds administration office has been sold to Westview Co-op.
Some of the expenses incurred in relation to those renovations include engineer’s and architects’ drawings, Williams noted.
Williams said the strategy of this year’s capital budget is to “go backward, to go forward,” meaning to stabilize financial pressures in order to grow reserves and thus more easily fund projects in the future.
“Once we stabilize core operations and our expenses, we can then focus on what council wants and its strategic plan,” Williams said.
One issue that likely can’t wait is removal and replacement of existing fuel storage tanks which support pumping operations, for the fire department, Williams and infrastructure director Adrian Pedro said.
“Upon review from the Alberta Safety Codes Council, both tanks were deemed to be obsolete and earmarked for a cease-and-desist order.
“The replacement of these tanks is essential to ensure reliable fuel storage, maintain operational readiness for fire suppression, and comply with current safety code and environmental standards,” a budget document said.
Coun. Darren Wilson asked Williams if he could foresee a time when the Town of Olds would be making deposits to, rather than withdrawals from, reserves
“Crystal ball activated: I believe we are at least five years out from that,” Williams said.
Coun. James Cummings said he’d like to see administrative staff provide proposed capital costs divided by years of expected life.
“To me, that gives me a better understanding of the overall cost of a piece of equipment and the cost required, or the monies required to replace it, and how we should be funding those capital things, going into the future,” he said.
Council passed a motion to that effect.
Williams said administrative staff have already done some of that work so he was confident that could be done as part of an overall asset management plan.
“But anything you see is going to be a first draft, of course,” he said.
“It takes time, a bit of expertise to get accurate numbers for a capital inventory that has never had that before and has reached an age where you're really either best-guessing or you're overwhelmed by the scale of the need.”
Wilson said “any information is good, helpful, especially of the financial slant,” but given all the issues outlined by administrative staff, he predicted the numbers council will be seeing as it tries to hammer out the 2025 budget will be “absolutely overwhelming.”
He noted that a one per cent tax increase generates roughly $100,000.
“How are we going to fund asset replacements? Whether you're talking the Sportsplex, whether you're talking the Rotary or the skateboard park, or whatever,” Wilson asked.
“Information is good. Knowledge is power. It'll be a daunting, overwhelming number, throwing 100 or a couple $100,000 into reserves, build a little bit of a nest egg in a rainy day.
“But the bigger question is how and where are we going to get money five, 10, 15 years down the road to replace our assets?”
