Capital Plan 2006 - 2008

The Capital Plan establishes the City of Vancouver's priorities for major maintenance, renewal and upgrading of our infrastructure and buildings and for community support programs over the next three years. The plan explains what projects are proposed, how much they will cost and how we will pay for them.

Capital Plan Primer

• What is a Capital Plan?
• Why do we need a Capital Plan?
• What are the priorities?
• How we spend capital funds
• How much can we afford?
• Where does the money come from?
• Opportunity Areas >>
• Referendum

What is a Capital Plan?

The Capital Plan establishes the City of Vancouver's priorities for major maintenance, renewal and upgrading of our infrastructure and buildings and for community support programs over the next three years. The plan explains what projects are proposed, how much they will cost and how we will pay for them.

The City provides its residents with a wide variety of public services. These include the ones you see and use everyday, such as our parks and community centres; the streets where you walk, bike and drive; our library system; and police and fire department services. It also provides for longer range projects such as upgrading our sewer and water mains and streets, and planning, maintaining and constructing all the buildings and infrastructure that we need to run these services. The costs for all these services are divided into two categories:

The ANNUAL OPERATING BUDGET pays for the day-to-day costs of delivering programs and services. These costs are similar to your everyday household expenses, such as utilities or groceries.

The CAPITAL BUDGET is where we pay for major projects such as reconstructing streets; building and improving public facilities such as community centres, parks, fire halls, libraries and bridges; and maintaining the City's sewer and water systems.

Review Capital Plan Primer in PDF version (1.35MB).

Why do we need a Capital Plan?

Most of the City's capital expenditures are planned on a long-term basis (for example, the sewer and waterworks programs are managed on a 100-year replacement cycle). We use the three-year Capital Plan to make them more manageable. It also allows the City to tailor programs to the changing needs of communities and to better manage its finances. City Council decides how much the City will spend and which projects will be included in the Capital Plan. However, if these expenditures are to be paid for with borrowed money, Council must seek approval from eligible voters in Vancouver during the civic elections, which is another reason for the three-year planning cycle.

What are the priorities?

Various City departments submitted funding requests exceeding $650 million to the planning process. A staff team shortlisted the requests based on our existing long-term policies, Council and community priorities, departmental plans and future needs. Because of the importance of our buildings and infrastructure, Council has long-term policies related to their maintenance and renewal.

The first priorities for the Capital Plan are to:

• ensure timely maintenance and renewal of existing infrastructure and facilities
• address safety and security issues
• address mandated environmental improvements.

Making sure our infrastructure and facilities are keeping up with our growing city is the second priority for capital expenditures supporting projects that:

• enhance infrastructure and facilities to meet existing service demands
• address areas where service levels are deficient.

As a third priority, the draft Capital Plan reflects the current priorities of Council and the community, namely: sustainability, affordable housing, child care and improved pedestrian and bicycle facilities. Many of these allocations are directed at providing:

• increased service levels in existing program areas
• new services or programs
• enhanced environmental sustainability.

How we spend capital funds

The City has a long list of projects for maintaining, upgrading and adding to our facilities and services. Developing the Capital Plan requires very difficult choices between what we need to do and what we can afford. First we decide how much we should spend. Then, we look at the capital expenditures that are required and prioritize them. We work to find a reasonable balance between how much of our money should be spent on maintaining our existing infrastructure (such as roads, sewer systems, buildings) and on making improvements (such as more bike routes, new parks, more trees). In recent Capital Plans, for every dollar of capital spending, about 75 cents goes to maintaining what we have and the other 25 cents goes to new projects.

How much can we afford?

Just as there are limits on how much you can spend on your home, there are limits on how much the City can afford to spend in each Capital Plan. Only the highest priority work is undertaken, and the costs remain within your ability to pay, since capital expenditures are paid by citizens through property taxes.

Like you, when the City borrows money for capital expenditures, we are required to repay it. We avoid funding crises because we are careful with our debt and we plan ahead. Having good fiscal policies is one of the main reasons the City of Vancouver holds a AAA credit rating, the highest available. This means we get the lowest possible interest rates when we do borrow.

In setting the spending limit, Council's policy is to find a balance between:

• maintaining an appropriate capital expenditure plan relative to the City's operating budget
• limiting the impact of the Capital Plan on property taxes and fees
• maintaining a capital expenditure program that meets our highest priority needs.

The 2006-2008 Capital Plan proposes to spend up to $354 million, of which $266 million will be supported by property taxes. Our projections show that the 2006-2008 Capital Plan could result in an increase in property taxes of approximately 3.2 per cent. This is about $15 per year for the average residential property in the city.

Where does the money come from?

The City raises capital funds from a variety of sources. Of the total capital expenditure program of $354 million, $54 million will come from water system user fees; $56 million will be paid by current taxes; $34 million will come from developer contributions; and about $210 million will come from our borrowing program. These City funds will attract another several million dollars of investment from outside sources for capital work.

Referendum

Once the Capital Plan is finalized, an election guide summarizing which projects are included will be mailed to everyone eligible to vote in the municipal election on November 19, 2005. On the election ballot, voters will be asked whether or not the City should borrow money for the projects in the plan. If these questions are approved, the projects in the plan will be initiated over the next three years.

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