Transcript: Committee of the Whole - 2026-07-13

Sam, It's it.

All right, good. Good evening, everyone. Bring out the gavel. I know. And it had zero impact. Oh, it does. I know. All right. Good evening, everyone. I would like to call this meeting of the committee of the whole to order. Before we begin our formal agenda, I will turn to Councillor Morrison to provide the territorial acknowledgment.

Thank you, Chair. We wish to recognize and acknowledge the Songhees Nation, the Kosopsin nation on whose traditional territory we live, we learn and we do our work. Thank you.

Thank you, Councillor Morrison. And just to clarify, the reason that I'm chairing tonight as opposed to Mayor De Jardin, is because we do this for committee. The whole councilors have a rotating agenda around who's acting for the mayor and the acting mayor runs the meeting on the for the committee of the whole. Are there any late items to introduce?

Not for the committee.

The whole.

Okay, thank you. Can I have a motion to approve

the agenda of approval?

Councillor Morrison and Councillor Brain. And we now move to the minutes from the committee of the whole meeting of June 15, 2026. Any errors, omissions or additions? Seeing none. I'll ask for a motion to approve. Councillor Kevins, Councillor Halliwell. Thank you. All those in favor, any opposed? Motions passed. Now turn to public input on items six and seven. So we've got a presentation by the hotel Development working group and then staff reports on the sauna pilot program at Gorge park and staff report on the reserve funds and surplus and a staff report on the debt analysis. So I welcome public input on those. There's a broader public comment period that will occur at the end of the meeting. But does anyone have any specific comments on those agenda items?

Calling once, calling a second time and calling a third time. That wraps it up. So we will now move to presentations and we have a presentation from destination Greater Victoria, the Hotel Development working group. So if someone can come to the mic and introduce yourselves, I will just note that you have. You have 10 minutes for the presentation.

Thank you very much, Chair, Mayor and council, my name is Paul Nursey and Jeremy Loveday, our vice president of external affairs and many other things is here with me. We'll be on work that we earlier this year around hotel development in the Greater Victoria area. Five municipalities participated, including your edo, as did Songhees Development Corporation. And we've met with as delegations with all the municipalities and Chief Sam and some of his council members. So we're taking the kind of the due diligence to come back and report back at the governance Level as was requested by staff. And I will just preface my comments. We're not here to lobby for hotels or do anything like that, but we have heard over the years that there is keen interest in having one, perhaps two hotels in Esquimault from various people.

So we thought we would just report back on the work and hopeful that it's good information in terms of kicking it off. We've had a long relationship with the township of Esquimalt. Some of the items are listed here. Importantly, we've undertaken major, major efforts around relaunching Rosemead House Hotel. We have very significant medium public relations investments in Canada, United States, United Kingdom and we're delighted to see the positive press around that reinvestment. As I mentioned, the Hotel Development Working Group was convened. It's a model that's been used across British Columbia, Vancouver and other areas to bring various players together, the development community, the municipalities, Financier, BC Hotel association, others.

Because there has been a challenge in actually getting hotel development investment across the line over the last 20 years. I'll go into some of the details and the rationale in the subsequent slides. But there is an acute market shortage and it is a difficult asset class. So the idea of working together to see how we could move this a little further for the sake of learning was deemed as advantageous. There's a clear hotel inventory supply gap in Greater Victoria, yet there's also a clear, we hear it all the time from municipalities that they would like to see, generally speaking, diversification in the property tax base, the catalyst for economic development in and around hotels, with small business and net new money coming into their communities.

So

these are big investments and they're complicated investments. And we understand while each council is different and the decision is up to mayor and councils, we understand the desire. We're just trying to close that gap. This process was full of learnings and one of the learnings that many Planning Department staff and EDO's took from the discussions around the table is that there are many different types of hotel developments and what's outlined here is just the models of many different formats of hotels and some of the inputs into them.

And different hotels suit different areas of the region a little bit better. We had participation from Sook, who had different perspectives, from Esquimault View, Royal Saanich, Victoria and so that was a very healthy discussion point. Everything that sometimes hotel brands have brand guidelines that intersect with bylaws and things of that nature, all these different friction points that need to be worked through coming out of the report there are many feasibility factors involved in whether hotels go forward or not. These are some of the high level pieces zeroing in on policy and planning. One of the discussions points was that either pre zoning or identifying parcels of land that could be considered for suitable hotel development in the future or even just friendly language and official community plans that hotel development is welcome is very much a strong signal to the development community that of the many different municipalities that they could consider making an investment in that they may want to consider that municipality as referenced earlier, it is a very challenging asset class.

What's up here is we went through detailed pro formas and the various different levers, 18 or 20 different levers in a project and even with that again we've replicated the four types of models and it does underscore that even with record demand and record average daily rate which we are experiencing and likely will continue to experience that these things do need a little bit of public policy support to be feasible.

And so that to and fro that good service with your staff before packages come to council's consideration is very much much valued. And with that I'm going to turn it over to Jeremy.

Mayor and council. I am pleased to have the opportunity to present to you. Thank you very much.

With the this one I may have turned it off.

Is it the star? The big star? That's the one. So start by telling you a little bit about the community and economic benefit of hotels. That was one of the goals of the Greater Victoria Hotel Development Working Group was to tell that story and to illustrate the benefits. We know that hotels are more than just places to places to sleep. They also catalyze community investment, provide gathering spaces, offer amenities that are available to guests and the public and act as muster points during emergencies and support local charities and community events. And I think these benefits matter in a place like Esquimalt where tourism, local business events and neighborhood scale economic development are all intimately connected.

An important point here is that hotel development when well located and well designed contributes significantly both to the visitor economy and the local community. Star button the economic impact is also very significant. Based on the 2000 net new rooms that that our study showed is needed. The report estimates that 2,750 direct and indirect local jobs will be created. More than 100 million in annual visitor spending and almost 50 million in annual tax revenue across all levels of government. In practical terms that means year round employment, more customers for local businesses, stronger support for events and attractions and a boost to public revenues at a time when we know that Governments are feeling the pinch and are looking to diversify their revenue sources.

So the working group, the diverse group that came around the table to collaborate and publish this report, came up with a number of recommendations, six of them in total, organized around three goals. And the goals were first, to deliver the 2,000 net new hotel rooms that the region needs to capitalize on the opportunity that's in front of us. Second, is to help de risk and streamline hotel development. And third, is to minimize the regional loss of hotel rooms. And I'll walk through the recommendations briefly noting which ones are perhaps most relevant to Esquimalt. So the first recommendation is about targeted zoning and land use policy changes that can be used to unlock new hotel development sites.

We found that even though there are many sites in the region that are zoned, those sites aren't necessarily the ones that are viable for development in terms of their location and size and whatnot. So recognizing that Esquimalt will likely look to get one or two new hotels, you probably don't need a whole policy suite change like other municipalities may look at. But as Paul mentioned, there are important signals that can be sent and messages that can show that you're open to this type of investment, including using tools such as pre zoning and your OCP and targeted density on suitable sites. So the second recommendation is focused on permitting and process improvements and essentially this is looking at trying to eliminate the number of back and forths that a proposal will go through at the staff level before it comes to council mostly, and looking at making sure that there is clear information upfront about where there is flexibility and when there is not, and making sure that there's clear guidelines specifically around the areas that are unique to hotels.

Because the development process and what's needed in terms of hotels is different from other typologies of buildings such as office and residential. And some of the friction points. There can be parking, loading zones, guest drop off servicing and hotel street interface, some of which are guided by brand guidelines that have requirements that may be unique to that brand and will require some flexibility by local governments. Third recommendation focuses on education and technical support. We haven't had many hotels built in the region in the last 20 years and so that also means that many staff and people around the table at the working group mentioned that there hasn't been the opportunity to gain the unique skills that it takes and the understanding and expertise of what it takes to get hotels built.

So this is looking at a collaborative approach to making sure that local government staff and decision makers have have the policy tools they need. The fourth is one minute perfect. The fourth is pursuing first nations hotel partnership opportunities. So local nations have have an ambition towards building hotels and these recommendations aim to help achieve that, that vision and the shared benefit that that would create. The fifth recommendation is regional collaboration for investment attraction. So that's probably working with your economic development officer, which we do on a frequent basis and just to close out. Squamalt is very well positioned to benefit from future hotel developments. And we want to thank the township for participating in the Greater Victoria Hotel Development Working Group. And we look forward to continued collaboration and across the visitor economy and happy to help how we can.

Thank you. I'll turn to the rest of questions.

Mayor, thank you for the presentation. Great recommendations. How do we take them from that paper and put them to play here? Next year we're going to go through an official community plan review. So there's an opportunity there, somebody's got to remember to put it in. But there are a number of those recommendations like education for staff, et cetera. Is DGV going to facilitate those with municipalities?

Yes, we plan to continue to keep this table together, maybe not meet as frequently as during this process of developing but you know, there was strong enthusiasm for doing so and I think it's a two way street. So we do want to keep the table together and touching base. And then other municipalities have signaled very strong interest and are going through their OCP plan right now and have even asked us to work on some specialized recommendations. So when you're going through that OCP process, we're happy to work with your EDO or as appropriate to provide ideas and you're welcome to adopt them as you see fit through your governance process.

Great, thank you.

Just had a question about the number of sites. Have you guys done a bit more detailed analysis of what, what is actually feasible based on those four types within Esquimalt and what we would like. I'm just. Are we talking one to two sites that, that those two hotels could fit in or are there multiple options And I'm just trying to understand the spatial extent of what we're looking at.

Yeah, spatial. So we haven't gone through and looked at your property and available to viable property but we do know and we can continue to look into the minimum size requirements for viable hotels by different categories and working with, work with your staff to, you know, we know what makes a minimum viable product, how many rooms are needed, what square footage is needed. We even got into the point of discussions with the developers who was very Open to share that. Share things such as a rectangular site is more efficient and more. More economic than a square site because of how the rooms are laid out. So there's quite a bit of knowledge and learning that happened through that process and we're happy to collaborate and share that with you.

Thank you.

Any other comments or questions? Okay. Well, thank you very much for your presentation. I also just want to take the opportunity to thank Ms. Finnegan for her contribution to this and her ongoing support of your committee going forward. So that's great. Thank you.

Thank you very much.

All right, we'll move to the next item which we're under staff reports now. And we've got a proposal around sauna pilot program at Esquimal Gorge Park. And who will be taking the lead on that?

Mr. Young, thank you very much. Good evening. Mayor and council staff are presenting staff report 008 regarding a proposed partnership with Gatherwell to operate a trial mobile sauna program in Esquimo Gorge Park. The presentation has been included in the agenda materials for your review. Staff are available to answer any questions regarding the proposal or the details contained in the report. The potential partnership presents both opportunities and considerations. On the positive side, the proposal proposal offers potential revenue stream with zero capital investment to the township and activates park space in the wintertime and provides a new wellness amenity that has been shown community interest in comparable markets.

But we also recognize there are considerations around liability management, the community perception of commercial activities in parkland and understanding market demand in our local context. Staff believe we have appropriately addressed these through a structured one year pilot program with clear performance metrics, mandatory review checkpoints points and community engagement. And we're prepared to work closely with that with Gatherwell to establish strong operational and safety protocols and will maintain the flexibility to discontinue the trial if outcomes do not meet our expectations. Staff are recommending committee, the whole recommend council to authorize negotiations to proceed on the terms outlined in the report. And we welcome any questions you have.

Thank you.

Thank you. Mr. Young. Any questions for staff? Councillor Cavins, Councilor Brain, then Councilor Morse.

When this came to the Environment Parks Recreation Advisory Committee, it got a lot of support from the members. But one of the main concerns was cost and accessibilities to lower income members of the community. Just looking at the projected costs for it, I was wondering if staff have thought about any ways to address this and potentially some connection with the LifePass program or something like that. If we were to do this to make sure that it is accessible to everyone in ishmael thank you for the

question through the chair. We haven't considered that as an option for this. The proposal as outlined would be a revenue share from the operator and they would operate their business. And just from discussions with the operator they, their fee they feel is comparable to or significantly better fee through comparable types of operations in the region. More high end son operations. However, staff are open to discussing and I believe the operator would be open to having conversation regarding this should council feel it necessary.

Councillor Bray, thank you.

So we had some great comments from people sending in, you know that it was great for social networking and things like that. So I really enjoyed that. Just, I think I read that in there and I just want to confirm. So the utilities, the hydro, water, all of that, that is covered by the company itself, not us. So it's, it's really very good lines. Okay, great. That was. Oh, what about the market? Will it get in the way of the Monday market?

So thank you for your question. Just to confirm that the capital investment would be the responsibility of Gatherwell and not fall on the township and the proposed location is nearby the water not currently planned to be near where the market operates. However, there are also parking considerations which have proven a challenge during large events and this will undoubtedly add more vehicles parking in the park.

Okay, thank you.

Councillor Morrison.

Yeah, I had the same question as Councillor Cabins, but just building on a little bit more because this is a commercial, private, private sector, commercial activity within our parks and recreation facilities. I just curious, like, do we, do we don't have a policy ourselves in terms of that our parks and recreation have to be affordable, accessible to everybody in the community. And that's why we, you know, heavily subsidize the cost of our parks and recreation. Heavily subsidized by the taxpayers of Esquimaux. So I'm just wondering like would this be in conflict with any of those policies? You know, I recognize that we also have a commercial activity like this, the farmers market, but that's, that's, that's kind of more of a community event type of activity, whereas this would be a strictly commercial activity.

So thank you for your question through the chair. The, the fees associated are currently what is being proposed by Gatherwell based off of what they have successfully done in other communities. Unique market conditions being. Esquimalt is not West Vancouver for example, meaning we could have those conversations with them. We would need to look at how we would operate this potentially through like a special event permit or how we would permit it. Exactly. So to answer your question about like do we need to make sure that this is affordable? I don't. I don't know the answer to that question.

Unfortunately, we don't have any policy on the books that says all, all uses of our parks and recreation must be considered, for lack of a better word, affordable. We don't seem to have any conflict there.

Not. Not to. Thank you for your question through the chair. Not to my knowledge, however, that that is why we're proposing this as a pilot, not a permanent situation.

Okay, thank you, Councillor Boardman.

Thank you. Thanks. Sorry if this is in here somewhere, but I, I. Can you expand on the revenue shared portion? What does that mean specifically?

Thank you for your question through the chair. The revenue share would mean that the township of esquimault would get 15% of the revenue associated. So it would be a straight 15% of all revenue would come to the township and the rest would be to the proponent here.

Thank you. Mayor, I'm ready to move the.

Oh, sorry. I had a question.

Okay, sorry.

Looking at the presentation from the applicant, I don't see unless I'm missing it, what the structure of the building would look like. I mean we've got structures in the one enamble side which looks very nice. But is there something in there in terms of structure?

Thank you for your question. No, there's no, there's no exact layout of what this could look like. The thing to acknowledge would be would be a mobile sauna. So something that can be installed and removed and be similar size of the ambleside one.

I guess my only comment on that would be that's what I assumed. And the one enamel side, it looks. Well, it is. It looks permanent. I would just want to ensure that if it's a mobile version that it has relatively nice aesthetics. I mean the pavilion's a gorgeous building. It doesn't necessarily have to pattern itself after that. But I wouldn't want to see something that somehow denigrated the beauty of the park in the pavilion.

Thank you for your question. And the proponent has been in the park. They have seen what we have to offer as far as the park and I believe are committed to ensuring that whatever they add there will enhance and not take away from the natural beauty.

Okay.

I'm willing to move the recommendation that committee of the whole directs recommend to council to direct staff to enter into a one year trial agreement.

Second.

Okay, thank you. Do you wish to motivate?

Sure. I just want to. I just want to add that this is jumping on a wellness trend that is occurring right now. And we know that people are wanting to go into the water all year round. We know that people benefit and really enjoy saunas. And that park is, this is an opportunity to, what's the word? Make it much more lively year round as opposed to, to just through the market season and what's happening over at the gorge. So I'm really interested to see how this goes over and I think, you know, kudos to us for thinking about it.

Thank you, Councillor Bramie.

Just the fact that because it's a trial, we can see how it, how it fits for us. I think kind of it's a win, win trial, period. If it works, great and if it doesn't, we can get, we can, you know, not do it further. So I think it's a good thing to try.

Okay. Any other comments?

I'm thinking of an amendment about some subsidy for lower income residents. But I'm just wondering, do we need that or can that just be. It was just to ask staff to talk to them and talk. Maybe to look at it and see what the options are. Wasn't going to make it more than that.

I don't know.

Do we need anything more than that

or is that not seeing anyone just

as through the chair, a motion for, for staff to, to look into that as part of the trial and, but I think just to make sure that that desire reflects council's wish rather than.

Okay, so I'll try an amendment to add an. And that council direct staff to discuss with the operator about the possibility of providing some subsidy to lower income residents, potentially through the LifePass program.

Yeah.

Any other discussion? I, I, I would just, I fully support that. I mean I wouldn't want to see this not go ahead if we, if they weren't able to offer the subsidy. But I like the idea of exploring for sure.

Yeah, that's about the level.

Yeah. Anyway, okay. Any other comments? Okay, so I'll call the vote on the amendment. All those in favor? Any opposed? All right. And then before I had one other comment on the act. Oh, any other comments on the motion as amended? My one comment, I was going to make it facetious, but the more I think about it, it's not necessarily facetious. Like they could actually pursue the full Nordic experience there. You start with a cold water plunge in the gorge and then you leap into the sauna. Repeat. Just a thought. Except that I wouldn't want them charging people to plunge in. Okay, I will call the question on the motion as amended. All those in favor? Any opposed? Motion cast as you ask. All right.

We now move on to the next item which is a staff report on reserve funds and surplus, I'm assuming. Mr.

Thank you, Chair. So this report this have this evening is based on discussions by council during the budget last year. You wanted to see more information in regards to the current status of surplus reserves for the township. I've included this report information about the balance details of the reserves as well as the policy that outlines each of the reserve policies that we or the reserve funds that we have. And this is to encourage discussion regarding the treatment of surplus, accumulated and annual surplus going forward and potentially making any changes to the policy. The reserve fund policy can be brought back to council for their review and approval.

Okay, thank you, Mr. Merne. Questions,

Councillor Kevin I have a question

about the difference between the Capital Projects Fund and the Infrastructure Fund. There's subtle, there are differences in the description, but it's curious in practice how staff are using those two funds through the chair.

So the Capital Project Reserve is used much more generally. We use the Infrastructure Renewal Fund for those that have existing infrastructure that we need to replenish or renew. So we focus on those sorts of projects, typically underground roads, those sorts of linear assets. The Capital Project Reserve Fund can be used for a multitude of areas. So we try and restrict the existing infrastructure replenishment to the infrastructure reserve and then looking at seeing the remainder of projects going through the Capital Projects Reserve. So they're all capital projects and linear assets and so on can be funded through the Capital Projects Reserve. But we typically like to focus on the infrastructure reserve first and then whatever flows over and above that would go to the Capital Projects Reserve.

And so how would a repair to say, or redoing the roof on the, on the recreation center that would be

in the Capital Projects Fund through the chair. So depending on the dollar value so on, it may or may not be a capital item. But if it does qualify as capital for something of that nature, we'd be looking at looking at the infrastructure reserve first because it is existing asset that we're trying to extend the life of. So we're looking there first. If there weren't significant enough funds to fund that or we needed to fund other things through there, we would look at moving some of that funding from the capital Reserve.

Thank you, Councillor Hallibo.

Thank you very much. Thank you for the information. I have two questions. The first is what do you in your opinion for Esquimal, what is a reasonable healthy minimum balance for accumulated surplus

to support our working capital through the Chair? So we've had a number of discussions internally and I've spoken with a number of colleagues in the same area. For the township of our size, for the reserves that we typically have, we'd like to maintain probably three to five years of annual surplus amount. So in our case that would probably be in the area of 5 to 6 million. That's a significant enough nest egg should something significant come up that we wouldn't be able to fund out of contingency if we had a shortfall in our reserves and we weren't necessarily able to due to the timing or circumstances around acquiring debt that would still allow us to fund it.

A great example of that is the public safety building, where the balance that we have now, we still have the ability to tap into those funds should we need additional funds in order to complete the project. It's not looking like the case at all, but it's nice to know that we have that buffer there should we need to and not have to jump through additional bureaucratic hoops or administrative timelines in order to get the funding that we need to get something done.

So not, not strictly cash management, but sort of cash management and emergency nest egg, correct?

Yeah.

Thank you. My second question is, could you provide a little bit more context or commentary on the Growing Communities Fund and if we've got ideas of what that'll be earmarked to and it looks like we've got a couple more years left, we haven't used much of it. So what, do we have a plan for that? Or is that something that needs to

be developed through the chair? So this was something that was provided by the, by the government? It was in 2023. It was 4. 7 million at the time. At the time we could allocate it to, and we still can allocate it to a number of projects. At the time we received it, we sat with council and presented to them and recommended that council wait until we were able to put together a long term capital plan which we've now provided. So we didn't want to spend it on something that was presented in front of us without evaluating the total need from a capital standpoint. So we feel we're at the point now of being able to look at projects that are in the pipeline as those that need to be done and within the next budget process, we're going to be bringing that forward for consideration for either individual assets or a stream of assets, sewer roads, whatever the case may be.

But we'll be incorporating those funds into the consideration for capital projects starting in the next budget cycle, recognizing that they need to be allocated or at least earmarked by 2028. So that'll be something that we'll be bringing forward as part of that discussion. But we've been holding off to be more strategic in regards to how we use it. But now we're getting to the point where we need to be using it for something and we figure now is the right time to be bringing that forward.

So no concerns from your perspective that we'll be able to utilize the funds within the constraints and timelines through the chair?

I think the timeline is not the issue. I think it's going to be more in regards to internal resources and trying to determine what the priorities are to be able to fund that, because it does allow a multitude of options for us to fund projects, is determining which projects are the right ones to be funded with the reserves and the growing communities that we have.

Councillor Morris.

Sorry. Just recognizing legally, like we're not supposed to over tax the residents of Esquimalt. I mean legally we are bound to have a balanced budget, but recognizing that this is not intentional to have these surpluses, they just happen as you outlined the report. Support by circumstance, but in that context, is there anything preventing, let's just say, for example, there was a 3% surplus. After this year is completed and we're looking at the next budget, is there anything preventing a council from essentially refunding that surplus back to the residents in the next property tax iteration through the chair?

So there's nothing precluding council from removing amounts from the accumulated surplus and bringing it into the budget to fund the expenditures within a given year? That's entirely separate than taking funds and providing refund payments or individual reimbursements to taxpayers. We can do it as part of the budget process. Council can bring it in to offset the needs from a taxation standpoint, but it would be restricted to be included in the financial plan as opposed to, to something outside of that.

So that flexibility is there for any, any council, any year, any budget.

Absolutely.

Okay, thank you.

I have a question.

Mr.

Thank you for your report. On the bottom of page two and top of page three, you talk about options for that. Excuse me, for the surplus. And as Councillor Morrison just talked about, one option I guess, for council is to devote some of it toward the budget for the coming year. Other options you talk about is to transfer it to capital reserves to support long term infrastructure or to create a new financial sustainability reserve to protect against economic volatility or lower than anticipated revenues. I'm just wondering, amongst those options let's. So let's. Assuming that you know, as you noted earlier, the 5,6 million in surplus is a given and so I'm talking about dollars above that. Is there.

Do you have a particular professional or accounting perspective on which of those options might make sense?

Through the chair I presented a number of options in here. Not expecting or wanting the committee to determine on just one. I think that it's. There's a long menu that you could do and you could do a number of these options with the funds you have available. I think one of the things that the township has been lacking in the past and I think would benefit from would be a sustainability reserve which could allow a certain balance to be maintained for use to, as councillor has indicated, of pulling into the budget to reduce taxation in a given year. It could be depending on the volume of infrastructure renewal by the federal government, we may be getting lower or higher amounts of pilt and it will allow us to set of funds aside and reduce maybe the offset of some of those fluctuations that we may see either from an economic standpoint or from a PILT standpoint that would allow us to maybe smooth out the increases in a given year.

Right now we're trying to do that through taxation and looking at supplemental items and reducing capital items to try and find that sweet spot where everyone is comfortable moving forward. But having a sustainability reserve for unforeseen fluctuations from an economic standpoint would allow council some more flexibility in regards to providing some ease in perhaps versus high income or high property taxes in certain years. So, but it shouldn't be limited to that because there are funds that we could be pulling into reserves to deal with the infrastructure deficit that we have. It could be creating other areas where we could pay down debt faster if that was something that we wanted to do. So there are a multitude of uses for it.

I just simply wanted to provide a number of different options so that the committee recognized that there are a number of things that they could do if they wish to do that. This isn't an exhaustive list, but it does give you a number of areas to consider when we're talking about the balance that that we have in the reserves currently.

Thank you for that response. So, and just to clarify further to your comments, are you then potentially potentially looking for direction from the committee that the council or the township formally establish some form of sustainability reserve through the chair?

What we'll be looking this evening is if there is desire to set up a reserve or to talk about moving some funds into the capital reserves or whatever Council wishes to see. We could come back or we would come back at a future date and provide an option of what that would look like, recommended amounts that we would consider based on trends and based on what other municipalities have or are doing. So it'd be something of more of trying to understand the appetite of the committee of what they would like to see and then staff can take that away and come back with more firm proposals to present to council for their approval going forward into the next year.

And sorry to further clarify then, so you're not necessarily, you don't have recommendations here, you're not necessarily looking for specific direction, but it's an opportunity for council to provide direction.

Absolutely.

Through the chair. If the committee wants to go in a certain direction or ask for certain things this evening, I'd be perfectly happy to come back with an updated policy for council's review and discussion. But if they want to explore certain things, can also make the direct staff to come back and present a number of different areas and what that might look like and have a future discussion about that.

Okay, thank you very much, Mr. And I see there are questions or perhaps motions coming out of that. I'll start with. Oh, go ahead, Councillor Boardman.

Thank you. The financial sustainability reserve fund that we

were just talking about that, how does

that differ from the sustainability reserve fund

that I'm looking at with 617,000 through the chair? So the sustainability reserve is typically funded from the local government climate action program. So we receive or have received funds from the provincial government and those have specific stipulations in regards to how those funds can be spent, typically items that are climate related. So the climate action plan and initiatives that come out of that, purchase of electric vehicles definitely qualify under that. So it's very specific in regards to the types of things that we can expend funds from that the financial sustainability would be more of a mechanism for us to utilize these funds to offset and support the expenditures within the financial plan.

Thank you, Mayor Dejarda.

That was my question as well. So I'm happy to make a motion that the committee of the whole recommend to council that we direct staff to come back with whatever else Ian said, which was options.

For further information on your options. I guess it was. No, it was to get more information on the, the options that he has provided. Yeah,

is that, I just want to.

Is that.

Well, I'm American motivated, but.

Okay, I'm seeing a nod, so I'll say yes. Go ahead, Mayor.

Well, I just, I think that this will obviously go into the Next council for information and I think the more that staff can provide around more detail and more ideas around recommendations, including the financial sustainability reserve idea, then new council coming in will have that for budget process and be able to dive in and maybe make some changes at that point.

Thanks, Councillor.

Yeah, I agree and in fact I think it's quite critical. One of the best outcomes of this council term so far has been the movement we've, we've made towards understanding our infrastructure deficit, our facilities concerns. We've done a bit of work understanding our reserve balances and accumulated surplus better and unfortunately it does take a year or so as council to kind of wrap your head around all of that. But to me we have a lot of the inputs now, but we haven't necessarily had that more strategic conversation about how all the pieces fit together. And so I would be a little bit worried in isolation to make a motion specific to a sustainability fund or specific to moving it to alt infrastructure or whatever the case may be, without looking at the totality of how much do we think we need to save across all of these areas, what split do we want to do between savings and debt?

And then that sort of helps flow into the questions around, you know, do we do a sustainability fund which is more about kind of year over year swings, or is it more about infrastructure? Infrastructure and all of those sorts of questions. I don't think there's criticality in having that done before the next council, but I think if we can get all of that information ready for the new council to hopefully shorten their orientation to these sorts of items, that can take a little while to wrap your head around. I think it will really, it'll produce a lot of dividends for the, for the municipality. So I support, and that's what I understood your motion to be and I'm seeing nods from you and from Mr. Irvis.

And so for that reason I strongly support doing this.

Thank you, Councillor Halliwell. Any other comments?

Councillor KEVIN I had actually prepared a more specific motion that basically was what Councillor Hallowell just motivated. But if that's Andrew stood, I'm fine with leaving it as this. I think that it's looking at how some other organizations do this. One thing we do, I know from the library, is we have this discussion about accumulated surplus every year and it's a really useful discussion as to which fund we put them into and it really helps to kind of understand the financial health and the capital plan of the institution. So it's sort of like we have so much from the previous year, can we put it into a sustainability fund?

And I think that would be a really useful process so that it's not just an automatic thing, but that the council really has to hear the health of these funds and where we need to put more money towards. It's a very useful discussion to have on an annual basis. So.

Okay, Councillor Morrison, so recognizing we'll wait to see what the final policies end up being, it sounds like it'll be for probably a future council to determine that. But I will say that whatever that policy is in terms of the accumulated surplus, I think it behooves us to be very open and transparent. Again, as I said, by law, we're required to have a balanced budget, which means we're only supposed to tax our residents exactly what we need for that year's annual budget. We were very clear around the 3% going towards our infrastructure needs this year. And I think we similarly need to have a way to communicate to the public that just so you know, we do anticipate that in most years we will have a 3% surplus amount. That's typically what the history shows.

And what we're going to do with that is whatever that policy ends up being. But that has to be communicated very clearly to the public because we can't be over taxing and then just deciding on our own what to do with the extra money without the public's knowledge. It's almost. I won't say illegal, but it's almost. It's certainly counter to the spirit of the law around balanced budgets for municipalities. Thank you.

Any other comments?

I just want to react to that because that's a pretty strong statement and you're kind of. Well, no, I mean, I don't. I just think we ought to be clear that we're. This is standard practice and I think we do need to. I agree with the sentiment, but I don't think we want to imply that our staff are doing anything illegal.

I, I just said it's not intentional, but I think we need to be very clear with the public. And we always say that every, every dollar that we tax our revenues on is required for operations. We have a tremendous surplus. That's not for operations. That's for us determine what to do with it. I just want us to be very, very clear.

All right. If there are no other comments, I will call the question all those. Any opposed?

Motion carries.

Thank you.

Thank you, Mr. And after that, very detailed and thorough and thoughtful report.

Thank you, Chair. So also through the budget discussions, there were questions raised in regards to the township debt. So we've provided information this evening in regards to the status of the township debt carrying costs. I've also included information about the various options the township has in regards to debt vehicles and have also attached to this report drafted a debt management policy for committee's recommendation. And we're looking if a couple this evening of recommending approval of the report to, to council or sorry, approval of the policy, directing council to approve the policy as it is or as amended. I am looking for any feedback at this time.

Thank you Mr. Irvin. Questions? Councillor Halliwell,

thank you very much. I have two, perhaps one, maybe three questions because they all sort of relate to each other and I was trying to figure out if nesting them is easier than sort of making a compound question. There's a statement in there this is around doing a should stay around 10% debt servicing to revenue not to exceed 12. 5 province allows up to 25%. And then there's a sentence in there that says provides. So doing 12 and a half provides adequate debt financing to fund required capital projects without hindering the township's ability to maintain base service levels. So whether this is one question or two, I guess I'm reacting to having what reads like a hard cap at 12. 5% which is half of what is actually allowed.

And then what I would read is also a relatively strong statement that this provides adequate debt financing, which to me assumes there's a lot of analysis underneath the statement. And I was wondering if you could just help me reconcile those in my mind.

Yeah, through the chair. So although the province allows up to 25%, it's by no means something that I as CFO would recommend that the township do. So I've tried to find some spot where I believe it's an appropriate level for us to take on. It's more than what we currently have now, but doesn't put us in an area where we start to be susceptible to higher interest rates and refinancing and those sorts of things. So I tried to find some area and 12 and a half percent seemed to be a reasonable. It could have been 15, it could have been any other number, but I wanted to make sure that it was significantly lower than what was permitted.

I think that there is a risk of, of seeing debt as an option that will cure the need to deal with the balances in the reserves, but it's at the detriment of the cost of borrowing. And so it's trying to find some area where we make a statement that cost the cost of debt is not less than what we currently have in our reserves. There is a cost to it over the long term, depending if it's 10 years, 15, 20 or even up to 30 years. And I think I wanted to make the statement in there that it's important to recognize that although debt seems to be an easy option of securing funds, that there's significant impacts that it has on today and next year and the year after this financial plan.

So not losing sight that we may be able to attain millions of dollars tomorrow, but that impact is going to be felt in the financial plan in the next year and the year after sector. So trying to find that balance of what the right amount is, but also stressing the fact that it's not free, that there are some significant implications from a financial standpoint that are going to be felt in the short term, even though we're paying it off over a number of years.

Thank you. And certainly agree with those principles and sentiments. I guess the piece that reacting to a little bit is just how strong it reads that 12 and a half is kind of the municipality cap. And you know what, if for whatever, for very reasonable reasons, we need to go to 12. 6. So would that require a change to this policy for us to do that? What would be the required approval steps if we needed to teeter over 12

and a half through the chair? So this would. This would be a council policy. So it would be up to council to determine as to whether they want to continue to comply with it or not, if they wanted to make a permanent change to the policy or if they wanted to make an exception to go above that. That's perfectly within council's ability to do that, making a decision or resolution going forward.

And last question is, last week when we were looking at the facilities master plan, the assumptions in there was that we were funding those facilities 70% debt. And I was wondering if that is kind of factored into your debt policy here or if that was just an assumption the consultant used and it's not necessarily what your modeling or recommendations will be.

Yeah, through the chair. So what I've tried to do is, I've tried to look at the policy in isolation of what I think is good, good financial governance for the municipality, notwithstanding the other reports that are out there in regards to long term capital infrastructure, the facilities and so on. As those come about, we will look and see what is needed at the time, what the best options are at the time, and compare it against the policy that we have in place at the time. And see what the best way to go forward, whether it's exceeding the 12. 5%, whether it's finding other creative ways of doing it, perhaps deferring some of the cost a future year and securing some debt now and finding some of the funding a little bit further down the road.

Number of different options. But this policy was not created or drafted with that facility report in mind. But it's something that we will be looking at and applying to the document that does get approved to see how we can marry the two together.

Thank you.

Our 2025 total annual servicing costs were 2. 2 million. And of this 1. 7 is the public safety building. So what is the remaining 500 ish

thousand attributed to through the chair? So we have sewer ini debt issues that we have. One of them is due to mature, I believe it's in the next three months. So in October, I believe that one expires and then the other one is due to mature in 2027. So by the end of 2027, the only long term debt issue that we will hold will be the public safety debt building.

Thank you, Mayor Deard.

Thank you, chair. Mr. Irving, somewhere in the report I read that there would be a restriction of debt funding operational costs. Do we have that in a policy now? Maybe it was just a statement within your report somewhere. The reason I'm asking is that through the last number of years we've been having conversations with various municipalities on how they provide health care, for example, and Colwood has set up their own clinic. And I would imagine that operational costs could be something that they would have to debt fund initially in order to get a payback. So I'm just wondering how restrictive the policy would be on something like that through the chair.

So it wouldn't be strictly limited to the policy. It would be in regards to MFA and the CRD in regards to what they permit debt funding for. And that is for capital projects and infrastructure. So we wouldn't be looking at borrowing for operational purposes.

Okay. And that's a normal practice that MFA follows. Okay, that's where I was wondering.

Thank you, Councillor Cabins.

Thank you for the report and thank you for the proposed policy. One thing that I am struggling with, and I think this kind of came out again in that facilities master plan last week, is the idea of what should be funded via debt and what should be funded by reserves. And when I heard the 3070 ratio, that kind of threw me because I assumed that we were moving towards an approach where our delayed maintenance was going to be Paid for primarily out of reserves and sort of our ongoing spending. And so the line in there that says that the print debt supports the principle that those who benefit from the infrastructure should contribute to its cost.

That makes sense to me for new infrastructure for building, let's say just say we're building a new rec center. Doesn't make as much sense when you are using it to pay for maintenance because then basically the people who haven't paid for the maintenance in the past, it puts the maintenance forward. So what I really would like to see in this policy or in a discussion coming up is where is the line where we decide to put something to debt or to reserves or to pre save for those reserves? Which is really the question and if and where that. I realize this is probably a fuzzy line, but some guidance on that I think would be really useful in this kind of a policy or just generally

from you right now.

Yeah, through the chair, I think we'd be looking at. When we're talking about maintaining existing infrastructure and we're not talking about millions and millions of dollars, I'm first looking at the reserve for those sorts of items. The first time I start thinking about debt is if we have a large individual asset, a facility is a good example of that. Or if we're wanting to do a program across across the municipality for sewer lines or roads or whatever the case may be that we could borrow a lump sum and be able to apply that to a number of various projects within the municipality. Now that means that that's not necessarily a new asset. It doesn't mean that it's maintaining an existing asset.

I think it's looking more strategically around what can we borrow for that makes the most sense of not tapping out fully the reserves. But it is something that we need from an infrastructure standpoint or from a facility standpoint in order to enhance the municipality as quickly as we can. And knowing that we've got the funds secured and that the infrastructure, either the asset of linear or the facility is going to be there for a number of years. So when I'm looking at debt, I'm not trying to do that balance of spreading out the payments over a long period of time for something that may be providing five or 10 years more to an asset.

I'm looking at something where we're talking 20, 30 and even longer into the future so that it equates those payments off at the same time that the infrastructure is in use for.

I appreciate that. I think the issue is that we're talking about putting aside tens of millions of dollars into our infrastructure reserves. When I look at what we've been presented with for infrastructure that needs replacement. And so I think some guidance to council to say, well, why we need to do that when we could just wait 10 years and borrow for it in 10 years. That's where the kind of the discussion strategically comes in. And some advice because I think I'm hearing two different messages and I don't know if Mr. Haran wants to jump in on that as well. How do we determine which is the right approach to fund that infrastructure deficit?

So through the chair, I think that's a solid question and it speaks to the change that's happened in this term because when you're at the beginning of growth and what you're setting aside for infrastructure renewal, when you're at the beginning of increasing how much capital work you're doing, how much maintenance you're doing, you don't have to worry about it as much because you just like even just the list of what projects are we doing next year, you kind of just pick the top ones and you can't go wrong because there's going to be a long list and you pick them and off you go.

But then as you start to get move along the path and we're already there now and we will be in the next few years, it gets more complex when you start trying to figure out like what are the right projects for next year, the year after and the year after that. And so what that means is it comes along with a certain change in what's the responsibility that staff have to provide Council with some, I'll call it product things to look at, to make at least to weigh in from a governance perspective that what we're doing makes sense in the long term. So for example, if we're, if council's target is, you know, we're currently doing roughly 4 million a year capital per 4 million per year of capital work and we're shooting to eventually get to 10 million per year.

Well, before we get to 10 million, we have to have more sophisticated ways to identify risks, to show what the plans are multiple years in advance and for council to weigh in on things like is it debt funded or is it funded from reserves, et cetera, et cetera, including sequencing of projects and so on. So hopefully that answers the question.

I think it's thinking of a new council and I think one specific question is, you know, we've had the turf field has been discussion actively and we're looking for grant funding for that. But you know, should the new council come in and decide that's their number one priority? How do we answer? Can we afford that without getting that grant funding? And this isn't really helping, to be honest. I think that's the key question that we need to be able to answer for the next council as to what can we afford and do we have enough reserves and do we have debt room or if you know, there's any multitude of projects, some crazy than others, that might show up in an election campaign.

And so being able to assess that, to know whether or not we as a municipality can afford that is really important. And I feel like there's something missing in the way we're communicating this and wrapping this all up right now.

Yes, thank you.

My question goes to the Interfund borrowing. Now I'm making an assumption that just going to throw it out there. Archives needs to build a bigger project. They could borrow the money from, say, I don't know, Parkland Acquisition Fund or something like that. As long as it goes.

No.

Okay, see.

Thank you.

Can you please explain it through the chair?

So Interfund borrowing is an option that's available for statutory reserves that have been set aside for capital purchases or purposes. So for example, the Capital Projects Reserve and the Infrastructure Reserve, we could move funds from one fund to another in order to support projects. We did that originally when we took money from the Capital Projects Reserve to establish the Infrastructure Reserve at one time and over a series of years we repaid that amount plus interest back to the Capital Projects Reserve. So it's really moving one fund to another for the purposes that you need those funds in a specific reserve. But it is required to be paid back plus interest to the original.

So it's just allowing you to fund through other mechanisms. But it doesn't. It's not new funds. It's just a way of being able to fund internally without having to secure debt or other funds in order to make those projects happen.

And we have in here that it would be has to be paid back within less than five years if we do that.

Correct. Okay, thank you.

Just one quick question.

So we haven't had this policy before,

so what is the reason that we

need it now through the chair? So due to council's questions about debt, I thought it was important to kind of codify all the things that we do, put things into a policy that we can refer to going forward, establish some benchmarking in regards to. To the amount of debt, talk about some of the terms and conditions of glossary and definitions that be Helpful to council to refer to as we're going through the budget in regards to debt understanding the different options from a short term a long term really provide information for council to understand what options are available from a long term and a short term debt standpoint so that they have that at their disposal when we're going through the budget and talking about capital projects.

Thanks.

All right. If there no other questions we have a recommendation

Council Brick I'll move the recommendation that the committee of the whole 1 receives the report for information 2 recommends that council approve the debt management policy fin 25 as attached to staff report fin 2620014 thank you seconder

Councillor Cabins. Councilor Bram, do you wish to motivate?

I just. I think this is good it help. I mean yeah, there's maybe still some areas that we'll, we'll, you know, tweak as we go but I think it's a really good starting point because I think it's important that we know what our finances, what our debt. I. I'm a fiscally frugal debt person so I kind of like having these numbers. So for that reason I like to

move forward with it.

Councillor Cabins?

Yeah, I just appreciate the last answer to Councillor Berman's question. Just understanding this is just putting our current practice into a policy that when we ask obnoxious questions you can just hand it to us. So for that I think it's useful. I would love it to be a little more detailed and maybe we'll move into that next council if we're still here but I. But for now it's a great start.

So any other comments seeing none. I'll call the question. All those in favor of the motion recommendation. Any opposed motion Recommendation passes. Thank you Mr. Irvin again for another thoughtful and analytical report. Okay, we now move to the public comment period. I just want to. Before we get to the comment period, I just want to clarify that after we have the comment period we'll adjourn this committee the whole then we will move in to the regular council well special regular council meeting they'll start right after that. Will start with an opportunity for people to comment on the agenda items at the upcoming council meeting. So this is not your only chance to comment.

This is a chance to comment on any topic that impacts Esquimault excluding agenda items that have been or will be subject to to a public hearing. And then at the beginning of the next meeting you can comment on the end to end items for that meeting. So is there anyone who wishes to come forward to make a comment. I will ask a second time. I'll ask a third time. Hearing none. I will close off the comment period and I'll look for a motion to adjourn. Councillor Bram, seconded by Mayor Desjardins. All those in favor? And we are adjourned. And just bear with us, audience. We're just going to make some adjustments here, and we'll start the next week.