BILD benchmarking study compares Lethbridge competitiveness to other cities

By Lara Fominoff @LaraFominoff on Twitter
October 16, 2018 - 2:48pm Updated: October 16, 2018 - 6:12pm

LETHBRIDGE - In response to concerns that Lethbridge County and other municipalities are seeing more businesses set up shop in those areas, rather than within the City of Lethbridge, the Building Industry and Land Development (BILD) Association of Lethbridge Region (formerly CHBA) commissioned a report to study the city’s relative competitiveness. It was presented at Monday's city council meeting (Oct.15).

The study, completed by Nichols Applied Management Inc., used 27 indicators including fiscal capacity, tax and utility charges, debt and reserves, the business community, expenses, revenue and employment.

Sources used included Municipal and Financial Data compiled by Municipal Affairs Alberta, financial statements and various city reports and publications, and personal communication with municipalities when necessary.

Lethbridge was compared to 14 other municipalities from across the province and in other jurisdictions in B.C., Ontario, Newfoundland and New Brunswick. Medicine Hat while close, was excluded from the comparison because of its large municipally owned utilities and telecommunications company.

Alberta municipalities included in the comparison included Grande Prairie, Red Deer, Calgary, Edmonton and Lethbridge County because of its proximity to Lethbridge.

According to the key findings, Lethbridge performed relatively well in several areas while questions were raised in others, including how and why Lethbridge has the highest rate of residential taxation across all comparable provincial cities except Grande Prairie. Lethbridge’s tax base is made of 21 per cent non-residential and 79 per cent residential properties.

It’s important to note that nine of Lethbridge’s top 10 employers in the city do not pay property taxes. They include Lethbridge College, the University of Lethbridge, City of Lethbridge properties, AHS facilities, 18 senior’s care facilities/retirement homes, provincial buildings and LPS to name a few. Mayor Chris Spearman said while they’re great employers, it places a strain on the system.

“When you have large facilities in the community taking up large real estate requiring sidewalks, requiring parking and other services, those place a strain on the remaining taxpayers. So, if those were private organizations, there would be a significant tax credit, which would reduce the taxes for all tax payers.”

Spearman said the provincial government used to provide a grant in lieu for government-run facilities, but that does not occur any more.

Some of the areas where Lethbridge performed well include:

  •    The city's long-term debt per capita was lower than all other comparable communities by $950
  •     Annual sewer and water charges in 2015 (the latest year for comparison) were 20 per cent lower than average across all comparable communities
  •     Lethbridge's annual accumulated surplus per capita was 18 per cent higher than average across comparator communities
  •     95 per cent of businesses in Lethbridge were classified as small businesses, often an indicator of overall economic health and growth of a city
  •     The number of business bankruptcies per 1,000 population in 2015 was lower than average across selected Alberta communities

Areas of exception, according to the report, have much to do with taxes and include:

  •     The average municipal property tax bill (excluding education property taxes) in Lethbridge in 2016 was above all other selected Alberta comparator communities, except Grande Prairie.  
  •      Between 2010 and 2015, Lethbridge’s long-term debt per capita increased by 87%, or at an average annual rate of approximately 13%. This is a higher rate of growth than nearly all other comparator communities
  •      The size of municipal government is larger than all other comparative cities, with 12.7 employees per 1,000, or about 1270 municipal employees as of 2015. (It’s not clear from the study if those numbers included employees with the Lethbridge Police Service, which numbers around 200).
  •      The City also spent about $125,300 per full-time employee – slightly above selected Alberta communities, while wages and benefits increased on average 3.5 per cent each year from 2010 to 2015, higher than all other communities other than Lethbridge County
  •      In 2015, municipal expenditures per capita was the highest among comparative communities as well, at $3,300 and 26 per cent higher than comparative Alberta communities
  •      Lethbridge collected $1,880 per capita from sales and user charges in 2015, above nearly all other comparators, and more than double the average of $825 over all selected comparators
  •      The non-residential mill rate in Lethbridge County is less than half of that in Lethbridge. According to the report, that could be a contributing factor for businesses choosing the County over the City, although Mayor Chris Spearman isn’t quite so sure.

“The City has a number of advantages over the county as well. We have a serviced industrial park that already exists, our utility rates favour food processing companies, declining rates of cost for industries that use water…you will also get a benefit on electricity… you might save $100,000 a year in taxes (in the County), but you might pay $150,000 a year more on utilities.”

BILD Executive Officer Bridget Mearns says when they brought forward the report to council, they knew that there were likely to be some “prickly” subjects, but that the information was not unfamiliar to administration either. And the purpose was to pose questions to the city, including those on expenditures and taxation rates.

“It really was wanting to understand where we are in the city compared to other cities. So for us to be competitive, we have to know where we sit and where we find ourselves.”

And she adds that she’s pleased the report is being taken seriously.

“To me that really demonstrates leadership. Taking this information that’s valuable and wanting to do something with it. There was certainly an opportunity to dismiss it. It was not something they asked for, but they didn’t… they’re treating it with the respect it deserves…and I applaud that.”

She adds that she does believe Lethbridge is a good place to do business, and there’s more to doing business than just tax rates.

Once the information was received and debated, Councillor Jeffrey Coffman proposed an amendment to review the report in depths in consultation with BILD, and to present the findings of that report to council no later than April 30, 2019. The amendment was accepted unanimously.

To view the entire 60- page report, click here: http://meetings.lethbridge.ca/sirepub/cache/2/hpagnqqhdikuqclgi4rclsql/21801710162018023831772.PDF

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