Building the Case….Continued

In the previous post we looked at building permit values and their change over time.

This only considered total business permit values.  As business friendliness is considered a key feature of any mayoral campaign, it warrants further exploration.

One of the areas I wanted to analyze is number of business licences granted.  Although building permits are a valid measure of growth, business friendliness implies ease of conducting business and success at attracting business investment.  If the business does not require any new or improved infrastructure, this won’t reflect in the building permit values.

However, the hard working staff at the Town have better things to do than satisfy my curiosity so I’m not pushing the matter.  When I receive the figures I will report what I find.

Building permit values are not the only figures reflected in the permit summaries published by the Town.  We can also look at the number of permits issued in a given year.  Again, although comparing figures between two different mayors ignores a whole host of factors that contribute to development, it is what was done in Mayor’s Musings, so it is what I will do here.

Mayor Lorne Mann: 2001-2007, 2011-2012: Average of 48 building permits issued per year

Mayor Iris Callioux: 2008-2010: Average of 69 permits per year

In fairness, you do see a stark contrast between the years 2001-2004 and those coming after.  As such, there was likely another driving force at play.

When you remove those calculations from the analysis, you find an average of 60 per year for Mayor Mann.  Again, statistical analysis shows the differences are insignificant and most likely due to chance.

What about commercial and industrial permits alone?  Residential permits make up the majority of the permit values, but commercial and industrial development is arguably a better metric to measure business investment in the community.

Using the same references as in the previous post and again adjusting for inflation to 2013 dollars I calculated the following:

Average value (number) under Lorne Mann: $6 620 272 (14)

Average value (number) under Iris Callioux: $7 986 208 (17)

Yet again, no statistically significant difference between the two.

Finally, Grande Prairie statistically dominates the northwest region.  It can thus give some insight into economic activity happening closer to home.

The decline from 2007 to 2008 was almost 35% in Grande Prairie but only 2% in Peace River.  From 2008 to 2010 during Iris Callioux’s term, building permit values dropped 60% in Grande Prairie and only 45% in Peace River.

If anything, the previous council mitigated the deflation wrought by the global recession.

Finally, in order to counter any suggestion that I cherry pick my data, from 2010-2011 there was a 49% increase in permit values in Grande Prairie and a much larger 104% rise in Peace River.

What specific policies under the previous council and mayor may account for this difference?  Was it a reflection of regional growth?  Regression to the mean?  Chance?

What do you think?

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Building the Case

First a quick recap of figures that came under scrutiny in previous posts.

1. 12% “confirmed” economic growth: No supporting documentation or source for figure.

2.  Ski hill on track to hit 40000 users, stated in February 12 Mayor’s Musings: Roughly 16000 confirmed as visitor number at ski club AGM.  At no point in the season would visitor numbers been remotely extrapolatable to 40000.

Now back to business, care of Mayor’s Musings once again.  In the January 30, 2013 edition, Mayor Mann states:

“Building permits total in 2011-$25 million, 2012 $30 million…Permits in 2011 [sic] before election of this council in October $7 million (down from $21 million in 2007 de election year)”

The implication is that the previous council under Mayor Iris Callioux was responsible for a decline in growth in town and that the current council under Mayor Lorne Mann restored us to prosperity.

Is that the case?

In 2010, building permits totalled $11 804 271.  There are two places from which Mr. Mann may have garnered the $7 million figure.  The residential permit figure for 2010 is close.  However, the figures he uses to describe his years in office are the TOTAL permit values.

He may have meant that building permits year-to-date in October 2010 were sitting at $7 million.  Unfortunately, that figure cannot be corroborated.  It matters not though because he states it is down from $21 million the previous year, which is the TOTAL permit value.

Thus, the implication is that the TOTAL building permit value in 2010, the last year of the previous council, was $7 million.

Except that it wasn’t.

In fairness, there is a noticeable decline in permit values from 2007 when Lorne Mann was “de elected” and 2011, his first full year back in office.  It is implied this is due to a change in leadership.

Of course we’d be forgetting about the recession in 2008.

Statistics Canada keeps records of the building permit values for Canada as a whole and Alberta as a province, which I compiled and adjusted to constant 2013 dollars (to account for inflation).

When you chart these figures against one another, the graphs look surprisingly similar.  In fact, the correlation between Alberta building permit values and Peace River values is 0.82, which in the statistical world is pretty incredible.  The corresponding figure for Canadian values is 0.77.  The strong correlation is evidenced by the visual similarity of the two lines.

But correlation does not prove causation.

It is disingenuous to suggest that Peace River is a complete reflection of broader economic cycles and equally so to suggest that Mayor and Council are completely responsible for building permit values.

(For you stats junkies out there, running an unpaired two-sample t-test leads to a P-value of 0.78.  This means the difference in building permit values between Mayor Mann’s terms in office since 2001 and Mayor Callioux’s is most likely due to chance.)

In the post scheduled for tomorrow, we will dig deeper into this.

What about NUMBER of building permits granted?

What do we find when we look at only commercial and industrial permits?

And finally, how did Peace River fare during Iris Callioux’s term in office compared to Grande Prairie?

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AGM Answers

My previous post addressed some questions to the Peace River Ski Club at their annual general meeting (AGM).  Thank you to Sean Banks, ski club president, for answering each of them to the best of his abilities.

I was not at the AGM, but Kate Bigelow, general manager for the ski club, stopped by the next day to drop off the agenda and information package.  From it and reports from friends who attended, I was able to get answers to all of my questions.

For the benefit of all those interested, I will post those questions and answers here.  I will leave interpretation and commentary to readers.

1.  When will charges for generator rental, generator fuel, and electricity be repaid to the Town?

At this time, as the operations and maintenance agreement with the town is still pending, so are details of repayment.

2.  Was much the same as question #1.

3.  a. What were the revenue and expenses for past years?  How does this year compare?

Between year ending 2006 and year ending 2013 (not including 2012 as hill was closed due to lack of snow) revenue ranged from $223058 in ’11 to $389552 in ’08.  This year was roughly middle of the pack of those seven years.

Expenses ranged from $198986 in ’10 to $415677 in ’09.  This year was the 3rd highest of the seven excluding ’12.

b.  Did the offloading of chairlift construction costs and other expenses/assets to the town improve the income statement?

This is very hard to assess.  The only way to measure this would be looking at surplus or deficit but even this is tenuous.  Reduction in liabilities is important as well, particularly long term debt which carries servicing costs over time.

The surplus/deficit only started being recorded in ’08.  It ranges from a deficit of $165089 in ’09 to a surplus of $115910 in ’10.  This year the club basically broke even as the total deficit was only $465.  Debt is discussed below.

4.  How much debt does the ski club currently carry?

Total liabilities currently sit at just under $95 000.  About $73000 is an operating loan.  This is a significant decrease from 2011, when total liabilities sat at $296327,   $230889.81 of which was owed to the Town of Peace River.  It is my understanding from the transfer agreement between the ski club and the Town that along with assets the Town also took on some liabilities.  It appears this is one of them as it is not listed this year.  Please correct me if I’m wrong.

5.  What were the visitor numbers for last season?  How do they compare to previous seasons?  What methodology is used to calculate the numbers?

a.  16134 visits; a FAR cry from 40000, but an improvement on previous years

b.  Average of 9749 for the preceding 5 operational years; highest prior to this year was 12911 in ’08.

c.  Calculated based on uses of the lifts.  Estimated that each visitor uses a lift 4 times.  So total lift uses are divided by 4 to arrive at visitor figures.

There you have it.

Make of it what you will.

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My AGM Wishlist

I want to be clear that I completely respect the work Sean Banks and Kate Bigelow do for the ski club (despite what a letter I sent as a disgruntled parent may suggest).  They are not the issue.  If the ski club were run as an arms length non-profit I would be concerned naught with its operations.

However, Town Council made it an election issue when they purchased the assets of the ski club.  Now the financial stability of the ski club is an interest of town taxpayers.

The town took on a $752325 debenture to fund the purchase and installation of the chairlift, as well as $105000 from the municipal reserve. Another $70000 is listed as “town at large”. Thus, the total cost is $927325.

As well, the 2013 budget shows a budgeted expense of $157275 for the chairlift. Thus, the total price tag so far is $1084600.

Council also approved the town to pay the rental costs of a generator for the chairlift, as well as the fuel, with the understanding that the funds would be paid back by the ski club.  The town then paid another $48602.76 for an electrical invoice. My understanding is that the charges for the generator, fuel, and electrical have not yet been repaid by the ski club.  If not, the total bill now sits at well over $1.1 million.

Finally, Mayor Mann, in his Mayor’s Musings, attempts to link the purchase of the chairlift to a record number of visitors at the hill this year.  The number stated is 40000 users.  This number stretches credibility given operational days, operational hours, the fact that this is a 300% increase from average years, and that the population of the surrounding area is nowhere near Nitehawk in Grande Prairie, which is hard pressed to hit 35000 in a year.  Not to mention that Mayor Mann states projections suggested this would take 5 years and millions more dollars to achieve.  As far as I know, no publicly available official figure has been released.

As such, these are the questions I would like answered at tonight’s AGM by the ski club.

Question #1.  When will the aforementioned charges be repaid?

Question #2.  As a new operations and maintenance agreement has not yet been finalized between the town and the ski club, is there a repayment agreement for future invoices?

Question #3.  What were the revenue and expenses for the ski club in past years?  What were those revenue and expenses this year?  Did the off loading of chairlift construction costs and the aforementioned expenses improve the income statement?

Question #4.  How much debt does the ski club currently carry?  Is this debt sustainably repayable or does it put the ski club in financial peril?

Question #5.  What were the visitor numbers for last season?  How do they compare to previous seasons?  Was the calculation methodology used this year acceptable by industry standards and the same as used in previous years?

Only time will tell if this was a “visionary” decision.  In the meantime, all we can do as voters and taxpayers is ask for honesty, transparency, and thoughtful planning.

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Twelve in Twenty

“All the current indicators point toward…the record growth we have been expecting for decades.”-Mayor Lorne Mann, Mayor’s Musings, Record Gazette, Dec 12, 2012 pg. 5

“Peace River’s 2012 confirmed growth was 12% in 2012″-Mayor Lorne Mann, Mayor’s Musings, Record Gazette; Feb 12, 2013 (emphasis added)

I love this beautiful town.  I think it’s the greatest place in the world to live, and I want the whole world to know about it.  Thus, the prospect of growth brings the hope that they do know and they like what they see.

As the Mayor stated this 12% figure like it was a verifiable fact, I wanted to find out the source so I could shout it from the rooftops, along with the other “current indicators” to which he referred.

Sadly, after an e-mail to Lorne Mann, I received no response.

Left to fend for myself, I looked elsewhere to corroborate this figure.

Population is the most relevant metric for growth (other metrics will be analyzed in future posts), and the provincial government keeps records of populations for municipalities dating back to 1913.  For the sake of modernity I started at 1971.

From 1971-2011, Peace River grew 34%, an annualized growth rate of 0.73%.

Provincial growth over that time period was 133% and the average growth of all towns in Alberta with 2011 populations between 5000 and 10000 was 167%.

Peace River grew 34% against an average of 167%, coming in with the second slowest growth among peers.  Blackfalds was a village in 1971, having over 4000 fewer people than Peace River.  By 2011, it surpassed our population numbers.

What about more recent growth? In every 5 year period from 1991 to 2006, the highest we’ve placed out of 22 towns is 19th.  We actually shed 5% of our population between 1996 and 2001.  From 2006 to 2011 we placed 12th, growing 6.6% against an average for the group of 9.1%.  

Overall, in the 20 years from 1991-2011 (for 10 of which we had the same mayor, including 2010-present), we added 12 people to our town.

Twelve people in twenty years.

It’s a number 12, but not nearly as flattering as the figure Mayor Mann stated.

To be fair though, he did say this 12% “confirmed” growth occurred in 2012.  Do we have more recent figures?

Taxation is another metric that indicates growth.  If tax rates stay constant (which they have for the last 3 years, the pros and cons of which will be covered later) but total tax revenue increases, this means the property values, the number of rate payers, or both have increased.  

In Mayor Mann’s first full fiscal year in office for this term, 2011, tax revenue increased a paltry 1%, less than inflation of 3%.  From 2011 to 2012, it actually decreased 0.2%.

But he did write the above article in 2013.  Maybe there has been a massive explosion of growth in tax revenue in the last year.

As this 2013 budget summary from the Town shows, they are only banking on a 1% growth increase.

Not 12%.  

1%.

Exactly where we’ve been for the last 22 years.

Why has this number not budged?  What is holding us back?  And what can we do to move forward?

*NOTE:If you wish to see the methodology and references for this post, and all future posts, go to the Methodology and References page.

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Setting the stage

The aim of this blog is to generate discussion and debate and, hopefully, an increase in voter engagement and turnout for this municipal election.

Over the next four weeks I will post twice weekly, outlining a major issue and my stance.  This counts as numero uno, so I will address seven major issues in municipal politics.

There are certainly more than seven issues about which Peace River voters are passionate so I want to hear from you.  Use the contact form on the About page to send me a request to publish a guest post.  I want to see all positions published on this blog to make for a diverse discussion.  Disagreement with a stated position is not being a “negative-ator” or “naysayer“.  It is being an engaged citizen.

To entice you to stick around for the four weeks, below I summarize the issues I will address.  Incumbent mayor Lorne Mann focused on many of them in his Mayor’s Musings published in the Record Gazette.  As such, I had a rich repository of issues to analyse and on which I could form positions.  I found that many of the supposedly factual statements were anything but and that the verifiable facts pointed to an entirely different interpretation of the issue.

I present these seven issues not only because they interest me, but because in their very public presentation in the Record Gazette, they galvanized debate in the community.

1.  Growth Due to Leadership

Mayor Mann stated numerous “facts” regarding growth in Peace River.  In searching for the sources of these statements, I found there were none, and that the true figures paint a very different picture.

2.  Misery begets misery: Part 1

A sober analysis of visitor numbers, financial transparency of the ski club, and the true costs of the Misery Mountain chairlift.

3.  Misleading figures or just a typo?

In Mayor’s Musings, strong statements were made about the financial performance of Town Council under the leadership of Iris Callioux from 2007-2010, particularly around building permits.  The numbers given were false and the conclusion unjustified.

4.  Balancing the books

Mayor Mann wrote often of fiscal responsibility and “growth funding growth.”  Growth is certainly apparent in the Town’s financial statements, but not where you might think.

5.  Misery begets misery: Part 2

A well researched and thoroughly provocative letter to the editor of the Record Gazette looking at the financial impact of plans for Misery Mountain.  Sadly, it was never published.  Until now.

6.  The CAOs: Part 1

A brief history of the CAOs dismissed and hired by the current Mayor and Council, the resulting controversy, and the total financial cost to taxpayers.

7.  The CAOs: Part 2

How does Kelly Bunn’s salary compare to that of CAOs in other similarly sized towns in Alberta?  What are the financial implications to taxpayers of hiring his company as CAO instead of him personally as an employee?

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