Photo: Deborah Pfeiffer

Penticton's downtown revitalization project is expected to begin this spring, despite the city not getting grant funding for the project.

Council learned Tuesday the city would not be receiving $2 million from the New Infrastructure Canada Small Communities Fund and the Gas Tax Fund.

As a result, council was presented with two alternatives – one to proceed with the project in the 100 and 200 blocks of Main Street, and the other to provide alternative direction to staff.

After much discussion, council voted, 6-1, to go ahead.

Council must now amend the 2016 draft capital budget to remove the grant funds, delete the LED light canopy from the project and reallocate the $394,000 from that project.

Council was also asked to authorize the use of inter-fund reserve borrowing in the amount of $875,000 to bridge the gap between 2016 construction expenses and passage of the 2017 budget.

The city is expected to proceed to tender for the project, with work on the 200 block being done this spring, and the 100 block in the fall.

Taking this route means the city will have a reduced ability to undertake other projects, such as the SS Sicamous master plan and facility plan master project.

Coun. Helena Konanz was the only one to vote against the proposal, saying she's concerned about projects that will be delayed.

Mayor Andrew Jakubeit stressed downtown is the heart of the community and the project is important.

Kerri Milton, president of the Downtown Penticton Association, said she was very happy with the decision.

"A lot of the merchants have already planned strategically for how to get through a slower spring with the construction and others have planned renovations to the back of their buildings, so people can enter through the alleys, so there has been an output of funds from the merchants," she said.