City of Penticton losing $200k a week during COVID-19

Photo: Contributed

Penticton's 2020 budget projection prepared earlier this year, seen here, is looking at significant losses during COVID-19.

Penticton's chief financial officer says the city is losing approximately $200,000 per week in revenue during COVID-19.

"The longer we are faced with closure the greater that number will be,” Jim Bauer told council via webcast at a special meeting Thursday aimed at examining the financial impacts of the pandemic. 

City revenue at risk comes from recreation and cultural revenues at city facilities like the South Okanagan Events Centre and Penticton Trade and Convention Centre that Bauer said have trickled to almost zero, and gaming revenues from the closed casino, which normally come out to about $2 million per year. 

But the largest chunks of revenue in a normal year come from collected taxes, at 35.2 per cent of the total, and utilities fees, at 42.6 per cent of the total. 

"The collectibility of our taxes and our utilities is at risk,” Bauer said, adding that they have not seen an immediate decrease in building licenses but that may change too. 

The city has issued temporary layoffs affecting about 20 per cent of its staff, which Bauer said has saved the city about $1.5 million. 

The difficulty going forward, Bauer said, is the large number of unknowns, mainly how many residents and businesses will be unable to pay their taxes and bills and how long COVID-19 will last. 

And as the city moves into recovery, "If we are not able to open up 100 per cent there will be additional revenues lost." 

Bauer said they currently have a strong cash position and could likely continue for the next six months, but asked council to approve setting up a financial safety net in the form of a bylaw allowing the city to borrow up to $35 million in the form of a revenue anticipation agreement with the Municipal Finance Authority. 

Councillor Judy Sentes asked what the interest would look like on those borrowed funds, should they be needed. 

"It’s important that people remember this has to be paid back," Sentes said. 

Bauer explained interest rates vary day to day but currently it is at 1.295 per cent. 

"It is not a significant or high amount at this point but it is a cost, and we would have to continue paying it as long as we have the necessary funds borrowed,” Bauer said. 

Council voted to approve the bylaw which will give staff the power to take out the loan if it is needed in the coming weeks and months.