Belleville approves 2.2% annual base property tax increase for 10 years to maintain current level of service

Belleville approved a 2.2% annual base property tax levy increase for 10 years to maintain current asset levels of service.

The increase was proposed by staff as a balanced funding strategy and was approved by council.

It falls between:

• 1.39% required to maintain the 10-year proposed level of service or PLOS,
• and 3.08% required for the more aggressive Whole-of-Life (WOL) funding scenario.

This 2.2% rate is intended to:

• Avoid breaching Belleville’s debt policy, which limits debt repayments to a maximum of 12% of own-source revenue (the maximum Annual Repayment Limit (ARL) set by the province for most municipalities is 25%). With this plan, the City expects to reach 11.98% over the next 10 years.
• Gradually reduce the infrastructure funding gap of $30.2M per year
• Build the Asset Management Reserve Fund to 53.46% of its target by 2034

In addition, the following increases were approved:

• 4.58% average annual wastewater fee increase
• 0.50% average parking fee increase

84% of the City’s infrastructure is currently estimated to be in Fair or better condition

• 13% of assets are estimated to be in Poor or Very Poor condition.
• 3% of assets are in Unknown condition

The assets in the “Very-High” risk zone for the City make up approximately 4.7% or $167.89 million dollars, consisting of assets in various service areas, including:

• Signalized Intersections
• Upper Bridge
• Buses

Average infrastructure gap of $30.2M per year

The City’s total 10-year average funding meets 85% of forecasted needs, leaving a $30.2M per year annual shortfall. The Whole of Life shortfall is significantly higher at $65.2 million per year.

• Capacity (Growth & Upgrade): Only 28% of needs are funded, with a $27.83M/year gap, indicating a significant shortfall in growth-related infrastructure investment.
• Reliability – Renewal: Near full alignment with needs (100% funded), demonstrating strong performance in asset reinvestment and alignment of budgets and long-term
  plans with Asset Management.
• Operations & Maintenance: Operating needs are 98% funded, with a $2.4M/year gap.

Options

It is the City’s responsibility to ensure that the City’s assets are managed sustainably and hence the City of Belleville shall actively manage this ‘gap’. Typically, this is achieved through:

• Increase Funding
• Accepting Increased Risk
• Accepting Lower Level of Service

To close the above-noted funding gap, the following immediate funding increases would be required by service area under both strategies noted above:

Accept Lower Level of Service

• Align services with funding capacity and public willingness to pay
• Utilize community feedback for decision making on lowering of service levels
  • Example: Defer road widening projects
    • Saves approx. $40.5M in capital costs
    • Risks: congestion, public dissatisfaction

2024 AMP recommendations for increasing funding

The financial strategy outlined in the 2024 AMP also recommended a ten-year phased approach to revenue increases in order to address the infrastructure funding gap, with the following targets:

• Taxation: 2.3%
• Wastewater: 5.13%
• Parking: 1.69%
• Water: no change (adequately funded)

Staff recommendations for increasing funding

Property taxes

Under this phased strategy, the AMP recommends increasing the annual tax levy by 1.39% each year for ten years. However, given the substantial capital investments planned in the 10-Year Capital Plan, this level of increase would lead to higher debt issuance that would exceed the City’s Debt Policy limit, which limits debt repayments at 12% of own-source revenue.

To address this, the WOL approach was considered, which would require a larger annual tax levy increase of 3.08%. To balance these considerations and maintain debt capacity within limits, staff intend to propose an annual tax levy increase of 2.2%. This rate falls between the two approaches and allows the City to build its Asset Management Reserve Fund in line with
targets set out in the Reserve & Reserve Fund Policy while managing debt responsibly.

Water rates

Although the AMP strategy indicates that Water service funding is sufficient, adopting a WOL approach would necessitate a 28% increase in water revenues. This translates to an average annual increase of 2.47% over ten years, driven by higher expected renewal requirements beyond the current planning horizon. However, considering the Water service’s projected
financial outlook and planned expenditures, this approach is not recommended at this time in order to maintain stable water rates.

Wastewater

The average annual funding needs for Wastewater over the ten-year planning period are similar to those identified under the WOL approach. Both scenarios require a 59% increase in wastewater revenues, with the WOL approach requiring a slightly higher average annual increase of 4.79% over ten years. Given this alignment, the WOL approach is not recommended at this time in order to maintain stable wastewater rate increases.

Parking

The projected average annual funding needs for Parking over the ten-year period closely align with those under the WOL approach, both requiring a 12% increase in parking revenues, with the WOL approach requiring a slightly higher average annual increase of 1.11% over ten years. Given this alignment, the WOL strategy is not recommended at this time.

Debt capacity

While some service areas may require higher levels of debt than others, the City’s Debt Policy measures debt capacity on a City-wide basis. The table below presents the projected maximum debt level the City is expected to reach over the next 10 years, based on the current 10-Year Capital Plan and the scenarios outlined above:

REC. NO. 252-2025

Moved by Councillor Sean Kelly
Seconded by Councillor Lisa Anne Chatten

That as recommended by the Finance Committee, the Manager of Finance/ Deputy Treasurer Report No. DDF-2025-06 – Asset Management Plan – Proposed Levels of Service, be approved.

June 23, 2025

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