KITCHENER - Kitchener is considering a special tax levy - that would be charged on top of regular property taxes - to pay for the cost of repairing and replacing aging arenas, pools and community centres.

If approved by council, the new levy would mean that Kitchener property owners will face property tax increases above inflation every year for the next decade.

The proposed new tax is contained in a new long-term financial plan, which councillors will consider at a finance committee meeting on Monday.

Kitchener now spends about $5 million a year on refurbishing its buildings, but should be spending about five times that amount to ensure its arenas, pools and community centres stay in good shape, city staff say.

The report doesn't specify how much the special infrastructure tax should be, but in May staff suggested a levy of between 0.5 and 1.5 per cent - equivalent to a tax increase of $5.50 to $15 on the property tax bill of an average home assessed at $309,000.

If approved by council, a levy of 0.5 per cent would mean total city taxes would increase about 2.3 to 2.7 per cent each year and generate about $38 million over the next 10 years.

The above-inflation property tax increases would come on top of utility rate increases well above inflation over the past several years. Water, sewer and storm water rates rose 9 to 10 per cent a year from 2015-17, and 6.5 per cent in 2018 and 2019.

Kitchener's 10-year budget allocates about $341 million less than what it should be spending to maintain or replace its infrastructure. The biggest portion of this gap, $227 million, is for city facilities like arenas and community centres, many of which are more than 50 years old.

If approved, the infrastructure tax would be set each year at budget time, said Jonathan Lautenbach, Kitchener's chief financial officer.

The long-term plan maps out the city's financial position over the next decade and some of the challenges it will face. It lists 24 actions, including the infrastructure tax, to keep the city on a sound financial footing.

In many ways, the city is in good financial shape: the tax base has grown with the construction of new homes and businesses, and the debt from its $110 million Economic Development Investment Fund is shrinking.

But the city faces several pressures, the report says. As well as the need to fund infrastructure, there are extra costs expected with the extreme weather from climate change; increased demands for service such as online access, more trails and arts and culture; and the need to be able to withstand unexpected costs such as increases in interest rates or energy costs.

Even with the extra levy, the city will still be well short of what it needs to keep its infrastructure in good repair. If it imposes a 0.5 per cent infrastructure tax, and dedicates the money it now spends to pay down debt to spend on city facilities, the infrastructure gap will shrink by $62 million over the 10 years, from $227 million to $165 million.

"It will take multiple approaches to see significant progress made to address this funding gap," Lautenbach said in an interview.

Lautenbach said the plan tries to take a reasonable approach without imposing too stiff a tax increase on ratepayers. "We want to balance what we think would be a reasonable increase, and the time frame. To try to address the entire gap over a 10-year time frame would be too aggressive."

Even with the infrastructure levy, property taxes in Kitchener would still be comparable to taxes elsewhere in the province, Lautenbach said.

Cities across North America are struggling with how to pay for aging infrastructure, he noted. Guelph, Mississauga and Toronto have brought in infrastructure levies like the one Kitchener is contemplating.

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