Inflation for many city projects has pushed costs up by 40% this year. Parkinson Recreation Centre is the city's biggest project, already priced at $134 million, before inflationary factors are added.

Image Credit: City of Kelowna

The high inflation rate gripping the country and the world are having a dramatic impact on the cost of City of Kelowna projects. The city is also contributing to inflation by proposing fee hikes of up to 30% for some recreational facilities.

Three reports gong to Kelowna city council on Monday, June 27, demonstrate just how grim the picture is.

“Kelowna is impacted by ongoing current events at the global and local level,” states a report on the city’s 10 Year Capital Plan. “There are global factors influencing this year’s plan that are beyond the city’s control. These include labour shortages, supply chain challenges, inflation, rising interest rates, increased energy costs, COVID-19 recovery and climate change.

“The city also faces a number of infrastructure servicing challenges at the local level. These include rapid growth, community demand for more and enhanced services, and greater need to replace aging assets.”

The capital plan is updated every year. This year’s version points to 40% increases on the costs for a number of building projects and 30% hikes to parks costs.

On the user side, a separate report outlines proposed fee increases for places like Parkinson Recreation Centre, Okanagan Mission Activity Centre, Kinsmen Fieldhouse, Rutland Activity Centre and Kelowna Community Theatre.

A ticket for a swim at the Parkinson Recreation Centre pool is proposed to go to $7.50 from $6, a 25% increase. The cost for a 20-ticket card could jump 22% to $106.40 from $82.80.

The non-profit rate to rent the Okanagan Mission Activity Centre could take a 31% hike to $32 from $22.08.

“Participation and access to sport, recreation and cultural activities and programs is essential to the quality of life within a community,” the report going to council says. It doesn’t talk about the impact of such big hikes on users.

These changes are not blamed on inflation but, rather, “a new benefits-based approach to setting fees and charges,” the report says.

Still, if adopted, it will have an inflationary impact on users.

Currently, fees are based on things like market comparison and trends, which is the way many communities calculate their fees. But that system doesn’t recognize things like “community nuances” and expenses, the report says.

“As we move forward, the benefits-based approach will expand on the current approach to setting fees and examine the investment in delivering services, its relationship to public benefit and corresponding investment recovery target for each activity.”

A real-world example of the immediate impact of inflation is a 15 to 20% increase to the cost to complete two active transportation corridors (bike paths).

That’s the amount attributed to inflation but the overall cost increases to the Abbott Street and Casorso Road projects is 31%, or almost $1 million more, for a total combined cost of $4.2 million. The rest is due to some design changes and things like unexpected electrical costs.

The big inflationary impact is on the 10-year plan that looks at spending $1.63 billion over the next decade, an increase of $131 million.

That increase is only about 11% because some projects have been dropped from the plan, going down to an unfunded level. Those unfunded projects total $744 million.

The city’s biggest project ever, replacing the Parkinson Recreation Centre, jumped to $134 million from $100 million last year.

READ MORE: COVID has added $100 million in expenses for Kelowna's long range construction plans

The 10 Year Capital report going to council Monday outlines the general cost impacts but doesn’t go into specifics, including an updated cost estimate for the recreation centre. But, if it’s hit with a 40% increase that will put the cost at more than $180 million.

What the report does identify are some significant unfunded projects.

That list includes the $102 million replacement of Kelowna Community Theatre, even though the Citizen’s Committee for a new Performing Arts Centre is pushing to have it open by 2026.

READ MORE: Dream of new Kelowna performing arts centre shaken but not dashed

Now it’s not on the horizon to start construction until 2032 or later.

Another $17 million in Prospera Place renovations is not in the works until after 2032 despite the fact that the arena is not currently fit to host the Canadian Hockey League's Memorial Cup and is in need of significant upgrades before it’s turned over to the city in 2029.

READ MORE: A tale of two arenas: Why Kamloops got the Memorial Cup and Kelowna didn’t

Other projects not making the short list for the next 10 years include a $75 million replacement for Kelowna Museum, an $8 million expansion of Rotary Centre for the Arts and a $23 million Glenmore Recreation Activity Centre.

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