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The City of Kelowna has a Legacy Fund expected to reach more than $111 million next year.

The question is, what is it a legacy for?

Certainly it won’t make up a significant part of the estimated $150 million it will cost to replace Parkinson Recreation Centre because spending it all would mean it’s gone for good.

“The thinking around this is that it’s like some of the larger institutions that have endowment or legacy assets,” Derek Edstrom, the City of Kelowna’s director of community planning and strategic investments, told iNFOnews.ca. “It allows for intergenerational equity. The focus is not that it’s taken out and gone forever. The focus is it grows so it can help support strategic investments or partnerships into the future.”

The idea is to maintain and grow the base and only spend investment returns.

The newly elected city council will “have a conversation” about the fund next year, Edstrom said.

Part of that will likely be around what “base” means.

The money that created the fund came from two sources – the sale of the city’s electrical utility to FortisBC in 2013 and the sale of natural gas rights-of-ways in 2015.

Those totaled about $85 million — $55 million from FortisBC and about $30 million for the gas rights-of-way.

That $85 million grew to $105 million in 2021, to almost $108 million this year and is expected to surpass $111 million next year.

Most of that money comes from the electrical company sale.

Instead of investing the $55 million in bonds – which is the normal requirement under provincial regulations – the city got permission from the Inspector of Municipalities to re-invest the money back into FortisBC shares.

“The discussion, at that time, was that we were exchanging similar risk between owning and operating a utility and owning and operating a more diversified utility in Fortis,” Edstrom said. “It has been a really good investment for the city.”

Those shares were bought for about $32 each in 2013. They are now valued at around $55 a share.

Since FortisBC is a regulated utility, the risk of losing money on the investment is very low, Edstrom said.

It also pays annual dividends, of which $1.6 million a year goes back into general revenue. The rest continues to grow the base amount in the fund.

The money from the sale of the rights-of-way followed policy and were invested in bonds, which typically have a lower yields than stocks.

Edstrom didn’t have a breakdown of how much each of the two components grew by.

The only money spent out of the Legacy Fund was to help pay for the creation of the city’s dark fibre network. Businesses pay to use that fibre and the money has been repaid to the fund, Edstrom said.

READ MORE: Kelowna is reaping rewards of dark fibre investment running under city streets

Council will decide at some time next year what the base amount of the Legacy Fund should be and whether it should continue to grow.

Secondly, with the fund now growing by more than $3 million a year, should some of that money now be invested back into the city?

That might be a small share of the Parkinson Recreation replacement, going towards a new community performing arts centre, Glenmore park development, affordable housing or anything else.

How do you think the City of Kelowna should manage this fund? Let us know your thoughts in the comments section below.

READ MORE: Kelowna’s most expensive capital project is in for a rocky ride

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