This is the second in a series of articles about the City of Courtenay finances.

I t’s no secret that residents of any municipality have at one time or another accused their local government of waste, inefficiencies, senseless delays and an unfriendly attitude on the part of a public employee. It happens. That such a complex organization affecting such a broad swath of the community occasionally runs afoul of a citizen or a group shouldn’t surprise you.

But it should alarm you when those citizens, out of frustration, suggest, ”They should run our city like a business!”

That’s a battle cry usually heard during municipal elections by newcomer candidates and their supporters trying to diminish the records of the incumbent mayor and council members. And there’s a lot of social media mud-slinging going on right now about Courtenay City Council’s financial management.

But what does “Running it like a business” actually mean?

A business exists primarily to generate profits for its owners, who can grow their revenue by any legal means. Home Hardware, for example, must generate more revenue selling home improvement products than it costs to operate the business. It can add products to increase revenue and drop products that prove unprofitable in order to maximize its net profit.

In a sense, a municipality must also make a profit. Besides paying today’s expenses, a city needs funds to set aside for future known expenses and to have sufficient reserves for emergencies.

But a city’s taxes and fees should only cover the costs of providing services, including all long-term maintenance and replacement expenses. The goal is not to maximize net profits. It’s to deliver municipal services efficiently and effectively.

Maximizing profits would mean overtaxation.

So let’s dig deeper into other ways that “Running it like a business” does and does not make sense for the City of Courtenay.

The reality is that municipalities in British Columbia have no legislated authority to tax anybody, citizens or businesses. They can only do what the province allows. “We are children of the province,”

LIMITED REVENUE STREAM

Private sector businesses can create any means short of illegal activities to earn more revenue. They can increase prices, add new product lines and expand into new territories to attract more customers.

Parks and recreation centers cost more to run than user fees provide. Does running a city like a business mean the city should solicit paid signage, such as billboards on the fields or allow mall-like kiosks in public buildings?

Would you enjoy advertisements interrupting plays and concerts at the Sid Williams Theatre? How about tolls on the Fifth Street Bridge? Charging sky-high entry fees at the museum and Comox Valley Art Gallery to cover all their expenses would quickly close them down.

That’s all silly, of course, because the reality is that municipalities in British Columbia have no legislated authority to tax anybody, citizens or businesses. They can only do what the province allows.

“We are children of the province,” says Councillor Will Cole-Hamilton.

Courtenay Councillor Melanie McCollum, Cole-Hamilton and other municipal leaders across the province have asked the BC Provincial government to provide additional sources of revenue for cities and towns. They have suggested the province share a percentage of the property transfer tax or a portion of the liquor tax, arguing that both correlate to municipal planning and policing costs.

“But at this time, there’s no way for the City Council to increase revenue and lower taxes at the same time – it would be self-contradictory. Property taxes are our primary source of revenue,” says McCollum, a budget analyst at North Island College. “It would require finding a substantial industrial taxpayer for this to change in a meaningful way.”

The only avenue for additional revenue today is to apply for grants for non-operational needs from the federal and provincial governments.

Courtenay’s revenue comprises 65 percent from taxes and 35 percent from grants. Municipalities with a smaller tax base, such as Cumberland, receive about 50 percent of their revenue from grant funding.

However, the current council did increase revenue from one important source this year: Development Cost Charges (DCC).

DCCs represent a developer’s contribution toward the cost of expanding infrastructure due to growth. The process for determining the charges involves complex calculations that have to be approved by the province.

Courtenay’s DCCs hadn’t been reviewed in over a decade, so the overdue review resulted in a substantial increase.

Courtenay, Comox and Cumberland are prime examples of the ticking time bomb of unfunded liabilities for infrastructure maintenance and replacement hovering over almost every Canadian municipality

EXPAND THE TAX BASE

Those who believe a municipality should be “Run like a business” should be happy campers. For decades after the end of WWII, municipalities across Canada and the United States, tried a trick out of the private sector’s playbook to gather more revenue.

Blame it on the automobile, maybe, but municipalities embraced suburban sprawl to expand their tax base. Generating growth was needed, they thought, to accommodate the needs of the Boomer Generation and create jobs.

Municipalities enlarged their boundaries so developers could open up large tracts of single-family housing. And the cities took in a bounty of revenue from building permits, developer cost charges, other fees and, of course, property taxes.

It seemed like the perfect answer: more growth equals more municipal revenue without increasing an individual’s taxes.

But, it turns out, suburban sprawl was really a Ponzi scheme, according to Strong Towns founder Charles Marohn, the author of “Escaping the Housing Trap: The Strong Towns Response to the Housing Crisis.”

“Cities also assumed the long-term liability for servicing and maintaining all the new infrastructure … This exchange – a near-term cash advantage for a long-term financial obligation – is one element of a Ponzi scheme,” Marohn says.

“Over the life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability, a ridiculously low level of financial productivity.”

Courtenay, Comox and Cumberland are prime examples of the ticking time bomb of unfunded liabilities for infrastructure maintenance and replacement hovering over almost every Canadian municipality.

But Courtenay took the first steps to defuse the crisis in BC by implementing its Asset Management Plan in 2019, immediately after the 2018 election. And then it took another bold step – any council that purposely increases taxes does so at great political risk – three years ago adding compounding tax increases over 10 years to save funds to cover all of its infrastructure liabilities.

Comox and Cumberland followed suit with their own infrastructure savings plans.

Comox Valley residents have also benefited from the Regional Growth Strategy, a shared vision to curtail urban sprawl – to avoid future infrastructure liabilities – and direct new growth to the right places to sustain the diverse economic, cultural and environmental assets of our multiple communities.

So, a post-war attempt to run a municipality like business failed miserably and current political leaders are only now providing the remedy.

The federal Liberal government has budgeted a significant increase in defense spending that includes a $3 billion upgrade at CFB Comox. Early estimates predict 700 new employees at the base (about 1,800 new residents).

POPULATION TRENDS MATTER

Today’s general economic inflationary pressures – especially from the pandemic years and recently jacked by U.S. tariffs – no doubt influence the City of Courtenay’s operational expenses. But the biggest driver of tax increases is our population growthl, according to Councillor McCollum.

“Adding population means a demand for more services, such as policing and recreation, two of the largest operational budget categories,” she said.

The City of Courtenay grew by 10.8 percent from 2016 to 2021, according to the latest census data. Comox grew by 5.5 percent and Cumberland grew by a whopping 18.5 per cent.

The three electoral areas grew, too. Area A added 9.9 percent more population, Area B added 4.2 percent and Area C added 6.8 percent.

Overall, the Comox Valley grew by 8.9 percent over the last census period. New census data, expected soon, will likely show similar or higher trends.

From 2021 through 2025, the city added an annual average of 372 new housing units, mostly apartments. Addressing the shortage of rental vacancies, developers created 491 new apartments in 2025 – nearly 80 percent of all new housing units that year – and 438 in 2022 and 443 in 2021.

The city issued 1,713 new building permits over the last five years, and approved 214 new subdivisions.

But that trend is slowing. Council received applications for only six subdivisions last year – all were approved – compared with 95 in 2021, a pattern that is consistent with a July report from the Chartered Professional Accountants of BC (CPABC).

The group’s quarterly economic report says Vancouver Island’s population growth slowed to its weakest pace in more than a decade.

“The region continued to attract new residents from elsewhere in British Columbia. That migration has been the primary source of population growth in recent years,” according to the report.

But a slowing trend isn’t likely for the Comox Valley, according to Councillor Cole-Hamilton, whose work on the executive team of the Federation of Canadian Municipalities (FCM), will help the city cope with an expected boom at CFB Comox.

The federal Liberal government has budgeted a significant increase in defense spending that includes a $3 billion upgrade at CFB Comox. Early estimates predict 700 new employees at the base (about 1,800 new residents).

CFB Comox is already urging the city and the regional district to provide more active transportation lanes (bicycling and pedestrian) and transit improvements on Ryan Road to move Canadian Forces personnel to and from the base gates.

In the past, municipalities have shouldered the burden of costly changes to accommodate DND expansion and other activities. Traditionally, those costs resulted in tax increases.

But Cole-Hamilton, who chairs the seven-member BC Caucus of the FCM, helped create the organization’s first policy on Department of Defense issues. It includes the formation of a national Defense Task Force to lobby DND to dedicate a substantial portion of its infrastructure spending to “dual use” projects – those that support the needs of both the Canadian Armed Forces and the communities that host them.

As co-chair of the national Task Force, Cole-Hamilton says he wants to ensure that municipalities like Courtenay “get a fair deal with DND.”

“Some people may think that we are not doing the math, or planning for the future,” Cole-Hamilton said. “But the facts are that we’re doing the politically hard stuff previous councils should have been doing. And we’re making important connections with other levels of government, such as my work with the FCM, that benefit the entire Comox Valley.”