Solberg's evaluation of County office is a little off
Councillor Solberg’s blog discussing a new County office shows a disconcerting lack of financial acumen. When evaluating a stream of maintenance costs for the new building he desires, he fails to use a Net Present Value (NPV) method to compare the costs of old versus new. There are detailed definitions and even tools on the Internet for calculating the NPV of investment alternatives.
Using Earl’s estimate of $425,000 per year in repair and leasing costs for 40 years, the NPV using a five per cent discount rate is just over $7 million. To look at this another way, still using Mr. Solberg’s data, if the County could sell a 20-acre parcel near Balzac for $8 million and invest that money at five per cent, the interest and principal could be used to pay for 40 years of upkeep to the existing building and leasing space without any debt or further contribution from taxpayers.
However, we do not have to choose now between 40 years of maintenance and a new building. There could be significant changes over the next five or 10 years. Perhaps the old building will be damaged in some way or lost to a storm. Besides waiting, there are other alternatives that are not even considered in his evaluation.
If there are too many staff for the current location, perhaps some of them could work from home.
The Provincial and Federal governments have offices all over to better serve their ‘customers.’ The County could also consider having some remote offices in towns throughout the county. This alternative would reduce crowding at the County office and allow residents to get County business done with a minimum of travel. With this glaring lack of financial skill guess it’s no wonder these incumbent councillors let the Rocky View County haul Wheatland’s waste for five years after they were aware it was a money-losing proposition (http://www.rockyview.ca/Default.aspx?tabid=792&entryid=521).
When it comes time elect County councillors this fall let’s find some that have the financial skills needed to correctly evaluate multi-million dollar proposals for spending your money.
John McMurray, Airdrie