From The Mayor's Desk

Ongoing Advocacy for Long Term Care Beds for Sioux Lookout 

In preparation for the Rural Ontario Municipal Association (ROMA) Conference in January, the Municipality requested various delegation meetings with different Provincial Ministries, including Long Term Care. Although they were unable to accommodate our request for an in-person meeting at the conference, they invited CAO Brian MacKinnon and myself to an update meeting via video conference on February 24th.
While it was gracious of the Ministry to invite us, the anticipated update from the Ministry seemed to flip to the Ministry seeking information from the Municipality. Essentially, there was no new information from the Province offered, other than their on-going effort to understand construction and operating costs in the north. 

The central and recurring question from the Province seems to be ‘why does it cost so much to build and operate facilities in Sioux Lookout’?  
We proposed that the questions could also be phrased as why does it cost less to build in southern densely populated areas compared to small, remote, northern locations?  We provided the following information to the Ministry to assist in their understanding:

1) We are a relatively small municipality (population 5,700) and are remote from large municipalities (400 km northwest of Thunder Bay, 540 km east of Winnipeg).  We are too small to have had a home-grown contractor develop here to handle those projects valued in tens of millions of dollars that occur every five to ten years.  So larger projects must be undertaken by outside developers and contractors.  

2) Our small size and remoteness add travel, transportation, accommodation, delay, and risk cost to construction.

3) When the Province develops and pushes out programs to fund and/or promote sector projects – such as long term care – it is a Province wide push. However, the pool of available contractors and developers is limited and they are based in the larger centres where there will be more than enough work to keep them busy.  So a further  premium to the cost is charged to work in small remote locations.

4) We are located in the Canadian Shield in which geotechnical factors are far more variable than in the St. Lawrence Lowlands where the majority of Ontario’s population lives.  The soils in Sioux Lookout include: glacial sand and gravel deposits, surface bedrock, muskeg, soft clay and silt – and these various conditions can all be encountered in one short infrastructure project.  Variability and uncertainty of below ground conditions leads to higher costs.

5) Our relatively northern location and resultant climate zone results in higher construction costs related to: required depth of bury for pipes and foundations, construction requirements for road infrastructure, shorter freeze-free construction season, higher snow loads on roofs, allowance for snow storage areas on properties, higher winter construction costs.

6) Cost data over many years shows that construction in Sioux Lookout is approximately 1.5 times the cost of construction in larger southern urban centres.

We were also asked, “Why are operating costs higher here than in southern locations?” The response is - due to many factors, including:

1) Our remoteness adds cost to specialized services required only periodically on buildings and infrastructure, such as: water and sewage plants, pumping stations, elevators, fire and alarm systems, specialized building control systems. 

2) Our relatively northern location and climate zone results in higher operations costs due to longer colder winters, snow removal costs, requirement for air conditioning despite shorter summers.

3) No natural gas available in Sioux Lookout results in higher heating costs.

4) Economy of scale for service delivery in a relatively small and remote community. (Studies have shown that cost of service delivery decreases by 15% for every doubling of city size.)

5) Property taxes are higher in Sioux Lookout due to several key factors (although hospitals and long term care facilities do not pay property tax):

• The largest employment sectors are health care and education – the facilities in which employees work are Provincial and pay a fraction of what an industrial or commercial sector facility/employer would pay in municipal taxation.
  Of the 306 municipalities with OPP policing service, our costs are the second highest per property count.
  
• A significant industrial employer – CN Rail – pays relatively small municipal tax when compared to an industrial employer of similar size. This is as per Provincial policy.
  
• Due to the points noted above we have a high dependence on the residential tax base which adds to residents on-going housing costs.
• Wages tend to be higher in Sioux Lookout in part to offset a higher cost of living and in part to attract new employees. Another factor is that we are the primary service hub for approximately 25% of the First Nations in Ontario, including 90% of the remote (fly-in access) First Nations.  We have a significant employment sector in First Nation agencies, some of which are able to offer to eligible employees tax-free pay.  In a market desperately short of labour this tends to drive up the cost of labour as other employers compete to attract employees.

Despite these challenging realities, we also reminded the Ministry that a considerable advantage to constructing the new facility as an add-on to the existing Meno Ya Win Health Centre is that Meno Ya Win was planned with the addition in mind. The land is already owned by the hospital, the land is serviced, the current facility was built with many systems designed to handle the planned addition of the long term care wing. 
This information, and much more, has been provided to various Provincial Ministries over the last fifteen years. It is incumbent upon the Province to act on the realities of building and operating facilities in the north; the simple fact remains: it costs less to build and operate in southern more densely populated areas than it does in the north.  
The Province must design funding formulas that recognize these facts to ensure equitable delivery of services throughout the Province.