The city is looking at an average utility rate increase for homeowners of 4.2 per cent in each of the next five years.
City staff is recommending council approve a 4.3 per cent increase in 2018, a 4.4 per cent rate hike in 2019, followed by another 4.2 per cent increase in 2020, a 4.1 per cent jump in 2021 and finally a 3.9 per cent increase in 2022 for city sewer, water, and solid waste services as well as storm water parcel taxes.
Myriah Foort, the city’s chief financial officer, said the increase is considered necessary to help pay for costly upgrades to the city’s aging and failing infrastructure, as well as pricey current and upcoming projects.
“There have been significant changes to the utility funds including the BC Hydro John Hart Generating Station project and the related changes to the water system,” Foort wrote in a report to city council. “Storm water has continued to be an under-funded utility and the works required to maintain the system continue to increase which has resulted in ongoing flooding in the downtown core and Nunns Creek/16th Avenue areas.”
To ensure operational and capital activities can be maintained by the city’s utilities funds, council has thus far endorsed setting annual user fees for 2018 at: $336 for sewer (3.5 per cent or $12 average increase), $396 for water (2.9 per cent or $12 average increase), $192 for solid waste (2.7 per cent or $3 increase), and $24 for storm water parcel tax ($12 increase). For all utilities, except solid waste, that $12 increase would be applied in each of the next five years. For solid waste, the increase next year is slated to be $3 but would rise to a $ increase in each of the following years until 2022.
Foort said the increase over multiple years is necessary for long-term planning.
“Staff have determined that a rate structure for only one year does not provide the necessary information to build the city’s 10 Year Financial Plan, which provides for long-term strategic planning with incremental tax and user fee increases to provide sustainable service delivery,” Foort said. “With a one year rate approval for utilities, this provides too much uncertainty to build a realistic capital plan and reduces the ability of staff to determine if the city can undertake needed capital maintenance and capacity upgrades to these utilities.”
Foort said the goal is to be able to fund operations and maintenance of the services long-term, as well as fund infrastructure renewals and upgrades as needed.
Part of the recommended rate increase, exactly $1 million annually, is to be allocated for pipe renewal for both sewer and water, with a long-term view of increasing that allocation to $2 million by 2027.
“The city does face significant infrastructure deficit with aging pipe infrastructure across the city,” Foort said. “The city operates and maintains approximately 250 kilometres of sewer pipe and 300 km of water pipe. Much of this infrastructure is coming to end of life and if not replaced in a timely manner, could result in decreased pipe integrity, increased reactive maintenance and challenges to maintain levels of service that coud lead to regulatory consequences.”
Council will have the final say on the utility rates come early December when it delves into financial planning sessions for next year’s budget.