December 2019 Newsletter
I hope you’re all having a wonderful holiday season. You are receiving this newsletter earlier than usual because our last board meeting of the year was December 12th, and I hopefully don’t have any more news to report between then and January.
After going through the first round of budget and receiving the last few reports I can now tell you that the days of discounted water on the Sunshine Coast are over. Discounted, you say? Just for reference, Gibsons’ lowest rate for water is $1.39 per cubic meter, and it goes up from there depending how much you use. Toronto pays $3.80 per cubic meter. We are currently paying $0.54 per cubic meter, some of the lowest in the country. The reason why our water is so cheap is because historically we have not paid for the full cost of maintaining and replacing our water system, not to mention expanding our capacity. Here are some more details why user fees and parcel taxes will be going up in the future:
1. Asset management
What is asset management? In 2008 legislation was passed that all local governments have to account for the full lifecycle of the assets they own and amortize them over their expected lifespan. Up until then that had not been done, which means no meaningful money had been put aside to pay for the replacement of these assets. The SCRD has been playing catch-up since then by creating an inventory of the assets we have, what condition they are in, and when we expect to replace them. Well, it turns out that we have a lot of old water mains in need of replacement in the near future. $13.5 million worth. As more of our assets get managed, more costs like this are going to keep popping up. We are also replacing a number of pressure reducing valves, pump houses, and vehicles that are needed to move our staff around. This is just on the water side. We are only starting in parks, and recreation has some of these issues as well.
2. Infrastructure upgrades
We need more water on the Coast and while the water is a natural resource kindly provided to us by mother earth, getting it to come out of our faucets at a consistently high quality is no easy feat and costs money. A lot of money. $53 million is the latest cost estimate for a reservoir. $8.3 million is the latest estimate of the Church Road well field with its 2 wells and a water main going the length of Elphinstone and Reed Rd all the way to the Reed Rd pump station. These two wells can supply 57 liters per second to the Chapman water system, reducing our deficit by as much as 50%. We are continuing to search for more well sites like this one because they are WAY cheaper than a reservoir.
3. Water meters
We will be going to the public to request $7 million in borrowing to complete our last section of the Sunshine Coast that has not had meters installed on their water connections. Once everyone is metered, we can do a much better job of finding and fixing leaks, and holding those accountable who have the leaks on their properties. In the future, we will also be able to have people pay by use, so that those that use more, pay more. How exactly that will look will happen with much community involvement, because those with low income who grow their own veggies and use more water than others shouldn’t have to pay as much as those people who like 4 acres of manicured lawn or have a swimming pool. A lot of people are blaming the water meters themselves for increasing the cost of water. That is not the case. The above mentioned reasons, plus the borrowing to install the meters in the first place will increase our cost, but if you are using more than the average household in water, your water bills will increase. If you are using less, it will decrease. This will incentivize home owners to invest in water saving measures like rainwater tanks, xeriscaping, low-flow showers and toilets, and bathing less often. For a more thorough list of reasons why water meters are a good idea, check my blog.
What’s this parcel tax versus user fees business?
User fees get charged out to those people connected to our water system. If you use SCRD water, you pay for it. Parcel tax is paid by every property, developed or not, that has the potential to access SCRD services. The intention is that user fees pay for the ongoing cost of providing water, whereas parcel taxes pay for the capital costs of providing the infrastructure. Whether you are connected to our water system or not, somebody still has to pay to have that water main go right past your property. As asset management captures more and more of the costs of keeping our assets intact, the higher our parcel taxes will go.
Budget Round 1
We went through the first round of budget and yes, it’s a doozy. For a run-down of our SCRD internal budget, click here. The individual budget proposals, which are easier to read, start in Annex D, p. 90. Highlights are an increase in our reserve for landfill closure by another $100,000; the website redesign for $125,000; $175,000 to determine what life is going to look like once our landfill is full; $350,000 for a new fire truck in Roberts Creek and a $50,000 increase to the fire department base budget. Since Roberts Creek is the only community paying for our fire department, increases here hit us harder than others, where the cost can be spread out. The fire truck is being paid for through reserves, but in order to keep our wonderful volunteers in line with recent training requirements and increasing demands, the base budget increase will be coming from taxation. All the other departments in the SCRD are receiving similar increases.
Some of our biggest budget items are in the regional water service, including a base budget increase of $650,000 to replace water mains, $300,000 to replace and upgrade the UV filter and the instrumentation in the water treatment center, $200,000 to manage the sludge that gets created in the water treatment process, $125,000 for replacing old pressure reducing valve, $175,000 to replace the water pumps at the Langdale pump station, $200,000 to further investigate a well site at Grey Creek, $200,000 to buy an excavator to replace the aging and inefficient backhoe, $225,000 to get the reservoir shovel ready and a cool $7 million for the completion of the installation of water meters. These will be paid for from a combination of reserves, user fees, parcel tax, possible grants, and borrowing.
Round 2 budget will add several more items, so buckle your seatbelts. I feel scared, somewhat disappointed and resolved to move forward. Scared and disappointed because it is a big impact on our community and it does not help to improve affordability, which is already a big issue here. Resolved because the actions we are taking now will correct some of the shortfalls and will move us towards long-term success. Much like the two trillion dollars of federal debt that the Canadian government is pushing on to future taxpayers, a lot of frugality at the local level in the past has created a deficit not in money, but in infrastructure. In the past we didn’t know any better, but with the compounding impacts of climate change, asset management, and policy changes like the environmental flow needs on Chapman Creek we have reached a new awareness and we need to move forward to tackle these issues, while playing catch-up to pay for the under-investments in the past.
I would love to hear your thoughts on all of this. On this cheerful note, I wish you all a good holiday season and I hope you can enjoy time with the people you love.
Being in politics now, I have to try to be politically correct, so here it goes.
In case you have any questions or concerns, you can always email me.