Banff residents will likely see increases to their sewer utility bills as the Town prudently tries to save for the future replacement of the town’s water and sewer infrastructure.
Administration is recommending accelerating payments to the sewer reserve to make sure the Town has money to pay for future replacement of the wastewater treatment plant, for example.
As for water reserves, the municipality is closer to the funding target needed to be able to replace future water production and distribution systems.
Officials say the sewer rate will continue to go up as it has in the past five years, while water rates are being reviewed sometime this year.
“It’s a little bit of a different situation with sewer reserves. It’s a little more urgent than water reserves because it’s currently in a negative position,” said corporate services manager Kelly Gibson.
“There is some urgency and we’re definitely suggesting accelerating our investment into this reserve. At our current contribution levels, I can’t see we’re ever coming out of it.”
The draft water reserve and sewer reserve policies were before the Town’s finance committee June 13, but they now need council’s final stamp of approval.
The draft policies lay out the various assumptions made for expected inflation, expected grants from other levels of government and the expected lifespan of various systems.
Banff’s water and sewer systems are set up as self-funding utilities, meaning utility fees cover the cost of providing the service.
Such services include costs associated with maintaining and replacing wells, pipes, the reservoir and sewage treatment plant.
Reports to the finance committee show that Banff has been much more diligent than most municipalities in saving for future infrastructure replacement.
That said, when things need to be replaced, they are big-budget items.
Councillor Leslie Taylor said she supports the policies, saying the funding target levels are a “prudent approach”.
“The risk here, of course, is that other communities that have not prepared and find themselves in a crisis situation may be bailed out by the province, while we, having been more diligent and prudent, will not,” she said.
“But, I still think that we have a responsibility to plan for these vital services. It’s like saving a little bit each year towards retirement, as compared to counting on winning the lottery when you’re 64!”
Councillor Chip Olver had some concerns, saying the assumptions made about the levels of funding coming from other sources of government may be off.
She said FCM (Federation of Canadian Municipalities) – of which she sits on several committees – has indicated 40 per cent of federal grants are set to expire in the next 36 months.
“FCM is working hard to reach an understanding, but we all know the federal government has another top priority,” she said.
“I don’t have much confidence in the level of grant funding mentioned in the report and I think we need to think of ways to protect ourselves.”
At the end of 2010, the total future replacement cost of assets related to treating wastewater in the reserve was $188,590,500, with an annual contribution required of $493,300.
The total future collection cost of the wastewater collection system was $219,603,300, requiring a yearly contribution of $462,100.
The report says the target should be $965,500 a year, but the current funding for 2011 is $714,000, leaving a contribution shortfall of $242,500.
The target reserve balance to properly fund existing assets as of the end of 2011 would be $33,448,000. The reserve balance at the end of 2011 is projected to be in a deficit position of $48,000, leaving a current shortfall of $33,496,000.
To work out this deficit, administration recommends that the annual reserve contribution increase by $500,000 for the next two years, which is approximately 20 per cent of consumption revenue.
They also recommend a more detailed replacement cost assessment of the wastewater treatment plant – the municipality’s single largest asset – be done in 2012.
As for the water reserve, the situation is not as dire.
Right now, the water reserve looks good for Banff’s needs for several decades. They are in a positive balance for the next 70 years.
But at that point, a lot of the town’s water production and distribution systems will be due for replacement and the reserves will not be sufficient.
Rates are being reviewed this year to address contributions to reserves.