Proposed infrastructure financing alternative for Greater Vernon Water.

Courtesy of the Coldstreamer:

The following submission was made to Coldstream Council and endorsed in principal by Council at the March 22nd regular meeting:

Proposed infrastructure financing alternative for Greater Vernon Water.

The agricultural community is upset with the 9% rate increase of the agricultural water. I commiserate with their plight but I am perplexed why the domestic customers are not protesting the 10.6% to 25% increase in their rates. After all, most customers in Coldstream are still receiving the same quality water they had 25 years ago yet their water price is now over three fold of what it was 10 years ago. This is only the tip of the iceberg. Upcoming expenses associated with further improvements will be out of this world. Why?

It appears that health officials are adamant that future water supplies from surface water sources will have to be filtered and treated by either ozonation or ultraviolet irradiation. This will require much more money.

We cannot continue treating agriculture water to those standards as costs would be prohibitive. The new plant will have to be down sized to serve only the domestic customers due to huge costs associated with the new treatment requirements. Domestic water will have to be separated from agriculture water as was envisioned by the original MWP but never implemented. Financing these projects will be costly.

It is obvious that the present financing model is not working. We urge people to save water and at the same time must sell enough water to meet our financial objectives. Those two objectives clash.

A better alternative would be to guarantee the fixed infrastructure financing costs through taxes and cover the remaining water costs with water rates. In order to encourage water conservation we could develop a graduated block system. The minimum allowance (80 cubic meters at present) could be provided at a low rate and above that volume we should start significant rate increases in steps. Presto: we would guarantee the finance costs through taxation (currently at $2.6 million or about 0.3 mill rate) and water saving would have less influence on our budgetary objectives.

This concept is identical to the way we finance the Multiplex (mill rate 0.3718) and the Theatre (mill rate 0.2039). It is obvious that we could not finance either of them through user fees as we can’t even operate those facilities on user fees, we must subsidize them through taxes. Borrowing for these facilities was approved by the electorate (just as the utility borrowing was) and we are financing them through general taxation. There were no complaints about this method of financing.

Prior to the referendum politicians insisted that the reason for the borrowing was so that current customers would share costs with future users. As it stands, large sums were set aside and, indeed used, for cash funding of infrastructure. This goes against the stated principle of the borrowing referendum. Thus, continued borrowing and financing over time is the most justifiable method of financing present and future infrastructure costs.

I believe that this would be the most rational solution to our present dilemma regarding financing the infrastructure needed for the completion of the Master Water Plan.

Respectfully submitted:

Gyula Kiss
Councillor