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29th June 2015
Who should pay? Calgary reckons with looming debt for water pipes, treatment plants

By Robson Fletcher

Your water bill, if you’re an average Calgarian, will be about $80 higher this year than last.

Next year, it’ll be another $90 on top of that.

And you can also expect $100 increases in both 2017 and 2018, according to city projections.

Why so much? Because, in large part, it’s expensive to build new water and sewer pipes to all of Calgary’s new communities.

It’s also especially expensive to build new wastewater treatment plants or expand the existing ones - like Bonnybrook, for example, which is currently set for a $690-million upgrade - to handle all the stuff we collectively flush down our toilets as our population grows, regardless of where that growth occurs.

Since 2011, developers of new communities have been paying levies that, when collected over a period of 10 years, are meant to cover half the cost of new water and wastewater infrastructure related to a particular development.

Kathy Davies Murphy with Calgary Water Resources, however, told councillors on Monday the cost-recovery system is “flawed and needs to be reworked.”

Effectively, she said, developers need to pay more, faster.

It’s an argument many have been making – and refuting – as the city looks to renegotiate its standard development agreement by the end of the year.

City council didn’t provide direction one way or another on that Monday, but heard something needs to be done to deal with the long-term financial health of the water utility, which is facing growing debt loads in order to keep up with capital costs.

Mayor Naheed Nenshi described the numbers as “shocking but helpful” and said the issue merits more attention.

“We argue endlessly about property taxes but, over the next four years the average increase in the water bill will be greater than the average increase in property taxes,” the mayor said.

That’s not quite true, according to city projections from 2014 that peg the water and wastewater fees at just below property-tax hikes in each year except 2018, but if you include drainage fees, too, then the total bills Calgarians pay for dealing with water in the city indeed outstrips the anticipated property-tax hikes.

Coun. Druh Farrell said developers need to pony up more cash, faster, to cover the new water and wastewater costs (they already pay 100 per cent of drainage, under the current development agreement) but others on council weren’t so convinced.

Coun. Peter Demong raised concerns over fairness if the entire cost were to be so quickly shifted to developers - who then typically pass on the price increases to new homebuyers - when, prior to 2011, water-and-wastewater upgrades were paid for by the city and existing water users.

“Everybody’s paying for the build-out we did 10 years ago when there wasn’t a levy (for developers),” Demong noted.

City manager Jeff Fielding said maintenance costs for existing pipes and treatment plants are also increasing, and the city may need to look at “new governance model” altogether to finance the whole system.

“We’re not going to solve this problem on the backs of what we’re doing with off-site levies (for developers),” Fielding said.

Guy Huntingford, CEO of Urban Development Institute (UDI) - Calgary, the city’s main advocacy group for the development industry, told Metro earlier this year that developers are hoping to work “collaboratively” with the city on a new standard development agreement but many have found it “disconcerting” how the city’s position keeps changing in successive re-negotiations.

Huntingford said the the mayor and council in 1999 focused on building roads and asked developers at the time to pay more for transportation, in exchange for having utility costs covered by user fees. Developers have since agreed to cover an increasing number of infrastructure costs, he noted.

Coun. Andre Chabot said smaller towns see more of these kinds of costs covered by the provincial and federal governments and big cities like Calgary should, too.

“Large municipalities are facing the same challenges and in an exacerbated fashion by virtue of our increasing population,” Chabot said.

Nenshi noted the Big City Mayors’ Caucus, an arm of the Federation of Canadian Municipalities that he sits on, has been lobbying for exactly that but to no avail.

The federal government just announced a major new fund for transit infrastructure, Nenshi noted, but water and wastewater is a less politically attractive arena for higher levels of government to devote funding.