A new line item will be appearing on 2015 utility bills: the supplemental capital contribution fee.
The fee aims to collect money for the city to hold in reserve to help pay for the next 10 years worth of utility-related infrastructure projects.
Diane McMordie, the city’s new director of finance and utilities, said while the 10-year utility capital plan will be publicly released Oct. 27 as part of the 2015 budget package, the plan for repairing and maintaining the current infrastructure totals a proposed $159-million.
That’s what the new fee will help pay for.
The fee, estimated to add $23.52 per month onto the average household’s bill in 2015, was driven up by about $9 by council’s decision to stop provincial grant funding, called the Municipal Sustainability Initiative, from being used for utility capital projects.
Those funds will be phased out over a five-year period and put towards other municipal capital projects.
Former mayor Richard Plain wondered what the grant money, which will now be directed to other municipal capital projects, will be used for.
“It means that money can be used by city hall to undertake other activities which might be more controversial,” Plain said.
Former city manager Bill Holtby said when that grant program was first introduced, the decision was to split it proportionally between utility and municipal capital projects, a practice that remained until the recent vote.
Plain remarked that rising utility fees could have an impact on economic development, as they’re part of what businesses could consider when looking to set up shop.
“When you take away portions of the capital funding that would have otherwise maintained and kept this at an environment level with our surrounding neighbours … well then we’re negatively impacting parts of our economic development plan,” Plain said.
The new utility fiscal policy also enshrines the idea that debt can only be taken on for repairing or replacing current infrastructure such as sewers, continuing over a decade of avoiding debt.
Holtby said in the early 2000s council was in a position where most of the city’s debt could be retired, and they decided to try and avoid debt as much as possible.
He said when it comes to some major infrastructure projects, like a water reservoir, debt might be unavoidable.
“It’s virtually impossible to save up the money to build the infrastructure,” Holtby said, likening it to trying to save for a house and paying out of pocket rather than getting a mortgage.
There’s two schools of thought on whether or not going into debt for infrastructure is positive.
Holtby pointed out that the money being collected to hold in reserve might mean some who pay into it don’t benefit if they leave the city before it’s built.
Plain noted there are some projects that are of a magnitude where borrowing has to be considered, but for other undertakings gathering the reserves can help avoid suddenly heaping debt servicing requirements onto the municipal budget.
“Eventually if you keep doing that then, of course, a greater proportion of your municipal operating revenues are directed towards serving that debt,” Plain said.
Plain has raised his own concerns about how the storm utility fee is calculated with the city, championing a different calculation system over the current flat fee that’s applied.
“It’s important that those get spelled out. It cannot be a black box,” Plain said.
