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Utility deficit shrinks

The city’s updated 10-year utility capital plan projects a $27-million funding gap, a startling decrease from the $148-million gap reported last fall.

The city’s updated 10-year utility capital plan projects a $27-million funding gap, a startling decrease from the $148-million gap reported last fall.

According to city finance director Jason Labonté, the new plan reflects $29 million in developer contributions from offsite levies. The city is also channelling 35 per cent of its capital grants into utilities.

“A few things changed. One would be the change in the offsite levies, so that’s one. And two would probably be how we’re staggering some of those projects for growth,” said Labonté.

The levies are charged to developers to extend water and sewer lines to new parts of the city. Rates haven’t been finalized yet, but Labonté said there wouldn’t be a deficit if the city didn’t have to pay to extend its utility infrastructure to the annexed land.

“If we separated out growth completely and the developer contributions, we’d have a reserve balance that we’d be carrying for the existing utility,” he said. “We want to grow, we have to have our ducks in a row.”

The 10-year utility capital plan is long-term document that’s updated every year to project the cost of running and maintaining the city’s utility infrastructure. Numbers in the document are subject to change based on market conditions or maintenance requirements, but right now the plan outlines $221 million in capital expenditures over the next 10 years, of which $82 million is projected for growth.

“It really is a snapshot in time, and it helps us to identify issues and then make decisions as we go forward,” Labonté said.

Last month, the city announced that it would front-end some utility costs to get development rolling in the annexed land. Earlier this week a decision was made at council’s finance and audit committee meeting that will allow the city to use debt as a financing tool for large infrastructure projects.

But Mayor Nolan Crouse doesn’t think utility projects will be the focus during this fall’s budget process.

“The main focus is economic development, and in order to have economic development utilities [are] one part of that,” said Crouse. “I just don’t think you’re going to find that we’re going to be focused on spending a lot of money necessarily on utilities.”

The utility capital plan projects a $15-million funding deficit in 2011, and subsequent deficits every year until 2019. But lower construction prices have also decreased the deficit calculation, said Labonté.

“We did see a decrease last year anywhere from 20 to 30 per cent,” he said. “It seems like the construction prices have levelled out and definitely changed since the last time we put a plan in front of council.”

Labonté said the city hopes to get more grant money for long-term utility projects, but its short term focus will be to come up with solutions to mitigate the deficit going into the budget process.

“We can’t put forward a deficit budget,” said Labonté. “It has to be balanced, so we’re going to have to look for strategies to take care of that.”

Crouse said the city will discuss the capital plan in depth this September and all financial implications — including user fees — will be reviewed.

“We need to go through that capital plan line by line,” said Crouse. “In order for us to … approve something for the budget, we’re going to have to understand each of those items.”

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