Olds councillors have passed the $41.5 million water commission business plan that will allow for more water to be piped to member communities but are holding off on passing along the resulting costs to residents.
Olds approved the Mountain View Regional Water Services Commission business plan during a special council meeting held last Thursday, the deadline by which the commission requested all member municipalities make a decision by.
Because the South Red Deer Regional Wastewater project is scheduled to begin construction soon, all member communities had to ratify the fresh water business plan so the two projects can be constructed in tandem.
Council previously passed the plan in principle during the regular council meeting March 28 but councillors said they needed more information before giving full approval.
Between the time of the two meetings last week, town administration received answers to a list of 11 questions related to the business plan not accurately reflecting financial details of the project. Once those answers were received, the special meeting was called to give council the opportunity to approve the plan based on the new information.
Norm McInnis, the town's chief administrative officer, said the town had difficulty with extending the debt limit of the project to $33 million indefinitely, as was stated in the business plan. In fact, once construction is completed, the debt limit for the commission will revert back to two times annual revenue, as set down by provincial regulation.
McInnis said from town administration's point of view, that was important because there are several potential capital projects upcoming in the next few years for the water commission, and the town didn't want that debt limit passed on to local customers indefinitely.
“In order for some protection at the local level to be there, this debt limit couldn't stay in perpetuity. It had to be just for this project so that when the next major capital project comes up and (the commission) needs a debt limit extension beyond what the regulation says, they have to come back to the communities again and get the OK for it,” McInnis said, adding that projects are financed, in part, through rates passed on to users.
On Thursday, council also passed two other motions: the rates the commission will charge the town ($1.20 per cubic metre beginning April 1, going up to $1.33 per cubic metre in 2012) and a related motion to raise rates the town charges residents to $2.51 per cubic metre from the current rate of $2.31 per cubic metre. Before April 1, the commission charged the town $1 per cubic metre for water.
While McInnis said the commission has resolved to raise rates by 20 cents per cubic metre on April 1, administration felt it was unfair to town residents to pass the increase on immediately.
“We just can't (pass on that cost) to our customers here in town (immediately). We've got to give some notice,” McInnis said.
Administration will be bringing back a request for decision shortly for council to consider passing the rate increase on to town residents.
Councillor Mary Jane Harper will be asking the commission at its next meeting on April 13 whether that increase can be delayed. If not, McInnis said a one-month delay in passing the rates on to town customers will cost the town about $20,000. The town will either add one or two cents onto each water bill until the end of the year to make up the difference, or it will absorb the cost through the town's operating budget.
Mayor Judy Dahl said the reason council wanted to delay ratifying the business plan was to protect the town's interests.
“We've learned from previous situations that we were placed in, and we wanted to make sure about the business plan. It was easy to rubber-stamp something that Municipal Affairs asks you to rubber-stamp, but we are a commission member and these are millions of dollars (involved),” she said.
"We've learned from previous situations that we were placed in, and we wanted to make sure about the business plan. It was easy to rubber stamp something that Municipal Affairs asks you to rubber stamp, but we are a commission member and these are millions of dollars (involved)."Mayor Judy Dahl, Town of Olds
