Ken Chapman says a proposal to allow free water hook-ups for 14 new users could set a precedent that could financially ruin Erin’s water system.
The county councillor for the area said a proposal being discussed by local council is part of an overall look into allowing free hook-ups in exchange for a local area charge that would cover the costs of installing a new water main to serve 14 units along the main street of Hillsburgh, north of Mill Street.
Speaking to council on Jan. 10, Chapman said it was about 15 years ago he first stood in the chambers on an issue about water.
“The (water) system is owned by the Town of Erin, but financed by approximately 1,500 commercial, industrial and residential users. These users have a vested interest in the finance of the system,” Chapman said.
He added, “This system is, and always has been, user pay.”
He cited Ontario water regulations requiring water rate studies and financial plans to be developed. He explained the 2010-11 water rate study cost $24,712 and the 2011 water financial plan cost $14,419.
“This regulation basically states that the Town of Erin water system should be self-sustaining and have a financial plan to create a sustainable system for both now and in the future,” said Chapman. “The plan calls for a 20% increase from 2011 for four years. This will effectively double the price per cubic metre for water.”
He added in the fifth year, there would be a 5% annual increase.
Chapman said the reports also state a service fee of $2,750 plus a connection fee of $4,981 should be applied to each new user to keep the system viable. He said those recommendations were passed by council.
“If council decides to allow these 14 units to connect to the water system free of charge – a shortfall of $108,234 in revenue will be created,” he said.
“This and any other discount given to new hook-ups in the system will have to be absorbed by the present users. The water department has been struggling to keep up with the demands of the ministry regarding water safety and the work involved.”
He said now is the time to begin a program of pipe replacement because of leaks in certain areas.
To illustrate shortfalls in water department finances, Chapman cited the Mountainview subdivision, which he said has waited since 1996 for fire hydrants. He said when new pipes were installed in the subdivision, residents were told the pipes had to be six inches in diameter main to accommodate fire hydrants.
At that time, the budget for the hydrants was $11,073 – today the projected cost for the same hydrants is $40,000 plus.
“But we are still awaiting installation,” he said.
Chapman added while the hydrants were included in the 2010 and 2011 budgets, no funds were available.
Chapman added substantial costs are forecast for water pipe replacement.
“I believe that if council goes ahead with allowing free hook ups to the system for these 14 new users, it will set a very dangerous precedent – one which could financially ruin Erin’s water system.”
He asked if, in the future, council would also consider free hookups to the 109 homes currently without water service. “Would the present users be expected to absorb these fees as well?”
He wondered who would end up paying for the decommissioning of any wells. “We all know that costs are continually increasing and to keep up, revenues must continue to increase.”
Chapman said to allow the hook-ups without connections or service charges, “council is literally giving away $7,597 – or approximately 10 years worth of water – for nothing.”
“This is not fair to the present users and I hope that you will take this into consideration with regard to the current situation and all future situations.”
Councillor Barb Tocher agreed existing water users should not have to pay those costs for new water users.
However, in this particular case, Tocher contended the connection charges are for existing infrastructure. In those cases the pipe already exists in front of the home, and the infrastructure is already paid.
Tocher said what was suggested in regard to the Hillsburgh situation is the area charge would pay for the new infrastructure.
Chapman said, “The fee was not there to pay for the infrastructure tomorrow, but to pay for the infrastructure that is here now – the pumps, the tower, the reservoir. It’s not just about the pipes under the road.”
