Several residents objected last week to town council’s plans to raise water rates by 165% by 2019, but council voted to proceed anyway with at least part of the plan.
In fact, the option chosen by council will have a greater initial impact on residents than originally thought, as it will be “front-loaded” with 20% increases each year for the next four years, before rate increases stabilize to about 5% annually.
That differs from the preferred model presented last month by Gary Scanlon, of Watson and Associates Economists Ltd., who presented the water rate study completed by his company. The original plan outlined by Scanlon called for annual increases averaging 11.4% until 2019.
But last week, water superintendent Frank Smedley argued that plan “creates a minimal net improvement in or financial situation” over the next five years.
“This new 2010 water rate study smooths out the initial impact of the rate increase by depleting our water reserves and [increasing] our water life cycle reserve fund amounts,” Smedley said in his report to council.
That, he said, would provide a net increase of just $46,396 in water reserves by 2015. On the other hand, he explained, the revised, front-loaded plan would result in a net increase of $1,055,873.
Under Smedley’s proposal, water rates will increase by 20% in 2011, 2012, 2013 and 2014, reaching a total annual cost of $1,001 by 2014. The plan identified in the study called for an increase of 12% this year, with 11% increases the next three years, culminating in a total bill of $739 in 2014.
From 2015 until 2019, Smedley’s plan calls for annual increases of 5%, while the Watson option would has average annual increases of 11.5% over those five years.
Council will likely not, however, lock in the rates from 2011 until 2019. Right now it is considering approval just of the proposed rates – judging by its decision last week, those in Smedley’s proposal – for the next five years.
Resident Joe Moore said he is strongly opposed to any plan that front loads large increases for home and business owners, especially during tough economic times.
“People just do not have the cash right now,” said Moore.
He noted there are still a lot of “unknowns,” including what provincial requirements and grants could be coming down the road.
“You’re really just shooting a dart in the dark, hoping to catch a number,” Moore said of Smedley’s proposal.
Resident Gary Bennett asked why the municipality needs such high water rate increases. Smedley replied the province is pushing municipalities to have money in reserves beforehand for future replacement costs, rather than having to borrow money when projects arise.
The town is not yet legally required to do so, Smedley explained, but refusing could jeopardize future funding opportunities. Plus, he added, the build up of reserves will likely be mandated by the province in three to five years, and the Erin water department has ran a deficit the last couple of years.
Another resident said she was in favour of building the reserves with the front-loaded plan, while yet another expressed concern about the 20% increases, especially for seniors who are on a fixed income.
Smedley noted the average annual difference between the front-loaded plan and the one suggested by Watson and Associates is about $140 over the next four years.
Several residents at the meeting took issue with the town’s method of communication regarding the proposed water rate increases. They argued not enough people knew about the special council meeting on Feb. 22, which was attended by only three people, and thus council is not getting an accurate account of the views of ratepayers.
Mayor Lou Maieron acknowledged there may be a communication issue, though he said notice of the Feb. 22 meeting was posted on the town’s website and in the Erin Advocate.
When it came to the rate increases themselves, councillor Deb Callaghan agreed with councillor John Brennan, who said, “20% up front is too much” during tough economic times. Brennan and Callaghan both suggested the township go with the 12% increase this year and 11% increases in subsequent years.
But councillor Barb Tocher noted the town did not implement the full recommendation of its water experts the last time a rate study was completed, “and here we are again, in the same situation.”
She said the front-loaded plan addresses water conservation as well as the sustainability of the system infrastructure.
Mayor Lou Maieron said leakage in the town’s water system is costing the municipality a lot of money and it would be wise to have more reserves saved to address those problems.
Councillor Josie Wintersinger said she never likes to introduce large increases, but she agrees the town needs to build up its reserves.
“All you’re doing here is putting off the inevitable [if council goes with the 12% increase],” she said.
Council ultimately passed a resolution to approve Smedley’s water rate plan for the next five years, starting on July 1. Tocher, Maieron, and Wintersinger voted in favour, while Brennan and Callaghan were opposed.
Council is expected to pass a bylaw officially approving the changes at its meeting on March 22.
