MAPLETON – Residential users of municipal water and wastewater systems here could be facing a 22 per cent increase, around $25 per month, in base rate charges next year.
The proposed increase is the result of higher-than-expected costs to build a water tower in Drayton, explained Mapleton director of finance John Morrison at the Nov. 9 council meeting.
In June council awarded a contract to Landmark Structure Co. to put up an elevated tank in Drayton for $6,149,000 including HST.
The company’s bid, the only one received for the project, was about 50% higher than an earlier design cost estimate of around $4 million, a difference attributed largely to a sharp escalation in the cost of building materials.
Morrison pointed out that when council accepted the tender it was advised rates would have to go up at least 77 cents a day.
“Now they’re going up 80 cents a day because we incorporated some of the asset planning recommended,” by consulting engineers Cima, Morrison explained.
The new rates, set to take effect Jan. 1, would mean a combined residential water/wastewater increase of $25.48 a month or 84 cents per day over 2021 rates and cost ratepayers an additional $305.76 annually.
“The increase in the rates is necessary to ensure that the long-term sustainability with equitable outcomes is supportable for both current and future ratepayers,” Morrison states in a report to council.
“Investment in the water and wastewater systems is required to maintain existing assets, for fire protection and to promote community growth that, over time, will moderate the water and wastewater rates downwards as the customer base grows.”
Under the proposal, variable rates based on usage would remain unchanged.
“It is the township pricing strategy that debt burden and capital requirements be financed through base charges,” the report states.
“The customer base in the township remains small. The utility services 948 customers, of which 854 customers are residential and 94 customers are commercial.
“If we didn’t support this increase would that result in the taxpayers continuing to support the water users?” asked councillor Paul Douglas.
“Absolutely that’s what it means,” replied Morrison. “The difference between the rates that we have in 2021and 2022 is over $300,000. And $300,000 is what is driving the debt that we incurred to build (the water tower).
“So if you don’t want to collect it from the ratepayers, where’s the the money coming from? It’s got to come from the taxpayers and that’s where it will come from?”
In Ontario, municipalities are not permitted to fund water systems from general property tax funds and are required to collect the funds through charges on users.
“This is an awkward spot to be in,” said councillor Michael Martin.
“I don’t know how many people bought gas or groceries, or looked at their tax bill, looked at our budget for next year, another four per cent … everything’s going up. And I work in the public sector, too, but my my wage is not going up to catch up with all these inflationary pressures. And 22% is a big number.”
He added, “I mean 22 per cent is going to cause a fuss, and I think it should, right? There should be questions asked.”
Martin asked if would be feasible to await the results of the township’s water and wastewater servicing master plan, which is due for completion in 2022.
“Mr. Morrison, (what) if we wait [for] the master plan?” Mayor Gregg Davidson asked.
“You’re going to be short $300,000,” Morrison replied.
Davidson said such a situation would not be fair “because the residents of Drayton and Moorefield would be then subsidized by all the other residents, including our farmers.”
Martin noted capital projects in the township’s proposed budget for 2022 total $1.8 million and wondered if $300,000 could be diverted to the water system.
“Are those expenditures absolutely needed?” he asked.
“The expenditures that are in the capital plan are expenditures that are required to achieve our goals. However … it’s always possible that tenders will come back favourable,” said public works director Sam Mattina.
Morrison added, “These projects, even if you try to defer them, it’s going to make yourself another problem, because you’re not saving enough money moving forward to pay for the projects, to pay for some of those things that are important for growth. Because if you have growth, the rates will go down.”
“So we have multi millions of dollars and projects that need to get done to maintain and to keep our water system running smoothly for our community, but we only have 948 users. So 948 users … they have to pay the burden of what needs to be done,” observed Davidson.
Councillor Marlene Ottens asked if was possible to apply any surplus from current public works projects that have come in under budget.
“I realize that’s coming from the general ratepayers, but it’s already budgeted and collected. So is that something that could be done to lower this increase?”
“Then you’re back to people, not on water/wastewater subsidizing people who are on water/wastewater – and that, to me, is wrong,” said Davidson.
Martin said, “I would love more time to think about it before making a decision tonight,” and moved to defer acceptance of the report and authorization of the increase after the passage of the township’s budget, which is anticipated on Dec. 14.
The motion to defer was approved unopposed.
