KENILWORTH – If the Wellington North community of Arthur is to see more development, the township must upgrade the capacity of its wastewater treatment plant.
But the question of how to pay for the $13.5-million estimated cost for a second-phase upgrade looms large.
Township CAO Brooke Lambert and treasurer Jerry Idialu presented council with the mix of options staff are exploring to answer that question.
Presented in a detailed Feb. 12 report, the options include:
- using tax dollars stored in reserves;
- relying on developers to front the cost;
- getting provincial grant dollars;
- going into debt; and
- opening a Municipal Service Corporation.
A phase-one upgrade to Arthur’s wastewater plant, completed at the end of 2020, expanded daily sewage treatment capacity by around 395 residential units, a percentage of which are divvied out by council to developers each year for sewage allocation.
However, annual allocations in Arthur have been frozen since the fall because of concerns about the plant’s limited capacity; July 2023 inflow to the plant was at 85% of its total capacity.
The township is also still paying off a $4.7-million loan for the first phase upgrade, with a 3.65% interest rate, and payments are expected to continue until 2031.
The proposed second phase upgrade, which would increase capacity enough for an addition 440 residential units, was predicted in 2016 to cost between $9.1 and $14.9 million.
According to various reports about the project, the second upgrade would turn a holding tank into an aeration bay and settling tank, pipes would be upsized, and a new headworks building, removing solids from sewage before it enters treatment, would also be installed.
“Without this investment, further growth (beyond some incremental units) will not be possible,” states a Feb. 12 report to council.
Last week, council made $3.64 million available from the township’s $8.3-million in reserves to support a provincial cost-sharing application requirement stating the municipality must cover 27% of a project’s costs. Those initial dollars will specifically be withdrawn from the township’s sewer development charge reserve.
Township staff are working with consultants to apply for the fund, with a deadline of April 19. Word about whether the township is successful is expected this summer.
Depending on whether the application is successful and how much money is given, staff will report back to council with ideas on how to fund any shortfall, including accessing a loan that would be issued by Wellington County.
In addition to the first-phase upgrade loan the township is paying off, the township is also paying off a $3-million loan for the treatment plant itself, started in 2004 with a 5.84% interest rate. That loan is expected to be settled this summer.
The cost estimate to design and construct the Arthur wastewater treatment plant second-phase expansion is $11.94 million before taxes. With tax included, the total estimated cost, as of last summer, is $13.5 million. CIMA chart in October 2023 Wellington North agenda package
If the township goes with a county loan, it’s likely to benefit from the county’s positive S&P Global credit rating, however staff have advised holding out for an anticipated interest rate decrease. The prime rate was sitting at 7.2% as of the report date.
“Debt financing allows the township to spread the substantial cost of the upgrade over its useful life, ensuring that future beneficiaries share in the financial responsibility,” the report states.
Staff also suggested front-ending agreements with developers to fund the work, similar to what Erin has done.
Getting developers to cover the cost keeps current taxpayers from facing a disproportionate financial burden, but the report cautions that agreements need to be in the township’s best interest.
It’s also suggested that developers could be forced to pay additional charges, a mechanism Erin has also used.
“Additional per-unit charges, beyond standard development charges, represent a way to ensure developers contribute to the long-term sustainability of township infrastructure,” the report states.
Staff are also looking at setting up a Municipal Service Corporation, similar to Wellington North Power, in which company shares are owned by the municipality or public sector groups.
The report to council calls the idea a “forward-thinking approach” that would provide fewer restrictions for financing. A detailed feasibility study is recommended before moving forward with that option.
Meanwhile, council has already approved $148,721 for a design and project tender, which staff recommend issuing this summer.
A work plan suggests a contract be awarded and construction started this fall, with construction concluding in 2025.
(A September 2023 engineering report predicts the plant, in its current state and with increasing inflow, will be overcapacity before 2025.)
At a Feb. 12 council meeting, Mayor Andy Lennox said the township is doing what it can to try and fund infrastructure demands fueled by provincially-mandated growth.
“We still need the province to help us bridge the gap to be able to allow growth and housing in particular in our community,” Lennox said.
