The City of Castlegar has released its sanitary system asset management plan — the second in a series of asset management reports on city infrastructure. A report on water infrastructure was released last month and reports on roads and storm sewers are expected in the coming months.
Castlegar water system in good shape
The report states, “The financial situation for the sewer network is in a strong position. There is a funding gap over the next 20 years, but that can be managed through small increases in sewer rates.”
However, the report recommends that there are no increases over the next two years, until the implications of the new metered rate structure are fully understood.
The city has about $63.7 million in sanitary system assets.
Over the last six years, the city has spent about $2.75 million on capital projects, or an average of $458,000 a year.
Sanitary reserves had climbed steadily for three years before decreasing in 2016 and then climbing again in 2017.
The study the report is based upon took three things into consideration when determining future spending requirements: asset risk (age and condition), capacity (does the asset need to be upgraded) and impacts of climate change.
In a baseline replacement scenario annual expenses are estimated to be $192,231 for years zero to five, $1,632,568 for years five to 10 and $314,109 for years 10 to 20. This equates to an average of $613,254 a year.
Under the baseline scenario there is a $232,000 gap between current revenues and required funding.
The report also gives what is called the 125 per cent and 150 per cent scenarios. These give a less conservative estimate for when infrastructure will need to be replaced. In those scenarios, there is no funding gap for the 20 year period.
One major project on the horizon is a $6 million upgrade to the North Treatment Lagoons. The city expects to receive at least a 50 percent grant for that project. If the grant is received, the baseline funding gap is reduced to $81,254.
Current sanitary rates do not take into consideration inflation so staff are recommending a formula for sewer rate increases that considers the infrastructure gap, the construction cost index (inflation rate for the construction industry) and a small, but increasing, contribution to the sanitary reserves every year.
A one per cent increase would go directly to reserves, another one per cent would cover the funding gap and an increase for the construction cost index would cover increases in future construction costs.