Castlegar’s water supply system is in pretty good shape, according to the new director of transportation and civic works.
Lucas Pitts was commenting on the city staff’s new water system asset management plan, delivered to council last week.
The report shows the city has $82 million in water assets, and the city is spending an appropriate amount to maintain that system.
“We are spot-on with what the national average is,” said Pitts. “Very few municipalities are funding in a way to completely reinvest in the system.”
That average Pitts refers to is set by the Canadian Infrastructure Report Card, an independent body that recommends annual infrastructure reinvestment rates.
The City’s management plan was developed under the direction of Pitts, who has a lot of previous experience in municipal asset management programs, including with Vancouver, Victoria and Duncan.
This report only covers the water delivery system, such as pipes and the treatment system. More reports are expected in the coming weeks on the sewer system and other city assets.
Revenue for 2018 is projected at $1.67 million, with operating expenses at $1.026 million. That leaves approximately $648,000 available for capital expenditures. The city’s reserves have climbed steadily for four years, before decreasing slightly last year.
There are approximately $1.5 million in water reserves.
“Financially we have to ensure that we are growing our water rates in a way that is sustainable over the long term,” explained Pitts.
“You need the money to reinvest, you need to ensure increases with inflation and have a little bit of savings at the end.”
Pitts feels that water and sewer rates should really go up by about two per cent every year just to keep up with inflation, “or else we actually have less money to do the work — it is actually a two percent decrease in what we can do or what we can replace.”
Staff is suggesting that no rate changes be made for the next two years to give enough time to see what water revenue will be with the new metered water system.
The report predicts $4.8 million in replacement costs in the next five years, $1.2 million in the five-to-10 year range and $9.8 million in the 10-to-20 year range.
Average annual investment for the next 20 years is estimated at $963,805 for the next five years, $237,986 in the five-to-10 year range and $981,855 in the 10-to-20 year range for a 20-year average of $791,375.
If the city takes the least-risk approach, the demand leaves a funding gap of about $141,000 per year.
To that end, Pitts says the staff’s suggestion is that after the two-year break in rate increases, rates should be increased by about four per cent. That would include one percent earmarked for water reserves and two per cent for inflation.
Any changes to the water fee structure would have to be approved by city council. Municipalities fund their water and sewer systems through user fees that are separate from municipal taxes. These accounts must be self-balancing and what comes into the accounts can only be used for water and sewer.