Water rates going up — after the election
Drop in new development results in lower off-site levies paid to city’s utility
Water bills could rise faster than expected in the coming years as the city looks to make up for a $47 million revenue shortfall that’s being blamed on a lack of building activity.
New development in Calgary fell to a 33-year low in 2016, according to a city report, resulting in lower off-site levies being paid to the city’s water utility.
The priorities and finance committee heard Tuesday morning that despite significant work to mitigate much of the revenue shortfall, “the magnitude of the shortfall will still put pressure on the rate increases in the 2019-2022 business cycle.”
“As a result of the less than predicted amount of development happening in 2016, what we end up with is a shortfall in revenue that means that utility ratepayers are now offsetting the shortfall in off-site levy revenues,” Gillian Skeates, a city finance manager, told members of council Tuesday.
While the 20-year average new development number in Calgary is 400 hectares, just 78 hectares of new development took place last year, “the lowest total since 1984,” according to the city report.
An off-site levy bylaw passed in 2016 means developers are on the hook for the full cost of water and wastewater infrastructure in new and established neighbourhoods across the city, and as a result, lower than forecast development has an impact on revenues.
City officials are predicting a four to five per cent annual increase to water and wastewater fees beginning in 2019, higher than the previously forecast 2.5 to 3.5 per cent jump.
It’s expected drainage fees will not require the same incrementally higher rate increases, with the report stating drainage fees are still projected to increase 7.4 per cent per year.
The possible fee hikes in 2019 come after city council voted last year to give homeowners a break on already approved water, wastewater and drainage fee hikes in 2017 and 2018 because of the economic downturn.
Rob Spackman, director of water resources, told elected officials at Tuesday’s meeting the water utility has spent the last three months trying to find savings and efficiencies to mitigate the revenue shortfall.
That’s included ensuring hiring and refilling vacancies is only done when essential, saving significant dollars by not rehiring most seasonal staff, and reprioritizing and deferring some work.
“We’ve looked closely at every line item of our operating budget,” Spackman told council members.
Committee vice-chair Ward Sutherland said the shortfall is made worse by the fact city hall didn’t require developers to pay for water and wastewater infrastructure in new communities for a decade.
“We’re paying for the sins of the past,” Sutherland said.
“It’s a reality now that the numbers are there and we’re going to probably, in the near future, have to raise the rates up more, which obviously is going to upset people.”