Council mulls temporarily using reserves for storm sewer line

City councillors are debating whether to use reserve funds to temporarily cover construction costs of a new storm sewer line, then paying it back when development in the area takes off.

The $10-million line in the city’s northwest is budgeted to be two-thirds paid for by off-site levies, charged to developers recover costs of servicing new areas with roads and pipes.

However, those fees are only collected when private building approaches near. Projects are often oversized to accommodate future growth, and required to be in place well before much of the land in any subdivision is broken.

The current situation, the infrastructure committee heard on Wednesday, is the city’s off-site levy fund balance is $2.5 million, but $6.8 million is needed.

Administrators propose using $4.5 million out of the rolling infrastructure reserve to cover the difference, then paying the funds back as offsite levies for the area — the Box Springs Business Park and industrial area — are collected.

“It’s a more flexible option,” said commissioner Stan Schwartzenberger, who said it is “highly” likely the area will see development and, therefore off-sites paid, to cover the internal loan.

Couns. Jim Turner and Jamie McIntosh questioned how staffers predict growth that plays a large part in rate setting and triggers projects.

When the entire city is considered, growth met or neared expected levels in three of the past five years.

“We based the budget on a certain level of development that didn’t materialize, it goes up and down each year,” said Schwartzenberger. He stressing that cost estimates and forecasts are reviewed each year. Projects are pushed off when necessary, he said, but the storm line is needed next year.

The city had previously dedicated $3.2 million of its annual provincial MSI infrastructure grant toward the project’s $10million budget.

“It’s always a push forward, then catchup game,” said committee chair Coun. Robert Dumanowksi, who added the perception in the development community is that the city is “over-collecting” off-sites.

“They should show that we’re being more than fair with off-sites.”

Officials state that going outside the city reserves to debt-finance the project would entail scheduled annual payments of $326,550 in each of the next 30 years to the Alberta Capital Finance Authority. The total interest charged would be more than the original $4.5 million amount.

Since off-sites are collected intermittently, and the finance department suggests the internal loan gives more flexibility to pay the debt early, or holding off payments without penalty.

The infrastructure reserve balance was projected to be $9.3 million at the end of 2017, according to a recent financial update.

The work would see a new larger storm sewer line built between Box Springs Road and Third Street NW, and would be done in conjunction with a new sanitary sewer bypass to lower costs.

Work would commence this spring and be complete in late 2019.

Schwartzenberger said doing the two lines at the same time will lower costs, but the timing is mainly based on the need to mitigate overland flooding concerns that were identified in 2006.