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I received the following question from a resident:

Our understanding was that the system sizing was designed to accommodate potential future additional users such as Sage Mesa and West Hills.  One would assume that at such time those respective communities would have to pay an allocation of that infrastructure cost as well as their consumption costs?  How would the RDOS then propose to reimburse the West Bench property owners for that portion of the capital cost that would be recovered from those future users?  This could also impact one’s decision whether to pay the capital cost upfront or over 20 years.  Just trying to get our heads wrapped around all of this.  It occurs to me that no doubt others would have similar concerns.

You are correct: provisions have been made for the Sage Mesa water system to connect to the City of Penticton's treated water system through the new West Bench infrastructure*.  If the Sage Mesa system were to connect in this way, it would have to buy into the West Bench infrastructure (water mains and pump house)  through a latecomers fee.  The mechanisms for such fees are well laid out in the Local Government Act and elsewhere.  My guess is that the exact allocation scheme would be based on water usage in the Sage Mesa system versus West Bench.

What happens to the latecomers fee?  I will double check this with RDOS Finance, but my understanding is that the latecomer's is split into 349 pieces.  Those properties that pre-paid their share of the capital costs would see a rebate for their 1/349th portion of the credit.  The balance would be applied to debt (thus reducing the term of the loan for those who did not pre-pay).  So the process works pretty much the way you might think it should work.  The only hitch is that the latecomers fee benefits the people who own the West Bench property at the time of the Sage Mesa buy in, not the person who pre-paid the capital cost.

The optimal strategy for accounting for this possibility in your pre-pay/don't prepay decision is not immediately obvious to me.  Much depends on whether Sage Mesa actually joins, when this happens, whether you are still on the West Bench, and so on.  Again, it seems to me that the safest bet is not to pre-pay.

* As you know, the Sage Mesa water system is currently privately owned so the decision to connect to Penticton would have to be initiated by the owner of the utility, the ratepayers, and the Province of BC.  The RDOS would enable such an arrangement, but is not the decision maker.

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