October 2018 update on Sage Mesa water

  • Posted on: 11 October 2018
  • By: Michael Brydon

As you hopefully know, the Sage Mesa water system, which services Sage Mesa, Westwood Properties, and Husula Highlands, is privately owned.  There has been talk for years about transferring ownership to a local government (e.g., the RDOS).  The primary reason for this discussion is that only local governments are eligible for infrastructure grants from the federal/provincial governments.  In addition, local governments can borrow on favorable terms through the Municipal Finance Authority.  Access to grants and long term debt funding are clearly important for aging water systems in need of major upgrades.

Two things need to happen for this transfer of ownership to the RDOS to occur:

  1. The RDOS has to initiate a service establishment bylaw. This bylaw will  create a "service area" for Sage Mesa water.  A service area is a polygon on a map that shows who is in the service area and who is out.  The RDOS cannot simply own a water utility.  The water utility must be associated with a legally-established service, with its own budget, taxation base, and provincial blessing.
  2. The property owners within the proposed service area must give their assent.  Before a new service can be established, a majority of property owners within the polygon must agree to the terms.  In this case: take on the assets and liabilities of the Sage Mesa system and pay the costs of running the service in compliance with health regulations on an ongoing basis.  Assent often takes the form of a referendum (as it did for the West Bench) but there are other cheaper possibilities.


So why hasn't the RDOS initiated this process? Well, regional districts in British Columbia have no obligation to provide water services in rural areas.   Indeed, in many parts of the RDOS, water is provided by private operators or irrigation/improvement districts (which are their own level of local government independent of the regional district).  The RDOS only becomes involved in water services if it is invited to do so.  In this case, the inviter has to be the owner of the Sage Mesa water system and—as noted in (2) above—the invitation needs to be supported by a majority of ratepayers.

What does an invitation look like?  It is basically a formal offer by the owner to transfer the water system to the RDOS if and only if the RDOS can successfully establish a service.  If the RDOS fails to establish a service (for example, ratepayers fail to provide assent), the RDOS cannot accept the system.  Various Area F directors have been in discussions with the Sage Mesa Water and Utility Co. about such a formal offer for a very long time.  One problem has been the RDOS's inability to commit to much once the system is transferred. This is especially true of grants. 

On September 11th of this year, a delegation from the RDOS and MLA Ashton met with senior staff from the Ministry of Municipal Affairs and Housing to discuss Sage Mesa water and the potential for grants to "move the process along".   You may recall that the referenda to authorize the transfer of the West Bench water system from the West Bench Irrigation District to the RDOS came loaded with all sorts of grant promises.  That made the decision for ratepayers a bit simpler: do you want free money or no?

Unfortunately, the province has decided to move away from conditional promises of grant money for such transfers. You can see their point: they do not want to earmark scarce grant funds to projects that may or may not move forward because voters may or may not give their assent.  Indeed, in our meeting they used the West Bench project as Exhibit A for what they are trying to avoid.  The West Bench project turned out well, but we encountered many false-starts, dead-ends, and delays along the way.

Given this, the process for transferring the Sage Mesa system to the RDOS and upgrading the system would have to look something like this:

  1. Owner of the utility formally promises to transfer the system on creation of a service area.
  2. The RDOS creates, and receives ratepayer assent for, a service area to takeover Sage Mesa water.  No grants or other goodies are offered as part of the assent process.
  3. If the service area is created successfully, the system is transferred to the RDOS.  There, it is managed like other RDOS water systems (Naramata, West Bench, etc.) by the Public Works department in accordance with both Interior Health regulations and best-practices concerning capital budgeting, and so on.
  4. The RDOS completes an assessment of the system and identifies upgrade priorities.  This study, like all costs of running the system, is charged to the service area.
  5. The RDOS applies for grants to address known water quality and quantity deficiencies.  Of course, this depends on the timing of Canada/BC funding programs (if any) and the level of competition for these grants.
  6. The RDOS requests ratepayer assent to borrow the balance of the funds required to upgrade the system.  Such an upgrade would likely (though not necessarily) involve connection to the City of Penticton's filtered water supply through the West Bench system.


That is it.  Not quite as exciting as the West Bench project (with all its moving parts and conditions and diverse players).  But simple is good, too.

As my term as Area F director winds down, the RDOS is waiting for a formal invitation from the system owner.  If this comes, the RDOS will then wait for formal assent from Sage Mesa water ratepayers (of whom I am one).  If ratepayers vote down the transfer, then we stick with the status quo.



So why not tell everyone , what it cost the Westbench taxpayers for the upgrade and to join the Cty water. What about the promise that if Sage Mesa connects it will recoup some of those costs to the RDOS. Westbench was also told that this would reduce their cost for their water, now their water is quite costly compared to what they use to pay for water. You must have some idea what it will cost the residents of Sage Mesa to rebuild all the water lines $15,000 - $20,000. Per home plus the monthly bill! Let’s be transparent here and not blindside the residents like you did the Westbench residents.

It is true that if Sage Mesa connects to the West Bench system, the Sage Mesa system will have to pay a latecomers fee (to cover their share of the cost of the new pumphouse, water mains, and so on).  This is fair and standard practice.  But I am pretty sure no one ever "promised" the West Bench that Sage Mesa would join.  How could we?  Sage Mesa is a privately owned system.  Indeed, slide 17 from the July 28, 2011, open house presentation says "Economies of scale if Sage Mesa joins".  I am not convinced that "if Sage Mesa joins" is as binding as you suggest.

There is no question that West Bench water is more expensive than it used to be (all this was explained in some detail in a series of open houses in 2010-2013, e.g., this presentation).  But please keep in mind that West Bench water is now filtered, pumped through a new pumphouse (with back-up power), carried on new water mains, and stored in a new reservoir. Moreover, West Bench residents avoided paying the true cost of the upgrades to their water system thanks to a couple large grants.  But grants are just the tax dollars of Vancouver residents, and Vancouver residents are showing signs of tiring of this arrangement. I think many people in Sage Mesa would willingly pay more to get first-world water if they could get anything like the deal the West Bench got.  In any case, they will have a chance to vote on it.

As for what Sage Mesa is facing, a previous post in this thread provides a link to an engineering report that outlines the challenges facing the (privately owned) Sage Mesa system.  I think this is all pretty transparent.

** Update: Much of this response felt oddly repetitive when I was writing it.  Looking back, I see it is largely a restatement of some of the issues addressed in this 2014 posting from the West Bench water thread.