West Bench water system will be put to the voters

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By Bruce Walkinshaw - Penticton Western News Published: February 23, 2010 (link to story)

The West Bench Irrigation District is a referendum away from a system upgrade that will connect West Bench’s water system with Penticton’s. Penticton council voted 5-2 Monday evening to approve two contract agreements, securing over $5.7 million in grant money from the provincial and federal governments to be used to upgrade the WBID system at a cost of roughly $8.6 million. West Bench residents must first vote to approve the project which will cost them $2.8 million.
If approved, the new system would be owned and operated by the City of Penticton, receiving an estimated $1.9 million contribution from the agreement to help augment the cost of the Penticton water treatment plant’s recent upgrades.

The upgrades to the WBID’s system, according to Penticton’s director of development and engineering services Mitch Moroziuk, will include: a new pump station, upgrades to the Westminster water main, replacement of aging pipes and upsizing of a water reservoir.

The money will also be used to install water meters for every WBID customer, which will be used to create a rate pay structure that will calculate each West Bench resident’s share of the bill, said Moroziuk.

Moroziuk noted that there will be two clauses in the contracts — that the province may terminate the agreement on 120 days notice and that funding from the province is subject to sufficient monies being available — that present potential financial risks to the city should the senior government leave Penticton on the hook for their portion of the project.

“These clauses have been discussed with both our solicitors and with the province. The province and Canada will not alter these requirements,” reported Moroziuk.

However, he said that provincial staff said they were not aware of any situation where either clause had been used in the last 15 years.

“Our solicitor has advised that it is very unlikely,” said Moroziuk. “The risk here is low.”

The risk, however, seemed to be significant enough to prevent councillors John Vassilaki and Mike Pearce from supporting Penticton’s involvement in the project.

“We do know we are in a coming down time of government (spending) levels,” said Pearce. “I would be reluctant to use my vote to cast in favour of anything so long as those clauses remain in there because I don’t want to get caught with our pants down.”

Coun. Dan Albas said that he thought the agreement was a demonstration of regional co-operation.

“I think this is a good indication of how we can work together at all the different levels of government (to solve problems),” he said.

Moroziuk said that staff will now work on details of the proposed project in order to present them to West Bench residents, hopefully in a spring or summer referendum. The vote will also include an ultraviolet treatment option.

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Comments

The story does not say what the $2.8M share from West Bench residents covers. In the 2007 AE report, the West Bench portion of the capital cost was only $1.52M. So this represents a pretty hefty increase if the $2.8M referred to in the story is only capital cost. The other major cost in the 2007 AE report was the City of Penticton's operating charge (basically, its average cost of operating its water treatment plant). This number dwarfed the capital cost, which is a large reason why we still have no resolution to this issue.

I have done some back-of-the envelope calculations below based on the new numbers (and using some rough guesses from the AE report). Much depends on the operating costs that the City of Penticton decides to charge West Bench residents. As shown below, it could be quite ugly. Please keep in mind, all these costs are in addition to West Bench's existing debt servicing costs.

 


West Bench share of capital cost  $  2,800,000  
Term 20 years
Interest rate 6%  
Annual debt and principal $244,117  
Number of West Bench households 351  
Average capital cost per household $695  
     
Estimated service fee (2007 AE report)  $  250,000 these are subject to negotiation
Depreciation fee (2007 AE report)  $  100,000
Total City of Penticton charges  $  350,000
Average operating cost per household  $  997
     
Total estimated capital and operation cost $1,692 per household

 

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