Banffites can expect to see a big jump in their utility bills in the coming years in order for the municipality to adequately fund water and sewer reserves.
But just how big that increase will be has yet to be determined as Banff’s finance committee has asked administration to come back with a 20-year plan and a 40-year plan to help fund the utilities.
“We’re doing okay with the water reserve, but we’re committed to trying to figure out a way to finance this deficit in the sewer reserve,” said Mayor Karen Sorensen.
“Administration has presented one scenario and we’ve asked for a few other scenarios to be presented to council so we can do some comparisons.”
Fees paid by residents and businesses for water and sewer cover all the costs of operating the systems, plus maintaining and renewing pipes and treatment pumps and plants and so on.
On Monday (Aug. 15), administration made recommendations to fund the water reserve to the appropriate level by the end of 2016 and the sewer reserve by the end of 2021.
To do that, they had recommended an increase of one per cent in water rates for 2011, one per cent in 2012 and then 2.58 per cent a year in 2013 through 2016.
However, staff proposed sewer rate increases be spread over 10 years in order to lessen the short-term burden of making up the shortfall in the reserve.
Their initial proposal called for a nine per cent jump in 2011 and 2012 and then 9.58 per cent a year from 2013 through 2021.
During a recent water and sewer reserve balance study, it was determined the water reserve was relatively well funded, while the sewer reserve is significantly under-funded.
Town administrators say the assumptions used in determining the proposed rates are that consumption will remain flat over the next 10 years and that expenses will inflate about two per cent in 2011 and 2012 and then 2.58 per cent beyond that point.
“It is also assumed that the optimal level of annual capital reserve transfers is $1,689,000 to water reserve and $3,250,000 to the sewer reserve,” said senior accountant Chris Hughes.
“It is believed that this level of annual reserve funding is required to keep both reserves in a positive balance over the long-term.”
