Saturday, February 25, 2017

Cooking The Water Books?

The North Okanagan Regional District's tentacles incessantly shuffle costs of water supply and infrastructure.

This isn't the first time a resident has suspected that some may be charged more than what is actually owed.  And elected officials either are -- or are not -- "on the ball" to prevent their constituents being gouged.

"Mable Lake is $192 for infrastructure base;
 Grindrod is $290 for infrastructure base;
 and Gunter Ellison is $300 for infrastructure base."

First, let's have a look at RDNO's sphere of influence:

RDNO boundaries have been described as a drunk tossing an open box of pushpins into the air.

Then click on this Board of Directors list as well as Advisory Committee lists to see who's involved in which area.
And how complicated it can--and does--become.
Especially with RDNO's senior bureaucrats tugging at directors' chains.
And circling the wagons.

So, could it be that RDNO's cooking the water books?
Are its tentacles spreading into new territory?

You decide, after this plea from a resident of Enderby:

"Get involved, people, or you will lose the right!"
                  Dana Mills, Enderby resident             

Dana Mills' Executive Summary to the Board follows:

"Gunter Ellison Road Water Local Service Area                                   2017 February 22
 Regional District of North Okanagan Board of Directors
 (Executive Summary Last Page)
We live one km outside of Enderby city limits and are supplied with potable water from the Enderby Public Utility. In fact, we share a distribution pressure zone with a number of Enderby residents. At City limits we are connected with a 2km length of 150mm C900 PVC pipe.

This, plus a few stop valves, is really the extent of our infrastructure. We're currently paying for the full capital cost of this pipe and will have paid for it by 2024 through a fixed rate parcel tax. Currently, the industry expectation of this class of buried pipe is that it has an service lifespan of 105 years. For reasons known only to himself, Mr. McTaggart thinks the service life will only be 80 years. You should note that this discrepancy does affect all taxes considerably over time. Be that as it may, our distribution main is only 13 years old and has no history of needing any maintenance over this period.

Our water meters were paid for by us when initially installed, and paid for by the Regional District through a grant when they were upgraded to "smart" meters a few years ago. The City of Enderby now covers all repair costs, including replacement, and charges us an out-of-town parcel tax to do so. Their fund also covers flushing, testing, and their billing administrative costs. They now deal with us as they would any other water subscriber within their jurisdiction.

The only direct infrastructure cost to the RDNO would be for "major events" like a watermain break. We have a substantial reserve fund already built up; enough to repair at least 10 major breaks according to Mr. McTaggart. Staff has the ability to draw on reserves for atypical expenses with the option of replenishment later. Perhaps the transition to direct billing caused RDNO administrative costs to spike last year, but that's over now and shouldn't penalize us forever.

Now, an Infrastructure Renewal reserve is a thorny issue for us considering that we're paying entirely for the initial pipe, and that this will be for the benefit of future generations to use. They won't incur the capital cost to install it, but that's a discussion for another time.

Our pipe is stable and will be left alone unless someone with a backhoe accidently digs it up. Our Water Local Service Area is very precisely defined with only one property charged but not yet connected.

Another property may be included in the future, but unlikely because of cost. The owner says he doesn't currently pay any RDNO water fees. So there's not going to be any expansion without serious negotiations, which is unlikely to happen during our tenure.

So we're not really sure what our Infrastructure Base Fee actually pays for, nor why it's increasing at all. To say that the increase is due to the Canadian cost of living index doesn't make much sense. For RDNO staff to say that a fee like ours is increasing due to cost of living, but with no other information provided, should raise your suspicion that they aren't doing much to be efficient and accountable.

                    "Isn't that really rationale for a decrease?"

On first glance the Small Utilities Rates Imposition Bylaw proposes to increase our total fees by 6.3% over three years. But wait a minute, 6.3% doesn't seem quite accurate. Our Debt Service Parcel Tax is fixed and doesn't change, so all of the increase is being applied to our Infrastructure Base Fee. This puts the essence of the total increase to 14.4% over three years.

Grindrod has a debt service parcel tax too, although it's not well documented. We don't know about any Mable Lake debt. Why is our debt presented to you as part of our RDNO total water bill whereas Grindrods' is not?

Comparisons can still be made by stripping out the 10% discount. Including debt service charges, Grindrod water rates with consumption will increase 3.9% over three years. Gunter Ellison water rates, with no consumption, will increase 6.3% over three years.

Without any debt parcel taxes considered, Grindrod water rates will increase 9.2% over three years, Gunter Ellison will increase 14.4% over three years, and Mable Lake 16.2% over the same period.

Confused? You can imagine how we feel.  So, for the rest of this presentation, let's just go ahead with the dollar numbers published before you. We think a 10% bill reduction is weirdly confusing and should instead be replaced by a delayed payment surcharge.

                         "'s obvious that the CSRD does a
              much more efficient job of managing their affairs."

Our total RDNO water bill is $686, with no consumption, with $300 of that as the Infrastructure Base Fee. The rest goes to service our debt. Grindrod, on the other hand, pays $580 total for unlimited consumption. They have a hidden $705 debt service tax which allowed them to get a river intake, still well, pumps, treatment, distribution, and SCADA. We simply have a distribution main. It seems that their Infrastructure Base Fee is $290, which is $10 less than ours for much more infrastructure. Mable lake is interesting too.  Their Infrastructure Base Fee is $192; considerably less than ours.

Now, percentage based increases don't sound too bad on the surface, but tend to compound radically over time and are quite misleading. Even with the appearance that both Grindrod and Mable Lake will have higher increases applied, at the end of 2019 they will still both actually have lower Infrastructure Base Fees than us despite them actually having infrastructure.

Staff rationale for increasing our fee at all is that Enderby bills us directly for consumption. Isn't that really rationale for a decrease? Remember, Enderby maintains our services and charges us directly for this.

A much more interesting comparison is between the Regional District of North Okanagan and the Columbia Shuswap Regional District. Their border is less than 10km from us. The CSRD looks after ten small water systems. Of these, over the next three years, three will have a 0% increase, one will have a 2% increase, and six will have a 6% increase. Remember, our increase is proposed to be 14.4% over the same period. They say that due to differences amongst their water systems, proposed annual increases will be implemented accordingly, thus the three with no increase.

This is the point we are trying to get across here. Gunter Ellison is different than any of your other small Utilities. Looking at the overall picture of all CSRD and RDNO small utilities, it's obvious that the CSRD does a much more efficient job of managing their affairs.

Back to User Fee comparisons. Mable Lake is $192 for infrastructure base; Grindrod is $290 for infrastructure base; and Gunter Ellison is $300 for infrastructure base. Why the discrepancy? Why are we charged the most? We have the least infrastructure of all. To be fair, we also have the fewest number of subscribers.

Candid pic of RDNO's lunchroom?

So, because nobody contacted us to address our concerns in a timely manner, I'm standing before you now at the last minute. We don't think our user fee rate is justified to simply send us an annual bill and to take care of our debt. Ancillary functions such as the Cross Connection Control Program are done "at no extra cost" to us, and I have a signed letter from the RDNO stating this.  All of our maintenance is now done by the City of Enderby through their out-of-town parcel tax, and our pipe should last well beyond our lifespans. The issue of Reserve Funds is very contentious these days, and will probably remain an ongoing discussion, but our fund is already significant.

Therefore we request a motion to keep our Infrastructure Base Fee at 2016 rate, and furthermore to lock this rate in until 2020. Failing this, we request a motion to refer Bylaw 2735 back to the Electoral Area Advisory Committee for further consideration.

Thank you for your time.
Dana Mills
Gunter Ellison Water User Ratepayers' Association

So...will Director Halvorson accede to the request for a bylaw amendment?

"Look at the Directors' names on that link again," Kia would've suggested, "and then the odds will be clear." 

The reserve fund today contains $42,000.
Skewering the books...and residents.

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