The positions of some water partners could have been entitled
Postulating and Puffery as the new Millenium got into full swing.
Or the
Mire of Bureaucracies.
With a view to a better understanding--even now in 2015--of water opinions held within various jurisdictions in Greater Vernon, this 2009 document is printed with permission from its author, Maria Besso, former Coldstream councillor. Links were provided.
At the text's conclusion, Maria has added two current comments to update the situation to where we are now.
In 2000 there were three separate Water Utilities supplying the
Greater Vernon Area;
1) The
City of Vernon supplying residential Vernon,
2) District
of Coldstream supplying residential Coldstream and
3) The
North Okanagan Water Utility (NOWA) that supplied residential and agricultural
customers in the Electoral Areas as well as areas of Vernon and Coldstream.
In 2003 the three Water Utilities came together to form the
Greater Vernon Water Utility (GVWU).
The history of why the
GVWU was formed is
long and complicated, but essentially Vernon needed water licenses in order to
service new developments, it had a 1.36 million dollar debt and a large
domestic customer base, Coldstream and NOWA had abundant water licenses that
had been secured for agriculture and a surplus of $.853 million. The
motivation for coming together was Vernon’s immediate need for water. The
utility came together under a set of principles (essentially a contract) of a
single Water Utility with the same water quality and same water pricing for
all.. Residential and agricultural rates were set so that agricultural
rates would be competitive with other Okanagan Valley areas.
The legal framework for this Utility came under the Local
Government Act whereby the Utility was part of a “Function” of the North
Okanagan Regional District. The participants in the “Function” were Vernon,
Coldstream, and Electoral Areas B & C. The “Function” was the Greater
Vernon Services Commission, formed by the NORD Board to deal with matters
pertaining to Parks & Recreation, the Greater Vernon Water Utility, Wesbild
Centre & Performing Arts Centre, and the Vernon and District Queens
Committee that were specific to the City of Vernon, District of Coldstream and
Electoral Area's "B" & "C". This Commission had maximum
delegated authority and a voting structure of three representatives from
Vernon, two from Coldstream, one from Electoral Area B, one from Electoral Area
C, plus an Agricultural representative with a vote on water issues.
In 2006 the Greater Vernon Services Commission was downgraded to
a committee and became the Greater Vernon Advisory Committee. The voting
structure has stayed the same (minus voting rights for the Agricultural Rep.)
but the decisions of the GVAC now had to go through the NORD Board.
What is DEVOLUTION?
It is the opposite of Evolution.
Devolution is going backwards.
Maria Besso
Also in 2006, Vernon requested a service review of the Greater
Vernon Water Utility “function” of NORD, stating dissatisfaction with
operational issues and a lack of control of water issue decisions within their
boundaries. Vernon stated that they only wanted to withdraw from the water
distribution portion of the function.
This would essentially mean Vernon would get to keep the water
licenses as they are part of the supply side of the GVWU, but would take away
their large domestic customer base. Their large domestic water base was what
they contributed in the first place to make the combined water utility
attractive to the other partners.
In late 2008 a consultant came out with a report analyzing the
financial implications of the withdrawal of Vernon from the distribution part
of the ‘Utility’ – this report: Devolution of the Water Function from Greater
Vernon Water Services to City of Vernon - Technical and Financial Report, dated
December 2008, by Quadra Development Solutions Inc.,which included a financial
analysis done by Catherine Lord,at that time the Chief Financial officer of the
Municipality of Coldstream. This full report and it’s implications became
public at the June 8th,
2009 Vernon Council meeting. The full report was then shared with
Coldstream in July 2009, and it at this point that the question of a hypothesis
of a financial subsidy for agriculture came to light.
This is the basis for the recent ad that Vernon ran in the
Vernon Morning Star, but the report is purely a financial analysis and does not
take into account any of the history and contractual obligations on the part of
the’ Utility’ partners.
In another process, occurring simultaneously with Arbitration, a
few other proposals have been put forward. One of the latest proposals put
forward by Vernon, was to set aside the Arbitration process IF Coldstream and
Area B&C allow the voting structure to be changed to population
representation with weighted votes on the NORD Board. Another proposal was to
set up an independent water utility (see clippings from
Morning Star).
The NORD Board represents a much larger area than just Greater
Vernon – including Armstrong, Enderby, Spallumcheen, Lumby, Area D, E, and F,
but the voting would remain with the original partners. Under this Governance
Vernon would get weighted votes representing 35,000 population, while the
weight for Coldstream would represent 10,000 population, and another
10,000 population for Area B&C. combined. i.e. a ratio of 7 to
4 Vernon vs Coldstrem,B&C.
Vernon’s position is that water rates should be based on the
amount of water consumed, i.e.: volume. Because Vernon has a larger
residential (domestic) customer base, and residential customers use less volume
of water than agricultural customers, then, in a nut shell, according to Vernon
their customers should pay less than they are paying now. Under the
present system, it would appear that the Vernon residential customers are
subsidizing Agricultural rates to a greater extent than anyone else, and that
seems unfair to them. However it can be argued that no such subsidy
exists, since most of the costs incurred are for water treatment, and
Agricultural users do not require treated water, all of these upgrades were for
the benefit of the Domestic users.
Coldstream and Electoral Areas B&C’s position is that, yes,
the domestic tax base in ALL jurisdictions is “subsidizing” , for lack of a
better term, agricultural water rates, but that was one of the reasons the
amalgamated water utility was formed in the first place. A large portion of the
water licenses belonged to the agricultural users before the formation of the
amalgamated water utility, this was a well understood part of the deal when the
‘Utility’ was formed. Assurance that agricultural rates would remain
competitive with those charged in other communities, was part of the founding
principles upon which the new water utility was formed.
As explained above, in the historical summary, the agricultural
users had the water licenses Vernon needed in order to allow it to develop new
areas, and consequently increase its tax revenue. The real estate value of all
the new properties that were able to be developed by virtue of Vernon’s access
to new water licenses as a result of the amalgamated utility, are directly
related to the value of the water. A beautiful view lot at ‘The Rise’ is
worthless without water…try selling one. Once Vernon was able to secure
water supply the new lots had great value, and were taxed accordingly.
This created a financial benefit for the city of Vernon for many years,
ironically now a lot of these lots have remained undeveloped and therefore do
not consume any water, thereby limiting their actual contribution to the water
utility revenue.
The position that Vernon is taking on devolution is:
1)That the rate structure is unfair to
domestic users.
2)Based on volume of consumption, the Vernon
customers would be better served by taking control of their own distribution of
water.
The position that Coldstream and Electoral areas B&C are
taking is:
1)That the original set of principles upon
which the Greater Vernon Water Utility (GVWU) were formed, were based on a
trade off of mutual benefits for the parties.
2)The priceless water licenses that were held
by Agricultural users ( in order to insure the viability of agriculture in the
future) are more than enough compensation for Vernon’s participation in the
combined utility.
Furthermore, when the combined water utility was formed, one of
the conditions that the provincial government insisted on , was the formation
of a Master Water
Plan (MWP)to address how the
goals of the new regional water utility would be carried out. The MWP called
for the separation of domestic and agricultural water. The MWP was never
followed, and right from the start the GVWU selected its projects to favor
improved services (and consequently improved property values and taxation
revenue) for the City of Vernon. That is not surprising given that these
improvements stood to benefit the greatest number of people, and given that
engineers argued that this was the most cost effective way to go. The
reality was that this was the most cost effective in the short term for the
water utility but most of the benefit was accruing geographically to Vernon and
effectively to the Vernon tax base. In the long term there would be a price to
pay if the interests of the agricultural users and less populated fringes of
Coldstream and electoral areas B&C were continuously superseded by the
interests of the more numerous domestic users.
Now the time has come we are going to have to pay the price for
not separating the agricultural and domestic water supply when we could
have. Now with the construction of the Duteaux Creek water treatment
plant (DCWTP), areas of Coldstream that have been suffering with inferior
quality water, are finally going to see some benefits.
Now is the time Vernon is choosing to withdraw from the
distribution side of the water utility.
Vernon is not getting a raw deal, as it seems to be implying,
Vernon got a very sweet deal.
Despite Vernon’s blatant self interest in the first few years of
operation of the GVWU, its partners Coldstream and Area B&C are still
willing to abide by the founding principles of the water utility. Coldstream
and Areas B&C want to see the status quo in the water utility - we do not
want to see the water utility devolve. The strength of the utility is in
it’s ability to spread out the cost of supplying and distributing a high volume
of water for agricultural use at a competitive rate by having a large domestic
base.
If Vernon is allowed to withdraw from the distribution side of
the water utility then it must properly compensate all the other partners for
all the benefits it received, and continues to receive. Coldstream and Areas
B&C have been very accommodating and patient since 2003. Initially Vernon
cited operational and control issues with scheduling of public works, as the
reason for seeking a service review and withdrawal from the service.
Coldstream and Areas B&C were very willing to discuss and deal with all of
Vernon’s issues in this regard, but every time an issue was dealt with another
one emerged. Coldstream even went as far as signing a set of devolution
principles, a signature they have now rescinded. Now the true reason for
Vernon’s desire to withdraw has come to light, as stated at the beginning of
this letter, it is their dissatisfaction with the pricing structure of a water
utility that is designed to stabilize agricultural rates at the expense ( as
Vernon sees it) of domestic customers.
Coldstream and Areas B&C believe this statement is at the
heart of the true problem. Vernon, with 80% domestic users and 20% agricultural
users, is eyeing the rural areas of Coldstream and the Electoral Areas, and
judging that there is a lot of water waste, hobby farms, and Country Estates,
that may be unjustly benefiting from reduced water rates. Water rates that they
view are in large part subsidized by Vernon domestic users.
If this is the problem then Vernon should discuss its concerns
up front with all the partners, water conservation and bona fide agricultural
use are concerns of all the partners. Instead of meeting with a mediator
and communicating with all the partners in the water utility, Vernon is
insisting on forcing Arbitration. Arbitration will be very expensive with legal
fees mounting easily into the hundreds of thousands of dollars.
Who knows what the solution will be …. we can only hope that the
arbitrator will be more intelligent than the politicians. At this point the
only thing that is certain, is that the solution will be expensive to all the
taxpayers in the end. "
Maria Besso
( written Nov.1st, 2009)
2015 comment from Maria Besso:
“keep
in mind (the above) was written in 2009 :-) so some of my thoughts may have changed.
In particular, with the new knowledge that came to light after the 2011 and
2012 water consumption data came out. That data revealed that 96 % (by volume)
of the water treated at Duteau the first few years, was being used for
irrigation and only 4% of the volume was used for Domestic consumption. That
for me was the turning point, that led me to further question the Master Water
Plan, and come to the conclusion that we had chosen the wrong water source, for
many reasons.... ( including unreliable 1)source quality, and 2)source
quantity, 3)remote location that required many miles of pipe twinning 4)
extreme cost to bring up to IHA standards 5) detrimental impact to Agriculture
- essentially the agricultural allocation was being converted to domestic.
I am
sure that others will remember or know the history better than me ... but
"Vernon's immediate need for water." referred to below, came in the
days of Sean Harvey (Vernon mayor) and the desire to develop "The Rise" and
"Predator Ridge", at the time, the Province refused to give
Vernon any new water license on Okanagan Lake, and thus started the coveting of
the Agricultural Water licenses at Duteau ... and the rest is history. “
February
2010 Update:
On
Feb. 8th, 2010 the Arbitrator
ruled in Coldstream and
Electoral Area B&C’s favor. He ruled that he, (the Arbitrator), does not
have jurisdiction to rule on a partial devolution of the (Greater Vernon Water) GVW function .
ie: Vernon cannot pull out of only the “distribution “ side of the utility. The
Arbitrator said he could rule on full withdrawal or no withdrawal not partial
withdrawal.
As
of May 2010 the City of Vernon has appealed the Arbitrators Ruling.
The
Municipality of Coldstream has opposed the appeal.
Electoral
Area B & C were not able to oppose the appeal because the NORD Board voted
not to do so.
May
24th, 2015 Update by Maria Besso:
Between
May 2010 and November 2011( the next Election) there was not much movement on
the Devolution front.
The
efforts of the Greater Vernon Water Utility turned to defending themselves
legally, after the contamination of a drinking water well at Antwerp Springs ( January
13th, 2010). A potential catastrophe was narrowly avoided, and
the Province sued the Water Utility ( RDNO), The District of Coldstream, as
well as the farmer that caused the contamination. For all concerned
Devolution seemed to be unofficially 'on HOLD'.
Meanwhile
in October 2010 the Duteau Creek Water Treatment Plant was officially
completed and started operation. For a short time people were happy with their
clarified water. Then, predictably they saw their water bills start
to rise.
On March
11th, 2011 the Interior Health Authority ( IHA) issued an Order to the GVWU
and RDNO to prepare a Master Water Plan that would achieve all the Drinking
Water Protection objectives mandated by the Federal Drinking Water Protection
Act by the year 2020.
Then
in November 2011 there was another Election, and Wayne Lippert was
replaced by Rob Sawatzky as the Mayor of Vernon.
An
atmosphere of greater cooperation started to take hold at GVWU, however
there were still problems.
Things
that may have contributed to a change in attitude regarding Devolution were
mainly a change in the people involved.
The
City of Vernon lost its Chief Administrative Officer (CAO)Leon Gous, who had
been a driving force behind the devolution litigation.
The
Regional District had a new Administrative officer Trafford Hall at the
helm - who was able to successfully negotiate operations agreements with all
the participants in the water utility.
Mike
Stamhuis, former RDNO employee involved with NOWA had become the CAO of the
District of Coldstream in early 2009 and was now in a position to
influence the direction of a new Master Water Plan that was being ordered by
IHA, and he had been able to successfully defend against Vernon's initial attempts
at 'Partial Devolution'.
Will
Pearce, a former administrator in Cranbrook, was hired to replace Leon Gous as
the CAO in Vernon, and he needed time to understand the nature of the conflict
at Greater Vernon Water and RDNO.
It
seemed that 'Principles' upon which the Water Utility came together, back in
2004 would be honoured by all the participants.
Then
the true cost of those 'Principles' started to get clearer, if one was taking
over an irrigation utility where a large volume of water is used for irrigation
and a small volume is used for domestic drinking water, and if one guarantees
the irrigation customers that their rates will stay competitive with other
jurisdictions, then the obvious result is that the domestic customer will end
up having rates that are not competitive with other jurisdictions because they
will have to bear the cost of unnecessarily treating large volumes of water for
irrigation purposes.
"...the
new 2012 Master Water Plan that would compound the magnitude of the error that
was made initially by choosing the Duteau Source as a major source of potable
drinking water."
Regardless
of the opposition - Greater Vernon continued with setting a direction for the
new 2012 Master Water Plan that would compound the magnitude of the error that
was made initially by choosing the Duteau Source as a major source of potable
drinking water.
On June
13, 2013 GVAC voted to Recommend that Option 2 of the 2012 MWP be adopted.
That option would require a filtration plant be built at Duteau by 2017, at a
cost of $26.5 million dollars plus at least $42.6 million dollars of pipe
separation to be done between 2013 and 2017 in order to bring the size of the
filtration plant down to 80 ML/day capacity.
On December
18th, 2013 the Drinking Water Protection Order was lifted by IHA,
they accepted the 2012 MWP as meeting the objectives of the Drinking Water
Protection Act - they did not comment on the financial implication or the merit
of the plan, as they said this was not in their mandate.
In
order to go ahead with this plan the public had to be asked for permission to
borrow the money. A borrowing referendum was held in conjunction with the November
2014 Election to borrow up $70 million dollars to implement phase 1 of the
$111 million dollar Master Water Plan.
Despite
the expensive public information campaign put on by RDNO, the message of
opposition to the Master Water Plan was successful in defeating the borrowing
referendum.
Now
(in 2015) RDNO seems to be continuing with the capital projects of the Master
Water Plan despite the failure of the borrowing referendum in November
2014.
In
early 2015 a new group called Citizens for Change to the Master Water Plan
formed, to urge the elected officials to stop with the projects of the
MWP and get an independent consultant to take a fresh new look at the Master
Water Plan.
That's
were we are now.
"Despite the failure of Vernon's 'devolution' attempt, some still want to take their bat and leave the game," says Kia.
But they don't own the ball.
Sincere thanks to Maria Besso for allowing her material to be printed here.
