City examining storm water fee structure

Weiss added property taxes are created based on the assessed value of a property and not on the storm water runoff a property will produce.

The City of Spruce Grove heard a presentation on possible changes to the way they collect stormwater management fees during the City's Committee of the Whole meeting on Tuesday. File photo

Share Adjust Comment Print

The City of Spruce Grove is exploring the possibility of making storm water management a utility.

Currently, the City collects fees to run their storm water management program from their municipal tax levy. In early 2019 the City of Spruce Grove engaged CORVUS Business Advisers to provide the City with a report to address the budgetary requirements of our storm water network.

The report suggests moving away from collecting storm water fees from taxes and instead opts to introduce a storm water utility. The recommended rate structure is to have separate fees for what are considered small and large customers.

Proposed fees begin at $7.30 per month for small customers, and $37.20 per month for large customers.

“Over the course of the last century storm water management programs have been largely funded by the municipal tax base. Municipalities have come to learn there are problems with that funding approach,” said Greg Weiss, president of Corvus business advisers. “There are many properties that produce runoff for example but do not pay property taxes.

Weiss added property taxes are created based on the assessed value of a property and not on the storm water runoff a property will produce. Therefore there is no correlation between property taxes and the storm water properties generate.

Further reasons for moving away from collecting fees out of the tax levy include the unpredictability of funding under the current model, and the projected possibility of significant infrastructure debt if changes are not made.

Weiss said under the current model, the storm water management program has to compete with more visible and popular municipal services for funding, such as roads, transit, police, or firefighting. The City of Spruce Grove, however, has a number of active storm ponds, which are coming to the age they require maintenance.

“The funding to the storm water program right now covers your cash requirement of the utility, but that is not the full cost of the utility. The full cost of the utility includes significant other cost, most noticeably the replacement or rehabilitation of infrastructure when it reaches the end of its life,” said Weiss.

CORVUS added the proposed model will allow all costs, operating and capital to be segregated so revenue requirements can be understood. All revenues associated with the program would be segregated and placed into an infrastructure replacement fund.

If the City accepts this funding model, next steps will be developing a clear communication plan so residents and business owners know exactly how they will be affected.

“We need to show the communication of why we’re doing this. Even if we could get an idea to show the comparison over the last five years of how much tax has been spent on storm projects. This way we can truly tell that story and have people understand it isn’t like we have not been working on storm projects, but the possibility for that deficit is there,” said Coun. Chantal McKenzie.

Council received the report for information.

Jothomas@postmedia.com twitter.com/joshthomasrepex

Comments