Staff Report: Fees and Charges Bylaw No. 958, 2016 Amendment – Sewer Rates
A report from the Director of Finance recommending a 1% decrease in sewer user fees to recover projected operating costs for 2022.
TOWN OF VIEW ROYAL COUNCIL REPORT
TO: Council DATE: August 31, 2022 FROM: D. Christenson, Director of Finance MEETING DATE: September 6, 2022
Fees and Charges Bylaw No. 958, 2016 Amendment – Sewer Rates
RECOMMENDATION:
THAT the report dated August 31, 2022 from the Director of Finance titled “Fees and Charges Bylaw No. 958, 2016 Amendment – Sewer Rates” be received.
CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:
I concur with the recommendation.
PURPOSE OF REPORT:
To consider an amendment to Fees and Charges Bylaw No. 958, 2016 to permit the collection of sewer user fees to recover related estimated costs and to outline the subsequent impact to property owners.
TIME CRITICAL:
The amending bylaw must receive final reading and adoption prior to mailing the 2022 sewer utility invoices. If the first three readings are completed at the September 6, 2022 Council meeting, adoption can occur at the September 20, 2022 Council meeting, with invoices mailed early October. Property owners will have at least 45 days after the invoice date to pay their sewer utility invoice, with any balance remaining on December 31, 2022 transferred to taxes in arrears.
BACKGROUND/DISCUSSION:
Per Community Charter Section 194, Council may, by bylaw, impose a fee payable in respect of a municipal service. The municipality must make available to the public, on request, a report respecting how a fee imposed under this section was determined.
The 2022-2026 Financial Plan established sewer user fee revenue targets based on 2022 estimated costs for operating and maintaining View Royal’s and the Capital Regional District’s (CRD’s) sanitary sewer systems. Projected costs for the CRD component, based on the 2022 invoiced amount, are nearly $73,500 lower than originally estimated, and represent 62% (2021 – 63%) of the total projected costs. View Royal’s sewer system costs are projected to be as originally estimated and comprise 38% (2021 – 37%) of the total.
| Sewer system component | 2022 Estimated Costs | 2022 Projected Costs | Difference | % of Total |
|---|---|---|---|---|
| View Royal | $ 868,407 | $ 868,407 | $ 0 | 38% |
| Capital Regional District | 1,469,000 | 1,395,543 | (73,457) | 62% |
| Total | $2,337,407 | $2,263,950 | ($73,457) | 100% |
Sewer rates are based on recovering sufficient revenue to cover the costs of both View Royal’s and CRD’s sanitary sewer systems. In 2020, View Royal implemented a new sewer user fee structure based on water consumption (year-round consumption for institutional users and annualized winter consumption for non-residential and residential users) and a three-tier progressive rate structure for institutional and non-residential users (see Sanitary Sewer Rates and Regulations Bylaw No. 397, 2000 and Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1058, 2020).
The total billable water consumption for the 2022 billing cycle is 997,977 m³ (2021 – 981,786 m³), an increase of 16,191 m³ or 1.6% over last year. Consumption by user class shifted slightly away from the residential class, as its class total consumption decreased slightly while non-residential and institutional consumption increased slightly from 2021.
[Chart: Total Billable Consumption by User Class bar chart showing cubic metres in thousands for 2020, 2021, and 2022 for Residential, Non-residential, and Institutional classes.]
Bylaw 1108 (attached) if adopted, would decrease the sewer user fees total volumetric rate by 1% to recover projected sewer system costs for 2022. The recommended amendment does not change the $100 total minimum fee, however the split between View Royal’s and CRD’s component is shifted by $1 – View Royal’s component went up from $37 to $38 and CRD’s component went down from $63 to $62, based on the component cost percentage. A similar effect is seen in the volumetric component rates. Sewer user rates proposed in Bylaw 1108, with the prior year rates for comparison, are shown in Attachment 1.
Projected revenue from each user class, based on the proposed rates, is shown below. Non-residential and institutional user classes contribute a slightly higher proportionate share of the total revenue because of the tiered rate structure.
Sewer user fees revenue by user class
| User class | Consumption base | Billable consumption | Billable consumption % of Total | Projected revenue | Revenue % of Total |
|---|---|---|---|---|---|
| Residential | Annualized winter water consumption (6 months x 2) | 691,785 m3 | 69% | $1,533,827 | 66% |
| Non-residential | Annualized winter water consumption (6 months x 2) | 121,556 m3 | 12% | $300,921 | 13% |
| Institutional | Full-year water consumption (12 months) | 184,636 m3 | 19% | $494,165 | 21% |
| Total | 997,977 m3 | 100% | $2,328,913 | 100% |
The projected revenue total of $2,328,913 provides an allowance (about $65,000) for potential reductions for leak adjustments that property owners may apply for after receiving their sewer utility invoice. We are not able to determine the potential for leak adjustments at this time; in 2021 leak adjustments totaled about $30,000. Any revenue shortfall because of leak adjustments would be funded by the Sanitary Sewer Fund accumulated surplus, and any revenue excess would contribute to the accumulated surplus.
In 2021 the sewer user fee paid by the typical single-family property owner with winter water consumption of 80 cubic metres was $357.12. If consumption for the property is the same as last year, a 1% sewer user rate decrease would reduce the sewer user fee by $3.57 to $353.55. The actual amount billed will closely reflect changes in consumption; as consumption increases, the sewer utility invoice will increase by a similar percentage. Throughout the 2022 financial planning process, property owners were advised of a potential 1% increase in sewer fees; however, this increase is not necessary due to the reduced projected total costs combined with the shift from residential consumption to user classes with tiered consumption at higher rates.
No changes to the sewer user rate structure as established in 2020 by Bylaw 1058 are proposed at this time.
An amendment to the Fees and Charges Bylaw (No. 958) Schedule A is required to amend the sanitary sewer rates. The proposed bylaw follows this report as Attachment 2.
Property owners can access their sewer utility account information online, such as viewing water consumption and yearly variances, and may opt to receive their invoice via email. The fall newsletter, website and social media messaging will advise property owners to watch for their sewer utility invoice, how to pay their invoice and how to access their account information online. Messaging will also include information about how their invoice is calculated and how consumption affects the amount they pay.
ALTERNATIVES:
Council may choose to keep sewer rates at 2021 levels or increase or decrease the rates by an amount other than 1%. Doing so will result in a deficit or surplus to the extent that sewer user fee revenue is sufficient to recover the costs of operating and maintaining both View Royal’s and CRD’s sanitary sewer systems. Any deficit or surplus in sewer revenue is funded or retained by the Sanitary Sewer Fund.
Staff recommends a 1% rate decrease to recover the projected sanitary sewer system costs for 2022.
RECOMMENDATION:
THAT the report dated August 31, 2022 from the Director of Finance titled “Fees and Charges Bylaw No. 958, 2016 Amendment – Sewer Rates” be received.
SUBMITTED BY: D. Christenson, Director of Finance
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