Staff Report: Fees and Charges Bylaw No. 958 – Sewer Rates

TOWN OF VIEW ROYAL COUNCIL REPORT

TO: Council
DATE: August 31, 2023
FROM: D. Christenson, Director of Finance
MEETING DATE: September 5, 2023
SUBJECT: FEES AND CHARGES BYLAW NO. 958, 2016 AMENDMENT – SEWER RATES

RECOMMENDATION:

THAT the report dated August 31, 2023, from the Director of Finance titled “Fees and Charges Bylaw No. 958, 2016 Amendment – Sewer Rates” be received.

PURPOSE:

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:

A bylaw to establish rates for the recovery of costs relating to sanitary sewer service must receive final reading and adoption prior to mailing the 2023 sewer utility invoices. If the first three readings are completed at the September 5, 2023, Council meeting, adoption can occur at the October 3, 2023, Council meeting, with invoices mailed mid-October.

EXECUTIVE SUMMARY:

The Community Charter permits local governments to establish user fees for services based on recovering the cost to provide the service. Each year, View Royal reviews its sanitary sewer user fees and adjusts the rates to reflect projected service costs using the tiered consumption-based rate structure established in 2020.

Projected 2023 costs to operate and maintain View Royal’s sanitary sewer system and to fund View Royal’s shared cost for the Capital Regional District’s sanitary sewer system total $2.306 million. The proposed bylaw amendment, if approved, would decrease sewer total volumetric rates for 2023 by 2% and result in an estimated total revenue of $2.364, providing a $58,000 allowance for future leak adjustments. Any actual surplus (or deficit) realized in the sewer fund is retained (or funded by) the Sanitary Sewer Fund and has no impact on property taxation.

The typical single-family residential property owner with winter water consumption of 80 cubic metres paid $354 for sanitary sewer use in 2023. The rate decrease proposed in Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1122, 2023 would reduce the amount paid by a single-family residential property owner by $7 to about $347. Sewer utility invoices are issued mid-October and due by the end of November, with unpaid amounts transferred to property taxes on January 1 of the following year.

BACKGROUND:

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 2023-2027 Financial Plan established sewer user fee revenue targets based on 2023 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 2023 invoiced amount, are nearly $32,735 lower than originally estimated, and represent 61% (2022 – 62%) of the total projected service operating costs. View Royal’s sewer system costs are projected to be as originally estimated and comprise 39% (2022 – 38%) of the total.

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 established a 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).

DISCUSSION:

The total billable water consumption for the 2023 billing cycle is 1,030,772 m³ (2022 – 997,977 m³), an increase of 32,795 m³ or 3.3% over last year. Consumption by user class in 2023 shifted slightly away from the institutional class, as its class total consumption decreased slightly while non-residential and institutional consumption increased slightly over 2022.

Bylaw 1122, (Attachment 2 – Proposed Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No., 1122, 2023) if adopted, would decrease the sewer user fees total volumetric rate by 2% to recover projected sewer system costs for 2023. 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 increased from $38 to $39 and CRD’s component decreased from $62 to $61, based on the component cost percentage. A similar effect is seen in the volumetric component rates. Sewer user rates proposed in Bylaw 1122, with the prior year rates for comparison, are shown in Attachment 1 – Sewer User Rates Year-Over-Year Comparison.

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 progressive tiered rate structure.

Sewer user fees revenue by user class

The projected revenue total of $2,363,708 provides an allowance (about $58,000) for potential reductions for leak adjustments that property owners may apply for after receiving their sewer utility invoice (see Policy #1600-016 Sewer User Fee Adjustments due to Water Leaks). Leak adjustments can vary significantly from year to year and have averaged about $15,000 annually in recent history. Any revenue shortfall due to leak adjustments would be funded by the Sanitary Sewer Fund accumulated surplus, and any revenue excess would contribute to the accumulated surplus, with no impact on property taxes.

No changes to the sewer user rate structure as established in 2020 as consolidated in Sanitary Sewer Rates and Regulations Bylaw No. 397, 2000 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 – Proposed Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No., 1122, 2023.

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.