Sanitary Sewer Rates Bylaw Amendment (Staff Report)
A report from the Director of Finance proposing a 1% increase in sewer user fees to recover projected costs for 2021.
TOWN OF VIEW ROYAL COUNCIL REPORT
TO: Council FROM: D. Christenson, Director of Finance DATE: September 1, 2021 MEETING DATE: September 7, 2021
Sanitary Sewer Rates Bylaw Amendment
RECOMMENDATION:
THAT the report dated September 1, 2021 from the Director of Finance titled “Sanitary Sewer Rates Bylaw Amendment” 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 2021 sewer utility invoices. If the first three readings are completed at the September 7, 2021 Council meeting, adoption can occur at the September 21, 2021 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, 2021 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 2021-2025 Financial Plan established sewer user fee revenue targets based on 2021 estimated costs for operating and maintaining View Royal’s and the Capital Regional District’s (CRD’s) sanitary sewer systems. Costs for the CRD component, based on the 2021 invoiced amount, are nearly $34,000 higher than originally estimated, and represent 63% (2020 – 62%) of the total projected costs. View Royal’s sewer system costs are projected to be as originally estimated and comprise 37% (2020 – 38%) of the total.
| Sewer system component | 2021 Estimated Costs | 2021 Projected Costs | Difference | % of Total |
|---|---|---|---|---|
| View Royal | $ 857,592 | $ 857,592 | $ 0 | 37% |
| Capital Regional District | 1,417,800 | 1,451,791 | 33,991 | 63% |
| Total | $2,275,392 | $2,309,383 | $33,991 | 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). Additional measures, such as extending the due date and deferring the transfer to taxes for customers most negatively affected, helped to ease the transition to the new system. By December 31, 2020, 82% of account holders, representing 89% of the total revenue had paid their sewer utility invoice.
The total billable water consumption for the 2021 billing cycle is 981,786 m³, an increase of 17,500 m³ or 2% over last year. Of this, 6,000 m³ of consumption is a result of 20 recently connected properties, indicating that consumption for previously connected properties went up by just over 1%.
Bylaw 1077 (attached) if adopted, would increase the sewer user fees total volumetric prescribed rate by 1% to recover projected sewer system costs for 2021. No change to the $100 minimum fee total is proposed, however the split between View Royal’s and CRD’s component is shifted by $1 – View Royal’s component went down from $38 to $37 and CRD’s component went up from $62 to $63, based on the component cost percentage. A similar effect is seen in the volumetric component rates. Sewer user rates proposed in Bylaw 1077, 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) | 693,715 m3 | 71% | $1,552,937 | 67% |
| Non-residential | Annualized winter water consumption (6 months x 2) | 109,867 m3 | 11% | $273,763 | 12% |
| Institutional | Full-year water consumption (12 months) | 178,204 m3 | 18% | $485,952 | 21% |
| Total | 981,786 m3 | 100% | $2,312,652 | 100% |
The projected revenue total of $2,312,652 provides a minimal allowance (about $3,200) 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; any revenue shortfall because of leak adjustments would be funded by the Sanitary Sewer Fund accumulated surplus.
In 2020 the sewer user fee paid by the typical single-family property owner with winter water consumption of 80 cubic metres was $353.58. If consumption for the property is the same as last year, a 1% sewer user rate increase would increase the sewer user fee by $3.54 to $357.12. The actual amount billed will closely reflect changes in consumption; as consumption increases, the sewer utility invoice will increase by a similar percentage.
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 2020 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 increase to recover the projected sanitary sewer system costs for 2021.
RECOMMENDATION:
THAT the report dated September 1, 2021 from the Director of Finance titled “Sanitary Sewer Rates Bylaw Amendment” be received.
SUBMITTED BY:
D. Christenson, Director of Finance
Attachment 1 Comparative Sewer User Rates
2021 Proposed Amendment Bylaw No. 1077, 2021
| User class | Consumption base | Consumption volume (m3) | View Royal user rate per m3 | CRD user rate per m3 | Total user rate Per m3 | Total % change |
|---|---|---|---|---|---|---|
| Residential | Annualized winter water consumption (6 months x 2) | All consumption | 0.8258 | 1.4062 | 2.2320 | 1% |
| Non-residential | Annualized winter water consumption (6 months x 2) | First 1,000 | 0.8258 | 1.4062 | 2.2320 | 1% |
| Next 10,000 | 0.9084 | 1.5468 | 2.4552 | 1% | ||
| Remaining | 1.0323 | 1.7577 | 2.7900 | 1% | ||
| Institutional | Full-year water consumption (12 months) | First 1,000 | 0.8258 | 1.4062 | 2.2320 | 1% |
| Next 10,000 | 0.9084 | 1.5468 | 2.4552 | 1% | ||
| Remaining | 1.0323 | 1.7577 | 2.7900 | 1% | ||
| % of Total | 37% | 63% | 100% |
2020
| User class | Consumption base | Consumption volume (m3) | View Royal user rate per m3 ($) | CRD user rate per m3 ($) | Total user rate Per m3 ($) |
|---|---|---|---|---|---|
| Residential | Annualized winter water consumption (6 months x 2) | All consumption | 0.8348 | 1.3751 | 2.2099 |
| Non-residential | Annualized winter water consumption (6 months x 2) | First 1,000 | 0.8348 | 1.3751 | 2.2099 |
| Next 10,000 | 0.9183 | 1.5126 | 2.4309 | ||
| Remaining | 1.0435 | 1.7189 | 2.7624 | ||
| Institutional | Full-year water consumption (12 months) | First 1,000 | 0.8348 | 1.3751 | 2.2099 |
| Next 10,000 | 0.9183 | 1.5126 | 2.4309 | ||
| Remaining | 1.0435 | 1.7189 | 2.7624 | ||
| % of Total | 38% | 62% | 100% |
Attachment 2 Proposed 2021 Amendment Bylaw
TOWN OF VIEW ROYAL BYLAW NO. 1077
A BYLAW TO AMEND THE TOWN OF VIEW ROYAL SANITARY SEWER RATES IN FEES AND CHARGES BYLAW, NO. 958, 2016
The Council of the Town of View Royal, in open meeting assembled, enacts as follows:
- This Bylaw may be cited as “Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1077, 2021”.
- The Fees and Charges Bylaw, No. 958, 2016, as amended, is further amended by deleting from Schedule A the item and row “Sanitary Sewer User Rates” and inserting the following items:
| Item | Item Detail | Fee | Fee Description |
|---|---|---|---|
| Sanitary Sewer Usage Fee - Minimum Fee | Town of View Royal Rate | $37 | As per Bylaw No. 397 |
| Capital Regional District Rate | $63 | ||
| TOTAL MINIMUM FEE PER PREMISE | $100 | ||
| Sanitary Sewer Usage Fee - Prescribed Rate | Town of View Royal Rate ($/m3) | $0.8258 | As per Bylaw No. 397 |
| Capital Regional District Rate ($/m3) | $1.4062 | ||
| TOTAL PRESCRIBED RATE PER CUBIC METRE | $2.2320 |
READ A FIRST TIME THIS _____ DAY OF _____________________
READ A SECOND TIME THIS _____ DAY OF ______________________
READ A THIRD TIME THIS _____ DAY OF _____________________
ADOPTED BY COUNCIL, SIGNED BY THE MAYOR AND THE CORPORATE OFFICER, AND SEALED WITH THE SEAL OF THE TOWN OF VIEW ROYAL THIS ____DAY OF ________, 2021
MAYOR CORPORATE OFFICER
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