Proposed Service

South Sewer Service Referendum
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April 26, 2016 CVRD Staff Report [PDF - 588 KB]

Summary

The south sewer project is a community wastewater (sewer) treatment system proposed for Royston and Union Bay and includes a mainly gravity-fed collection system and a new wastewater treatment plant (WWTP) in the area. Collected wastewater would be treated at the WWTP and then piped to connect with the Comox Valley water pollution control centre’s outfall at Cape Lazo.

The first phase of the project includes 950 homes – the core residential hubs of Royston and Union Bay, and the Kilmarnock neighbourhood. The project is in partnership with the K’ómoks First Nation, who own land in the area. Please see the attached service area and neighbourhood maps.


A referendum (assent vote) will be held on June 18, 2016 for electors in these areas to vote on the south sewer project. Electors will vote on two questions – one question related to the four bylaws required to enable the south sewer project and one question on a long-term partnering agreement for the south sewer project.

Synopsis of Proposed Bylaws in Relation to the South Sewer Project

The purpose of South Sewer Service (Shared Capital) Establishment Bylaw No. 426, 2016 is:

  • to establish a service to raise money from within the area defined in Bylaw No. 426 (the “service area”) to finance, construct, and commission the Union Bay and Royston pump stations, trunk sewers downstream of the Union Bay and Royston pump stations, a wastewater treatment plant to serve that part of Electoral Area A defined in Bylaw No. 426 (the “service area”); and
  • to authorize the imposition of a parcel tax within the service area to provide for an annual requisition under the bylaw of a maximum of $618,000.  

The purpose of South Sewer Service (Area A Capital) Establishment Bylaw No. 427, 2016 is:

  • to establish a service for the financing, construction of collector and trunk sewer infrastructure to be of sole benefit to lands in that part of Electoral Area A defined in Bylaw No. 427 (the “service area”); and
  • to authorize the imposition of a parcel tax within the service area to provide for an annual requisition under Bylaw No. 427 of a maximum of $686,000. 

The purpose of South Sewer Service (Operations) Establishment Bylaw No. 428, 2016 is:

  • to establish a service for the operation and management of sewer infrastructure constructed under Bylaw No. 426; and any other collection or trunk sewer or other sewer system related infrastructure constructed within the boundaries of Electoral Area A defined in Bylaw No. 428 (the “service area”);
  • to authorize the imposition of a parcel tax within the service area to provide for an annual requisition under Bylaw No. 428 of a maximum of $535,000; and
  • to provide for the establishment of a commission to include community representation to provide for the administration and management of the south sewer project infrastructure following completion and commissioning of the south sewer project.

The purpose of South Sewer Service (Shared Capital) Loan Authorization Bylaw No. 429 is to authorize the regional district to borrow up to a maximum of four million dollars ($4,000,000) and secure the debt through the issuance of debentures for a maximum term of 20 years and to authorize the regional district to enter into an agreement regarding the use of the amount borrowed in connection with the construction of the south sewer service (shared capital) under Bylaw 426.

The synopsis of each of Bylaws 426, 427, 428 and 429 are intended to provide, in general terms, the intent of Bylaws No. 426, 427, 428 and 429 and are not to be understood as an interpretation of Bylaws No. 426, 427, 428 and 429.

The Need

Evidence of failing on-site sewage (septic) systems has been found in Baynes Sound – this, combined with the high concentration of small lots in areas with poor soil conditions, are creating risk to human health and the environment. Increasing regulations are making it harder and more expensive for homeowners to find acceptable solutions for new on-site systems. As a result, the Comox Valley Regional District board has identified a community wastewater system as a priority and this approach is supported by Island Health.

Funding and Costs

Phase 1 of the south sewer project is estimated to cost $56.2 million in 2019 dollars. The project team is on track to secure roughly $35 million in funding and contributions (breakdown provided below). The remaining costs will be financed and amortized over 30 years beginning in 2017 by service participants. Both capital debt cost and operation & maintenance (O&M) cost will be recovered through parcel taxes. The parcel tax for sewer will be deferrable for eligible property owners.

A maximum requisition cost of $2,036 per year is presented in the referendum question, based on an estimate of $1,400/year for capital and $636 in operations and maintenance. The actual estimated cost is approximately 10 per cent lower at $1,804/year ($1,245/year in capital debt repayment and $559/year in O&M costs). The difference provides a buffer to protect against the possibility of minor cost increases due to uncertainties such as the actual interest rate or higher than anticipated construction costs. Maintenance costs will be subject to inflation, though the capital portion will not -the interest rate will be fixed over the 30 year project agreement.

Collection of parcel taxes for this project will start in 2017. This cost recovery strategy has been developed to minimize annual costs to initial users and increase costs over time in pace with anticipated development.

All property owners in the service area will pay the operations and maintenance costs annually. An option to pay a lump sum payment, referred to as ‘commutation’ of the capital repayment parcel tax may be available. Details regarding the possibility of commutation and, if available, the resulting fee, will follow in subsequent communication material. The O&M costs (for all) and capital repayment costs (for those that amortize the costs) are anticipated to decrease as new developments are added to the system.

COST BREAKDOWN
Phase 1 Cost $56.2 million
Grants: 
UBCM Strategic Priorities Fund Grant $15 million
K’ómoks First Nation Contribution $ 5.4 million
PPP Canada Grant $13.3 million
Community Works Fund $ 1.5 million
   
Remaining Costs for Property Owners $18.9 million
Total estimated annual costs for occupied parcels (capital + operations) $1,804
Maximum requisition from property owners per year (includes 10 per cent buffer per above) $2,036

Private Partnerships

In the interest of finding the most cost-effective option for the development of this infrastructure, the south sewer project team has identified a partnership with the private sector (public-private partnership) as a means of making this project affordable to property owners. PPP Canada – a crown corporation – offers financial and administrative support that encourages the use of these partnerships.

Preliminary reviews suggest the south sewer project would be of interest to the private sector, and final consideration by PPP Canada for a $13.3 million grant is underway. One question on the referendum ballot will ask about the community’s support for such a partnership, based on a 30-year agreement where the CVRD retains all ownership of the assets.

Timing

If the voters support the establishing bylaws and long-term agreement in the June 18 referendum and funding sources are secured, the procurement process would start in the fall of 2016, with construction expected to begin in fall of 2018 and expected to last 18 months. While property owners would then have two years to connect to the system, billing would start in 2017.