Lakeshore Advance, 2012-11-28, Page 7Wednesday, December 21, 2011 • Lakeshore Advance 3
Lambton Shores: Letter of acceptance sent by December 31 deadline
CONTINUED FROM > PAGE 1
received the Committee report and
had a chance, as a Council, to
reflect and discuss fully its recom-
mendations. Our mayor has made
public statements on more than
one occasion, and we have sup-
ported hint at Council, that the
plant is not dependent upon Zones
3 and 4 to operate. 'Ihe municipal-
ity has never refuted his
statement."
onesteel said there was a 'fri-
,.Ipal agreement Nov. 29 with
a decision to continue on with a
5/4 vote. "We have already made
the commitment we are honour-
ing this agreement- and it clearly
says we have 30 days.
"One party says they are in but
have no money- the other partner
says they would like to build a plant
but not the one in the agreement
and we are here today to talk about
the ramifications."
Bonesteel said he is frustrated by
the lack of clarity. "We have five
partners, the federal and provincial
governments and three municipal-
ities. "We would be absolutely
remiss to say to our provincial and
federal partners we have changed
our minds- you will never see
another penny from these levels of
government. They have commit-
ted $15 million -to this project and
we have to see it throug h'
Scandlan said he has worked
with staff for options and has taken
a look at best and worse case sce-
nario. He said the whole premise
was to work forward with five part-
ners and a $27 million facil-
ity. "You have a $15 million contri-
bution from the federal and
provincial government, $1 million
from the (.seen fund and a 2.4 %
loan- which is almost unheard of"
When asked about costs for the
current customers he said, "With
the partnership agreements the
overall impact, as in the cost per
customer would have been an esti-
mated $22 a year and that is to con-
vert front a lagoon system to a
mechanical system." I le said that
$22 a year would be staged over 4-5
with an increase to current
prs
s of $3 or $4 per year until 2016
when the full $22 would be
charged. "And that is the decision
you were trying to make with your
partnership," he explained.
Lambton Shores treasurer Janet
Ferguson said the $22 that was
mentioned was the increase to the
average user's utility bill - annu-
ally. There are no additional
charges for the existing sewer
users. As a worse case scenario,
Scandlan said the cost to current
users; with no partners the costs
would be an estimated $250 per
household. Ferguson said this too
would be the increase to the cur-
rent user's bill with no other addi-
tional charges. To get to that
number they took the existing rate
study and updated it with any
operating and capital budget
changes. As part of that the plant
information was updated with the
tendered numbers. 'then we took
the current rates and the recalcu-
lated rates and applied them to a
typical or average home with 200
cat of water consumption. 'Ihe dif-
ference was $22.00.
Ward seven councilor John Rus-
sell asked how ninny customers
would be paying this and he was
told the 2,7011 on the system now.
That includes Grand Bend, Forest,
Arkona and 'I hedford.
Ward four councilor Ruth Inman
said they needed to step back and
clarify. "We have already built in
sewage rates and have two plaster
plans; one for the Grand Bend
Treatment Plant and one for West
Bosanquet system. We have built
in replacement costs for anywhere
in Lambton Shores. She said any
stoney for infrastructure if for all of
Lambton Shores infrastructure.
Lifecyde
Ferguson explains that when the
lagoons were built there was no
legislated requirement to have life-
cycle costing - "there still isn't for
wastewater but it is "highly recom-
mended" by the Province and
appears that it will become a
requirement in the near future.'
She says that when Lambton
Shores standardi'red the water and
wastewater nates (2003) they began
implementing lifecycle costing for
all of the water and wastewater
assets. Lifecycle is factoring in a
replacement Cost component into
the rates for future replacement of
the assets. "What is confusing is
the correlation between debt and
lifecycle. As Gary Scanlan men-
tioned, the asset only hits the rates
once so you shouldn't have the
debt and the lifecycle layered --
meaning not including both at the
same time. In this case the debt is
up front so the debt repayment wilt
be incorporated - as the debt is
paid down, the lifecycle costs are
phased in to take up that room
without causing a spike to the
rates. Typically the asset life far
exceeds the debt allowing suffi-
cient time to recover the lifecycle
costs. What is unusual about this
situation is everyone sees a
number for Lifecycle - normally
you don't, you see one number for
all assets that the rate model calcu-
lates out. 'lhe lifecycle is calculated
based on the asset value replace-
ment costs and spread across the
life of the asset to level out the
financial requirement and done in
the background of the rate
model. No doubt full lifecycle cost-
ing will be high for this type of asset
as it is a state of the art facility - but
as Gary Scanlan alluded to it isn't a
direct operating "
Dovelopment Chews
The plant is incorporated in to
the municipal Development
Charges ([X's). Ferguson explained
that funds collected can be used to
apply against the capital cost of the
plant. "Persons building a new
home in serviced areas or in the
identified expansion area pay a
1)C. Any DC's collected after the
plant is finished will be applied to
the debt repayment, thereby
reducing the amount required
front the wastewater rates,' she
said.
Bonesteel said, "This is what 1
would like to see. 'There are a
number of scenarios- that 1 am
seeing- three full time- two full
time double train partners- 2 single
phased in single train partners. We
will not be doing this on our own.
In that two single -full build we
would have a 70% cost- I would like
to see -debt carrying- 2,700 plus +
350 on a 70% number for us with
life cycle broken out- (our share
$700,000) and operating costs...for
each of those options. This is board
of directors of a corporation- with
12,000 shareholders and we need
to make decisions that stake sense
that will move us ahead. Lambton
Shores has to be cutting edge. "We
have to tell businesses we have
their best interest in mind. 1 need
to see those numbers broken out
so we can go back to the table."
Debt
Davis-Dagg said they have to
think in other terms like revenue
streams. "'ghat is the new way- that
is where we are now...we have to
think smart- we already pay two
million in debt each year. We have
to look at other opportunities" 'l'o
that Bonesteel said he thought eco-
nomic development is the best
debt recovery. "But who and? " he
asked !Milan said the structures;
the Legacy Centre and the Shores
are this municipality's economic
recovery. "'This is investment. That
is what the treatment plant is, that
is what collection systems are
--investments for the future—then
people will conte. If we are not
thinking down the road we are in
trouble. This is the single most
important decision this council
will slake. So we have debt- we
have millions in investments- and
part of that is debt- stop this red
herring nonsense about debt -1 am
sick of it"
Bonesteel concurred saying any-
thing he has read front every econ-
omist is that, " if you are a munici-
pality you should invest in
infrastructure now because you are
never going to get stoney like this
down the road." Scanlan agreed
stating right now if you are going
invest it is encouraged with interest
rates so low. "Yours is 2.4 -you have
invested in $175 million inwater
and waste water and $350 million
in roads, facilities to the tune of
about $555 million. That is a fair
stint of assets"
Me decision
The only decision this council
needed to make 'II tesday was if they would
send a letter of consent to the Tri -Munici-
pal board before the December 31 dead-
line. Davis-Dagg made a motion to table
the decision until the next sleeting. She
said she wants a lawyer to confirm by
them agreeing to accept the plant- that
they are not agreeing to take on the project
alone and not tie their hands. Bonesteel
said there is no agreement- since the two
partners were not adhering to the original
plan. Ile said what they were doing was
the honourable thing and following
through with their mediated agreement.
"Are we obligated to build full plant? No -
there is 30 days to reconsider," said Weber.
Davis-Dagg said she wanted this to be
black and white. She also wanted a public
meeting Monday for those people she
feels are disenfranchised and who do not
know they are part of the 2,700 users of the
system. (Forest,'ihedford, Arkona). It was
explained that a public sleeting has to be
advertised for two weeks before the meet-
ing. Davis-Dagg's motion was lost. She
made another motion for legal counsel to
explain the agreement's meaning and that
motion was also lost. It was agreed by
council to send a letter of intent to honour
their agreement and state they would like
to continue discussions with the partners
to discuss alternatives. They also agreed to
get a legal opinion before the 31st
deadline.
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