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Shoreline Pipeline By-Law repealed
by Sandy Lindsay

January 15, 2015

Kincardine Council

 

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To say the issue was convoluted is putting it mildly. After two hours of debate at Kincardine Council meeting on Wednesday, January 14th (2015), the infamous on-going discussion of By-Law No. 2004-044, around the contentious 'Shoreline Pipeline' project and Inverhuron water and sewer, has been repealed and amended.

The discussion had just started when Councilor Randy Roppel put forward the motion to go to a straight repeal of the By-Law.

Looking back over the history of the project, it all started following the Walkerton water tragedy in 2002.  Following the incident, the Municipality of Kincardine began an environmental assessment (EA) to look at its long-term water quality and supply requirements.

A study was carried out and the Council of the day decided that providing the lowest 'life cycle' cost per property while providing long-term safe drinking water within the study area, including Inverhuron Park, was the option of choice.

Council also made the decision however, that mandatory connection or payment by property owners to the Shoreline Pipeline was not required.  Instead, it was decided that a 'premium' structure would be implemented to encourage early connection to avoid  annual increasing connection costs.  The early connections however did not materialize and, by 2013, only 23 properties had connected, an average of three per year, leaving a debt of $1.5M.

Therefore, in 2013, Council directed municipality staff to re-visit alternative options to determine if the pipeline debit could be eradicated.  After receiving options from the staff, Council in 2013 made the decision to implement a mandatory payment of the capital charge.

Then, on December 10, 2014, Council passed a Resolution for staff to complete documentation setting out parameters to repeal the By-Law, outline alternate options to eliminate the debt, set out the terms of the Water Reserve Fund and present the financial implications of refunding premiums already paid.

Repealing a By-Law is not without implications of all kinds as the Council found out on Wednesday.

*  Premiums that were paid by 22 property owners between 2005 and 2013 for voluntary connections had been refunded ($64,360).  The Town finance officer said it would be "difficult to re-invoice those owners for the refunds".  Therefore, Council should decided whether the amount would be added to the total unfunded debt.

* The Water Reserve Fund consists of contributions by some 3,777 existing water users, both residential and commercial, through rates established in the Rate & Fees By-Law. The users include those in Armow, Scott's Point, Underwood and the Township of Huron-Kinloss.

If the debt of $1.5M was funded from the Reserve, it would probably result in water rate increases at an accelerated rate in the future.  The water network currently has an estimated replacement value of $66M and estimated annual infrastructure deficit of $K.

* If Council was to repeal the By-Law, it would also have to decided whether or not to re-instate the terms of the original By-Law that would include re-instating the premium schedule where capital charges for 2015 and beyond would be $11,604 + CPI.

* Also, on December 8th, approval was received to proceed with the extension of municipal water and sewer into Inverhuron.  In 2011, Council passed a resolution (1 2/14/11-07) whereby all properties in the Inverhuron EA would be required to mandatory pay and mandatory connect.  The repeal of the By-Law however, would delay but not eliminate the 2014 - 2017 payment when the Inverhuron billings would take place.

If the resolution was to be amended to not require mandatory payment and connection for the Shoreline Pipeline properties but Inverhuron owners were required to do so, it would result in 'inconsistency' between neighbouring properties.  In other words, Shoreline Pipeline properties have optional choices where Inverhuron's choices would be mandatory.

According to the report at Wednesday's meeting, water sampling "had indicated that contamination is occurring throughout the community and one of the primary objectives of the Municipality is to protect the health and well-being of the residents.  Therefore, if contamination occurs and someone becomes ill, the Municipality could be exposed to liability issues.

After discussing, debating and rehashing all the options and choices, staff told Council that it basically had four options open:

1.  Uphold the By-Law and not repeal it and continue on the path forward.  This option would eliminate the debit and preserve the water reserve fund for its intended use.  It also minimizes but does not eliminate the inconsistencies between neighbouring properties.

2.  Repeal the By-Law and fund the debt from reserves.  Council would have to decide on which reserve fund(s) it would use.  If the Water Reserve was used, it would equate to $398 per current water customer.  The reserve was established for a full-cost receover model for repairs and replacement of the existing water system and not for new construction.

 

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3.  Repeal the by By-Law and allocate a capital charge for all properties in the municipality to fund the debit.  A capital charge would equate to $212 per property.

4.  Repeal the By-Law and revert back to the provisions of the original By-Law.  This would mean going back to the premium structure for all severances and voluntary connections until the debit is retired which would take 30 years.

5.  Another option to be determine by Council.It was to be Option 5.

Mayor Anne Eadie was adamant however, in her stand against using the Water Reserve Funds for anything but their original intended use.  "I do not want to penalize those people who have already paid into this."

Council Laura Haight added that the entire project was mistake at the beginning.  "This should have have been mandatory, payment and connections ... the Council of the day made  a mistake and here we are 10 years later.  I don't think a straight repeal is the answer.  It takes us back to what it was before but a By-Law can be amended and capital charges can be repaid.

Mayor Eadie also pointed out that the Inverhuron project had been approved.  "I don't want to see the past mistake compounded with another and my fear is that we will end up with two classes of people at Inverhuron.  However, this project is expected to go ahead in the spring."

Councilor Mike Leggett put forward the suggestion to repeal the By-Law, borrow from reserves and pay the debt, do not re-bill premiums, and all future charges go to pay back the reserve fund.

At the end of the day, a recorded vote was taken with only Mayor Eadie and Councilor Haight voting 'no' against Roppel's motion to repeal.

Motion approved:

By-Law is repealed; no premiums are to be charged; debt funding to come from the Health Reserve; staff to have until June 30th, 2015 to determine procedures to move forward; any future charges will go back into the Reserve Fund.


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Thursday, January 15, 2015