Councillor Mac Bain, left, and the chairman of the Water and Sanitary Sewer Review Committee, George Maroosis, question city staff during their meeting on Wednesday night. PHOTO BY LIAM BERTI
It seems as though every time the Water and Sanitary Sewer Review Committee meet, their attempt to level the billing inequity between residential and industrial users becomes more complex.
The politicians are out to address the fact that the residential sector is paying 73 per cent of the revenue required for the city’s water and sanitary sewer cost recovery, but only accounting for 51 per cent of the water usage.
On the other hand, the ICI/multi-residential sectors use the other 49 per cent, but are only paying 27 per cent of the revenue.
Previously the committee had decided to try and move towards a 2016 billing system that charges water users the same rate per cubic meter of water consumption, regardless of property class, as well as using water meter size to determine their base bill.
But their optimism seemed to come crashing down on Wednesday night, when city staff presented the potential water rates that would cause some ICI/multi-res rates to skyrocket.
When abolishing the idea of property classes and taking fixture size into consideration instead, the simulation showed that ICI/multi-residential units with bigger fixtures would be in for some big changes.
When the committee conceived the idea last month, they used the American Water Works Association meter size rates. But when using adjusted factors to meet the city’s cost recovery needs, everything changed.
On the most basic level, in a 60 per cent fixed, 40 per cent variable cost recovery model, the city needs to recover $7.4 million in fixed rates to cover their costs from the 17,816 connections in the area.
But if every user were to be charged $0.99 per cubic metre of consumption, which the committee previously deemed fair for 2016, then the city’s big users would be hit hard.
A standard residential home with a 5/8-inch or 3/4-inch fixture would still expect to pay $30.40 in fixed fees per month for the water portion of their bill. However, as the connection size increases, the rates would increase substantially.
A one-inch connection, for example, would pay $79 each month in fixed fees, while a six-inch connection would be paying $1,575, with all other connections falling between that range.
What’s more, the city's chief financial officer, Margaret Karpenko, alluded to examples of commercial properties that have multiple large fixtures, which could potentially result in the fixed portion of their bills more than doubling.
“The approach that we’ve taken is we need to balance getting there in a responsible way so that we don’t start running industry and institutional users out of our region,” said David Euler, the city’s managing director of Engineering, Environmental & Works.
“Conceptually, if we were 100 per cent variable, we would have total equality,” he added. “It’s the fixed fee that causes the inequality.”
And all of those numbers are before the sanitary sewer and treatment plant surcharges are factored into the bills.
But Karpenko’s numbers showed that, even if those fixture size-based rates were adopted for 2016 and the city stuck to the 60 per cent fixed, 40 per cent variable cost recovery model, the residential sector would still be accounting for 64 per cent of the city’s revenue.
She then presented a four-year transition plan that still didn’t reach equity among the classes.
Even with gradual tapering, Karpenko said the closest they could expect to get to true equality would be in 2019, when the residential sector would account for 57 per cent of the revenue under a 30 per cent fixed, 70 per cent variable cost recovery model.
That model, she said, would come with significant risk to the city and is still a bit of a stretch.
“That’s as close as I could get it,” she said of the remaining disparity. “My personal opinion is, this is a model; I don’t know if I could etch in stone that we could get there and move this quickly.
“My fear is that basing the rates on only 30 per cent fixed is very risky because we do know that our costs are over 80 per cent fixed,” she added.
Using actual data from 2014, Karpenko also illustrated the dramatic effect that would have on the ICI/multi-res sectors in a series of graphs that showed real examples of large spikes for most users.
So the battle then becomes: which side of the equation will face the biggest change, the industrial and commercial businesses, or the residential users who work the jobs at those locations?
“We don’t want to see industry and businesses leaving, but the residential end has been paying for the majority of the water,” said Coun. Jeff Serran. “We are also running the risk of losing our residents because they won’t be able to afford living here with that inequity, so we won’ t have people to work the jobs; it’s a real double-edged sword here.”
When asked why they couldn’t reason by analogy and look at other municipalities throughout the province for guidance, city staff said the amount of complex variables make each scenario extremely different.
“We have a unique issue in North Bay from our Northern Ontario counterparts,” Euler explained. “Our ICI uses substantially less water than say Sudbury, who has smelters and mines that use tremendous amounts of water, so that ICI water helps them pay the freight.
“One of the nice things about North Bay, in some respects, is we don’t have a huge industrial sector; but in other respects, it’s painful because the residential sector has to carry it,” he added. “That’s what you see when you run these models.”
When looking at the number of each meter size in the city, there are four six-inch connections, seven four-inch connections, 52 three-inch connections, and 199 two-inch connections.
The committee now faces the challenge of formulating a recommendation to bring forward to council by their September 10 deadline. Their mandate and mission is to present a suggested system that represents equity and fairness.
But if the data they were shown on Wednesday night is as bad as it sounds and still doesn’t bring equality across the board, then they still have a lot of work ahead.
“Our mission is equity, and I don’t think we can recommend anything other than equity and an equitable plan,” said committee chairman George Maroosis. “But I don’t think we can jump to any conclusions about our recommendation at this point."
Echoeing Coun. Mike Anthony's previous idea of a longer "shadow-billing" adjustment period, Mayor Al McDonald suggested that the committee ask council for more time and delay the water meter billing until January 1, while sticking with flat fee billing at an 8.3 per cent cost increase for the rest of 2015.
However, despite Coun. Serran indicating that idea might gain momentum from other councillors, city staff said that suggestion would likely fail to address the projected $500,000 year-end water and sanitary sewer deficit, if it were even legally possible to change the rates in the first place.
Moving forward, the group decided to take the time to digest Karpenko’s presentation for further consideration, while also tasking city staff with finding comparisons with other communities using similar models.
Their next meeting has been scheduled for Thursday, August 20, at 5 p.m. in the fifth-floor boardroom of City Hall.
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