Before announcing the impending tax hikes and the reasons behind them, Kevin Ramsay, District of Squamish chief administrator, this week braced council members for what they were about to hear.
"If we don't do this right today there will be long-term problems for our children," Ramsay. "This gives us the science to make intelligent decisions and the community needs to understand the challenges that lie ahead."
The challenge is that the value of infrastructure in Squamish is $450 million and in 50 years the municipality needs to save that much money to replace the existing infrastructure.
To make that happen, water utility rates need to increase by 68 per cent, sewer utility rates need to rise by 58 per cent and property taxes need to increase by 12 per cent within the next year - or failing that, more gradually over the next four years.
Water utility rates would jump from $219 per year to $367 per year, sewer rates would rise from $286 per year to $451 per year and the owners of a three-bedroom, single-family home in Brackendale that currently pays $1,800 per year in property taxes would see their tax bill increase to $2,016.
That would provide the $9 million needed to ensure Squamish's infrastructure can be replaced when needed.
The issue is detailed in a 219-page report prepared by the District of Squamish's oft-used consultant, Kerr Wood Leidal Associates, who compiled all the district's most recent reports into one comprehensive document.
On Tuesday (Feb. 15), municipal infrastructure engineer Jenni Chancey explained the findings.
"This is a plan that will be a Bible for the engineering department for the next 30 years," Chancey said. "We are intending this to be a living document that can be used every day."
Chancey said municipalities across the country are working on similar issues because infrastructure across Canada is reaching the end of its lifespan.
Despite the substantial tax hikes proposed, council members were excited to receive the detailed report on the community's infrastructure.
"I have to thank staff for compiling this valuable information and in doing so, bringing Squamish to the front of the pack," said Mayor Greg Gardner.
"What do we have and what is it worth?" Chancey said. "That was the crux of the Public Works Asset Management Plan.
"The bad news story is that much of our infrastructure is failing and we should have a savings account to replace it at the end of its lifespan."
To determine the costs of replacing this infrastructure, each asset was assessed based on the probability of failure and the consequences of such a failure.
According to the "asset criticality" chart, Rating 1 means a minimal consequence if the asset fails and more than 50 per cent lifespan remaining. Rating 3 means a significant consequence if the asset fails and less than 10 per cent life span remaining. Rating 5 means a catastrophic consequence if the asset fails and its lifespan has been exceeded by more than 50 per cent.
The wastewater treatment plant received 2/5 and was valued at $47 million. Roads, lights and bridges received 3/5 and were valued at $71 million; drainage received 2/5 and was valued at $35 million; flood protection received 3/5 and was valued at $76 million and parks and trails did not receive a rating and were valued at $1 million.
Those results were used to help rank projects and create long-term plans.
Brian Barnett, district general manager of engineering and parks, said that when discussing cost and priority, the question of preventative maintenance vs. capital replacement comes into play.
"Investing money up front will help ensure the asset reaches its service life, and will also decrease risk throughout the asset life," he said.
"However, spending money on the asset before it reaches the end of its life is sometimes hard to justify when there are other pressing issues on the table."
The analysis led Barnett to propose several operational programs that would increase operational cost but extend asset life and decrease risk. Trails maintenance for parks, dike maintenance and gravel removal for flood protection, leak detection for water pipes and bridge inspections were only a few of the suggestions.
Gardner was stumped by one of the proposals.
"Are you telling me, Mr. Barnett, that we have not been doing bridge inspections?" asked Gardner.
"That is correct," Barnett replied.
Barnett said the failure of assets early in their lifespans often results from using defective materials or incorrect construction.
"If well-maintained, most assets will tend to exceed their design lifespan," Barnett said.
"Therefore it is very important to have regular maintenance and inspection programs in place to assess how close an asset is to failure, and how much extended life can be obtained."
An ideal example is that 70 per cent of the underground water pipes in Squamish are made of asbestos cement, which is not an ideal material as its original lifespan was only 50 years and it isn't much cheaper than ductile iron, which has an 80-year lifespan.
The water main replaced this summer along Government Road was made of ductile iron and according to Barnett, PVC (polyvinyl chloride) is also good.
"Most of our pipes are like garden hoses right now," Barnett said. "They just leak incessantly."
Level of service was also a major focus of asset management - the plan aims to address the needs of Squamish residents while protecting public health, safety and the environment.
The district is currently providing adequate levels of service and meets minimum service requirements in most areas, according to the report.
Infrastructure replacement funding indicators were below national benchmark rates, but so were operation and maintenance costs when compared to other municipalities across the country.
One glaring example is water use versus cost.
The water rate per household per year was $219, below the average cost of $300, whereas the number of litres consumed per person, per day was 423 litres more than average.
However, with the mass amount of pipe and reservoir leakage that has been occurring those results are not surprising, Barnett said.
The Plateau reservoir in Valleycliffe (installed in 1983) is leaking 19,000,000 litres per year and the Thunderbird reservoir is also leaking substantially, although an exact amount was not included. The Alice Lake reservoir, installed in 1965, only has a four-year lifespan remaining.
"These are priorities that need to be addressed," Barnett said.
While operation and maintenance are important to extend the useful life of assets, Barnett said both the operating and capital budgets would require a significant increase between 2011 and 2040.
He suggested that between two and 2.5 per cent of the value of the asset be budgeted each year to replace that asset at the end of its life.
"For example, our current water system is worth $115 million, so in 50 years we need to save that amount to replace the existing infrastructure," Barnett said.
That means that to replace a water reservoir costed out at approximately $1.7 million, the district would need to allocate $34,000,000 per year to its replacement fund.
Barnett acknowledged that was a significant amount but said compared to other, less necessary amenities "it wasn't so bad."
"Your cable bill costs X amount, your cell phone costs X amount, so to pay $367 per year for good, clean water doesn't seem like that much in comparison," he said.
Despite the overwhelming amount of work to be done, Squamish excelled in four areas - no boil-water advisories in recent years, no sewer overflows reported, no wastewater treatment plant tests out of compliance and a high ratio of park space per capita.
Coun. Doug Race said he thought setting aside two to 2.5 per cent per year seemed substantial and asked whether any other municipalities did that.
"Historically, definitely not," Chancey said. "But no matter how you cut the pie, the number is always between two and 2.5 per cent.
"How you put it aside is up to you, but that's the cost of your infrastructure."
The proposed system would hypothetically create a municipal budget that requires no borrowing as the district would have sufficient money put away for each piece of infrastructure by the end of its lifespan.
"If we did this we would eventually have no debt," Gardner said. "So I guess it's an aspirational goal."
Coun. Paul Lalli said he didn't see the tax hikes as affordable.
"Affordability is the key and I don't want to scare anybody with 60 per cent," he said.
"From my perspective, it's a 30-year plan and a plan to address this with preventative maintenance is a good way to prolong the life of some of our assets. I guess the next step is to create a financial model that would support some of these assets."
Coun. Corinne Lonsdale said she wanted to see some options.
"We're still going to borrow and there will still be grants for capital works," she said. "Will staff come back with options? Is it feasible we start by putting aside $3 million as opposed to $9 million to start making a difference?"
Ramsay said exploring those options is part of the strategic spring budget plan.
"Part of this process is to make sure we lengthen our assets," he said. "The figures of $9 million a year are terrifying, but we will work on funding sources of how we manage this."
