In their meeting of July 19, 2010, Central Elgin Council chose Option 3, the most-expensive-to-affected-residents option, for recovering the costs of Phase 1 in relation to the Eastwood Subdivision Sanitary Servicing.

At the beginning of the meeting Councillor Russell Matthews declared a potential future conflict of interest regarding Report PW 58-10, excusing himself from the discussion and vote on this report. Councillor Sally Martyn is away on vacation.

PW 58-10 Eastwood Subdivision Sanitary Servicing, Phase 1 - Cost Recovery

The 2009/2010 Phase I of the Eastwood Sanitary Servicing project included the installation of gravity sanitary sewer mains on Paul Street, Bailey and Elmwood Avenues. These gravity sewers outlet to the existing gravity sewer on Elm Street. The municipality received a two-thirds Building Canada Fund (BCF) grant for the installation costs of the sanitary sewer component of the project. The report states it was always Council's intention to recover the costs associated with the installation of the sanitary sewers as these are considered a new service to these properties. Prior to obtaining the grant, the estimated cost per property was $15,000.

Construction Costs:
The total cost of the work associated with the installation of sanitary sewers is $558,197.23, including the engineering, advertising and other applicable sundry costs related to the project. One-third of these costs have been prorated as payable through the water rates as a portion of the work included water main replacement. One-third is payable through the tax rates as the streets were reconstructed. A total of 72 sanitary sewer connections were installed.

After applying the grant funding, the cost to be recovered from the individual properties is $186,065.74, which translates into $2,584.25 per connection to recover construction related costs. During the public consultation phase of the project, staff had estimated to residents that the construction component recovery cost would not exceed $5,000 per property. The actual cost is just slightly more than half of the estimate conveyed to the public.

Waste Water Treatment Costs:
In addition to construction related costs there is a cost per connection for sewage treatment. During the public consultation phase staff suggested residents would face a $3,500 cost per property payable to the City of St. Thomas for waste water treatment. After the municipality knew they had received the BCF grant, the total estimated cost per connection relayed by the municipality to the public was approximately $9,000.

Since the public meetings, the City of St. Thomas lowered their Waste Water Treatment Development Charge on July 1, 2010 to $1,483.91 from the $3,300.00 charge in 2009. As well, on April 26, 2010 Central Elgin passed the new Development Charges By-law No. 1202, which sets a waste water treatment development charge for new connections to waste water treatment plants at $4,040.

Council now had to choose from one of three options as to what fee would be collected to recover the costs.

Option 1: Collect the amount for Waste Water Treatment as required by the City of St. Thomas:
That translates into $1,483.91 for the City of St. Thomas plus the construction cost of $2,584.25 for a total cost per connection of $4,068.16.

In staff's view this option would create an inequity between these residents and any other lot in the municipality covered under the Development Charges by-law, as the other lots would be required to pay $4,040 (eg: Lynhurst area or South block DC area). This would also mean that sanitary sewer customers would be required to pay for the construction of the pumping station to be located at the intersection of Centennial and Talbot, impacting existing sanitary sewage user rates. This pumping station will be necessary to service the industrial/commercial lots along the Hwy #3 corridor.

Option 2: Collect the amount that was estimated that would be applicable during the public consultation phase:
That translates into $3,500.00 for the City of St. Thomas plus the construction cost of $2,584.25 for a total cost per connection of $6,084.25.

In this option they bill each property for the actual construction costs plus the estimated, rather than actual, waste water treatment fee for the City of St. Thomas. Staff says this option leads to inequities with other development covered by the Development Charges by-law which use the City of St. Thomas waste water treatment plant. It would also require the municipality to fund a portion of the cost of the Centennial Talbot pumping station and this would affect sewer rates.

Option 3: Collect the amount that is identified in the municipality's comprehensive Development Charges By-law:
That translates into the actual construction cost of $2,584.25 plus the $4,040.00 development charge (from which the municipality pays the $1,483.91 to the City of St. Thomas for waste water treatment and keeps the rest) for a total cost per connection of $6,624.25.

The remaining $2,556.09 (x 72 = $184,038.48) would be used to fund the cost of the Centennial Talbot pumping station. Staff says this would benefit all waste water customers in the municipality, including those covered by this project, as the waste water user fees (sewer fees) would not need to be increased to cover the $511,218 cost for the construction of the pumping station. Staff feels this approach is equitable to all new development that would use waste water treatment facilities that the municipality owns or uses through adjacent municipalities through agreement.

Council's Discussion and Decision

The original motion put on the Council floor was Option 2. Deputy Mayor David Marr said he put this proposal forward simply to put something on the floor to start the discussion. "What's making this difficult is not as much the people we are affecting today, but the ones we will be affecting in the future," Marr said, stating he thought Option 2 was the fairest one.

Scott Mathers and Sharon Larmour favoured Option 3 "as everyone will eventually have to fund a pumping station in that area to service industrial land." Larmour said they would put the extra money into a reserve fund to pay for the pumping station.

Councillor Reu said that though he signed the motion for Option 2, he favoured Option 3 as it "is the best and most equitable for everybody."

Councillor Carr said he favoured Option 3 because "putting reserves away is always a good thing" and it was the most fair.

At this point Deputy Mayor Marr changed his position, saying that "we know expansion is coming" regarding commercial and industrial development. "We have Option 2 on the table to get something out there for discussion. We need to defeat Option 2 and go with Option 3."

Option 2 was defeated with Carr, Rock, Reu and Marr voting against it. Reu moved a new motion to approve Option 3 and it carried. Option 1 was not considered.

"Fair and equitable wins over popular," Mayor Marks declared.