Aquatera Revenue Sharing Agreement

We just had a very unusual delegation at Council. Reeve Beaupre and County Council paid us a visit. They came to discuss Aquatera and money owed to the City.

Aquatera has brought some very big benefits to the County. City ratepayers have also invested a lot of money into Aquatera. In recognition of this, there is a Revenue Sharing Agreement (RSA) in place.

The County has many non-residential properties that developed after the extension of Aquatera services into their area. The City receives a small part of the taxes generated by these properties. The City doesn’t receive any revenue from residential properties in the County.

This year, the County owed the City $1,231,517 under the RSA. This is a contractual obligation. Payment was due at the beginning of September.

I was under the impression that County Council was coming to give us a cheque. However, no real cheque was offered today. We were told to expect payment sometime later this month. Instead, there was a request made for the City to take a photo op with a large, ceremonial cheque. We were not able to accommodate this request due to being in the middle of a business meeting.

This request for a cheque presentation is VERY unusual. I also found it off putting.

Many governments make cheque presentations. These are typically reserved for voluntary grant programs. Cheque presentations are used to recognize contributions to public facilities, non-profit programs, and other community enhancements.

But the money owed by the County is essentially a utility bill. These are usually paid without ceremony. I’ve never heard of a cheque presentation like this one.

It is also unusual for a contractual payment to be delayed for the sake of a presentation.

Our staff will continue their efforts to get payment from the County. City Council also needs to have a conversation about how to respond to a similar situation in the future. I strongly believe that we should insist on this annual payment being made on time.

Worth noting: the City also has a long standing Aquatera Revenue Sharing Agreement with Sexsmith. Sexsmith has never done a cheque presentation. Its payment for the year was made early.

Also worth noting: usually, the City charges overdue accounts 18% per annum in interest. However, we want to have a good working relationship with the County. There has been no effort to add interest to the County's late payment. Although perhaps that is something we should discuss in the future.

[EDITED ADDITION ON TUESDAY- The City received a cheque this afternoon, the day after the meeting this blog post is about]

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MORE INFORMATION

Aquatera has brought many benefits to the County. These include:

• Tax generating development. For the 2018 tax year, the County generated over $12 million from non-residential properties that were developed after being connected to Aquatera. The County also generates large revenues from residential properties connected to Aquatera.

• Lower water rates. It is more expensive for Aquatera to pipe treated water into the County than into the City. However, City and County customers pay the same rates. That means that County customers are being subsidized by City customers.

• Dividends. In 2018, Aquatera paid the County $723,301 in dividends.

These benefits to the County have been made possible by City ratepayers. The City contributed the majority of Aquatera’s infrastructure. And City customers pay more for treated water than they would if their rates weren’t tied to County rates.

There has also been County development that only occurred because of Aquatera. Without water and sewage, some of this development would not have happened. And some would've moved to the City, which would've increased our tax base.

Aquatera brings big benefits to the County. It has also created large costs for the City. That is why there is a Revenue Sharing Agreement (RSA) in place.

The RSA requires the County to give the City 10% of the tax revenue it receives from new non-residential development that accesses Aquatera service. The County also contributes 20% of the revenue it generates from a co-generation facility. The RSA does not include any revenue the County receives from residential property.

In my opinion: the $1.2 million the City received from this agreement undervalues Aquatera contributions to County development. It represents a great deal for County ratepayers.

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The County sometimes suggests that the RSA money is a contribution toward the use of City facilities by County residents.

Implicit in this claim is a recognition that the County should be funding City facilities. That is very true. City facilities (and many other City services) benefit County residents and businesses. It is appropriate for the County to provide funding for them.

However, the Aquatera Revenue Sharing Agreement does not represent a contribution to City facilities due to use by County residents. There are four big problems with suggesting that it does:

1. The revenue shared through this agreement is based on properties connecting to Aquatera. It is not impacted by any facility costs the City incurs. It also isn’t impacted by how many County residents use City facilities, or the direct costs County residents create for the City.

2. The RSA does not give the City any revenue from County residential taxes. Since County residents don’t contribute to the RSA, it is hard to picture how it represents their contribution to their use of City facilities.

3. If the RSA is meant to pay the City for the use of its facilities, then the City is getting nothing for its contributions to Aquatera. This is a much bigger problem than the City receiving no funding for its facilities.

This is all a really long way to say:

In 2019, the County owed the City over $1.2 million. This was for the City’s contributions to Aquatera. And, in my opinion, this is an INCREDIBLY good deal for the County. In future years, this money should be paid on time and without ceremony.