Paying for Stormwater Systems

One important service the City provides is a storm water system.

This is also an expensive service to deliver: in 2018, the City spent $6,325,000 on projects associated with storm drainage.

Currently, this work is primarily financed through tax revenue. However, Council is exploring moving towards a utility model for storm water. Under this model, property taxes would no longer go towards paying for drainage systems. This would lead to a tax reduction. However, property owners would receive a separate storm water utility bill.

Nobody likes getting bills, especially utility bills. When first hearing about this, many people will be resistant to this idea. I totally understand this (I get utility bills too).

I have no idea if I will ultimately support this change. However, I am looking forward to more information. A utility model for financing the storm system deserves consideration. It has a few potential benefits, the largest one being that it would likely deliver City tax payers a net financial savings.

Below is a bit more information about this idea and some potential benefits I see.

The Costs of Storm Water

It is vital that the City have infrastructure to properly drain storm water. Pooling or improperly discharged water is a large safety risk. It can destroy private and municipal property. It can also cause environmental damage.

The City doesn’t pay for new storm water systems. When land is developed, the developer is responsible for building the original drainage system. However, once it is built, the system gets handed over to the City. Then, the City is responsible for maintaining and eventually replacing the system.

The City owns over 226km of storm pipes, 97 storm outfalls, 4410 catch basins, and 43 storm ponds. Here is a picture of the network. Each colour represents a connected system- my understanding is that colours on this map do not say anything about the condition, size, or other attributes of pipes.

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Some of this infrastructure dates back to the 1940’s. And it costs a lot of money to maintain.

In 2018, the City spent $6,325,000 on projects associated with storm drainage.

Council also recently adopted a Storm Water Master Plan. It calls for close to $100,000,000 in capital projects for our storm drainage system.

Tax vs Utility Model for Storm Systems

Currently, the City pays for its storm system through property taxes. If it found an alternate way to pay for storm water work, the City could offer a tax discount of just under 6%.

Many municipalities have decided to create a tax discount by no longer funding storm systems through tax levies. Instead, they send storm water utility bills to property owners.

Alberta municipalities which have a utility model include Calgary, Edmonton, Strathcona County, and St Albert. There are many other municipalities across Alberta and Canada which either currently have or are considering this model.

The Benefits of a Utility Model

Instituting a utility model to pay for storm water would lead to a tax reduction. However, property owners would receive a separate bill. If the only effect of a utility model was to send properties an extra piece of paper while charging them the same total amount, it wouldn’t be worthwhile.

However, a utility model has several potential benefits. The biggest is that it would likely lead to net savings for property owners. It could do that in two ways:

  • Billing non-taxable properties: there are many properties within the City that require services, including a storm water system, but which are exempt from paying municipal taxes. These include some of the biggest properties in town, such as hospitals, schools, the court house, and the college. City taxpayers bear the cost of having servicing these buildings. Which is a problem, because they benefit many non-residents. This is one example of how City taxpayers subsidize non-City residents. Sending a utility bill to these properties would lessen the subsidy they receive. The revenue generated from non-taxed properties would lessen the amount taxable properties need to pay.

  • Creating incentive for less runoff: there are many decisions property owners can make to lessen how much runoff their property generates. When they do this, the City doesn’t need to spend as much money on storm systems. A utility model could be used to give properties a discount for retaining more storm water. This would give those properties a clear savings. However, it may also benefit other taxpayers by allowing the City to undertake less maintenance on its systems.

A utility model could also have environmental benefit. Storm water discharge puts sediments and chemicals into waterways. It also causes erosion. If savings incentives were used to get property owners to decrease their runoff, that would be good for the environment.

Finally, a utility model could increase City transparency. Property owners would know exactly how much they are paying for this service. And they would be able to make a more like-to-like comparison when looking at what Grande Prairie charges for taxes compared to other municipalities that pay for storm water through a utility bill.

Current City Direction

Today, the Infrastructure and Protective Services Committee directed administration to pick a section of the community to model. My understanding of the motion: staff will be looking at costs for storm drainage in part of the City, what properties would need to be charged on a utility bill to cover that cost, and how much moving to a utility model would save those properties on their tax bill.

This information will give very useful context to continue this conversation. Once Council sees the results of modeling, it will decide whether or not to continue exploring this idea.

If Council does end up adopting a utility model for storm water, I don’t picture that happening without significant conversation. There was talk at the committee meeting about the need to have very open and responsive dialogue about this with both the community at large and with the business community. If Council does continue looking at a utility model, I would expect that the next step would be to launch a robust engagement process.

I’d love to hear from you.

Right now, I have no idea whether or not a utility model should be adopting. But I certainly think it is worth exploring. What’s your take? Is this conversation worthwhile? What thoughts, questions, ideas and concerns do you have as you read about this?

Thanks for reading!

-Dylan


JULY 11 ADDITION: I’ve had some great conversation about this, including significant push back from a few. That’s great! That is a huge reason I make these posts: to run ideas past our community and hear their perspectives.

Most of my conversation has happened over coffees. However, there have also been some good comments on my Facebook page: you may want to check them out.

I want to re-iterate: I don’t know if this is a good model for our community to adopt. However, I’ve been told again and again that people want us to be taking a good hard look at how we spend money and at how we collect revenue. We shouldn’t just assume that the way the City currently finances things is the best way to do so. With that in mind, I think this model bears discussion. But the conclusion of that discussion may be that, in this case, the status quo is best.


Dylan Bresseywater, taxesComment