March 28, 2022 Council Highlights
Posted March 31, 2022
The following is a summary of decisions made by Town Council during its March 28, 2022, Regular Meeting. For an audio recording of this meeting please check the bottom of this page. The agenda and attachments are available here: Peace River – Document Center (civicweb.net)
The Franchise Agreement is an Agreement between ATCO and the municipality. In this Agreement, the Municipality grants ATCO certain rights to provide natural gas distribution service to consumers. In turn, ATCO commits to terms and conditions under which it will deliver natural gas service within the community.
The existing Agreement was established in 1958 and has been renewed several times since then. The proposed Agreement provides updated language and provides modernized legislative references. The new Agreement also includes the provision for the Town to assess property taxes on ATCO’s property and linear assets.
A Bylaw is required to enter into the Agreement and therefore Bylaw 2111 has been prepared to reflect this. Note that some minor administrative details of the Agreement (addresses and so forth) have not yet been updated in this initial draft. Aside from these administrative changes, the Agreement is as it will be presented for later ratification.
Following first reading, a mandatory advertising period will take place to solicit public comments on the proposed Bylaw and Agreement. Once this is complete, ATCO will prepare the required submission to the EUC. Once the EUC has approved the Agreement, ATCO will prepare the Agreement for execution. The final version of the Agreement will form part of the Bylaw when it is presented for second and third readings.
Administration recommended that Council provides first reading to the attached Bylaw to provide a new ATCO Gas franchise agreement with a 10-year term at a franchise fee of 32% not including property taxes.
The motion to provide first reading to the attached Bylaw to provide a new ATCO Gas franchise agreement with a 10-year term at a franchise fee of 32% not including property taxes was carried.
Request for Decision re: Alberta Municipalities Presentation (verbal report)
Councillor Good presented his Request for Decision in regard to presenting at the AUMA 2022 Convention & Trade Show.
The motion to support Councillor Good presenting at Alberta Municipalities breakout session on Municipal structural history and access to property tax assessment was carried.
The motion to have the Town of Peace River rent a booth at the 2022 Alberta Municipalities Convention for the promotion of the Town of Peace River in conjunction with Councillor Good’s initiative was carried.
The motion to enable Councillor Good to make a presentation to the Alberta Municipalities Board on Municipal structural history and access to property tax assessment was carried.
As part of the 2022 budget, Administration asked that Council finalize the water, sanitary sewer and stormsewer rates for 2022.
Previously, water and sanitary sewer rates were established by imposing a percentage increase to the existing rates. The intent with the increases were to work towards a full cost recovery model so that all water and wastewater operating and capital expenses were fully funded including establishing a capital reserve for future projects.
In reviewing how well this approach is working, Administration reviewed the last three years of expenses versus revenues.
Administration also reviewed existing standards and practices for utility billing. This included comparisons with other municipalities in their current rates structures and rates.
Administration also reviewed existing American Water Works Association (AWWA) standards for utility rate billing practices, and those practices for power and gas utilities.
In the American Water Works Association (AWWA) publication “Manual of Water Supply Practices – Principles of Water Rates, Fees, and Charges”, the following objectives should be considered when determining a rate structure:
- yielding necessary revenue in a predictable manner;
- minimizing unexpected changes to customer bills;
- discouraging wasteful use and promoting justified uses;
- promoting fairness and equity;
- avoiding discrimination;
- maintaining simplicity, certainty, convenience, feasibility, and freedom from controversy; and
- compliance with all applicable laws.
It is also recognized that there are two approaches to determining revenue requirements for water and wastewater utilities:
- The utility (full cost) approach; and
- The cash needs approach.
Power and gas utilities, for instance, have moved to a full cost recovery model and split their fixed and variable costs for better transparency, and to ensure that the true cost of providing a service to the end user is recovered.
Director Websdale also addressed the question often posed: “Why is Peace River’s system so expensive to operate?” Within the document, linked directly above, is information regarding the unique features of our system, and their necessity in terms of our geography.
A chart comparing Peace River to other municipalities in terms of infrastructure is available within the document, and the full chart comparing Peace River’s water rates with other municipalities’ can be found here.
Administration presented three different models for their consideration.
Option 1 is a full cost recovery model, wherein a balance of fixed and variable costs would provide a more stable cash flow model to fund our water and wastewater system. This option would see Administration distinguishing between residential and other user types similar to electrical utility providers. This distributes the burden according to user type and system usage.
Option 2 would be to phase in the full cost recovery model over the span of two years. This option phases in the fixed cost over two years, putting more emphasis on the variable rate which sees shifting the burden to higher usage customers to offset the cost of the fixed rate for lower usage customers.
Option 3 would be a move to a full cost recovery model, but keeping the percentage increase method. This option is more problematic as there is significant subsidization of low usage rate customers. Based on 14m3 for an average customer, the equivalent rate would be $9.33 m3.
Examples of a typical residential bill under all three models are available within the document.
The motion to direct administration to bring back full cost recovery models for water, sewer, storm sewer rates for periods of 1 to 5 years was carried.
Administration brought forth their proposed capital budget for 2022, along with the attached 5-year capital plan for consideration and comment. The capital plan is a required element to secure federal/provincial funding and a requirement under the “Municipal Governance Act (MGA).”
This briefing note contains the project summaries, the proposed funding plan, and the 5-year capital plan.
To reduce the burden on the tax base, Administration aims to maximize Federal/Provincial funding and grant opportunities where possible.
The motion to approve funding for the 2022 Neighbourhood Infrastructure Renewal Project on 94 Ave for the amount of $3,365,500 was carried.
The motion to approve funding for the Bio Solids Handling Facility Remediation 2022 Project in the amount of $1,066,312 was carried.
As water rate discussions continue, discussion surrounding the budget will also continue.
In 2019, the Town underwent a routine Public Service Body audit. The Town then received a letter assessing $616,321.42 in unassessed GST. Of that, $6,750 was assessed on the sale of naming rights. This was an oversight on our part and was immediately corrected.
However, the Town appealed the rest of the assessment of $609,571.41, and on March 14, 2022, the Town received notice that CRA allowed the objection in full. The Town was able to support its position that the funds were indeed provided for a specific purpose. CRA has said they are reassessing the Town’s account and the Town is working on making any financial adjustments needed.
At this point, no decisions have been made on developing new processes. Alberta Municipalities is reviewing the letters and process used in the appeal and their Municipal Governance Committee will be discussing any next steps on the advocacy side at their upcoming meeting. It is possible that the Committee will still have some outstanding concerns given the difficulty we had in proving the true nature of the cost-sharing agreements.
The motion to accept the briefing note for information was carried.
The Municipal Planning Commission (MPC) is a municipal board established by a bylaw that is responsible for reviewing and making decisions on discretionary use development applications and may also provide advice and input on strategic planning processes. The board, at the time of presentation, had 7 members.
The MPC currently has two official vacancies. Administration has advertised for a new MPC member and has received two applications from:
- Robert Ashfield
- Richard McIntosh
The applications in full were reviewed by the MPC at the MPC meeting on March 23, 2022. The MPC passed a motion recommending that Council appoint Mr. Ashfield and Mr. McIntosh to the MPC.
The motion to appoint Robert Ashfield and Richard McIntosh to the Municipal Planning Commission for a three-year term pursuant to Bylaw No. 1993 was carried.