Utility rate proposal examined in Coaldale budget deliberations

Posted on December 13, 2023 by Sunny South News

By Heather Cameron
Southern Alberta Newspapers
Local Journalism Initiative Reporter

On December 7, 2023, Town of Coaldale Council met for 2024 budget deliberations and part of those deliberations included a utility rate review.

Kyle Beauchamp, Chief Financial Officer and Deputy Chief Administrative Officer for the Town of Coaldale, presented two options to Council for 2024-2026 Utility Rates. The first option, Beauchamp said, includes a flat fee increase for water and storm and a 10 percent year-over-year for the water and the sewer. On average, Beauchamp said, this does equate to a five percent increase for the next three years. The Town’s water cost, Beauchamp said, is designed to allocate the future water cost, as it is expected to increase by two percent next year and have a three percent surcharge on top of it from the Water Commission. Not all this would be going to future capital, Beauchamp said; it would be going to rewards operating as well. The second plan, Beauchamp said, includes changes where the increase for water variable would be cut in half from 10 percent to five percent. Since costs have risen so drastically next year, Beauchamp said, the Town still had to maintain some level of funding, so what they did was they reduced the increase from 10 percent from six percent, but did it at an increase of $0.50 a year for the storm flat fee. That, Beauchamp said, drops the increase from 4.92% next year versus 3.9%. The total change in that revenue, Beauchamp said, for future capital projects over three years is $440,000. 

Beauchamp also showed Council two slides detailing the Town’s water and sewer reserves over the future and said they were largely because the Town has two debentures required for the reservoir and the Sierra (SE) trunk line for next year. Based on the assumption, Beauchamp said, there will be new debt that will be required for the reservoir; it’s a debenture payment of $5.3 million averaged at 10 years. The current rate right now, Beauchamp said, is 5.2 percent, but that will actually change depending when the actual debenture comes out so he said he was speaking of what is going into reserves; there are we have Capital expenditures and there are debt payments and Administration just wanted to provide a slide of how these project over 10 years and 15 years once the Town fully fulfills their capital projects under the Offsite Levies Bylaw.

Beauchamp also showed the actual amount going into the reserves for the water reservoir is not that much bigger than the funding required for the debt payment on the water reservoir in 2025. There would be funding of $725,000 going into water reserves, Beauchamp said, but the debenture payment on that would be $690,000 a year that’s partially offset by cash levies, but again those are dependent on future developments and when the Town is going to receive them, so these are levies that the Town has projected to receive over the next five to 10 years. Beauchamp said that it could be offset by future additional development that does come online as well as the sewer reserve and sanitary reserve for 2025 and 2026. The debenture payment, Beauchamp said, is essentially equal to the funding going towards reserves and with the slides, he wanted to pain the picture that Administration that I would like to show kind of paint the picture that the Town is not inflating the amount of funds that are allocated to reserves here;  there will be future infrastructure that will have to be required that will have to come from this source of funding, so this will likely reduce as additional requirements do come up. 

Beauchamp also went through slides containing the Capital Plan with Council and stated a few important points from them: two emergency vehicle services are partnerships with Lethbridge County and a portion for the Town of Coaldale under a fire service agreement with Lethbridge County. Another point, Beauchamp said, was that the Civic Square outdoor space Phase Three is still waiting on a $1 million CFP grant application. Since the Town is dependent on that, Beauchamp said, they are waiting on that CFP application and the actual cost for the outdoor space, specifically the debenture amount is $593,000 and is somewhat still contingent based on those actual funds coming in. 

Beauchamp also said that the Civic Square Phase One addition was originally scheduled to be repaid through an internal loan from the additional MSI operating funds and some rental Revenue, but Administration is proposing to fund that through the Land Sale Reserve account essentially reducing the required tax increase. Had we not done this, Beauchamp said, those funds for that internal loan would not be able available for the operating budget and would result in a higher tax increase from what is being proposed. 

Beauchamp then said that the sewer enhancements for the Coaldale Birds of Prey facility is still Grant and Administration is still waiting on the outcome of that grant application. 

Another thing Beauchamp highlighted was that the water reservoir for $1.1 million and the debenture amount for 5.3 million. Right now, Beauchamp said, Administration is proposing a 10-year debenture. Current interest rates, Beauchamp said, are at 5.26 percent, and that would be funded through future utility revenues and offsite Levy payments. Again, Beauchamp said, that is a 75 precent off-site Levy project but we do have to front most of that cost and collect that through future developments as it occurs through town. 

Beauchamp also highlighted the Sanitary Trunk Line and said it was a 90 percent Levy project. The town, Beauchamp said, has to front the majority of the cost and collect it back in the future as future levies are collected. The sanitary trunk, Beauchamp said, is proposed as a 15-year debenture for the amount of $3.16 million over 15 years at a current interest rate of 5.46 percent. Administration previously had it at 10 years, Beauchamp said, but based on the funds Administration is currently allocating to the sanitary reserves, it was not enough to meet the annual debenture payments.

The Road Rehab program for the sanitary trunk line, Beauchamp says, is funny dependent on the R.C.M.P. costing being successful in Council’s discussion on this item. if that isn’t successful, Beauchamp said, then Administration will have to look for additional means possible debt or other sources of revenue to fill that $1 million.

Beauchamp concluded by saying that we have table the fire engine and removed from the budget for the emergency services committee meeting as discussed at the previous budget meeting. Beauchamp also stated that Administration could also provide any information on rent versus own options for Fleet Capital should Council have any questions, and he also commented that there were a lot of capital projects listed. 

Councillor Abrey requested to hear the pros, cons, benefits, and drawbacks, of purchasing vs. leasing, especially on mowers that sit for seven months out of the year. Justin MacPherson, Director of Operational Services for the Town of Coaldale, explained that for the fleet, the Town has four large fleet mowers, and for equipment, Council has seen presentations on a couple of pieces before. MacPherson used the hydraulic truck as an example to explain what happens when the Town makes presentations on large equipment to Council. McPherson says that when it comes to light trucks, the Town we present options on leasing, renting, contracting out, or purchasing, The Town, MacPherson says, heavily weighs the options. Larger municipalities, MacPherson said, do economies of scale, and one of the things Coaldale does when buying trucks is replace the ones connected to the most critical positions first and as they get replaced, they get pushed down to less critical. Councillor Chapman then spoke and said that Councillor Abrey, himself, and the previous Council deliberated the value of leasing, renting, and purchasing and the recommendation at the time was to lease. Councillor Chapman thought it was a good to continue evaluating that and MacPherson agreed, saying that very second year the Town goes over the leasing prices and rental pricing and due to rental and truck shortages in recent years, that is something that the Town will continue to evaluate as different options come to light. 

Van Rijn also floated a question from Council to MacPherson about the line painter, whether it can be used for uh streets and parking lots as well as green spaces. The unit Council proposed, Van Rijn said, is part of the budget for line painting the sports fields is a unit that is a little bit cheaper than replacing the existing vehicle and its price tag is $36,714. Russ Tanner, Director of Recreation and Community Services for the Town of Coaldale, explained that the unit the Town proposed is part of the budget for line painting for sports fields is a unit that is a little bit cheaper than replacing the existing vehicle.  The price tag, Tanner said, is its price tag is $36,714 if the Town was wanting to use it for roads and parking lots, but Tanner offered to let MacPherson speak on the value of upgrading the equipment because he has evaluated it, but it more than doubles in price and the Town doesn’t see the same value in it as far as sports fields goes. Tanner said there is paint savings up to around $13,000 a year as well as manpower, so that’s saving about $144,000 a year. MacPherson, Tanner said, has circled back and looked at the possibility and if there’s value and upgrading and doubling the price. MacPherson said that following Tanner’s presentation, they asked themselves if this is something they could utilize this and while in theory it could, most of the line painting on roads is done by a contractor in the middle of the night, as this mitigates traffic issues and it’s a good deal involving local contractors with very competitive pricing. MacPherson also said that the other line painting that the Town’s internal staff does is not line painting; it’s on the curves, on gutters, on uneven surfaces, and that’s not a practical application for this device. One thing that the device could be utilized for, MacPherson said, is parking lots, but parking lots are painted every five years at a cost of about $250 in paint per parking lot. Parking lots he identified, MacPherson said, were the future parking lot at the parking lot at the Town office, the parking lot at the rec center, the parking lot at the arena, and the museum parking lot. The device would save the town about $1,000 every five years, MacPherson said. 

Councillor Beekman questioned MacPherson’s analysis regarding the savings the painter would bring the Town and also had questions about the painter’s abilities itself, but Administration said that Macpherson’s analysis was well-detailed.