Chestermere Utilities Incorporated (CUI), Board’s recommendations on dissolving the utility company were presented during a Special Meeting of Council on June 11.
“In essence, the process was to fully understand CUI operations, the finances, the projects, and the practices,” said Chestermere Chief Administrative Officer (CAO), Bernie Morton.
The city explored partnerships with third parties in all aspects of CUI. We engaged in discussions with the province, explored debt, funding sources, and governance. We explored what could be done in-house, what needed to be outsourced. We looked at obligations to existing staff, contractors, and the community, Morton said.
The CUI Board recommended that the city handle inquiries regarding water services, wastewater, storm water, curbside garbage, recycling, organics pickup, and utility billing, said CUI Transitional Manager Rick Quail.
He added, there was also a recommendation that the city oversee and manage storm water collection, and treatment system, solid waste collection and processing services for garbage, recycling, and organics, along with assuming responsibility for all engineering support functions, including the recycling depot.
The city will also provide billing and collection services for water, waste water, storm water, and solid waste services.
“The estimate on the financial impact associated with this, if there is a third party as a sub-contractor the cost would be an increase of $382,383, if the city is the sub-contractor the cost would be a decrease of $292,191,” Quail said.
There are currently two realistic options for the future of CUI, which is municipalization, or a hybrid, said Richard Jones from McMillian LLP Legal Counsel.
“Municipalization would involve the return of all the CUI utility services to the city. It would be for the city to determine insourcing and outsourcing services,” Jones said.
He added advantages for municipalization include increased accountability, more transparency, direct control over the provision of services, and direct control over rates.
Disadvantages include the addition of CUI debt to the city’s debt limit, the potential to exceed the debt limit might restrict the city’s ability to commence new capital projects in a timely manner, and rate-setting might become politicized.
The hybrid option would keep a shell of CUI for the purpose of managing the scope of debt, Jones said.
He added advantages of the hybrid include having control over the setting of rates, council would sit as board members, CUI would not incur new debt, old debt would remain in CUI and will be paid down as CUI receives revenue.
However, bookkeeping, audited financial statements, single employee and related costs, corporate maintenance, and internal costs to the city in maintaining a relationship with CUI are potential disadvantages.
Despite hearing the information presented to council, Chestermere resident Al Kersch felt as though there were a lot of details missing from the presentation.
“I don’t feel comfortable, if I had to make a decision now, I wouldn’t know what to do,” Kersch said.
He added that as a Chestermere citizen, he is concerned that the city would hit the maximum debt limit.
“What my understanding is, is that we’re going to see tax increases, or we’re going to see a significant addition in non-residential tax revenue to keep the debt limit down,” Kersch said.
Kersch wasn’t the only resident sitting in the Council Chambers gallery who was concerned with the debt limit.
“What was most significant to me is the complexity of what council is try to do with CUI dominated by debt,” said Robert Inkpen.
“It’s very clear to me that we have a debt problem in this city. If Chestermere did not have a debt problem, the dissolution of CUI would have been done very quickly, he added.
Although council asked employees to examine and review options recognizing council’s direction in reducing utility rates, Inkpen was concerned that there wasn’t an examination of the billing structure presented.
“People are concerned about the total amount they are paying, but 66.67 per cent of our bill is a fixed cost, and only a third is based on usage,” Inkpen said.
“I’m sure there are many people who wonder if that’s fair,” he said.
For Inkpen, the most unfair aspect of the billing structure is the almost doubling for water when a resident exceeds the 18 cubic meters allotted a month.
“I’m a family of two, and I have trouble staying under that limit. I can’t imagine what a family of four, or six are facing because they have to be using more than 18 cubic meters. I don’t believe that’s the average usage per resident.”
For additional information regarding CUI, please visit the City of Chestermere website at https://www.chestermere.ca/