Another $39 million could be added to Moose Jaw’s debt level over the next 25 years due to upgrades to the Buffalo Pound Water Treatment Plant, a city councillor has calculated.
The Buffalo Pound Water Treatment Plant (BPWTP) Corporation is currently engaged in a plant renewal project to help it meet its mandate to provide safe water. The corporation has indicated it has been nearly 30 years since the plant was last upgraded, while major components are now at, or near, the end of their lifecycle.
The plant renewal project encompasses 30 smaller projects that have been identified since 2005 and reviewed in technical studies. The project’s cost range is $127.2 million to $224 million.
The corporation is a non-profit organization responsible for the operation and maintenance of the water treatment plant. The cities of Regina and Moose Jaw jointly own the corporation, with Regina having a 74-per-cent stake and Moose Jaw possessing a 26-per-cent stake.
The corporation has already committed $20 million to the project, while the hope is to acquire federal funding of at least $50 million, explained general manager Ryan Johnson. That $70 million would lower the project cost to $150 million.
The corporation applied in April to the Investing in Canada Infrastructure Program (ICIP) for the maximum eligible amount of $215.4 million.
“Everything hinges on grant funding,” he told city council during its Nov. 25 regular meeting as part of a semi-annual update, where he indicated the treatment plant has had a great 2019.
Since the City of Moose Jaw consumes 17 per cent of all water from the plant, that means it would have to pay $25 million on that $150 million cost, noted Coun. Brian Swanson.
That amount would be paid back over 25 years through principle interest payments, replied Johnson. While Regina and Moose Jaw own the plant, Moose Jaw would pay only 17 per cent of the actual costs based on actual usage of water.
“So we looking at $39 million added to city’s debt limit,” Swanson said. “We’re at ($60) million now (in debt). (Therefore), we’re projected with Buffalo Pound to add another $15 million in the five-year plan.”
Sighing, Swanson sat back in his seat.
The plan is to use all the capital reserves – about $53.7 million – to fund the project that are not already allocated to the project, Johnson said. The rest of it would be offset by the loan.
Another area that caught Swanson’s eye was the proposed 2020 budget for the water treatment plant. In his report, Johnson noted there would be a water rate increase of zero and a capital water rate increase of 14.36 per cent, for an overall “blended rate” increase of 4.79 per cent over 2019.
The corporation will continue to charge Regina and Moose Jaw $355 per megalitre (ML) for a water rate. The capital water rate will increase to $215 per megalitre next year from $180 per ML.
One megalitre is equal to one million litres.
That roughly five-per-cent increase would translate into an increase of less than one per cent for Moose Jaw’s water utility, finance director Brian Acker told Swanson. But production costs are only one component; other costs include water distribution.
As part of the plant renewal project, the building will be sized for a total capacity of 250 ML. This would allow for growth and ensure the plant can reach its next renewal, which is anticipated in 2050. Full completion of the project is expected to occur by early 2021.
Council then voted to receive and file the report.
The next regular council meeting is Monday, Dec. 9.
