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Great Lakes Article:

User fees skyrocket as city struggles with upgrades
By Annette Phillips
Kingston Whig-Standard

Local News - Kingston, one of Ontario’s oldest cities, is also home to some of the country’s oldest sewer and water pipes, so when federal and provincial governments started getting out of the infrastructure financing business in the late 1980s, the city suffered more than most.

One visible and harmful result of infrastructure decay has been the deliberate dumping each year of millions of litres of raw sewage into Lake Ontario and local rivers.

The city sends the foul fluid into local waterways, most often during rainstorms, because the ancient sewer system cannot handle heavy flows. The alternative is to allow the sewage to back up into homes and businesses.

Federal industry minister Allan Rock announced two weeks ago a $25-million boost to help the city upgrade its sewage works. It was the first serious cash infusion in more than a decade.

The province, which set up a new competitive funding structure in 1999 through its SuperBuild initiative, said at one time the city would receive $12 million in infrastructure grants, but has delivered only about $800,000 so far. About $40,000 was allocated to an environmental assessment for sewer system upgrades. The rest was a recreation grant that paid for new boards and glass at city arenas.

In 1997, in an effort to manage an infrastructure backlog pegged at $270 million and growing, city council set Kingston on the "Road to Recovery." Part of the plan involved the introduction of a 10-year capital works strategy and a commitment to an annual one-per-cent tax hike for capital projects.

But the tax hike wasn’t nearly enough to maintain the kilometres of underground sewer and water pipes.

That’s how Kingston also became one of the first Ontario municipalities to take sewer and water charges off the tax base and introduce a full cost recovery program that is modelled after the city’s profit-making natural gas utility.

While residents in the east and west ends of the city had newer infrastructure, residents of the historical city core, where the pipes were the worst, had no option but to start paying the charges.

The first step was streamlining and evening out costs.

"Currently, there are 34 water and 24 sewer rate codes with up to nine sub classes in each rate code, spread across seven areas," Keech wrote in a report to council in March 2000, kicking off the political debate over water and wastewater.

Adding to the confusion is that councillors from the former suburban townships insisted that three separate sets of rates be maintained so that township residents, with their newer pipes, wouldn’t be subsidizing massive overhauling of the city core’s antique infrastructure.

"The mess was mind boggling," Keech said.

In a year-long exercise, Keech and city council combined as many rates as possible and introduced a combination of user rates and user charges like water meter hookups for residential customers.

The city also reconfigured impost fees and development charges, user fees that pay for infrastructure needed to service new growth.

Though impost charges and development fees went up, the city removed some huge infrastructure projects - like a new bridge across the Cataraqui River - from the list of things those fees paid for.

At the end of the day, the city-owned utilities company ended up with a set of complex rate calculations that include capital projects, operating costs, major projects and allow Utilities Kingston to predict for years ahead how much rates will increase or decrease.

But the user fees have been enormous. In the first five years, water and sewer rates have risen more than 60 per cent.

Without a significant influx of cash from federal and provincial governments, rates would increase another 60 per cent over the next five years, said Bert Meunier, Kingston’s chief administrative officer.

The good news is that if the city-owned Utilities Kingston is allowed to stick to its current schedule, the backlog of rotting infrastructure that plagues the city centre and keeps the municipality from spending its money on other things will be mostly eliminated by 2008, Keech said.

"Five years from now, you will see a huge difference."

Garbage and parking, both services under city operations commissioner Mark Segsworth, are other areas where Kingston has moved to wholly or partially recover some, or all, service costs through user rates.

Segsworth calls them "cost centres," meaning all the costs and revenues are handled independently from the general city finances.

Parking generates enough profit that the city has been able to undertake capital upgrades at a faster pace than it did before.

On the garbage front, council has decided that recycling is good for everyone and should be funded through tax dollars.

Garbage, council decided, should be an individual charge and next year the city will limit curbside garbage pickup to one bag per week. A bag tag, which costs $2.50, will be required for each additional bag.

Some see the bag tag as an unfair tax. But the city incurs the cost of garbage pickup, plus the expense of trucking its trash to a landfill site in Napanee.

Citizens there have been battling an expansion of the private landfill site where the city’s garbage goes now and if they are successful, Kingston could face the bigger expense of finding a new place to dump its trash.

Segsworth’s department also oversees road repair, snowplowing, transit and maintenance of the city’s fleet of vehicles.

Each of the services is working toward the cost centre approach to service delivery, Segsworth said.

Some services may not be self-sustaining, but the cost centre approach will result in a cost breakdown that lets the city compare itself with other service providers, he added.

The ultimate objective is to show the public that the city is delivering services competitively, Segsworth said.

"Maybe that will help the [garbage] generator become more accountable for what they generate," he said.

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