To help cover a funding shortfall for the community’s new water treatment plant, the Union Bay Improvement District (UBID) board is looking toward future properties for funds.
The move is aimed at helping to fully restore reserves after it became known the community’s new water treatment plant had cost more than expected.
“The lack of clarity about how the plant was funded has now come to light,” Chair Ian Munro said at the May 20 board meeting. “I don’t feel good about leaving the reserves where they’re at.”
At the time the plant opened a year ago, a news release indicated the project cost $4.1 million, but since then it became known the cost was closer to $5.2 million.
“The biggest mistake that was made in the last three or four years was they should’ve been raising rates and parcel taxes, so that we didn’t find ourselves in this situation,” trustee Eve Gaudreau said.
The board passed a motion at the April 15 meeting, just prior to the final annual general meeting for UBID, to look into the reasons why this happened. The board asked consultant Brian Clemens prepare the report, which was released for the May 20 meeting, following interviews of trustees, staff and interim administrator Gary Nason.
“He’s made best efforts to set forward the sequence of events,” Nason said. “The most important section, to my mind, is moving forward.”
In effect, the board had been borrowing from its reserves, which were usually augmented by operating surpluses. Three initial contracts for early work such as engineering, equipment and site preparation, however, were awarded without any funding source identified at the time. These projects were approved in 2017.
Clemens identified factors such as a lack of coordination and communication. For example, the administrator was preparing budgets without input from the financial administrator. As well, some trustees said they were not being provided with up-to-date information.
The reserves are set aside to fund regular infrastructure rather than major capital projects, like the water treatment plant, which, the report notes, has been the largest project for UBID.
The report also points to steps that could be taken to cover costs of the plant, such as raising revenue through the rates and connection charges.
Another source of note in the report is gaining revenue through charges on so-called B parcels, which refer to the parcels not currently connected to the water system. The board is looking at adding these parcels but had not determined the financial implications.
“We haven’t done all of that work yet,” Munro said.
He estimates at least 50 B parcels could cover some debt and a $35,000 deficit, along with costs for office and washroom space that are being added to the plant. The move will allow them to replace funds taken from operating surplus reserves, which usually cover infrastructure replacement of the regular water distribution system.
The motion the UBID board passed was to ask the interim administrator to inform the Comox Valley Regional District of the UBID’s board desire to add the B parcels to the 2022 tax roll and that additional revenue derived from this move go toward funding for additional borrowing that can start replenishing the reserve funds.
Underlying all of this is the fact that UBID will hand over its services to the CVRD on July 1. As part of the transition process, the current board is providing some direction to the CVRD for a long-term capital plan for Union Bay.