Phase 3 of the water line north project to Fawcett is being delayed over concerns that additional grant funding won’t come in.
Westlock Regional Water Service Commission chairman Clem Fagnan said the $6.2 million provincial grant the commission received won’t be enough to cover the latest estimate of $9.2 million.
And in order for the province to revisit the grant and cough up more money, the project has to be completed first.
“Well, we don’t have the money to front end that, we have to borrow it,” Fagnan said. “For financial prudence, me as the chairman, I’m not prepared to tell the members we’re going to borrow this money. We are financially responsible if we do something without ministerial approval, and I don’t have that kind of money and I don’t think any of the board members have that kind of money.”
The commission originally estimated the project to cost $7.1 million based on 2012 figures but after tendering out the project in 2017, that estimate jumped $2 million.
The Water For Life grant covers 90 per cent of the project, but for the 2012 estimate.
Originally the province said that extra grant money would be reviewed after the tender costs came in, but in October, contrary to what was said before, the commission was told additional funding would be reviewed after the waterline is finished.
Fagnan said he would be in favour of delaying the waterline to get the finances in order, as several things need to happen before the project can go ahead.
“My suggestion is going to be we wait unless we can get approval in a short time, which has never happened before,” he said. “It takes at least two months and that’s a quick response. A slow response is six months to a year.”
In the meantime, the first step is for the commission to review its business plan, including the business case for the line, and figure out who would pay to supply the water and at what price.
Then the commission needs ministerial approval to exceed its $3.3 million debt limit. The minister has already approved upping the limit to $11 million. Fagnan said the debt limit would have to be raised another $500,000 to go through with the project.
After that, the commission has to get written confirmation from the province for another $1.6 million grant, as well as written confirmation for a time extension on the March 2018 completion date.
“Then you got to address who’s going to pay the capital costs for this line,” Fagnan added. “The principle ‘the benefactor bears the brunt of the cost’ needs to be applied… (The benefactors) are Jarvie, Fawcett, Pibroch, Dapp; county people they need water. They’re not actually carrying the brunt of the cost.”
Although the commission is paying for the project, 93 per cent of its revenue comes from town taxpayers since revenue is based on the sale of water and the town is the biggest user. Once the waterline is completed, Fagnan said the tax burden for the town would only drop to 92 per cent.
“Hamlets only have, the total is 307, but we’re doing the same thing in Vimy, we’re doing the same thing in Pickardville and Busby,” he said. “Not only that, the county is saving a pile of money because they don’t have to operate their treatment plant anymore in those places.”
The water commission’s mandate is to supply water to the region, but due to the cost of transmitting water to all the rural communities, the lines were completed in phases, with Fawcett being the final phase. The town was part of the first phase and the second phase included the southern portion of the county.
The commission also has to pay for other projects, like the town’s water reservoir and the water treatment plant roof repair, out of its capital and operating reserves, which each contain between $300,000 and $400,000 — not nearly enough for the waterline.
In any case, Westlock County councillors were in favour of going ahead with the line at a Nov. 14 council meeting.
“It’s a huge thing for our county,” said commission member and Coun. Jared Stitsen. “I don’t know what all our options are but supplying water to our northern communities is very, very important. The Jarvie station requires a bunch of upgrades as well if this doesn’t go through. Once it’s set into place, it’s done and it’s going to be awesome. It’ll continue for years and years to supply that end, otherwise we’re kind of at that spot where the grants are there and if they’re not going to be used, it may be hard to get them back again.”
Coun. Dennis Primeau, who also sits on the commission, said he wasn’t in favour of delaying the line.
“We’ve already done some work on it, engineering work and that, and it’s only good for so long,” he noted. “If it’s been sitting there for two or three years, you have to redo it all, so this will be extremely important. Basically everybody is on board except for the Town of Westlock.”
Primeau added that short-term financing may be required and that “it’s really not an issue, but they’ve made it an issue.”
“Westlock County will have to decide what actions they have to take if this is turned down,” he continued. “It’s quite possible this could happen soon, possibly at the next meeting, or the county will have to appeal. There’s no real reason to turn the waterline down. It costs about five cents a cubic (metre) to get that line done and we’d probably lose more money than that in the operational side.”
While Fagnan acknowledged that some members want to move ahead, he heeded the Municipal Government Act, which states commission members are liable for the amount borrowed unless there is ministerial approval.
“Some members might say we can do this, we can do that; we can’t do that,” Fagnan said. “The MGA tells us we can’t do that because we are financially responsible if something goes wrong.”
Fagnan also wondered if the extra funds are a sure thing since he heard the province at both the AUMA and AAMDC conferences this past month advising municipalities to tighten their belts.
“If we’re tightening our belts, are we going to get approval after we do this job and borrow money? We’re not sure and I’m not prepared to bet,” he said.
Speaking as the commission chair and not as a town councillor, he suggested the county upfront the costs.
“I don’t want to get it mixed up that the town doesn’t want the water to go to Fawcett, because we as commission members are on the water commission for the members and we would like to see the water go to Fawcett,” he said. “But I don’t think it’s prudent for us to go ahead without having the financial agreement, the ministerial agreement, the money in the bank and ready to go. That just doesn’t work for me and the other members should be thinking about that too.”
The water commission will decide what happens next Dec. 12
