Is TSBP financial manager Humble really suggesting that all TSBP taxpayers pay for a Wiarton Sewage treatment plant expansion? (Craig Gammie 4-13)

On the April 15 TSBP council agenda is this item: Agenda item 8.1 FS10-2014 Wiarton Sewage Treatment Plant Expansion

I support sensible and controlled residential growth.   But it must be paid for by those who benefit, they being the developers and their customers. Residential growth should not be paid for by general taxpayers.

Financial Manager Michael Humble proposes to expand the Wiarton sewage treatment plant to allow residential growth. The municipal share is estimated at about 2 million dollars, but that is just an estimate, not a quotation.

In his report Michael Humble refers to a funding sources table as appendix “A”. But there is no appendix. Nevertheless it is clear that he proposes that the money for the municipal share of the sewage treatment plant expansion should come from a debenture held against general taxpayers, with those taxpayers to be paid back “later” from a pot of development charges.

A debenture on the backs of taxpayers is bad, unfair policy.

The costs should be paid for by developers, up front. Current taxpayers should not have to risk their money for sewage treatment plant expansion.

Michael Humble justifies making all taxpayers pay by saying that all taxpayers will benefit through lower taxes:

In his report he says:

 The broader Municipality will benefit from increased development activity and an enhanced assessment base for property tax purposes.

 This is rubbish. It is true that total town-wide assessment goes up with new residences. But costs and the associated town budget go up too. The only way existing taxpayers would benefit would be if the extra assessment goes up more than the new extra costs. But given history, the opposite is more likely. It is more likely that costs will go up more than assessments, leaving current taxpayers paying more. In any event, if there were a benefit to existing TSBP taxpayers, it would be very small.

With the debenture proposal existing taxpayers are being put at significant risk. They will have to make principal and interest payments on the sewers debenture until enough developers have paid sufficient development charges to pay off the debenture.   And there is a risk that there will be a recession or sudden low housing demand and the developers will simply back out, leaving the existing taxpayers on the hook for two to four million, or more by some estimates. If the real cost is 4 million and no developers come, the cost to the taxpayers will be about $270,000 per year for 25 years. That would make everyone’s tax bills about 3 per cent higher than they would otherwise be.

Michael Humble contradicts himself in his report.

On the one hand he is asking council to approve the project and approve use of a debenture held against general taxpayers (but which he hopes will be fully paid back by developers sometime “later”).

On the other hand he proposes a study for:

 The primary goal of the background study will be to derive a fair cost-sharing arrangement for the cost of growth-related studies and infrastructure investments between the existing residents and future development. (emphasis added by C. Gammie)

 So “on the other hand” the project will be funded by taxpayers, but part and only part is to be paid back by developers (that is if they come at all). This leaves general taxpayers (in Wiarton, Allenford, Oliphant, Sauble Beach, Red Bay, Howdenvale, etc.) on the hook for at least part, and maybe all, of the costs.

Then Mr. Humble says:

 “It is unreasonable and unfair to expect existing system users or taxpayers to bear the cost of growth-related expenditures on behalf of developers.”

 It seems to me that this is directly contradictory to his previous statement or statements. Do developers pay or not? Do general taxpayers pay or not? Do taxpayers take on the risk through a debenture or not?

With all the contradictions in his report it is really difficult to know what Mr. Humble is really proposing. On the other hand it is very clear how council should respond.

Council must decline to approve the capital project, and must decline to approve the financing scheme.   Staff should be sent to find a way to get developers to pay for the growth, without any taxpayer involvement. If there absolutely must be taxpayer funding, there must be a mechanism in place to ensure that the general taxpayers will be paid back, fully, with appropriate interest, and without any risk whatsoever.

Finally Farrow-Lawrence and Humble try to use scare tactics with this little gem:

 Council may decline to approve the capital project and accompanying funding commitment from the Federal and Provincial governments. Since we would then be in contravention of our funding commitment, the Municipality will be asked to repay the approx. $409,000 that has already been advanced to us. Given the extraordinary efforts on behalf of Federal and Provincial staff to secure approval for this request, we would also put ourselves at a severe disadvantage if we were to apply for funding for any project in the future.

 This is absolute rubbish. If council declines it will have no impact on future requests. Humble’s words are just scare-tactics. (In Farrow’s report she just parrots Humble’s words.)

The proposal might be especially objectionable to the residents of Colpoys Village, Mallory Beach, and Oxenden, as many draw their water from Colpoys Bay downstream of the Wiarton treatment plant effluent pipe, and so not only would they be paying for the Wiarton sewage treatment plant expansion, but also they would have to deal with the prospect of more Wiarton sewage treatment plant effluent contaminating their drinking water.

Craig

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