Why
the Water and Sewer Rates are Doubling
The
decision by City Council to double water and sewer rates
has made many people angry. Understandably they aren't
enthusiastic about paying the increased rates, but politicians
and City staff argue that there is no choice; the pipes
must be fixed. Thus anyone who criticizes the increases
is labeled as refusing to face up to reality — we
are in a mess, we must pay to get out of it, end of discussion.
This is accompanied by the threat that if we don't double
the rates in the next five years, we'll have to triple
them in the next 10 years.
But
it's not quite that simple. How did we get into this mess?
Why were our pipes allowed to deteriorate to such a terrible
state? We are told it's because the water and sewer rates
have been too low for a long time. In effect, WE are to
blame because we didn't pay enough, so we shouldn't complain
now that we're forced to catch up.
A
couple of facts suggest this isn't the complete answer.
In the first place, while our existing rates are lower
than some cities, they are higher than others, including
those in Toronto. Secondly, the doubled rates will be
at least one-third higher than those of ANY other city.
Average rates might be acceptable, but why should ours
be the highest around?
We
don't have access to all the facts, but we know enough
to conclude that the skyrocketing water and sewer rates
are partly the result of inappropriate decisions of our
local government including:
Let's
start with the last item. The crisis in the water and
sewer pipes was presented to Regional Council in December
1996. Six years later we're facing a doubling of our rates
over the next five years. But remember the threat that
if the increases are delayed, then tripling will be required.
This refers to a City staff explanation also provided
continuously since 1996. Staff say that if minor maintenance
costs $1 and is not carried out, then major maintenance
will cost $4. If the major maintenance is missed, then
rehabilitation will cost $50 and if that isn't done, then
replacement will cost $200.
Thus,
any delay in spending dramatically increases the final
bill. Clearly delays have already taken place. But obviously
the same problem occurs if money allocated in the past
for water and sewer maintenance was spent on something
else. And that has definitely been happening in Hamilton-Wentworth
for a long time. Here is some of the evidence.
A
December 1996 report made to Regional Council by its senior
staff stated: "Maintenance, rehabilitation and replacement
of existing infrastructure has been deferred as funding
has been redirected to special projects such as the Freeway..."
This was followed in February 1997 by: "Funding for
maintenance has steadily declined as the contribution
to special projects has risen. As a result, maintenance
for the water, sewer and roads programs is now significantly
below optimum levels." So money that should have
been used for pipes went to pay for other special projects,
instead of honestly explaining to the public that if they
wanted a new expressway they would have to pay for it.
As we know this deception continues to this day.
In
the 1996 Regional Budget we find that it was "deemed
necessary to include the annual debt charge on prior development
charge shortfall borrowings in the general levy and the
water and sewer rates". The borrowings were $53.4
million, repaid at $7 million a year. About $2.6 million
of this was added to the water and sewer rates. So money
that should have been used to fix our pipes was instead
used to pay the debts from urban sprawl. Today, development
charges continue to be far lower than the real cost of
servicing new development.
Between
1971 and 1996, the population of old Hamilton rose slightly
from 309,000 to 322,000. In the same period, the population
of the older parts of the city north of Mohawk Road FELL
by over 60,000 souls. Massive new suburbs were built south
of Mohawk, as well as in Stoney Creek, Ancaster and Waterdown.
All this new growth required new pipes, even though there
was virtually no net growth in the number of taxpayers.
Therefore a substantial part of the water and sewer budget
went to build new pipes, while allowing existing ones
to deteriorate. Each time this must have involved someone
asking: "should we service new growth or fix the
old pipes?" Since the wrong decision kept being made,
the total length of pipes that now has to be maintained
has dramatically increased.
We
know the same thing happened with regards to roads. Staff
say we are now $300 million behind in maintenance of existing
roads and must increase the annual budget for roads by
$45 million a year ($338 per average homeowner). Meanwhile,
the claim is made that another new expressway is affordable.
The
sprawl development pattern included hundreds of new commercial
buildings, from strip malls to big box complexes. Of course,
this was accompanied by the devastation of older commercial
areas like Barton, Ottawa, Kenilworth, downtown Hamilton,
and the older cores of Stoney Creek, Dundas and Ancaster.
By last summer we had over 4000 vacant commercial units
in the new Hamilton. The pipes still go to these empty
units but we can't collect water and sewer rates from
them. At least 10% of the remaining businesses are behind
in their taxes. More new commercial growth will just shut
down more older businesses, but that apparently hasn't
sunk in with our decision-makers.
In
short, all these mistakes are being repeated. The mayor
says the answer is more growth, including 1400 acres of
development near the Airport and a massive residential
and commercial "Meadowlands East" complex —
all of it requiring more new pipes. Will our increased
rates be used for this instead of fixing the existing
pipes? There's also a plan to double City debt over the
next three years, and to build a $200 million expressway
whose maintenance and operational costs are unknown and
have not been included in the official cost estimates.
We're told we got into the water and sewer mess because
we forgot about maintenance costs. The same principles
apply to expressways.
A
significant part of the water and sewer rate increases
could have been avoided. They weren't, and the majority
of the current City Council is making exactly the same
mistakes again.
