The decision to expand capacity at Dauphin’s sewage lagoon was an easy one. It was a project necessary for growth in the community in both the short and long term.
Where the options came in is deciding how to finance the project, currently estimated to cost around $20 million, mayor David Bosiak said, adding the City would be responsible for just under $11 million, which would be financed with a $1.4 million withdrawal from reserves and a $9.385 million debenture to be paid back 50 per cent by utility rates and 50 per cent by taxation.
That option for repayment was chosen from three scenarios the City’s finance director Scott Carr provided councillors.
The first option considered was using utility rates to repay debt. In his analysis, Carr indicated that while this is the most equitable way to deal with the debt, the Public Utilities Board (PUB) indicated that sewer rates would more than double and other municipalities have had challenges sustaining debt repayments due to a trending decrease in water usage. Additionally, this method requires Municipal Board and PUB approval, which may delay the process, and it could place financial hardship on lower income families.
A second option was the use of a local improvement debt on taxation which, according to Carr, would be the simplest and quickest choice as the debt would be repaid by all properties in Dauphin. The choice, however, would result in a mill rate increase of approximately 10 per cent beginning in 2027.
The option chosen by council, Carr said, strikes a balance between placing the burden on taxation and the utility, which recognizes the project is needed for future economic growth and for existing utility users. On the downside, the process will be complicated and cumbersome and may still place financial hardship on utility users as sewer rates would still have an increase of 50 per cent.
The estimates being used in current plans are based on a similar project recently completed in The Pas, which went through the same ups and downs as Dauphin has experienced.
Both projects, he said, were originally budgeted to cost between $12 million and $13 million.
“Our whole funding formula is based on that,” Bosiak said.
“So over the couple of years that we were waiting to get approval, obviously costs went up. Then we got approval and we were in the middle of COVID, so that slowed it down a teeny bit more.”
The Pas’ project came at around the $17 million or $18 million mark, Bosiak said, and there is still a chance Dauphin’s project will come in under projections.
“(The estimate) is in between what’s expected and a worst case number. So we’re not lowballing it and then going ‘oh gee we’re short $2 million, now what are we going to do?’” Bosiak said, adding he is encouraged that costs for some of the front end work already completed have been less than expected.
“We were pleasantly surprised that the amount of money that we had to spend last year on the desludging and the environmental, the upfront stuff, came in a little bit less than we had estimated two years previous.”
The federal and provincial governments have committed a total of $9,135,000 to the project. That contribution agreement was reached when the project was estimated to cost at a little more than $12 million.
While there is no chance a new tripartate agreement will be negotiated, Bosiak is still hopeful there may still be additional support from the other two levels of government.
“We’ve been asking the province for help and we asked the feds for help. So far we haven’t had either of the other senior levels of government saying ‘yeah we’re going to throw some more money at you.’,” he said.
“A former federal politician told me that there’s always corners to be swept out at the end of the fiscal year, if your timing’s right. So that’s what we’re hoping, that somebody somewhere, whether it’s the feds or the province, has some money left over in a specific program that’s related to this.”
But even if that does not happen, Bosiak is confident in the council’s decisions on the project.
“We’ve had some pretty good discussions about this. Scott’s been really good at laying it all out for us and this Council right now is feeling sure of itself. That we’re making the right decisions from an investment point of view,” Bosiak said.
“Part of our philosophy right now with council is we’re willing to incur some of this debt, because we’re viewing it as an investment rather than an expense. It will lead to other things. We are looking very positively at the increase in assessment that’s occurred on the south end because of that development, so we’re going to have a little bit more taxes coming in because of that over time which helps cover this.”
The City also has to be ready for any development opportunities which come its way. Top of mind for Bosiak is the Community Justice Centre currently in the planning phase.
“We have got to be ready for the new justice center, having this lagoon project done, and not be a delay for that project,” Bosiak said.
“The last thing we want to do is have something not happening in town that lets the province say ‘we’re going to wait on this Dauphin thing.’ Because that happened before and that’s why we don’t have it now.
“I hate higher taxes and I hate having debt, but it’s for a good reason.”
