The fast growing community of Sun Peaks has been attracting new residents, more guests and additional real estate development. But what impact has that had on the local water aquifer? Here’s the second in a series of four in-depth articles regarding the challenges of the water situation in Sun Peaks, made possible only by reader contributions.
The first story in this series can be read here.
Municipality sees new, $6.5 million projects crucial to SPMRM’s continued growth and current needs
This summer, Sun Peaks Mountain Resort Municipality (SPMRM) will undertake its most significant water utility project to date, having gained the community’s consent to move forward with a new $6.5 million water reservoir project that will sit between Tod Mountain and the top of the Sundance Chair.
When fully built, the project will effectively double the community’s potable water supply, which has come under increasing stress over the last several years.
A 2018 study concluded the community has been overdrawing from its groundwater system—which has an estimated sustainable aquifer yield of 180,000 cubic litres a year—since 2013.
Public approval for the reservoir project was gained through an alternative approval process (AAP), a mechanism that invites the public to register opposition to a proposal. SPMRM received no objections to the proposal; if more than 150 people objected, the municipality would have been forced to conduct a referendum.
Along with a $1.56 million loan for wastewater system improvements that was included in a separate AAP, the loan constitutes the largest borrowing figure that the SPMRM has taken out since it was incorporated in 2010.
SPMRM council said the investment is a necessary step forward for the community. Having taken over the water and wastewater utilities from Sun Peaks Resort LLP (SPR) in 2018, it has had to act quickly, making significant investments to keep water flowing and ensure there is enough capacity for future growth.
SPMRM is already supplementing the groundwater supply with surface water thanks to an agreement with SPR, which allows the municipality to source surface water from one of the resort’s snowmaking reservoirs.
Water from the SPR snowmaking reservoir, which sits in the same area as where the new reservoir will be built, is treated at a treatment station that sits at the top of the platter, which was built with a $1.4 million loan undertaken by SPMRM in 2018.
That project was built as an emergency measure, as there was mounting concern that the community’s groundwater system could fail to produce enough water for the winter season.
While SPMRM will be able to use this building to process the water from its new reservoir, mayor Al Raine said that a new water line will be required to transport water from the new reservoir to the main valley distribution system. The current snowmaking line is nearly 20 years old, and SPR believes it will need replacement in the near future, explained Raine.
A new supply line for domestic water presents another significant cost on the horizon. The municipality currently has a federal/provincial government grant application submitted, worth $4.2 million, to cover its cost.
According to Rob Bremner, chief administrative officer of SPMRM, the new reservoir project should satisfy the community’s needs for the next 10 to 15 years. It will also allow the community to stack up development cost charges (DCCs) that can be used to further increase its capacity, he added.
“Let’s face it, in January and February of the past couple of years, the village has been as full as it probably can be,” said Bremner, noting the growing strain on the community’s water utility. “We were able to meet those demands, but I mean, obviously, just meeting the demands and not having a great deal of flexibility [is not ideal].”
The reservoir project will ultimately double SPMRM’s water capacity, adding 200,000 to 250,000 cubic metres of surface water a year. The municipality already has three three main wells that are used to source—at the Village Core, Fairways Dr., and the East Village. The Burfield area also has its own surface water reservoir.
In its AAP for the reservoir loan, SPMRM stated the loan will be paid back through a combination of DCCs, making up 75 per cent, and utility user charges paid by all property owners will make up the remainder.
Raine said he is confident there will be enough development going forward to hit the DCC targets.
“Had we not had COVID-19, we may have been able to [repay] that in the next two or three, [or] four years,” said Raine, adding that that timeline to hit it will likely now be extended.
In a clarifying email, SPMRM stated if there is a shortfall of DCC’s, the municipality will use surplus reserve account funds to repay the loans. Then, as DCCs come in, these funds will be used to repay any funds loaned to the utilities from this account.
The significant financial costs associated with building out the community’s water utility has led some to question why SPMRM assumed control of the water and wastewater utility in 2018.
According to a public presentation by KPMG, an accounting firm that was hired to spell out the advantages and disadvantages of the transfer of the utilities, the process was triggered after the Comptroller of Water Rights—a provincial agency charged with overseeing the province’s privately owned water utilities—mandated SPR to establish a capital reserve of $80,000 annually for water. (SPMRM was unable to share KPMG study in full, citing “extensive private information” related to SPR.)
As advantages, the KPMG study identified the municipality would have access to grant money and the money it saved in reserves would not be taxable, whereas if the water utility remained under SPR it would be. The study also noted that SPMRM could borrow money at preferential rates through the Municipal Finance Authority of BC, and that municipalities could introduce DCCs as a way to fund infrastructure projects and upgrades.
When it comes to disadvantages, the KPMG study noted numerous wastewater assets were being operated “beyond their estimated service life,” a lack of reserve funds upon acquisition, and the expanded administrative costs and responsibilities. The acquisition of the water and wastewater utilities effectively doubled SPMRM’s expenditures and staffing levels.
The presentation did not identify concerns about the capacity of the aquifer or the need to make significant investments in surface water infrastructure. According to Raine, new hydrology studies were done after the municipality purchased the utility, and these concluded that previous estimates of the aquifers capacity were too optimistic.
Raine addressed the issue in his comments in SPMRM’s 2019 annual report.
“The ground aquifer supply system has proven to be below the original estimates and our only realistic supply option is to supplement with surface water,” wrote Raine. “Gathering and treating surface water is a more complex and expensive process.”
SPMRM ended up paying a nominal fee of $10 for the water and wastewater infrastructure, while also taking over a $400,000 debt associated with SPR’s construction of a composting facility associated with the wastewater treatment plant.
Reflecting on the transfer, Raine said that taking over the utilities was the right move for the municipality, as the savings it gains via grants and tax-free status (it doesn’t have to pay federal tax on its reserve funds) are passed on to homeowners.
“The main motivation [for the transfer] was that as a private utility, the utility was not eligible for infrastructure grant programs or borrowing through the Municipal Finance Authority,” added Raine. “The Municipality is able to borrow at interest rates well below the interest rates applicable to private utilities. In addition, private utilities also are permitted to have a ‘return of investment percentage’ built into their costs, a cost that is not applicable for municipal owned utilities.”
While SPMRM did win a grant for $2 million for its wastewater utility in 2018, it has so far not been successful in winning any for its water infrastructure.
“The way grants work, you are not going to be successful every time,” reflected Raine. “There are a lot of communities lined up.”
Raine said that SPMRM will have to “bite the bullet” when it comes to the reservoir project, given its importance to serving the community’s current needs and those of future development.
The KPMG study provided some insights into how SPMRM’s utility costs stack up to other communities. Citing figures from 2013, it stated water charges for a single-family home with no suite were about $1,017.81 per year. That’s higher than other municipalities, including Whistler ($279) and Revelstoke ($488.64), but lower than Silver Star at $2,104.18 and Dawson Creek ($1,419.72).
“I mean, it’s hard to give averages, but generally, people are paying a couple of thousand dollars a year for both services,” said Raine, speaking of present-day costs for both sewer and water. Raine added that’s significantly higher than Whistler, where a single family home would pay about $500 or $600 a year.
That difference, he said, is due to the fact that SPMRM has a smaller population base and hasn’t obtained nearly as many grants as Whistler.
“Whistler’s costs are much lower as their system was built many years ago and the original start-up costs were financed by 90 per cent grant funding and they have been collecting utility DCCs for many years,” said Raine. “But our costs aren’t out of line with say, what’s happening in Big White, where they also have private utility providing water and wastewater treatment.
“Our approach has been to make sure that the utility costs are 100 per cent covered by user fees and not subsidized by property taxes, many municipalities do cover a portion of utility costs with property tax funds thus comparisons are not always reflected of exact costs.”
Peter Coxon, a water engineer who has worked on Sun Peaks utility for the past 20 years, said it’s important to note that all aquifers have their limits, and that the challenges facing those in the valley became clear in the past five or six years, with the last couple of wells that were drilled (next to The Burfield, and then by the golf course) not producing as much as has been predicted.
“I always explain to people that understanding groundwater is as much of an art as it is a science,” he said. “In the last four or five years, we’ve been sort of acutely aware that the aquifer is perhaps more limited than we thought.”
Coxon added it’s important to note that all groundwater systems have limits, and that SPMRM’s is not different.
“I think it was fairly common knowledge that groundwater and sewage treatment plants have limited capacity,” he said, when asked about the transfer. “I mean, everything has limits. So I’d be surprised if they didn’t understand that there were limits.”
Raine noted that water engineers did note that there might be issues regarding the ground estimate prior to the transfer.
“Estimating water flows in the ground is not a precise science and it is only after a few years of taking water that hydrologists can establish the actual recharge rate of the aquifer,” said Raine. “Recharge rates also vary over a number years so estimating capacity is truly hit and miss. This concern was not deemed to be a reason to not proceed with the purchase, because if there was a shortage, the private utility would have had to proceed with the expansion of water sources, without any chance for an infrastructure grant or lower borrowing rate and all and any additional costs would be paid by our residents through user charges.
“A private utility would have higher costs and those costs are borne by the users of the system.”
Coxon said that, through no fault of their own, perhaps council did not fully grasp the complexity of taking over two major utilities.
“I guess what I’m trying to say is they might not have understood, fully understood, the complexity of what’s required to run it, but that’s no reflection on the municipality. That’s just the reality of taking on a new business, and new challenges.”
Going forward, Coxon said the municipality will carry out an important master plan for its water and wastewater utilities. The plan will provide an important roadmap for the future, accounting for everything from where pump stations can be placed to where the growth in the community will be.
It will also allow council to create a plan that can be used to guide it with regards to water and wastewater for the next 20 to 25 years, said Coxon.
“It helps them to start to put the pieces of the puzzle together.”