Halifax property developers fighting back over proposed water rate increases

Dark clouds are gathering over proposed changes to the City of Halifax’s water rate pricing and stormwater management program. A group of Halifax property developers has asked a Toronto association to lobby on its behalf over the proposed changes.
The Real Property Association of Canada (REALpac) earlier this year issued a letter protesting the rate changes, which are currently before the Nova Scotia Utility and Review Board. The proposed changes include a 52 per cent increase in consumption charges for sewer and water and a 500 to 1,000 per cent increase in sprinkler charges.
“REALpac is acutely aware of public utilities' need to sustainably fund its infrastructure; however, we are against sudden and significant increases in rates that can lead to rate shock,” wrote the letter’s author, Ryan Eickmeier, director of government relations and policy for REALpac.
Eickmeier has since left REALpac. His replacement could not immediately be reached for comment.
Representing “key cogs”
REALpac says it’s representing a number of member companies, which are “key cogs” in the Nova Scotia economy. According to REALpac, the companies occupy two head offices, 16 regional offices and own a portfolio of 259 buildings spread across 42 municipalities.
The lobby calls the proposed rate changes an “extreme” increase and argues “it raises the cost of doing business in an economy that is already fragile.”
In its five-year business plan, Halifax Water notes that the current water, wastewater and stormwater rates aren’t sufficient to meet the capital needs for sustainable infrastructure identified in its integrated resource plan. Over the next five years, Halifax Water plans to file three rate applications.
The utility argues that such rate applications aren’t out of the ordinary.
“Unfortunately, wastewater and stormwater assets have been underfunded throughout North America, and other municipalities/utilities have made, or are making, inroads to increase rates,” Halifax Water notes in its business plan. “In Canada, the cities of Toronto and Ottawa, and EPCOR in Edmonton are well on their way to sustainable funding through increased rates.”
Inherited infrastructure debt
Halifax Water points out that it inherited a significant infrastructure debt from the Halifax Regional Municipality when it assumed responsibility for wastewater and stormwater assets in 2007. The utility’s most recent annual report showed Halifax Water had long-term debt of $133 million as of March 31, 2012.
And while the utility says the past five years have been challenging, it says it faces more demands both now and in the future. These include upgrading deteriorating infrastructure and also mitigating and adapting changing climatic conditions.
Nonetheless, REALpac isn’t buying Halifax Water’s proposals. Instead, the lobby group recommends Halifax Water consider debenture financing, capital funding reductions and/or deferrals, and long-term rate increases at a significantly reduced rate than currently proposed.
“REALpac believes that a combination of these programs would allow Halifax Water to significantly reduce its current proposed rate, fund its capital needs, and maintain a sound economic environment for local property owners and businesses.”
The other point of contention is the proposed stormwater management program.
REALpac is objecting to Halifax Water’s intention to focus on raising rates based on volume from so-called impervious areas, or hard-surfaced areas such as concrete that don’t let rainwater or snow permeate the ground and instead directs the run-off into the Halifax stormwater system.
James Campbell, spokesperson with Halifax Water, says: “We have to deal with the stormwater that runs into our system and there are costs for us to do that and we have to recover those costs.”
But REALpac calls the stormwater management program proposal simplistic and points out that an impervious area charge merely accounts for the run-off attributed to hard surface areas within the City of Halifax. Instead, the lobby recommends an “user-pay” model that would accurately measure each individual property’s contribution to storm water run-off.
Other cities currently using the “run-off co-efficient model” include Saskatoon and Colorado's Boulder and Fort Collins. The run-off co-efficient model takes into account the percentage of water that doesn’t permeate the ground and evaporates before entering the stormwater infrastructure.
12 points of objection
REALpac raises 12 points of objection in all to Halifax Water’s stormwater proposal. The lobby points out that the changes in billing would shift stormwater costs from residential to non-residential properties, particularly horizontal properties with large parking areas such as shopping centres and big box retailers.
The lobby argues that a major source of stormwater run-off comes from common municipal roads, sidewalks, buildings and parking facilities. The shift to non-residential property would allocate a disproportionate share of those common-use facilities to commercial property owners.
At the urging of the Nova Scotia Utility and Review Board, Halifax Water developed a cost-to-service study in 2011-12 which Campbell considers the top policy in its rate design manual.
“Our position is the folks who are receiving the benefit of the service should pay for the cost of that service. I understand some folks might not like our calculations, but we think this is the fairest way to do it.”
Added Campbell: “Our position would be that those who are actually generating the stormwater are the ones who should be responsible for the cost of that. If you pave an area and that water or snow melt is forced to run into the Halifax stormwater, we believe you should be the one who pays for that service.”



A multiple award-winning reporter, writer and editor for more than 25 years, Charles Mandel most recently worked as the National Observer's climate change reporter. He is a former Atlantic correspondent…

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A multiple award-winning reporter, writer and editor for more than 25 years, Charles Mandel most recently worked as the National Observer's climate change reporter. He is a former Atlantic correspondent…

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