As we were all made aware during last December’s State of Local Emergency, much of our infrastructure is in a critical failure state. We are now pushing forward to replace our infrastructure that has the highest likelihood and highest risk of failure – with a first 26 km of water and sewer mains identified as our main priority for replacement. To contribute a portion of the costs of these critical replacements, the City is proposing to undertake two 30 year loans.
Why does the City have to borrow to complete the work? In the Spring the Province announced that Prince Rupert would receive an unprecedented $65 Million towards replacing water infrastructure. This is a major achievement, but to get the 26 km replaced, current estimates are that it will cost over $200 Million. To get us closer to the finish line, we’re currently seeking additional funds from the Federal Government. As a part of the application for funds, the City must also contribute a portion of project costs - which is why the City is now proposing borrowing of $40 Million for sewer and $5 million for design and construction work to cover our portion of anticipated costs.
What is the opportunity for public input? In order to borrow funds of that magnitude, we need to get what’s called ‘assent of the electors’ before we can take out the loans. Municipalities can get ‘assent of the electors’ either through referendum, which cost about $40,000 and are time and resource intensive, or through an Alternative Approval Process, which allows the public to weigh in through signing a form to indicate opposition to borrowing. If over ten percent of the voting population is opposed to borrowing, then Council may decide to bring it to referendum or not to proceed.
Alternative Approval Processes are a commonly used tool that local governments use in instances where borrowing is considered urgent and/or unavoidable. Because of the time-sensitive and critical nature of the work needed, Council has elected to go with an Alternative Approval Process for these particular loans. Simply put, we’re in a position where we have to do this work – and soon – or we are putting the entire water system at risk of failure. What does failure look like? It means no operating water or sewer system, and serious if not devastating economic losses to residents and businesses.
The City also knows that residents will be concerned about the potential impacts of borrowing on utility fees. Staff and Council are working as hard possible to obtain additional revenues through a Resource Benefit Agreement and other means that will offset the cost of debt repayment. All amounts presented in the video are based on a worst-case scenario.
For more information on what is being proposed - check out this short informational video we've created to help the public understand what is being proposed and potential impacts.
For additional information, reach out to the City at finance@princerupert.ca or by calling (250) 627 0976.
For the formal notices of the Alternative Approval Process - check out the notices section of our website.
And for more information on capital loan authorizations, including this proposed project and borrowing, head to this page of our website.