Baseline

A waterworks capital financing explainer

They are big numbers— bigger than this municipality has ever had to manage or explain. We’re here to make sense of them.

The headline figure, $280 million, has received considerable attention since September 8. Several candidates and others have described it as the County’s total exposure under the proposed waterworks plan, and as the burden existing waterworks customers would have to bear. But it does not represent the full cost of the capital plan.

That plan is currently estimated at $360.8 million. Even that figure assumes the County can contain cost overruns and keep the scope of work from expanding once excavation begins. Those risks are a conversation for another day.

The Water and Wastewater Financing Strategy presented to Council last month set out these costs and much more. But folks unaccustomed to financial or municipal reports may have missed the distinctions between the individual amounts and the overall total.

The Times has produced a simplified chart to make those distinctions clearer.

At the bottom of the chart is the $277 million, often rounded up to $280 million, needed for new facilities in the waterworks expansion plan that underpins the regional water plan. These include a 20-kilometre pipeline, a new Lake Ontario intake, a new water treatment plant, new distribution facilities in Picton, and a wastewater plant in Wellington. Some have presented this figure as the full cost of the plan. It is only the starting point.

Watson and Associates, the consulting firm, has calculated an additional $29 million in inflation costs over the 10-year construction period, using an annual inflation rate of 3.5 per cent. Next is the $34.6 million already spent on the water tower, equalization tank and trunklines in Wellington. Shire Hall converted those expenditures to long-term debt this past summer. Repayment has only just begun.

Finally, the capital plan includes $20.1 million for reinvestment in other waterworks assets outside Picton and Wellington.

Together, these amounts total $360.8 million— the estimated cost of the waterworks capital plan presented last month. That is the current estimate, not a guarantee against further increases.

Any discussion of the waterworks strategy must start with that full amount—not partway down the expenditure column. Had Council endorsed the plan last month and proceeded with all the proposed spending, it would have committed to a $360.8-million capital program,

From this baseline, Shire Hall and residents may begin to consider who should pay for what and when. But such a discussion needs a common starting point.

As of September 8, this was it.