Financial Policies

Affordability Policy

• Measures and Ranges of Affordability

  The cost of municipal servicing can be extensive. The Town recovers the majority of the costs from benefitting property owners, and therefore each project needs to be assessed on a case-by-case basis that considers the necessary works, available funding sources, and the end cost to the benefiting property owners.

  What makes a water or wastewater service extension project "affordable"?

  The most current census data is used to determine the median after-tax, single household income. This number will be used to determine the affordability, as each benefitting property owner will be required to pay for the cost of a service extension with available after-tax income.

  Using the most recent Census Data, the following measures of affordability will be used:

  • If the annual household cost of extending a service is equal to, or less than, 5% of the median after-tax, single household income, the project is considered affordable.
  • If the annual household cost of extending a service is greater than 5%, but less than 10%, of the median, after-tax single household income, the project would require additional analysis to determine affordability, including additional financial support, in order for the project to meet the affordability threshold of 5%.
  • If the annual household cost of extending services is equal to, or greater than, 10% of the median, after-tax single household income, the project would be deemed unaffordable for both the Town and the benefitting property owners.

  For example, using the most recent Census Data, (2016 on the 2015 median, after-tax single household income) the principles outlined above would result in the following measures:

  Description	Household Income	Share of Income (%/year)	Share of Income ($/year)	Maximum Charge
  Affordable per service	$ 33,760	<5%	$ 1,690	$ 21,060
  Unaffordable per service	$ 33,760	>10%	$ 3,380	$ 42,130

  The above chart illustrates the Maximum Service Extension Charge per service extension. The figures are calculated assuming 20-year financing with a 5% annual interest rate. If a property is receiving both a water and wastewater service extension, the Maximum Service Extension Charge would be doubled.

• Support for Extending Municipal Services

  Why does the Town want to extend water and/or wastewater services?

  The distribution of potable water and the collection of wastewater (sewage) benefits both the property owner and the community.

  Servicing enables the owner to:

  • achieve the highest value use of their property by removing building restrictions imposed by on-site servicing;
  • avoid the costs and inconvenience associated with the ongoing operation, maintenance and replacement of water wells and septic systems;
  • lower the cost of water and wastewater servicing through centralized municipal utility; and
  • access to reliable and permanent servicing solutions with high quality.

  Community benefits are achieved by enabling the:

  • protection of vulnerable natural lands, groundwater or watercourses especially when lot sizes are small;
  • servicing of employment lands (i.e., restaurants); and
  • incremental, overall improvement of the natural environment by centralizing wastewater treatment to a facility regulated to discharge compliant effluent.
• Issues with Extending Municipal Services

  What are the primary issues the Town encounters when extending municipal services?

  Cost

  Much of the Town's development has occurred along the Georgian Bay shoreline, resulting in long, thin, and stretched-out water distribution and wastewater collection systems that require more pumping stations, reservoirs and appurtenances than a typical system of its size. As well, the shallow depth of bedrock increases construction costs significantly.

  Method

  The Town’s unique geography means that there are elevation changes throughout the Town’s water and wastewater systems that hamper traditional servicing methods. The topography impedes water distribution and requires the evaluation of alternative means to collect wastewater beyond gravity sewers, including modified gravity systems and low-pressure sanitary systems. In addition, the need for pumping stations or grinder pumps increases.

  New wells and septic systems

  Residents with older wells or septic systems who connect to municipal services can avoid future repairs and maintenance costs for private wells and septic systems. However, this benefit does not outweigh the cost of connecting to municipal services for residents who have recently installed a new well or septic system.

  The Affordability Policy states that residents who have installed or significantly upgraded a new well or septic system within five years can defer the payment of capital costs for a maximum of ten years.

• Wastewater Servicing Methodology

  The Town passed a Wastewater Servicing Methodology Policy that outlines the criteria for wastewater servicing when extending municipal wastewater services. This policy also clarifies the ownership and operation of grinder pumps servicing properties that are connected to low-pressure sanitary systems.

  The policy confirms that when a municipal wastewater servicing extension to an unserviced area of Town is being considered, a comparison of life-cycle costs over a 20-year period will be completed to select the preferred alternative. In most instances, the solution with the lowest life-cycle cost is preferred. There may be circumstances where the costs are relatively close, or factors such as property owner preference, future extension capacity, or other factors warrant another alternative being preferred. Other overriding considerations may include protection of the natural environment or another priority reason by the Town.