How is the Water Increase of 30% over 5 years explained ???

IMPACT OF VOTE ON RATES

1. 7How will borrowing $70 Million for the Master Water PLan (MWP) priority projects impact water rates?

A “Yes Vote” would mean that the total GVW budget would increase by 30% for debt servicing (principle + interest payments).  This increase would be phased in over 5 years. This is based conservatively on a 4% interest rate and a 20 year borrowing term through the Municipal Finance Authority. The following provides an estimate of the impact to rates based on an average domestic GVW customer:

• Average GVW Domestic Customer Water Bill in 2014: $585/year (based on 175 cubic meters of water used in one year)
• Percentage Increase: 30% phased in over five years averaging 6% per year
• Annual Increase to Water Bill: $36.00
• Increase to Water Bill by 2019:  $180 (total annual bill in 2019 = $765)

It should be noted that this increase is only to fund the MWP priority projects and does not include additional increases due to the Consumer Price Index (CPI), increases in operations and maintenance, costs associated with any legislative changes, or other capital works projects required outside of the MWP (e.g. emergency repairs or infrastructure renewal). This projected increase for the MWP priority projects is for project construction costs in 2012 dollars using the 2014 rate structure for domestic customers (Greater Vernon Water Rates (Bylaw No. 2622, 2014).  

A “No Vote” would mean that the projects outlined in the MWP will not proceed as presented. The impact on rates is unknown and would only be determined following a review of the MWP with elected officials and Interior Health.

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Don Quixote Note:

If we borrowed $70,000,000 for the Master Water Plan Capital Requirements this is the repayment schedule we would have for a 20 year borrowing at the RDNO predicted conservative lending rate of 4.00%. http://mfa.bc.ca/long-term-lending-rates (This chart is for comparative purposes only as rate are only guaranteed for the first 10 years.)

The Annual Financing Costs would be $5,150,722.

For 2014 the revenue required from rates was $18,600,840.
Of this $16,968,524 was to come from Domestic (Residential) ($14,224,499) and Commercial & Institutional. ($2,744,025) Balance from Agriculture was ($1,025,616) with other fees and charges bringing in ($606,700.)

Consequently the revenue required after this borrowing (if approved) would increase to $23,751,562 or a further 27.69% rates increase. (assuming rate increase spread equally over Agricultural, Residential , Commercial and fees)

However it appears that the rate increases will be applied only to the $16,968,524 For Residential,Commercial & Institutional and thus the %age increase will be (16,968,524 +5,150,722)/ 16,968,524 = 30.35% 
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An interactive calculator where you can put in your average quarterly consumption and see the annual effect of the 30% rate increase predicted can be found at the link below.

https://docs.google.com/spreadsheet/ccc?key=0AqjuHhD4a7O5dEZmRjZzallUdm4xRS1FZGxYcDJqZVE&usp=sharing