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New water reservoir has large price tag

Council passed first reading of a bylaw to borrow up to $10-million to pay for a new reservoir

The Town of Sylvan Lake has been working towards a new water reservoir since 2015, and is now ready to move forward with the next step.

It has been decided the best location for the new reservoir, which will provide potable water the the Town, is a quarter section of land at NW3-39-1-W5, also known as Sandbar Estates, in Red Deer County. According to a report to Council at Monday night’s meeting, a letter of intent was completed at the end of November with the landowner.

A preliminary design for the “first phase” of the reservoir has been completed by Stantec. This design will support the town with a water capacity to support a population of 30,000 people.

The next step though is to come up with the money to pay for this investment.

The design will cost more than Council budgeted. Stantec estimates the project will cost upwards of $10-million, and Council budgeted for $6.5-million to be spent on the reservoir in 2018. An additional $4.6-million was planned for expansion in 2022.

Public Works asked Council for a budget adjustment to pay for the needed reservoir project, which was approved at the meeting on Feb. 26.

“The Town does not currently have these funds available, therefore it is recommended that a borrowing bylaw be put into place to support the construction of this infrastructure,” said David Kalham, project manager with Public Works.

Mayor and Council believe the project to be of the utmost importance.

The current reservoir will be able to supply clean water to the town up to a population of 18,000 people.

“This is absolutely vital for us. It is something our residents depend on, and something we have to be able to provide,” said Mayor Sean McIntyre.

The first reading of the bylaw for borrowing up to $10-million for the North Water Reservoir was also carried at the meeting.

According to the Municipal Government Act, the project cannot begin until there is a bylaw in place authorizing the borrowing.

“The electors of a municipality may, within 15 days from the date of the last publication of the notice, petition Council for a vote on the borrowing bylaw,” Darren Moore, director of finance with the Town, said.

If no petition is presented, the municipality may pass the borrowing bylaw. The process is expected to take two months before final reading is passed, and work can begin on the reservoir.

After the second and third reading of the bylaw, which is expected to be held on March 26, there will be a 30 day period where an application may be sent to have the bylaw declared invalid.

“If no application is made, Bylaw 1753/2018 becomes valid,” Moore explained.

Now is believed to be a good time for a loan, as interest rates are relatively low, Kalham says.

“We expect interest rates to rise in the next couple years, so now would be a good time,” said Kalham.

The plan is to have the majority of the project paid for by future developments. Moore says 51.4 per cent of the $10-million budget will be paid back by developments, while the Town will pay back 48.6 per cent of the cost.

The first reading of the bylaw does state the Town plans to borrow “up to” $10-million for the project. This is because administration plans to apply for a grant to supplement the cost.

“The project is eligible for funding under Alberta Municipal Water/Wastewater Partnership (AMWWP) and is a priority one, according to current program guidelines,” Moore said.

With the current population of Sylvan Lake, 14,816 according to the federal census, the Town is eligible for 30.18 per cent of the project costs under the grant.

“Construction can commence prior to grant approval for priority one projects and costs incurred before approval will be covered by the grant program,” Moore told Council.

Borrowing money for the reservoir will ultimately affect the residents of Sylvan Lake. The Town plans for the initial borrowing to take place in September, the first payment will be due in March.

This will require utility rates to be adjusted for 2019, depending on amount borrowed.

“Borrowing $7 million will result in each utility customer paying approximately $3 more on a monthly basis. If $10 million is the amount to be borrowed, either initially or when the project is complete, the resulting effect on each utility customer would be approximately $6 more per month,” Moore said.

Public works plans to open tenders for construction in March. The building of the new reservoir is expected to last 15 months, beginning in May and ending in autumn 2019.

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