Stormwater Rate Review

One of the items to be considered at the very busy Council meeting on June 26 is a review of Stormwater fees.  There are several issues in contention: 1) it’s a tax not a fee; 2) it’s not appropriate for large rural properties (e.g. farm land and cemeteries) that don’t use any of the Town’s Infrastructure; 3) it’s excessive for residences on acreages (such as is common in the west end of Cobourg); 4) properties on town owned land like Northam Industrial park are exempt and 5) there is no incentive to mitigate run-off.  When asked to review the issue, Director Laurie Wills elected to hire the original consultant to do the work.  Their report is on the agenda at the coming Council meeting – see Resources below – but as usual, I will summarize.

  1. The cost of managing Stormwater Infrastructure was originally recovered as part of the tax levy but Council elected to make it a fee collected on LUSI bills in the same way as water and sewer fees are recovered.  But fees must be for a specific service which is not always provided for Stormwater – a tax does not have this requirement.  The review does not appear to address this issue.
  2. Some farm land in Cobourg has seen annual bills as high as $30,000 even though they absorb most rain and the rest flows into a creek.  They don’t use Town Stormwater infrastructure.  The recommendation is to cap the fee although it’s not clear why there should be any fee at all.
  3. High fees for residences on acreages would be reduced with an appropriate cap.
  4. The “no charge” for land owned by the Town is rationalized by the fact that it would be the Town charging itself so it is not a net gain.
  5. The review does not address the benefit of encouraging mitigating factors.

The report by Watson and Associates was initially presented to the Public Works, Planning, and Development Standing Committee but it will also be presented to the Council at their regular meeting on June 26.

They do acknowledge the excess fees with this table: (the report has one table, it’s split here to permit web site formatting).

Current Rate Structure

Property Type Total number
of properties
Properties with Annual Bill <$200
# % of Total Average Bill
Commercial 345 181 52% $93
Institutional 26 2 8% $120
Industrial 74 8 11% $59
Agricultural/Vacant 420 327 78% $45
Residential (low density) 5,735 5,523 96% $64
Residential (medium density) 539 527 98% $44
Residential (high density) 1,394 1,359 97% $31

This looks like lots of people paying small amounts. But a relatively small number have large bills per the table below.

Property Type Properties with Annual Bill >$2,000 Highest Bill
# % of Total Average Bill
Commercial 29 8% $5,356 $18,612
Institutional 8 31% $5,964 $12,896
Industrial 36 49% $8,012 $41,664
Agricultural/Vacant 27 6% $8,952 $29,412
Residential (low density) 6 0% $2,888 $5,873
Residential (medium density) 0 0% $0 $1,147
Residential (high density) 3 0% $4,779 $7,711

The standout anomalies are low density Residential and Agricultural/Vacant which don’t make sense.  The consultants offer two options – Option A shows a maximum bill for Agricultural/Vacant at $1,974 and Low Density residential at $2,220 and Option B shows both of the property types with bills of $104. (Download full report in Resources). Of course, if the fees charged to some properties are reduced, others will need to increase (a little bit) to bring in the same total revenue. See also the Letter to the Editor for more on these options.

The consultants also reviewed the effect of exemptions to certain properties.   See their report for details.

Decisions to be made

Council is being asked to decide on several items as follows:

  • Which rate option will be implemented (A or B).
  • How the charges to date are to be reconciled.
  • Whether or not interest rate charges will be waived for all current outstanding stormwater charges until such time as the new rate structure is implemented.
  • Whether any properties or property types should be exempt from the rate structure.

Note on something else.

The Agenda for the June 26 meeting is long with a large number of items to be resolved.  Stay tuned on Cobourg Blog for reports over the next week on some but not all of the items.

Resources

Letter to the Editor

Cobourg Blog articles

Addendum

At the council meeting on 26 June, after a long discussion, Council passed the following motion:

THAT Council direct staff to finalize an alternative rate structure B to have an effective date of January 1, 2024; and

FURTHER THAT Council direct Staff to prepare a by-law with the new Stormwater Rate Structure, including an implementation plan for final review and approval by Council; and

FURTHER THAT Council direct Staff to consult with Lakefront Utilities Services Inc. with options to reconcile 2023 billings in alignment with alternative rate structure B and report back to Council in September, and

FURTHER THAT Council direct the waiving of interest rates for all outstanding stormwater invoices until further notice; and

FURTHER THAT Council reclassify cemeteries as vacant land.

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8 Comments
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Sandpiper
1 month ago

I
Nothing seems Fair in this Town anymore !
The fact that the Town is not Accessing or charging Fees on The Northam Industrial and other Town owned assets Tilts the Fair and Competitive market system .
These buildings and lands are Occupied by larger successful Tenant operations mostly long term at much
Cheaper Rents than the market calls for . Competing Landlords must charge back or
pass along to their tenants in the Form of T M I to stay a float .
Why is the Town not doing the same with out the threat to the rest of the Property owners of Cobourg as — seeing an increase to cover these charges as the Mayor suggest Taxing or Feeing it self . I hope that’s not what they are doing and Catering to their tenants Poor Management if they are
The Town already has the unfair advantage over other Industrial Commercial Landlords and is charging less than market rents now . and are presently Passing along any losses and short falls to the Tax Payers HOW can the Fair Market compete against the Town when they can Cherry pick the Tenants and undercut the competition . These unfair and less than equitable practices and should / need to stop
If they did we might see more Industry come to town But not while the town holds the upper hand ,control of unfair practice .
They may be making money with our assets but could we be making more ?

retired banker
1 month ago

Question: Whre are the funds placed until needed. They could earn in GICs. A short term say 6 months is paying a return of approximately 4.35%.

Sandpiper
Reply to  retired banker
1 month ago

Some Credit Unions pay way more

Kathleen
1 month ago

Upon reading this it seems like a No-Brainer. Council should reverse its decision and make Stormwater part of our taxes.
In hindsight, it looks like a lot of money could have been saved in costly, inaccurate Consultants – not to mention the money in wasted time – if Staff had not recommended this be a “fee”.
IMO, money could be saved if we rid ourselves of Lakefront/Holdco all together. Buy from Hydro One (their stock pays dividends). All water issues should be part of the Public Works Dept and Stormwater added to taxes.
My 2 cents.

Liz
Reply to  Kathleen
1 month ago

Hydro one??? Cost is much higher!!

Bryan
1 month ago

Thanks for this John. An outstanding job as usual.

As you noted, stormwater costs are part of the annual budget. The difference is that the SW costs were previously funded by the tax levy (property taxes). In 2022, based on a staff recommendation, Council changed the SW funding to a new stormwater fee, not a tax. As Ken Strauss notes in his letter to the editor, one of the reasons for this change was to avoid having a 14%+ levy increase.

This fee-tax issue may seem trivial, but is is a major issue because a fee is based on a specific product/service delivered/rendered to a specific recipient (customer). It is unlike a tax which is levied, as the Mayor and Works Director have said “for the common good”.

The 2022 SW bylaw says it is a fee. To move forward, this issue has to be resolved NOW, not some time in the unspecified future.

Exemptions are another major issue. As noted by JD and others, various properties (mostly Town owned) are exempt form paying the SW fee. These are typically Town departmental business units that operate commercial businesses, frequently in competition with the local private sector.

Both Northam and Linmac hold commercial/industrial properties that are leased to tenants. The two are essentially the same except that Northam is a departmental business unit of the Town. Why should Linmac and similar firms be charged for stormwater while Northam is not, just because it is Town owned.

The elimination of exemptions would add about $100K to upwards of $250K to the SW billing, thus lowering the SW fees everyone else. The total budgeted SW fee ($1.7M +/-) remains unchanged.

There is also the issue of “bonusing” (municipal act, sect 106), which prohibits the Town from providing financial assistance to businesses. There is no exemption due to ownership.

The Mayor says that it would be pointless because it would be the Town charging itself. On a corporate entity level he has a point. However, at the departmental level, it is a totally valid business practice. The Town already does this. Departmental salary costs are “charged” to other departments for work done. The dredge charges the marina and the harbour. The marina charges the campground for both management and staff. The marina and the campground recover these “transferred” costs as part of the fees charged to their customers. Northam would do the same by passing the SW fees on to its tenants, just as Linmac does with common area expenses.

Ken Strauss
1 month ago

Thanks, John, for an excellent summary of many of the issues!

Not mentioned is that under Option A, the stormwater charge for every residential property smaller than 1 acre (the average residential property in Cobourg is about 0.2 acre) will increase by approximately 17%.

As noted, a number of properties — Northam, Northumberland Curling Club, some Lucas Point properties, William Academy, etc — are commercial operations yet they are currently paying nothing for their stormwater fees. Charging them as any other business would largely eliminate the need to increase the rates for others.

Gerinator
Reply to  Ken Strauss
29 days ago

Thanks Ken for the excellent, outstanding letter addressing the inequities within the ‘highly-paid’ consultant report and the implementation.