Frequently Asked Questions
What are the conditions that led the City infrastructure to be in this state?
The City is in this position due to multiple factors including, but not limited to, decades of severe economic downturn which resulted in a mass exodus of population; annual subsidization by ~$1 million of the only municipally-run ferry service in the Province; limits to available revenues due to local tax regimes that limit industrial property tax rates and payments; alongside the fact that our budgets intended for capital replacement are far too often eaten up by emergency repairs.
In addition, in the past, there was limited appetite from previous Councils to further raise taxes to renew infrastructure, due to the community’s hard economic times. That delay in rate adjustment has now caught up and set our commercial and residential rates at among the highest in the Province. The impacts of those severe cuts (by up to 75% in some cases) to operational spending are being felt today – with the City responding to up to four emergency water breaks per week, a record level, culminating in a Local State of Emergency called in December as a way to be able to pull in adequate resourcing and to potentially receive emergency assistance from the Province.
Given the extent of upgrades needed, a major road block to addressing our infrastructure deficit sooner is constraints on local revenues. That's why our staff have also been advocating to Provincial and Federal levels for increased financial supports above and beyond those project-specific grants that are available for qualifying projects. Although we've been able to fund portions of our dam replacement and water treatment projects through grants, grant funding is generally not available for things like replacement of our water distribution system - which, as you'll well know because of the Local State of Emergency, is in dire need of attention. We are making headway with other levels of Government, and will continue to advocate for Prince Rupert as we have been doing for the past several years.
Infrastructure replacement has long been a priority for the City. Staff efforts across multiple areas have all been with the main goal to obtain new revenues - this includes removing the pulp mill and getting Watson Island back on the tax roll, negotiating for a Resource Benefit Agreement for the Northwest (which is ongoing), coordination of multiple annual meetings with other levels of Government, work to advocate for subsidization of our airport ferry, and advocacy for resolution to the industrial tax caps and disagreements with the Port of Prince Rupert over their Payments in Lieu of Taxes. We want to thank the community for being patient with us as we navigate these challenges together, in the shared spirit of a better future for Prince Rupert.
Water Infrastructure + Treatment
What is the model the City is considering for Water Treatment? Why is this model being considered?
To start with, in the model that the City is considering, the water itself, our watersheds, and the actual facility that treats the water will continue to be owned by the City. The model will enable City Council to have final control over rates, as well as to direct all potential revenues that come from operations.
The City has worked with our project managers on the Water Treatment Project, Colliers International, on exploring the different potential operating models. The direction to obtain additional information and explore feasibility of a Municipally Controlled Corporation model was taken given internal concerns during our engineering and design process with respect to capacity to staff technology used in the facility. Staffing our Operations Department has been extremely challenging given market conditions lately. Finding water operators in British Columbia is extremely difficult, let alone with the additional certification requirements that will be needed to operate the new facility. The level of certification required is a challenge due to the fact that experience needed for certification cannot be obtained at our existing facility.
Colliers provided a big-picture breakdown of potential operating models, from which City staff selected one that was felt best retained municipal control over assets and enabled us to continue to have our union contract in place – which is the DBFOM approach. With a Design, Build, Finance, Operation and Maintain (DBFOM) approach, the overall responsibilities for designing, building, financing, operating, and maintaining are bundled together and transferred to a third party through an operating agreement. Designing and building the facility would always be something that we contracted to an external party, due to the specialized nature of that work. The reason the City is exploring the DBFOM model is to see if there are efficiencies that can be achieved through having an external operator to manage the water treatment service for us after the facility is built, and to provide financing for the City.
As participants in the eventual operations of a facility, DBFOM models incentivize engineers and contractors to be as efficient as possible in the use of public funds. The service contract will also require the private entity to take responsibility for staffing the facility, which as previously noted due to BC-wide shortages in qualified water treatment operators, has otherwise been identified as a risk to the City’s planned expansion of service. This may result in non-local staff being brought in, but will ensure that we can always staff the facility, and by association treat the water. However, it should also be noted that it was clear in the City’s initial Request for Expressions of Interest that if the City proceeds, the operator would have to work under the City’s Collective Agreement.
The City’s operating agreement, if it were to go ahead, will also have a mechanism to opt out of an operating contract if it is not desirable in the future or if the City finds itself in a position to consistently staff the facility locally. If this were to occur, and the City’s operator had provided financing as well, the City would need to pay back any financing taken on by the third party.
When did city council direct senior staff to move forward on using a city owned company to run the City’s public water and possibly its public sewer system in partnership with a private company?
Council did not direct staff to move forward with the creation of City owned company for water service provision. Rather, they provided consent for staff to investigate potential alternative operating models that work with private service providers, based on internal concerns with respect to staffing as well as looking to options to finance cost overruns. A Request for Expressions of Interest, which the City issued in October, is a tool typically used in the pre-project development phase to assess interest in your project. With Expressions of Interest in hand (ie. proof that there would even be interest in operating a facility for us), staff is still in the process of developing information for Council to explicitly address cost and operating model considerations, and compare to alternatives.
How much debt does the City plan to finance through a city owned company? There are rumours it is $230 million, is this true? Is this the scale of what we’re looking at for the city owned company to raise in terms of capital?
That figure may be close to the cost of replacing our entire water conveyance system, plus treatment – but is certainly not reflective of borrowing required for treatment alone. At this point (and again, we have not completed engineering or cost estimating), a water treatment facility is likely to cost between $40-$50 million. We have obtained $20 million in grant funding that will help support that, as well as capital funding from Prince Rupert Legacy Inc that is planned to be dedicated. However, since the City’s original application to fund water treatment was made in 2018, the City now anticipates a shortfall in funding of between $12 Million - $18 Million. If this model went ahead, the City is exploring the option of the operating contractor taking on that shortfall as debt financing, to be repaid with utility rates over time.
As we don’t currently know the rate a private operator will charge for financing, the City is still in the process of determining if that’s a more cost-effective option – which will be addressed in the information presented to Council. Interest costs will always be a cost of the new facility – the difference will just be whether the rate is paid to a bank, or to a private operator if that model is selected. The rate would need to be comparable to rates available through the Municipal Finance Authority (our usual lender), for staff to recommend operator financing as an option.
What are the alternatives? Have these been considered by city council already?
Additional information, including an exploration of alternatives will be provided to Council as part of the Business Case to be presented in the new year.
Have all options been presented to Council?
A memo reviewing available operation options for the treatment facility was presented to Council in an open meeting on February 21st and is publicly available on the Documents section of this page. If Council determines it is worthwhile to move forward with pursuing the potential Design-Build-Finance-Operate- Maintain model further, direction will be provided as to how Council prefers to engage the public.
What is the City doing to implement sewage treatment?
The City is continuing to work with our partners in the Federal and Provincial governments to implement a sewage treatment plan that will bring us in line with Federal and Provincial environmental standards. Until recently, it was believed the options available for sewage treatment would require the City to twin all existing combined storm/sewer lines. This is a significantly cost prohibitive option for a community of our size – and is anticipated to cost in excess of $175 million.
To avoid this expense, the City completed work in 2021 to explore available options to treat sewage with a wetland system, which is an innovative and environmentally friendly approach to treating community wastewater used elsewhere in the world. In addition, this is a low maintenance approach that will reduce overall operating cost and capacity requirements for the future. The City will be completing design and construction in 2022-2023 to implement this technology on a small-scale for with a replacement of the lift station behind Omineca Avenue, which services approximately 100 homes.
What will the impact of a wetland treatment system be on my neighbourhood?
It may sounds strange, but although the area will be clearly blocked off and identified, there will be no noticeable look or smell to the project. Solids and sediment will be filtered out of the water in the first step of treatment, before wastewater makes its way to beneath the wetland where pollutants are broken down through natural processes in the vegetation of the marshland. Once it goes through that natural treatment process, wastewater will be treated and pumped back into the existing sewer network while we work to demonstrate that it can be treated to a standard acceptable to our regulators. If it’s determined to be safe, then in future the treated water may be discharged back into the natural environment – which is common in other areas that treat their water this way. For instance, many communities use treated wastewater for irrigation.
What are the costs, and what stage are you at in the process of implementing wastewater treatment?
The City has completed two grant applications to complete the work on the Omineca area project, servicing 100 homes, which is currently estimated to cost approximately $6 million. As we move forward, we will be closely monitoring the success of the project to confirm that it meets all Provincial and Federal regulatory standards, and if so, the approach can be applied elsewhere throughout the community - with total costing for full build out of this treatment system still unknown.
The design drawings are now complete for Phase I of the program and approved to proceed if we are successful in the grant application.
Public Works Building
Why is the City developing a new location for its Public Works yard?
The existing Public Works buildings are failing, and require replacement in order for staff to have a safe and healthy workplace.
In 2020, the City’s had invested a set of used ATCO trailers as an interim solution to house staff, following discovery of maintenance issues with the existing facility that were beyond repair. In the meantime, Management worked to find a more permanent and suitable solution for housing its over 60 staff members.
Why did the City choose the former GM MacCarthy Building as the location?
As the community knows, existing industrial lands in the community are challenging to find, especially with existing buildings and servicing. The City identified the former McCarthy dealership, which had been closed for 2 years, as both a central location with adequate lot space to house City works.
In 2022, the City signed a 5 year lease for the building with an exclusive option to purchase. The lease option is anticipated to save the City significant time as a fully new build of a Public Works facility would first require identifying appropriate lands, to be followed by architectural designs and obtaining contracting services.
What will happen to the old Public Works yard?
The existing Wantage Road facilities will still be used for storage of gravel and materials, with staff offices and primary work areas moving to the new location.
How much is this project anticipated to cost and how will it be paid?
Between $750,000 - $2 million in anticipated costs for 3 phases of the project are being covered by a dividend from Prince Rupert Legacy Inc., the City’s wholly owned Development Corporation.
What stage of the project is the City in for the Public Works relocation?
Architectural designs to retrofit the building have been completed, and construction will begin early in the new year on interior works to develop office space, accessible washrooms and a lunchroom/kitchen area.