The Regional District of North Okanagan (RDNO) will seek the public's approval to borrow up to $18 million to install filtration at the Mission Hill Water Treatment Plant.
The RDNO's board of directors plan to proceed with the Alternate Approval Process (AAP) for the City of Vernon, District of Coldstream, and parts of Electoral Areas B and C to borrow the money.
"If the AAP is successful, the debt incurred from borrowing will be paid through Greater Vernon Water user rates and will not impact property taxes," said the RDNO in a release Wednesday, Feb. 26. "The estimated $85 million to construct the filtration plant will be paid through grants, GVW (Greater Vernon Water) reserves, and debt."
The AAP is an alternative to seeking electors' approval other than by referendum. It's a less costly and less time-consuming way of asking the electorate permission to proceed with the adoption of something like a borrowing bylaw.
Those electors in the service area who do not want the project to move forward will be able to register their opposition once the AAP process is initiated, and no date for the AAP has been established at this time.
If the total opposition received is at least 10 per cent of the estimated number of electors in the service area, the board will not be permitted to proceed with the borrowing bylaw.
Construction of the filtration plant has risen in priority due to the increasing presence of cyanobacteria in Kalamalka Lake, with two blooms occurring in the past four years, presenting a health risk to water customers.
Algae, including cyanobacteria, can only be mitigated with filtration.
The board adopted a new four-year water rates bylaw in December 2024. The new borrowing is expected to have no impact on water user fees and charges because there is $17 million of existing GVW debt that matures in 2025.
At the end of 2024, GVW had approximately $74 million in cash reserves for future capital projects and will have only $0.5 million in outstanding debt by 2029 before consideration of this project.
"GVW could proceed with the project without borrowing any funds; however, it is financially prudent for local government utilities to hold some reserves for items like future capital expenditures and matching funds when there are grant opportunities," said RDNO.
Because of the current economic climate and significant construction cost escalation in recent years, the approved financial strategy incorporates a project cost of $85 to $100 million to ensure the project will be completed. If the project cost is at the lower end, the RDNO may not borrow the full amount of funds under the loan authorization bylaw and may utilize more of its reserves on hand.
The borrowing under the loan authorization is contingent and meant to provide additional funding only if required.
"It is more financially prudent to borrow at the time," said the regional district.
The actual borrowing will not occur before 2027.
The regional district says GVW鈥檚 outstanding long-term debt has been declining by approximately $2 million annually. Its outstanding debt peaked in 2010 at $32.4 million when $18 million was borrowed for the Duteau Creek Water Treatment Plant.
"With the potential addition of $18 million in new debt in 2027 for the Mission Hill Water Treatment Plant Filtration project, the total debt outstanding will be like the level outstanding in 2018, and approximately $1.9 million per year will be paid off in the years immediately following the new debt issuance," said RDNO.
Details for the Alternate Approval Process for the Mission Hill Water Treatment Plant Filtration project are anticipated to be announced after approvals are received by the province this spring.
For more information on the project, contact utilities@rdno.ca. For more information on the Alternate Approval Process, contact corp@rdno.ca.
