Canada's Housing Bubble

Jul 17, 2010 Kelly Sinoski Vancouver Sun

The fees paid by Metro Vancouver residents for regional utilities — water, sewerage and garbage collection — will jump by more than 50 per cent over the next five years, a Metro staff per cent predicts.

The cost of garbage collection alone will nearly double.

The reason for the projected increases is a series of big-ticket infrastructure items such as the $820-million Seymour-Capilano water filtration plant and long overdue upgrades to the Iona and Lions Gate sewage treatment plants.

By 2015, the owner of an average $600,000 home in Metro Vancouver is projected to pay $665 a year for the three utilities combined, the report says. That's up 54.4 per cent from the $428 they cost now.

The report was based on the assumption that the region's population will grow by 1.5 per cent over the five years.

"We have to deal with our garbage and ensure we have clean fresh water to drink," Metro director and Vancouver Coun. Raymond Louie said.

The Metro report projects water rates will jump 37 per cent — or $115 — over the five years, with the average homeowner paying $301 annually in 2015 compared with $186 now.

The water increase is due mainly to the Seymour-Capilano treatment plant, particularly the rising costs of a renegotiated contract for the twin tunnel portion.

Metro Vancouver was forced to re-tender the twin tunnels contract — adding another $220 million to the project cost — after firing former contractor Bilfinger-Berger when it stopped work on the project because of safety concerns.

While Metro is suing Bilfinger-Berger to recover the additional costs, the results of the legal action are not reflected in future projections. Nor is the weather factored in: A wet summer can drop water revenue by $3 million, according to the report.

On the sewer front, the average homeowner could see costs bumped from $162 today to $212 by 2015, mainly as a result of federal requirements to upgrade the Iona and Lions Gate treatment plants to secondary treatment. Those improvements are estimated to cost $1.4 billion over the next 10 years.

"We're very concerned because the federal government has laid this on the region, but hasn't committed to provide us any funding for it," Louie said. "We're discharging into the ocean and we want to do the right thing ... but we're not getting any support."

The cost of garbage collection and disposal is projected to rise from about $80 to $152 per average household by 2015. The jump coincides with Metro Vancouver's push to reduce the amount of garbage going to the landfill and boost recycling rates from 55 per cent today to 70 per cent by 2015.

But as the pile of garbage declines, Surrey Coun. Marvin Hunt said, the costs of garbage and recycling services goes up because the region still has fixed costs to maintain such as operating its landfills and the Burnaby incinerator and running garbage trucks in and out of the region.

The report says that upward pressures on garbage tipping fees, including the rising price of fuel, have historically been offset by increasing waste flows in the region and boosting energy revenues through the sale of steam and electricity, but this has not held true the past couple of years.

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