If you've been following the HRM's recent decision to spend $25 million to pipe sewage from Timberlea to Halifax, you could be forgiven for having a difficult time figuring out who, exactly, is going to be paying for all these new sewage pipes. As has been pointed out elsewhere, regional council has been provided with a series of confusing, and often conflicting explanations as to who, exactly, is paying for these new sewer pipes. The decision to tear up the Chain of Lakes trail to run sewage from a handful of new subdivisions to be treated in Halifax has been criticized by some as "bad planning". It's an example of bad accounting as well.
One of the major costs of urban sprawl in the HRM is the extension of sewer and water pipes to service new development. Not only does it cost money to build new sewer and infrastructure, it also increases the future costs to service and maintain this growing infrastructure. Water rates are often not enough to cover these ongoing costs.
Residents of the HRM are justifiably angry about recent and substantial increases to their water rates. Yet much of the debate has ignored the significant geographic growth of the water and sewer system, and the spiralling cost of maintaining ever-growing infrastructure. While HRM has a sewer and water service boundary, that boundary covers a substantial area. In addition, regional council has frequently made decisions to extend that boundary, often to provide sewer and water to specific new subdivisions.
While developers pay the cost of installing all sewer and water pipes within the subdivisions they build, these pipes then need to be connected to the larger water and wastewater systems. As a result, developers pay a complex series of sewer development charges, trunk sewer charges and capital cost contributions levied by HRM and meant to cover the costs of all new infrastructure. Unfortunately, these charges haven't proven adequate to cover the costs of new pipes, which has also contributed to rising water rates. Halifax Water is now proposing a simplified and higher regional development charge meant to replace existing charges and cover the costs of new development.
There is no question the current system is confusing, as evidenced by council's recent decision regarding the Chain of Lakes pipe. It would seem that when council originally voted to approve the extension of municipal sewer and water services to Brunello Estates and nearby subdivisions in 2007, they were told that the developers of these subdivisions themselves would pay for the pipes directly through capital cost charges in their area.
Halifax Water is now stating that while 10% of the cost of the new Chain of Lakes pipe will be paid by existing ratepayers, 90% of the cost will be paid by developers. But not by the developers whose subdivisions actually require the pipes. By charges levied on ALL developers in HRM. And therein lies the shoddy accounting. A developer who chooses to build in an area where infrastructure already exists, or requires minimal upgrades, will pay the same amount into the fund as the developers in Timberlea who require $25 million in new pipes. This is effectively a subsidy for bad planning.
Unfortunately, Halifax Water's proposed new regional development charge won't change that. Developers will pay a single standard charge, regardless of where a development is located relative to existing infrastructure. While the higher charges will take some of the burden of paying for growth off of ratepayers, it will put that burden onto developers in general, not those that are driving up costs by demanding more infrastructure. These costs will eventually be passed on to homebuyers, driving up the cost of ALL housing in HRM.
There are lots of valuable planning lessons we should learn from the Chain of Lakes sewage pipe debacle. One of the most important is that if we are going to make growth pay for itself, we need to find a better way of accounting for it. One way would be to ensure that development charges reflect the actual cost of servicing new developments.