St. Albert Mayor Cathy Heron says a utility corporation controlled by the City of St. Albert could generate extra revenue for the municipality.
Heron filed a notice of motion on March 21 to have city staff look into the feasibility of a city-owned utility corporation to handle water distribution, wastewater collection, solid waste collection and new possibilities for treating wastewater, as well as generation and distribution of heat and electricity.
The motion calls for city staff to develop a business case by March 4, 2019 for a future operating model for the services in question.
Heron said the motion will probably come to council within the next two weeks.
The motion follows a December 2017 information request from Heron about the process, timelines and benefits of such a utility corporation.
Responding to that request, city solicitor Gene Klenke stated St. Albert would have to hold a public hearing on the matter and council would need to consider a “detailed and comprehensive business plan as part of the cost-benefit analysis.”
“We don’t have that yet. That’s kind of what my motion is asking for, and kind of the pros and cons,” Heron said.
With the utilities in question included under a city-controlled corporation, St. Albert could offer additional services to the non-residential sector, she said.
“I don’t imagine raising rates, just to generate a dividend. I imagine offering the services to non-residents, so we could pick up the garbage for commercial and stuff like that,” she said.
City manager Kevin Scoble said a municipal utility corporation could also make St. Albert more competitive in the region by bringing down servicing costs for new developments, which he said are currently high.
“Instead of relying on parties outside of the city, there’s opportunities to do (servicing) more locally. Then that revenue that would otherwise go to third parties would go to the city,” he said.
He said the big picture is to generate more sources of nontraditional revenue and help address the city’s high residential tax burden without hiking non-residential taxes.
“What we’re trying to do is increase our non-residential revenue, but not by shifting the residential burden to existing businesses in town,” he said.
Since the City of St. Albert would be the corporation’s sole shareholder, any dividends would become a new source of revenue.
“The city council can decide what they want to do with that – whether they want to use it to fund capital projects, whether they want to increase services, whether they want to apply it to taxes,” Scoble said.
“It’s really their choice, but it gives an opportunity that hasn’t been there previously.”
Having a city-controlled utility corporation would help the city move toward zero-waste processes.
“We can’t do a lot of the things that (Scoble) wants to do with zero-waste stuff without this corporation,” Heron said.
The city has a feasibility report coming back to council in the second quarter of 2018 on zero-waste processes and infrastructure to manage St. Albert’s solid waste.
Scoble said the gasification of municipal solid waste can generate green energy.
“That generates heat and electricity, and you can also capture heat recovery from sewage. The idea is you combine all these technologies together and you provide an alternative form of servicing to new developments – particularly commercial developments – and included in that is heat and electricity,” he said.
When the final changes to Alberta’s municipal government act roll out in April, the rules governing municipally controlled corporations will relax, making it easier for municipalities to establish such corporations.
The changes would mean St. Albert would not have to get ministerial approval before establishing a utility corporation. However, council would need to review a business plan and hold a public hearing before making their decision.
Council would also have to be satisfied that the profits and dividends of the corporation directly benefit residents.
The business plan would need to include costs of establishing and controlling the corporation, the value of any municipal assets to be transferred to the corporation and a three-year cash flow projection.
The corporation would have to submit public annual financial statements to council.
Municipal utility corporations will also not be subject to the majority of the Public Utilities Act, and the Alberta Utilities Commission would not need to approve changes to franchise agreements.
It’s unclear what effect that might have on changes to St. Albert’s franchise fees.
Stormwater switch proposed
Heron’s motion does not call for the corporation to take on stormwater. Instead, she wants city staff to look into the impacts of switching stormwater from the utility operating and capital budget to the municipal operating and capital budget.
She said she put that forward because utilities are supposed to be a user fee.
“You can use ‘x’ amount of water, you can use ‘x’ amount of sewage, and same with garbage, but you really have no control over your storm, right? If it rains, it rains,” she said.
“It’s more a municipal service than a utility.”