Water Devolution

 
 


What would this valley look like without water?  57% of Coldstream is within the Agricultural Land Reserve, and an even higher percentage than that is currently used for Agricultural purposes. Recently the newspaper has reported  that the City of Vernon wishes to withdraw from the Water Distribution function of the Greater Vernon Water Utility - most people do not really understand what that means and how it will affect them . This process is called Water Devolution.




What is DEVOLUTION?  It is the opposite of Evolution. Devolution is going backwards.


Vernon wants to devolve the Greater Vernon Water Utility (GVWU). Why should we be concerned?


Well, if you live in Coldstream or Electoral Areas B & C you should be very concerned because a large percentage of your area is Agricultural (57% of Coldstream is in the ALR). Approx.80 % of the volume of water used in Coldstream is for Agricultural purposes while 20% is for Domestic purposes. Meanwhile the reverse proportion applies in Vernon 80% Domestic vs 20% Agricultural.


If you live in Vernon you should also be very concerned because your local Council is undermining local food security, and contractual obligations, in a misguided attempt to save you money at the expense of your neighbors. ( this was the case in the 2008-2011 electoral cycle...now in 2012 we have new hope that the new Vernon Council will not pursue this direction....Jan.28th, 2012 update)


As a result of this DEVOLUTION:( the following was written in 2009, updates are noted at the bottom)


EITHER; your Domestic Water Rates, outside of Vernon,(ie: Coldstream and Area B & C), will significantly increase, if the  Agricultural rate is kept competitive.


The Domestic water consumption rate is 84 cents per cubic meter (2009).update Nov.2010 it is $1.10 per cu. m.


The Agricultural water rate is set per hectare of allocation. According to the GVS Water Rate Bylaw, it is (2009), presently $210.56 per hectare/per yr, however, based on total volumes used for Agriculture divided by the revenue collected, that translates to approx. 6 cents per cubic meter.( figures based on GVW 2007 Water Costs and Revenue).


OR;  Agricultural Water Rates will have to go up significantly, making agriculture even less sustainable.


Agriculture in the Okanagan is dependent on irrigation…. the equation is ;


Water + Sun + Land/soil = salable commodity $$$


The same equation exists in other places in Canada, eg. St.Lawrence Valley, Niagra Peninsula, Lower Mainland Vancouver etc., our farmers have to remain competitive with areas where water is more abundant.


If the water portion of the equation is supplied solely by rain and no irrigation is needed, then costs can be kept down and the salable commodity is more competitive in the market.


In the Okanagan we have an abundance of sunshine and warmer temperatures, however we are challenged with water supply and lack of agricultural land. Due to our mountainous topography and other factors only 5% of B.C. is considered good agricultural land. Most of the good agricultural land is found in the flatter valley bottoms. Because of their relative flatness, these areas are also the most desirable for urban development.  In order to protect this precious farmland from urban encroachment, the provincial government established the Agricultural Land Reserve (ALR) in 1972 ( it was adopted in Coldstream on March 15th, 1974). The intention of the ALR was to safeguard agricultural land in British Columbia for the future. 


Because of its scarcity and its desirable qualities for urban development, agricultural land has still become very expensive, although the price is somewhat reduced by the ALR status.


So back to our previous equation.


Water + Sun +Land/soil = commodity $$$


IF: the sun is cheap, and the land is expensive, but kept relatively cheaper by ALR policy. THEN: the price of water becomes a prime factor in creating a viable competitive commodity.  In the  Greater Vernon area of the North Okanagan, agricultural water rates were protected as part of the original founding principals at the creation of the combined Greater Vernon Water Utility in 2003. Now they threaten to become very expensive, due in great part to the debate about water devolution.



Where are we now (2009)


As of July 2009 the issue is before a Provincial Arbitrator Brian Wallace – this is a legal procedure whereby the Arbitrator will rule on the Legal Ability of Vernon to pull out of the Water Distribution portion of the Greater Vernon Water Utility (GVWU) – function of the North Okanagan Regional District (NORD).



How we got to this point.


In 2000 there were three separate Water Utilities supplying the Greater Vernon Area;


1)The City of Vernon supplying residential Vernon,

2) District of Coldstream supplying residential Coldstream and

3) the North Okanagan Water Utility (NOWA) that supplied residential and agricultural customers in the Electoral Areas as well as areas of Vernon and Coldstream.

In 2003 the three Water Utilities came together to form the Greater Vernon Water Utility (GVWU).



The history of why the GVWU was formed is long and complicated, but essentially Vernon needed water licenses in order to service new developments, it had a 1.36 million dollar debt and a large domestic customer base, Coldstream and NOWA had abundant water licenses that had been secured for agriculture and a surplus of $.853 million.  The motivation for coming together was Vernon’s immediate need for water. The utility came together under a set of principles (essentially a contract) of a single Water Utility with the same water quality and same water pricing for all..  Residential and agricultural rates were set so that agricultural rates would be competitive with other Okanagan Valley areas. 



The legal framework for this Utility came under the Local Government Act whereby the Utility was part of a “Function” of the North Okanagan Regional District. The participants in the “Function” were Vernon, Coldstream, and Electoral Areas B & C. The “Function” was the Greater Vernon Services Commission, formed by the NORD Board to deal with matters pertaining to Parks & Recreation, the Greater Vernon Water Utility, Wesbild Centre & Performing Arts Centre, and the Vernon and District Queens Committee that were specific to the City of Vernon, District of Coldstream and Electoral Area's "B" & "C". This Commission had maximum delegated authority and a voting structure of three representatives from Vernon, two from Coldstream, one from Electoral Area B, one from Electoral Area C, plus an Agricultural representative with a vote on water issues. 


In 2006 the Greater Vernon Services Commission was downgraded to a committee and became the Greater Vernon Advisory Committee. The voting structure has stayed the same (minus voting rights for the Agricultural Rep.) but the decisions of the GVAC now had to go through the NORD Board.


Also in 2006, Vernon requested a service review of the Greater Vernon Water Utility “function” of NORD, stating dissatisfaction with operational issues and a lack of control of water issue decisions within their boundaries. Vernon stated that they only wanted to withdraw from the water distribution portion of the function


This would essentially mean Vernon would get to keep the water licenses as they are part of the supply side of the GVWU, but would take away their large domestic customer base. Their large domestic water base was what they contributed in the first place to make the combined water utility attractive to the other partners.


In late 2008 a consultant came out with a report analyzing the financial implications of the withdrawal of Vernon from the distribution part of the ‘Utility’ – this report: Devolution of the Water Function from Greater Vernon Water Services to City of Vernon - Technical and Financial Report, dated December 2008, by Quadra Development Solutions Inc.,which included a financial analysis done by Catherine Lord,at that time the Chief Financial officer of the Municipality of Coldstream. This full report and it’s implications became public at the June 8th, 2009 Vernon Council meeting.  The full report was then shared with Coldstream in July 2009, and it at this point that the question of a hypothesis of a financial subsidy for agriculture  came to light.


This is the basis for the recent ad that Vernon ran in the Vernon Morning Star, but the report is purely a financial analysis and does not take into account any of the history and contractual obligations on the part of the’ Utility’ partners.


In another process, occurring simultaneously with Arbitration, a few other proposals have been put forward. One of the latest proposals put forward by Vernon, was to set aside the Arbitration process IF Coldstream and Area B&C allow the voting structure to be changed to population representation with weighted votes on the NORD Board. Another proposal was to set up an independent water utility (see clippings from Morning Star).



The NORD Board represents a much larger area than just Greater Vernon – including Armstrong, Enderby, Spallumcheen, Lumby, Area D, E, and F, but the voting would remain with the original partners. Under this Governance Vernon would get weighted votes representing 35,000 population, while the weight for Coldstream would represent 10,000 population, and  another 10,000 population for Area B&C. combined.  i.e.  a ratio of 7 to 4  Vernon vs Coldstrem,B&C.


Vernon’s position is that water rates should be based on the amount of water consumed, i.e.: volume.  Because Vernon has a larger residential (domestic) customer base, and residential customers use less volume of water than agricultural customers, then, in a nut shell, according to Vernon their customers should pay less than they are paying now.  Under the present system, it would appear that the Vernon residential customers are subsidizing Agricultural rates to a greater extent than anyone else, and that seems unfair to them.  However it can be argued that no such subsidy exists, since most of the costs incurred are for water treatment, and Agricultural users do not require treated water, all of these upgrades were for the benefit of the Domestic users.


Coldstream and Electoral Areas B&C’s position is that, yes, the domestic tax base in ALL jurisdictions is “subsidizing” , for lack of a better term, agricultural water rates, but that was one of the reasons the amalgamated water utility was formed in the first place. A large portion of the water licenses belonged to the agricultural users before the formation of the amalgamated water utility, this was a well understood part of the deal when the ‘Utility’ was formed. Assurance that agricultural rates would remain competitive with those charged in other communities, was part of the founding principles upon which the new water utility was formed.


As explained above, in the historical summary, the agricultural users had the water licenses Vernon needed in order to allow it to develop new areas, and consequently increase its tax revenue. The real estate value of all the new properties that were able to be developed by virtue of Vernon’s access to new water licenses as a result of the amalgamated utility, are directly related to the value of the water. A beautiful view lot at ‘The Rise’ is worthless without water…try selling one.  Once Vernon was able to secure water supply the new lots had great value, and were taxed accordingly.  This created a financial benefit for the city of Vernon for many years, ironically now a lot of these lots have remained undeveloped and therefore do not consume any water, thereby limiting their actual contribution to the water utility revenue.


The position that Vernon is taking on devolution is:

1)That the rate structure is unfair to domestic users.

2)Based on volume of consumption, the Vernon customers would be better served by taking control of their own distribution of water.


The position that Coldstream and Electoral areas B&C are taking is:

1)That the original set of principles upon which the Greater Vernon Water Utility (GVWU) were formed, were based on a trade off of mutual benefits for the parties.

2)The priceless water licenses that were held by Agricultural users ( in order to insure the viability of agriculture in the future) are more than enough compensation for Vernon’s participation in the combined utility.


Furthermore, when the combined water utility was formed, one of the conditions that the provincial government insisted on , was the formation of a Master Water Plan (MWP)to address how the goals of the new regional water utility would be carried out. The MWP called for the separation of domestic and agricultural water.  The MWP was never followed, and right from the start the GVWU selected its projects to favor improved services (and consequently improved property values and taxation revenue) for the City of Vernon.  That is not surprising given that these improvements stood to benefit the greatest number of people, and given that engineers argued that this was the most cost effective way to go.  The reality was that this was the most cost effective in the short term for the water utility but most of the benefit was accruing geographically to Vernon and effectively to the Vernon tax base. In the long term there would be a price to pay if the interests of the agricultural users and less populated fringes of Coldstream and electoral areas B&C were continuously superseded by the interests of the more numerous domestic users.


Now the time has come we are going to have to pay the price for not separating the agricultural and domestic water supply when we could have.  Now with the construction of the Duteaux Creek water treatment plant (DCWTP), areas of Coldstream that have been suffering with inferior quality water, are finally going to see some benefits.


Now is the time Vernon is choosing to withdraw from the distribution side of the water utility.


Vernon is not getting a raw deal, as it seems to be implying, Vernon got a very sweet deal.


Despite Vernon’s blatant self interest in the first few years of operation of the GVWU, it’s partners Coldstream and Area B&C are still willing to abide by the founding principles of the water utility.  Coldstream and Areas B&C want to see the status quo in the water utility - we do not want to see the water utility devolve.  The strength of the utility is in it’s ability to spread out the cost of supplying and distributing a high volume of water for agricultural use at a competitive rate by having a large domestic base.


If Vernon is allowed to withdraw from the distribution side of the water utility then it must properly compensate all the other partners for all the benefits it received, and continues to receive. Coldstream and Areas B&C have been very accommodating and patient since 2003. Initially Vernon cited operational and control issues with scheduling of public works, as the reason for seeking a service review and withdrawal from  the service. Coldstream and Areas B&C were very willing to discuss and deal with all of Vernon’s issues in this regard, but every time an issue was dealt with another one emerged.  Coldstream even went as far as signing a set of devolution principles, a signature they have now rescinded.  Now the true reason for Vernon’s desire to withdraw has come to light, as stated at the beginning of this letter, it is their dissatisfaction with the pricing structure of a water utility that is designed to stabilize agricultural rates at the expense ( as Vernon sees it) of domestic customers.


In their “Statement of Response” position paper, Vernon refers to “the assumption of bona fide agricultural use” stating that “this may not reflect the actual use


Coldstream and Areas B&C believe this statement is at the heart of the true problem. Vernon, with 80% domestic users and 20% agricultural users, is eyeing the rural areas of Coldstream and the Electoral Areas, and judging that there is a lot of water waste, hobby farms, and Country Estates, that may be unjustly benefiting from reduced water rates. Water rates that they view are in large part subsidized by Vernon domestic users.


If this is the problem then Vernon should discuss its concerns up front with all the partners, water conservation and bona fide agricultural use are concerns of all the partners.  Instead of meeting with a mediator and communicating with all the partners in the water utility, Vernon is insisting on forcing Arbitration. Arbitration will be very expensive with legal fees mounting easily into the hundreds of thousands of dollars.


Who knows what the solution will be …. we can only hope that the arbitrator will be more intelligent than the politicians. At this point the only thing that is certain, is that the solution will be expensive to all the taxpayers in the end.



Maria Besso 


( written Nov.1st, 2009)



This debate is really about putting a price on agricultural water in an arid area that has a lot of desirability for urban development.


Gone are the illusions that water is free, there is a cost!


We have to stop wasting water and using more, every year, than falls as precipitation, or else we will enter into an unsustainable model of behavior that will have dire consequences for the future.



 


February 2010 Update:

On Feb. 8th,  2010 the Arbitrator ruled in Coldstream and Electoral Area B&C’s favor. He ruled that he, (the Arbitrator), does not have jurisdiction to rule on a partial devolution of the (Greater Vernon Water) GVW function . ie: Vernon cannot pull out of only the “distribution “ side of the utility. The Arbitrator said he could rule on full withdrawal or no withdrawal not partial withdrawal.


As of May 2010 the City of Vernon has appealed the Arbitrators Ruling.

The Municipality of Coldstream has opposed the appeal.

Electoral Area B & C were not able to oppose the appeal because the NORD Board voted not to do so.


                                     

                                                                      

 



 

Coldstream....Rural Living at its best!

The grass is not, in fact, always greener on the other side of the fence. Fences have nothing to do with it. The grass is greenest where it is watered.”


Robert Fulghum (1937–),

from It Was on Fire When I Lay Down on It



“ Thousands have lived without love, not one without water.”


W.H. Auden (1907–1973),

American Poet

 

Water IS Life!

 
Back To Water  Devolution CLIPPINGSWater_Devolution_clippings.html