Policy Change Partially Used To Justify A Subsidy Elimination

An official policy change during the tenure of the previous city manager has been used by Council to justify the removal of a taxpayer funded subsidy on the replacement of hundreds of private sewer connections.

In an unanimous 7 - 0 vote Council decided to eliminate the subsidy paid when property owners decided to replace their no corrode sewer lines.

No corrode sewer lines (often referred to as tar paper pipes) were sewer pipes used for sewage connection lines during the 1940’s to 1960’s when there was a shortage of metal following World War II. The no corrode pipes were wood fiber based impregnated with cold tar and then used for service connections for sewage. The “tar paper pipes” were highly popular across North America until they were discontinued after problems developed with flaws in using paper for fluids.

No corrode was once touted as a miracle pipe with a 50 year life expectancy but developed major structural problems as it could not resist moisture and began collapsing in 30 years or less. Alternatively the moisture softened the walls of the pipe and allowed what had been called an impervious pipe to easily be penetrated by tree roots.

“The pipes have been in service for 55 to 65 years of age and have met a reasonable life expectancy,” director of public works and utilities Darrin Stephanson told Council.

Stephanson said originally approximately 2500 homes had no corrode sewer service connections installed but today following the on-going replacements there are approximately 1800 remaining no corrode connections in service.

Reading from a report he said the City had adopted a policy in the 1970’s where the City paid 75 percent of the cost to replace the pipes. In 2005 the subsidy was changed to where the City’s subsidy reduced by one percent per year due to the pipe still being used.

At the present time the City provides a 32 percent subsidy with the subsidy reducing two percent per year with the subsidy set to be zero in 2036 which was the original timeline for the completion of the cast iron water main replacement program.

Although the program could have potentially subsidized all of the 2500 properties serviced by no corrode service connections the City had an unofficial limit on the number of properties it would service each year so people had to get their applications in early if they wanted to be on that year’s replacement list.

The program has cost the City of Moose Jaw $687,000 over the last three years with the total liability of $5.1 million if the program remained active and all affected property owners took advantage of it. There is no amount set aside to directly fund the program.

Stephanson pointed to the fact that the City did not own the sewer line service connection and that no other city in the province provides a subsidy like Moose Jaw does.

“The service connections are 100 percent owned by the property owner therefore with this subsidy other ratepayers are effectively subsidizing private infrastructure replacement. As such Administration does recommend the City discontinue the no corrode subsidy,” he said.

It needs to be noted that initially property owners owned and were responsible for service connections from the property line to their structure and the City owned the service connections from the property line to the main lines. This meant the City owned and was responsible for the sewer connections from the property line to the

The change was later made by the Council of the day defining the ownership of the service connections to be that the property owner owned the water service connection from the property line to the structure with the city owning the water line from the property line to the water main. The policy or ownership change made at the time transferred the sewer connection from the main sewer line to structure to that of the property owner.

“That infrastructure has lasted and I think the City should be off of the hook,” Councillor Heather Eby said. “I don’t know if the City should be on the hook and I think the time has come (to discontinue it) and people have the opportunity to put this on their taxes.”

Councillor Eby said she could not say why the City was subsidizing the replacement program to begin with.

“I wonder if it was a moral obligation instead of a legal obligation so that is when we have to be careful to make those decisions,” she said. “I feel the time has come for this to end, 55 or 65 years those connections have lasted.”

Mayor Fraser Tolmie said he did not want to belabour the point of the cast iron water main Local Improvement Program (LIP) but that controversy had shown residents had wanted the entire City to pay for the main pipes while the property owner bore the responsibility of the cost of the service connections.

“We understand the community is willing to pay for the community portion of the line so I think this is understandable,” Mayor Tolmie said.

Asked if property owners could still take advantage of replacing and financing the service connections through the City (the current financing program charges four percent interest annually over seven years) if the subsidy was removed Administration said that option would still exist.

Installing new service connections during the cast iron water main replacement program is the preferred option and saves property owners money, Puffalt said.

“The opportunity when the contractors are in the area to reduce the cost to homeowners is there as there is no mob(ilization) and demob(ilization) costs and the excavation is partially open anyways,” he said. “That is absolutely the best time to do that when we are coming through and ripping up the streets anyways.”

Councillor Jamey Logan agreed with eliminating the subsidy.

“I agree the time has come these lines have lasted through their life expectancy,” Councillor Logan said.

In a 7 - 0 vote Council agreed to discontinue the subsidy and the savings will be re-directed to the water and wastewater utilities capital deficit.