Calgary wants to borrow $1B for water projects to meet demands of growing population

City of Calgary administration outlined a number of major water projects on Tuesday as part of its proposed budget adjustments for 2025.

The city is eyeing the construction of $1.5 billion in projects. To make it happen, the city wants to borrow more than $1 billion. The debt would be repaid through monthly payments on resident utility bills and the collection of off-site levies.

The plan comes after a summer that saw a major water feeder main fail, and amid rapid continuing population growth in the city. 

The list of projects includes two new feeder mains, a new water treatment plant and major upgrades to two existing wastewater treatment plants.

There are no firm budgets for any of the projects because the numbers in this week's budget adjustments are preliminary. Design work hasn't been completed, construction contracts haven't gone out to the market.

However, city administration is "requesting council approval of authority for the city to borrow up to a maximum of $1,038,718,000 to a maximum term of 25 years for water resources," the borrowing bylaw states.

New projects detailed

The new water treatment facility would be built near the existing Bearspaw Water Treatment Plant, said Michael Thompson, the city's general manager of infrastructure services.

This would allow the city to provide treated water to an ever growing number of Calgarians and also improve redundancy in the system. 

This past June, a rupture in Calgary's most important water feeder main — built nearly 50 years ago — led to weeks of water use restrictions as repairs were carried out.

The incident revealed that Calgary has limited capacity redundancy. With an additional plant, if there's an issue with the existing Bearspaw facility, the new one would continue to operate, Thompson said.

The new facility is projected to open in 10 years. Once operational, Calgary would have three plants — the two at Bearspaw plus the Glenmore Water Treatment Plant. 

The money would also cover an expansion of the Bonnybrook Wastewater Treatment Plant to help keep up with Calgary's growing population. The city has already spent more than $1 billion at the site over the past decade. 

It is also planning a modernization of facilities at the Fish Creek Wastewater Treatment Plant.

In recent months, the city has often discussed its North Calgary Water Servicing project and South Calgary Water Servicing project. Those projects have long been required for growth, Thompson said. However, the projects are now being accelerated.

"It's required for both growth and for redundancy," Thompson said. "Because of the accelerating population growth the city's undergoing, we really need to get those projects online." 

The two major water feeder main projects that the city is working on will take a long time to complete, spanning beyond the city's current 2023-26 budget cycle.

Proposed higher monthly utility rates

To fund the new infrastructure, Tuesday's budget adjustments propose an increase to utility fees for 2025 and again in 2026. The water/wastewater/stormwater increases work out to a little more than $4 for typical residential metered water usage of 19 cubic metres per month. 

The city estimates the rate increases would fund base operating expenditures of $105 million in 2025 and $40 million in 2026.

On Tuesday, Coun. Sonya Sharp said the significant new borrowing included within the proposed budget adjustments concerned her, adding the city wanted to maintain its standard of borrowing.

"We've always been very proud of ourselves … about making sure everyone knows that," said Sharp, councillor for Ward 1. "I would say that there's a risk there."

Ward 10 Coun. Andre Chabot said he wasn't overly concerned about the credit rating impact. 

He said much of the borrowing is considered "self-supported debt," meaning it would be paid back through off-site levies and user fees.

"We're well below our threshold, so that's not an issue. The issue is, how much are we going to continue to raise rates to people? Because that's the same as a tax increase," Chabot said.

Council is set to begin its annual budget debate on Nov. 18.