Conversion Q & A/Cost Analysis
April 07, 2022
What happens to the ownership of lands or right of ways or water licences if conversion proceeds to the RDOS?
The Cabinet order dissolving the OFID will transfer title for all lands, easements and rights of ways in the name of the OFID to the RDOS. Similarly, the water rights and licences will be transferred to the RDOS.
What happens to all assets including investments and reserve accounts?
With the Cabinet order all assets of the OFID would be transferred to the RDOS. All of the transferred assets, including any funds, would remain with the same services and benefit the same ratepayers.
What happens to the OFID staff?
The three full-time staff (2 in operations and 1 administrative) would be transferred to the RDOS at conversion and integrated into a similar type of position. The duties currently held by the part time staff would be allocated to RDOS operations, administrative or finance staff.
What happens to the area that benefited from the OFID services ?
The RDOS would have bylaws prepared for each service being transferred. The RDOS service area would include the same benefiting participants as the OFID. This means that the people receiving or benefiting from a service before conversion would continue to receive and benefit from the service afterwards.
What happens to the way costs are charged to service participants?
The OFID uses ‘tolls’ and ‘taxes’ that break each property out by Grade, Group and Type of use to recover costs for each service. The existing rate structure would be inherited and used until the RDOS Board changed the method for cost recovery.
To provide comparable rates when looking at operation provided by OFID and what is anticipated for operational costs by the RDOS, these assumptions were made:
- Rates based on OFID classification: Taxes C-I, Tolls a. for Single Family Dwelling
- Rates include contributions to reserves each year for both OFID and RDOS but do not include upgrade costs or new debt payments
- OFID operational costs increase by 8% annually due to increasing need for reserves to complete required projects
- RDOS operational costs increase by CPI (typically 2%) annually, but with borrowing and grants, the reserves do not need the 8% increase each year
Why are Operational Rates Lower?
- Economy of scale and experienced staff would be taking on the proposed four services
- RDOS operates other water systems, cemetery, parks and trails and recreation facilities
- RDOS shares common resources over whole organization
- RDOS is eligible to receive senior government grants for up to 2/3 funding on capital projects
- Membership in the Municipal Finance Association which typically has lower long term borrowing rates than banks —Spring 2022 MFA borrowing rates for 20 years is at 3.71%