Deep Bay Improvement District

1. Deep Bay Improvement District November 20, 2013

2. BSI Developed Wells (suggested area) Recommendations from hydrologists (Pacific Hydrology and Guiton Environmental Consulting) are that new wells be developed outside the current small well field of the District. The area suggested could be on BSI lands.

3. Protecting the Water Supply Does the water supply need protecting? What would be the cost to replace the entire infrastructure of DBID? What is the current status of bylaws? What bylaws are needed? Request that DBID servicing standards bylaw be established for very large developments

4. Does the water supply need protecting?

5. Does the water supply need protecting? The RDN Bylaw 500provides protection for areas where the RDN provides water.  The RDN provides no protection to improvement districts or other water purveyors. It is relatively rare for an improvement district to be faced with a development that would more than double demandsfor water. Developers are there to make money. Shortcuts will be taken unless explicit rules are required.

6. $$$ What would be the cost to replace the entire infrastructure of DBID?

7. What Is the Cost of a Water System? Estimated Replacement Value of DBID’s Infrastructure The estimated cost to build the system uses the costs estimated by the McElhanney Water System Evaluation reported in February 2008 (based on 2007 costs). These values were brought up to 2014 costs based on a 2% compounded inflation rate/year. From the Deep Bay Capital Replacement Schedule: Original Cost to Build • Wells built in 1973 cost ~$75,000 • Wells built in 1997 cost ~$145,000 • Wells brought on line 2013: EPCOR $300,000

8. 2014 Estimated Replacement Value of DBID Water Works (adjusted for inflation @2%/yr.) This is probably understating the replacement costs. With inflation compounding at 2%/ year, the cost would go up by about $420,000/year.

9. Original estimates were 4 times over current usage. How Much Water Is Required By BSI?

10. Was BSI Acting in Good Faith? There appears to be no protection in current DBID bylaws to prevent “transfer” of water rights to additional properties owned by the developer The original request was for more than 22 L/s or 4 times current usage. Was there a hidden agenda here to obtain twice as much water than was necessary in order to “transfer” what they didn’t need for the current property to other properties they may develop within the DB District? Lantzville-Nanaimo Agreement included: Restrictions on provision of water (i.e., properties within the boundaries of the District of Lantzville) and no resale of water.

11. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS The RDN determines the requirement of “how much water is required” not the developer.

12. Phased Development Process

13. However, BSI will continue with their high density development application and re-apply in the near future. • Baynes Sound Investments (BSI) has just hired a new hydrologist…Gilles Windling – GW Consultants • GW Consultants are now testing Deep Bay’s water system-- for “surplus” water • This would indicate BSI is going for a “phased development” pattern to get their foot in the door for a 700 unit proposal • What are the potential ramifications to residents of Deep Bay?

14. Phased Development Process Current estimated replacement value of the DBID infrastructure: $21 million Sometimes called “the pay as you go” plan for developers More than doubling the number of units currently serviced by DBID would also more than double demands for water. This would require a service structure that includes: 7 wells Equivalent sized reservoirs to DBID Pipelines within the strata itself Pipelines to link to the DBID water system The developer will only be required to pay $6,500/unit even if the actual cost to supply water services costs much more. This payment includes infrastructure he builds within the strata. Phase I may only be for 10 units. DBID may receive only $65,000 RDN has requested a servicing commitment for the full 700 unit development. This would be a legally binding $21 million commitment for the DBID based on doubling the infrastructure for DBID. There is no timeline given for this commitment in current bylaws. Shouldn’t this commitment only commit the district to maybe 5 years?

15. “Surplus” Water Some developers attempt to call this engineered water supply “surplus”. This is “water piracy” . Without good bylaws requiring large developments to find and develop new water supplies then the district would be vulnerable to this form of piracy. (more on this later) • It is not “surplus” water when engineered into a purveyor's water system; the water supplier must plan for sufficient water supplies over average daily requirement to provide for: • Peak water usage after 150 days without rainfall • Expected growth from fill in lots and smaller subdivision of 2 to 10 lots • Extended dry periods that last 2 or more years without sufficient precipitation to fully recharge the aquifer

16. What are DBID’s bylaws regarding new developments?

17. Current bylaws in Deep Bay Improvement District Who is Responsible For Finding and Developing New Sources Of Water

18. Baynes Village Centre Water Services Costs to Find Water The management and administration of the process would likely require additional staff time or possibly additional staff What would be the result of not being able to find additional water supplies – after committing water service to the development? Legal action by the developer may result. Current process for the development of new water • Deep Bay Improvement District finds the water, applies for crown land approval, obtains engineering services, obtains hydrological services for well drilling, hires the well driller… etc. • oops.. No water $$$ It now costs approximately $300,000 to bring a new well into production. (EPCOR)

19. Deficient Bylaw DBID Bylaws Regarding Developments The RDN has stated in Staff reports that all infrastructure must be completed before construction of homes will be allowed to begin. How is this bylaw going to work under this condition? The application of this bylaw would not provide sufficient funds to develop even one well in a phased development. There are no timelines requiredregarding completion of the development. The developer will profit when the land is sold with water rights. Bylaw 201: Comprehensive Capital Expenditure Charge “The capital expenditure charges may be fixed for the sole purpose of providing funds to the improvement district to pay the capital cost of providing, constructing, altering, or expanding water facilities in order to service directly or indirectly, the development in respect to which the charges are fixed” (March 2008 – now more than 5 years old) Current charge: $6,500/unit • Phased development: • Only 10 units built out of 700 – Charge: $65,000 • Full Build out of development- Charge: $4,550,000

20. Deficient Bylaw DBID Bylaws Regarding Developments • Problem: • The distribution mains, etc., must become the property of the district – this would include necessary right-of-ways for access and fire protection. • The last phased strata development (36 units) utilizing this bylaw resulted in incomplete payment of charges, legal actions and costs. What could happen with a 700 unit strata? Bylaw 169: Bare-Land Strata Subdivision Water Regulations 6. To assure adequate maintenance of the distribution mains, fire hydrants, and other fittings within the subdivision, the improvement district may enter into legal agreement with the Strata Corporation or strata council respecting maintenance and repair of the works.

21. What bylaws are needed?

22. Learning from other water purveyors and their bylaws Both the RDN and DBID operate under the Local Government Act. We can operate with similar bylaws and standards. REGIONAL DISTRICT OF NANAIMO BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS

23. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS In addition Explicit requirements for: Water storage volume Water distribution piping Service connections Fire hydrants Valves & Fittings Trenching and Backfill Water meters Features Not Found in DBID Bylaws • The developer is required to build the water system with theses specifications • Explicit requirements for: • water demand • fire flows • Well drilling • Professional designs

24. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS The developer makes the financial commitment, not the community. Financial Commitment of the Developer Completion Date requirement that all work to be carried out and completed by that date. If project is not completed by the “Completion Date”, the RDN may use the funds secured by the Letter of Credit to complete the work at the expense of the Developer. Who will own the water system on completion? • Transferring the Water System • Final Inspection • Transfer Agreement by Developer • Maintenance Agreement • Letter of Acceptance of the Works by the RDN • Dedications, easements and right-of-ways

25. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS The Developer pays the costs for development, not the community. Transfer Agreement System of Works Certification of Installed Works Maintenance Agreement Wellhead Protection Report Standby Irrevocable Letter of Credit Latecomer Agreement Formsincluded in Bylaw 500 • Subdivision Servicing Agreement • Irrevocable Letter of Credit • Letter of Assurance • Certificate of Design • Certification of Installed Works • Fire Hydrant Use Permit • Hydrant Certification Form The developer pays for water used during construction

26. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS Appendix 1 Subdivision Servicing Agreement Appendix 2 & 3 Standard Drawings (16p) Approved Products List (5p) Appendix 4-6 Letter of Assurance (commitment of compliance) Certificate of Design Appendix 7 & 8 Fire Hydrant Use Permit (charges $2/cubic meter and damage deposit: water used during project development) Fire Hydrant Certification Appendix 9 & 13 Transfer Agreement Maintenance Agreement Various other required Agreements Developer Commitments • That all works become the property of the RDN • That the Developer shall give all prospective purchasers a copy of this agreement and covenants and bring to their attention that this agreement restricts their ability to apply for a building permits. This would prevent the developer from selling properties until the water supply has been completed.

27. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS Provides protection from developers lawsuits Developer assumes all risks and financial commitments The DBID would maintain control with much less administration overhead than would be required under current bylaws of the district. Why an equivalent bylaw should be used by DBID. • RDN Bylaw 500 is • comprehensive • Has been vetted by legal advisors • Has been developed by professional engineers • Has been tested by the RDN to protect the RDN interests and services

28. RDN BYLAW NO. 500 SCHEDULE ‘7D’ COMMUNITY WATER SYSTEM STANDARDS This Bylaw has been applied to the following developments: Lakes District Schooner Cove Fairwinds Phased Developments must have a Phased Development Agreement (PDA) before the property goes to zoning. This would include timeline requirements. www.rdn.bc.ca/cms/wpattachments/wpID1185atID5792.pdf

29. DBID • Request that DBID servicing standards bylaw be established based on the RDN Bylaw 500 Section ‘7D’ • Without a similar bylaw DBID would be vulnerable to • Large financial commitments • Water commitments it may not be able to provide • Additional costs, including additional staff to manage the development of new water sources

30. Questions?