Policy & Priorities Committee Agenda

February 7, 2017 9:00 a.m. 911 – 32 AVENUE NE CALGARY, AB, T2E 6X6

CALL MEETING TO ORDER

UPDATES/ACCEPTANCE OF AGENDA

A CONFIRMATION OF MINUTES - December 6, 2016 Minutes Page 3

B REPORTS - None

C APPOINTMENTS

MORNING APPOINTMENTS 9:00 A.M.

1. All Divisions – File: 2000-150 Utilities Operations Service Delivery Review

Presenter: Stack’d Consulting

Staff Report Page 7

Presentation Page 10

2. All Divisions – File: 4050-100 Review of Gravel Road Research and Development Program

Presenter: Howard Bell, Manager Roads Maintenance

Staff Report Page 107

Presentation Page 109

3. All Divisions – File N/A STARS Air Ambulance Service Update & Funding Request

Presenter: Glenda Farnden, Senior Municipal Relations Liaison

Staff Report Page 136

Presentation Page 138

Agenda Page 1 of 158 Policy & Priorities Committee Agenda

February 7, 2017 9:00 a.m. 911 – 32 AVENUE NE CALGARY, AB, T2E 6X6

4. All Divisions – File: 5051-400 Mountain View Regional Water Services Commission

Presenter: Moutain View Regional Water Services Commission

Staff Report Page 148

Presentation Page 150

D GENERAL BUSINESS -None

E BYLAWS - None

F UNFINISHED BUSINESS/BUSINESS ARISING - None

ADJOURN THE MEETING

Agenda Page 2 of 158 ROCKY VIEW COUNTY POLICY AND PRIORITIES COMMITTEE December 6, 2016 Page 1 ______A regular meeting of the Policy and Priorities Committee of Rocky View County was held in Council Chambers of the Municipal Administration Complex, 911 – 32nd Avenue NE, Calgary, Alberta on November 6, 2016 commencing at 9:00 a.m.

Present: Councillor R. Ashdown, Division 4 (Chair) Councillor E. Lowther, Division 8 (Vice Chair) Councillor B. Kendall, Division 9 Councillor L. Breakey, Division 1 Councillor J. Arshinoff, Division 2 Councillor M. Bahcheli, Division 3 (Arrived at 9:57 a.m.) Deputy Reeve E. Solberg, Division 5 Reeve G. Boehlke, Division 6 Councillor L. Habberfield, Division 7 (Arrived at 10:43 a.m.)

Also Present: K. Grieg, County Manager K. Robinson, General Manager, Corporate Services C. O’Hara, General Manager, Development Services B. Riemann, General Manager, Infrastructure & Operations Services J. Anderson, Planner S. Jewison, Manager, Operations C. McCullagh, Manager, Recreation and Community Services A. Zaluski, Senior Planner C. Satink, A/Manager, Legislative Services J. Sinclair, Legislative Clerk-Council

Call to Order

The Chair called the meeting to order at 9:10 a.m. with all members present with the exception of Councillor Habberfield and Councillor Bahcheli.

1-16-10-04-01 Updates/Acceptance of Agenda

Update to Agenda That the order of agenda items be updated so agenda items C-1 (Balzac West Landowners Committee) proceeds last and agenda item C-4 (Fulton Industrial Park) proceed as the last presentation.

MOVED by Councillor Lowther that the December 6, 2016 Policy and Priorities Committee agenda be approved, as presented. Carried Absent: Councillor Bahcheli Councillor Habberfield

Agenda Page 3 of 158 ROCKY VIEW COUNTY POLICY AND PRIORITIES COMMITTEE December 6, 2016 Page 2 ______

1-16-10-04-02 Confirmation of Minutes

MOVED by Councillor Lowther that the November 1, 2016 Policy and Priorities Committee meeting minutes be approved as circulated. Carried Absent: Councillor Bahcheli Councillor Habberfield

1-16-10-04-03 (C-4) Division 4 –Fulton Industrial Park Project Brief File: N/A

Presenter(s): Brad Chorley, RESLAND Development Group

MOVED by Councillor Lowther that the presentation from RESLAND Development Group be received as information. Carried Absent: Councillor Bahcheli Councillor Habberfield

1-16-10-04-03 (C-2) All Divisions –Sanitary Sewer Servicing – Lakes of Muirfield, Wheatland County File: N/A

Presenter(s): Jimmy Sousa, Lakes of Muirfield

Councilllor Bahcheli arrived at 9:57 a.m.

MOVED by Councillor Kendall that the presentation from Lakes of Muirfield be received as information. Carried Absent: Councillor Habberfield

MOTION ARISING MOVED by Councillor Kendall that Council have a workshop in March 2017 to discuss growth opportunities for wastewater and potable water, specifically Crossfield and Muirfield and include the financials and business case of current system as it has progressed to date.”

Agenda Page 4 of 158 ROCKY VIEW COUNTY POLICY AND PRIORITIES COMMITTEE December 6, 2016 Page 3 ______MOTION TO AMEND MOVED by Councillor Arshinoff that the motion arising be amended to include “include the financials and business case of current system as it has progressed to date.” Carried Absent: Councillor Habberfield

MOTION TO AMEND MOVED by Reeve Boehlke to amend the Motion Arising to replace ‘January 2017’ with ‘March 2017.’ Carried Absent: Councillor Habberfield

Voting resumed on the motion arising and it was Carried.

The Chair called a recess at 10:21 a.m. and called the meeting back to order at 10:36 a.m. with all previously mentioned members present.

1-16-10-04-05 (D-1) Division 9 –Spray Lakes Sawmills Recreation Park Society Capital Funding Request File: 6070-175

Robin Mitchell, Spray Lakes Sawmills Recreation Park addressed questions of Council.

Councillor Habberfield arrived to the meeting at 10:43 a.m.

MOVED by Councillor Kendall that the Spray Lake Sawmills Recreation Park Society’s capital funding request, not to exceed $72,680, be recommended to Council for approval. Carried

1-16-10-04-03 (C-3) All Divisions –Marigold Libraries Annual Update File: N/A

Presenter(s): Michelle Toombs, Marigold Library System

MOVED by Councillor Kendall that the Marigold Library System annual report be received as information. Carried

The Chair called a recess at 11:17 a.m. and called the meeting back to order at 11:25 a.m. with all previously mentioned members present.

Agenda Page 5 of 158 ROCKY VIEW COUNTY POLICY AND PRIORITIES COMMITTEE December 6, 2016 Page 4 ______

1-16-10-04-03 (C-1) Division 7 –Balzac West Landowners Committee Presentation File: N/A

Presenter(s): Robert Weston, ERW Consulting Inc. Phil Perry, Balzac West Landowner (C-1 Exhibit 1) Connie James, Balzac West Landowner (C-1 Exhibit 2)

MOVED by Councillor Habberfield that the presentation from ERW Consulting Inc. (representing the Balzac West Landowners Committee), regarding a proposal to develop the Balzac West lands, be received as information. Carried

Adjournment

MOVED by Councillor Lowther to adjourn the December 6, 2016 Policy and Priorities Committee meeting at 11:57 a.m. Carried

______CHAIR

______CAO or Designate

Agenda Page 6 of 158 C-1 Page 1 of 100

UTILITY SERVICES TO: Policy & Priorities Committee DATE: February 7, 2017 DIVISION: All FILE: 2000-150 SUBJECT: Utilities Operations Service Delivery Review

1ADMINISTRATION RECOMMENDATION: a) THAT the Utility Operations Service Delivery Alternatives Review (Stack’d, January 25, 2017) be received for information; and b) THAT Administration be directed to include the cost of a new position for the Utility Services department as part of the 2017 Budget Finalization process, for Council’s consideration.

EXECUTIVE SUMMARY: In 2007, the Minister of Municipal Affairs signed order in Council 183/07 creating the Aqueduct Utilities Corporation Regulation. The intent of creating the Corporation was to provide a means to effectively manage utility service delivery within Rocky View County. Over the years, County Council has debated the feasibility of implementing the Corporation and has commissioned various outside consultants to assess and provide recommendations. In accordance with the 2015 - 2018 Corporate Strategic Plan Key Objectives for Sustainable Communities to “Research and assess options for County utility system management” and to “Create a viable water management strategy to address storm water, wastewater, and potable water issues”, a further review was completed in 2015 by Stack’d Consulting, which considered an Implementation Strategy for Aqueduct and also assessed the feasibility of providing utility service delivery in-house as an alternative to a stand-alone municipal corporation. Stack’d Consulting will be in attendance to present Committee with a summary of their review and recommendations for consideration. Administration has reviewed the submission, concurs with the recommendations and will be following the Stack’d presentation with a recently implemented reorganization of the Infrastructure and Operations structure that elevates the corporate focus on utilities.

BUDGET IMPLICATION(S): An approximately $80,000 addition to the 2017 Utility Services budget is required to achieve the recommended enhanced internal solution for utility operations service delivery (new position for 8 months). Administration recommends that Council recover this through water and wastewater user fees.

BACKGROUND: In 2006, the County began exploring the prospect of creating a Municipal Corporation to manage all water, wastewater and solid waste functions within the County’s control. The goals of this initiative were as follows:

______1Administrative Resources Stuart Jewison, Manager, Utility Services Byron Riemann, General Manager

Agenda Page 7 of 158 C-1 Page 2 of 100

 Provide financing options and debt management opportunities.  Address anticipated growth in utility operations.  Provide an opportunity for regional systems.  Foster and improve relationships with neighboring jurisdictions. From 2006 to now there have been many milestones achieved related to the formation of a Municipal Corporation. As of the date of this report, Administration has completed the following significant steps in the path toward implementing the County’s Municipal Corporation, Aqueduct:  Business Plan and Financial Model – Completed in 2006/2007  Ministerial Approval (Regulation 183/07) – Completed 2007 (Updated in 2012)  Corporate Registration – Completed 2007  Implementation Review and updated Financial Model – Completed 2012  Utility Operations Service Delivery Alternatives Review – Completed 2015 The Implementation Review that was completed in 2012 was the first part of a two-part exercise. At the time it was contemplated that, depending on the results of the Implementation Review, the development of an Implementation Strategy would follow. The Implementation Review was presented to Council in 2012 and the results confirmed the original business plan which showed that Aqueduct was a viable alternative for managing the County’s utility systems. In 2014 Administration presented Council with a report recommending that funding be allocated to develop the Implementation Strategy contemplated in the 2012 Implementation Review. The Implementation Strategy was deemed necessary at the time given the County’s utility customer base had grown from a relatively localized base to a significant diversified customer base throughout the County. With this increased customer base came a need to revisit the County’s management of utilities. Council approved the funding for the Implementation Strategy which was to include an update to the Aqueduct business plan, an option for the creation of a utilities department within the County, and a public communication and consultation strategy. The Implementation Strategy project, awarded to Stack’d Consulting, was completed in 2015 (which will be available on the County website in the form of the “Utilities Operations Service Delivery Alternatives Review – Stack’d Consulting, January 25, 2017”) and included the following scope:  Develop an implementation strategy and business plan to move the County water and wastewater utilities to Aqueduct Utilities Corporation, a wholly-owned municipal controlled corporation operating at arms-length from Rocky View County.  Provide recommendations on enhancements to the County’s current utility service delivery model as an option for delivering water and wastewater services within the County structure.  Compare the key advantages and disadvantages of each of the above service delivery alternatives and recommend which alternative will provide the best long term solution for managing the County’s current and future utility operations. The review was aligned with the 2015 – 2018 Corporate Strategic Plan Guiding Principles and Key Objectives for Sustainable Communities as they relate to infrastructure and utility management, and concluded that it is not yet prudent to proceed with the Aqueduct model, because the utilities would not be financially sustainable in the short to medium term. Given the large extent of capital infrastructure relative to the still low number of customer connections, the review surmised that Aqueduct would require on-going funding assistance through the County and as such would not meet the MGA minimum test requirement to be independent of its parent for its ongoing operations. Based on this conclusion, the following recommendations were made:  The “Enhanced Internal Solution” alternative be adopted by the County to keep the County Utilities in house, at least for the short term.

Agenda Page 8 of 158 C-1 Page 3 of 100

 Support resourcing to the Utilities to focus on implementing the draft Potable Water Servicing Strategy and increase the customer base of County-owned and operated utility infrastructure.  Take initial steps to start managing and treating the Utilities as if they were a distinct operating entity by increasing the management capacity to a full-time manager position and developing more transparent and full-costing financial and operational performance reports.  Evaluate how to add currently unallocated cost components to utility customers.  As new customers are connected and the financial results approach break-even, consider adding in future organizational structure changes to slowly evolve towards the desired Aqueduct organizational roadmap.  Consider transitioning to Aqueduct at a future date if and when the projected Utility operating results and cash flows can be fiscally self-sustaining and not dependent on Rocky View County for on-going funding assistance. Administration supports the recommendations of the Stack’d review and has developed the attached corporate structure re-organization that aligns with the review’s recommendation of an Enhanced Internal Solution for Utility Operations Service Delivery. Administration recommends Option #1.

OPTIONS: Option #1 a) THAT the Utility Operations Service Delivery Alternatives Review (Stack’d, January 25, 2017) be received for information, and b) THAT Administration be directed to include the cost of a new position for the Utility Services department as part of the 2017 Budget Finalization process, for Council’s consideration. Option #2 THAT alternative direction be provided.

Respectfully submitted, Concurrence,

Byron Riemann Kevin Greig

General Manager County Manager

SJ/bg

ATTACHMENT ‘A’ – Stack’d Consulting Summary Presentation ATTACHMENT ‘B’ – Proposed Corporate Structure Re-organization ATTACHMENT ‘C’ – Stack’d Utility Operations Service Delivery Alternatives Review

Agenda Page 9 of 158 ATTACHMENT 'A' C-1 Page 4 of 100

CONSULTING

Agenda Page 10 of 158 C-1 Page 5 of 100

Project Objectives

This project's purpose was to recommend a specific direction for the future of Rocky View County's Utilities

Alternative 1 Alternative 2 External - Aqueduct Utilities Corporation Internal - Separate Utilities Department

~------• Provide Recommendations on • Develop Implementation Strategy & Enhancements to the Current Service Business Plan Delivery Model

Recommended Long-Term Solution

• Compare Advantages & Disadvantages for Each Alternative

Page 12

Agenda Page 11 of 158 C-1 Page 6 of 100

Context

Rocky View has recently implemented utility infrastructure to serve a growing number of communities within the County • Rocky View now provides I coordinates utility services for the following communities:

Community Water Wastewater

Bragg Creek Yes Yes Elkana Yes - Elbow Valley I Pinebrook - Yes Cochrane Lakes - Yes East Balzac Yes Yes Con rich Yes Yes Prince of Peace - Yes Langdon - Yes

• In addition, a draft Potable Water Servicing Strategy Framework was developed to provide Rocky View oversight across the County Page 13

Agenda Page 12 of 158 C-1 Page 7 of 100

Current Water Utilities

Summary of estimated system servicing and financial data for 2015

Number Water lncu,..d User Amortization Customers Ucense for Growth Revenue Value Improvement East Rocky View System East Balzac $43.59M $15.0M $11.62M 0 3,900 722 61 $999k $1 .13M $964k Con rich $20.58M $750k 0 0 Bragg Creek System Bragg Creek $13.0M $0.97M $1.12M 302 120 120 $625k $281k $179k $132k Elkana $2.95M 0 $2.65M Miscellaneous

Aqua 7 0 0 0 0 0 0 0 $66.5k 0 $0

Other* NA NA NA $998 0 0 $560k NA* NA* NA*

Totals: 4,202 844 181 $80.1M $16.4M $12.59M $4.33M $1.35M $1.31M $1 .10M * Miscellaneous agreements with private systems. For purposes of study it is assumed operating revenues offset operating costs Page 14

Agenda Page 13 of 158 C-1 Page 8 of 100

Current Wastewater Utilities

Summary of estimated system servicing and financial data for 2015

Demand Number Fixed Net Incurred User Amortization Avg ml/dey Customers Book Value for Growth Revenue

East Rocky View System East Rocky View 1,071 88 $48.07M $25.53M 0 3,010 $2.65M $1 .47M $1 .89M Langdon 1,341 1,611 $24.26M $16.06M 0 Bragg Creek System Bragg Creek 55 60 $10.10M $0.97M $1.12M $388k $137k $102k

Elbow Valley 855 937 $4.89M 0 0 $699k $1 17k $699k Cochrane Lakes System Cochrane Lakes 1,049 258 287 $867k $276k 0 $1 43k $13k $143k Totals: 6,244 3,580 2,983 $88.6M* $42.84M $1.12M $3.88M $1.74M $2.83M • Included is an additional $424k NBV of collection system assets for Morgan's Rise not presently in seNice Page 15

Agenda Page 14 of 158 C-1 Page 9 of 100

Current State Observations

Rocky View needs growth in customer connections to better utilize system capacity and cover operating costs 1. Utility infrastructure is young and has a total capacity which far exceeds current demand levels (now approximately 34% overall): • Only the East Rocky View Wastewater System is nearing capacity (approximately -80%) and requires immediate capacity upgrades 2. Given the Utilities' current fixed vs. variable cost structure, the expected operating costs per m3 of customer demand is forecasted to decrease as the systems near rated design capacity levels • East Balzac Water: cost per m3 currently at $3.79 @ 19% system capacity (direct costs only) --+ drops to approximately $1. 78 @ 70% system capacity • In regard to improving operating cost performance, increasing the number of customers for currently underutilized systems is the most important factor 3. Forecasted 2015 user revenues of $3.93 million are not self-sustainable as they are expected to only cover: • 76% of direct operating costs, and • 43% of direct operating costs, allocated corporate overhead, & amortization expenses Page 16

Agenda Page 15 of 158 C-1 Page 10 of 100

Alternative 1 : Aqueduct

The proposed mandate for Aqueduct would include: 1. Provide safe and reliable potable water distribution and wastewater collection and treatment services to customers within Rocky View County; 2. Support Rocky View County's growth plans for both residential and non-residential development by making fiscally prudent investments in utility expansion and upgrades for new customers; and 3. Assume a leadership position for the provision of safe and reliable water and wastewater services across the County by: i. Entering into service agreements with non-County utility entities to document their individual operating area boundaries and ensure appropriate operational standards are met; ii. Facilitating the consolidation of non-County water delivery entities, including transfer to Aqueduct; and

111. Structuring agreements with new water delivery entities to ensure the provision of safe and reliable water services and to plan for the ultimate transfer to Aqueduct.

Page 17

Agenda Page 16 of 158 C-1 Page 11 of 100

Aqueduct Financial Projections

Operating Results: Base Scenario

Aqueduct Operating Results Proforma (2015- 2031)

$18,000.000 $16,000,000 $14,000,000 $12,000,000 $10.000,000 $8.000.000 $6,000,000 $4,000,000 $2,000,000 s $(2.000,000) 20.15 2020 2025 2030 S(4,000,000)

- Utoloty Usage Charges

- Excess of Utility Charges over O&M, Replacement, G&A, & Start up Costs

- Total o&M, Replacement, G&A, & Start-up Costs

• Assuming future revenue increases which only match the rate of cost escalations, the Utility would not be operationally self-sustainable until the mid-to-long term (pending the rate of growth) • Rocky View County would have to fund an additional $8.5M to ensure break-even status Page 18

Agenda Page 17 of 158 C-1 Page 12 of 100

Alternative 2: Enhanced Internal Solution An "Enhanced Internal Solution" must satisfy the following short-term objectives relative to the current state: 1. Provide Full Utility Financial Reporting: • Identify, confirm, and allocate all applicable internal costs, assets, and debts to the Utility; and • Generate regular internally-focused reports on the Utility's fully-loaded costs, revenues, assets, obligations, and system performance. 2. Grow Customer Connections: • Provide focused leadership at increasing the number of customer connections, demand, and user revenues for existing systems; and • Support municipal growth objectives by anticipating and analyzing utility growth opportunities as appropriate. 3. Assume County Water Leadership: • Facilitate consolidation of non-County water delivery entities; • Develop franchise agreements with consolidated entities; and • Plan for consolidation of non-County infrastructure and operations to the County.

Page 19

Agenda Page 18 of 158 C-1 Page 13 of 100

Short-term Internal Organizational Structure An initial step would increase focus and capacity to Utility management, customer growth, and regional leadership

Current Organization Structure Short-term Enhanced Alternative

Manager Manager Operations Operations I Team Lead Utility Operations Strategy & Customer Internal Utility Service Lead Operations Staff Technologist (x4) Utility Operations External System System Operators Operators I Contractors Contractors I

Legend: - New I Modified Position Page 110 D Existing Positions

Agenda Page 19 of 158 C-1 Page 14 of 100

Evaluation of Alternatives

An Enhanced Internal Solution is recommended short-term , but Aqueduct becomes plausible once Utility is financially self-supporting

Criteria Aqueduct Enhanced Internal Solution Favored Alternative • Currently constrained by limited customer demand vs. system capacity • Able to subsidize utilities from tax base Enhanced Fiscal Challenged to raise rates sufficiently to be self- given currently limited customer demand • • Internal Solution Responsibility sustainable in short-term • Avoid initial start-up and incremental costs (short-term) • Would not meet MGA requirements today to Aqueduct requires form separate corporation Given current lack of financial self-sustainability, • Enables close relationship with County Plan short-term investment focus would dominate • initiatives to drive residential & non- and may sacrifice appropriate longer-term Enhanced Sustainable residential growth in target areas • investments Internal Solution Communities Short-term, provides greater means to push Longer-term, has potential to provide a higher • (short-term) • forward the draft Potable Water Servicing level of governance, operational stability and Strategy sustainabili~ • Strong short-term incentive to cut costs in order Short-term priority should be on increasing to conserve cash and minimize operating losses • Enhanced Service customer revenues. Achieving operating • Internal Solution Excellence • Longer-term would have an advantage given cost efficiencies is secondary (until a critical (short-term) expert Board and heightened management & mass of system utilization is achieved) operational focus Page 111

Agenda Page 20 of 158 C-1 Page 15 of 100

Summary Recommendations

1 Select the "Enhanced Internal Solution" and keep the County Utilities in house for the short-term; 2. Support resourcing to the Utilities to focus on implementing the Potable Water Servicing Strategy and increasing the scale of customer servicing by County-owned and operated utility infrastructure; 3. Take initial steps to start managing and treating the Utilities as if it were a distinct operating entity: • Increasing the management capacity to a full-time manager position; and • Developing and providing more transparent and full-costing financial and operational performance reports to be reviewed and discussed by senior administration and Council. 4 Where feasible, evaluate how to add in currently unallocated cost components to utility customers as compared to current customer affordability and equity constraints. • Specifically, more formal analysis and evaluation of trade-offs should be performed to compare full cost recovery rates for existing customers vs. what fully-loaded rates would be if the utility systems were at full utilization 5. As new customers are connected and the financial results approach break-even, consider adding in future organizational structure changes to slowly evolve towards the desired future-state model. 6. Consider transitioning to Aqueduct at a future date if and when the projected Utility operating results and cash flows can be fiscally self-sustaining. • It would then be prudent to re-assess the merits of spinning out Aqueduct at this time • This could provide a tangible test on whether an enhanced internal solution could ultimately work for Rocky View County Page 112

Agenda Page 21 of 158 C-1 Page 16 of 100

CONSULTING

Agenda Page 22 of 158 ATTACHMENT '8' C-1 Page 17 of 100

Utility Operations Review I & 0 Re-structuring

February 2017

Agenda Page 23 of 158 C-1 Background Page 18 of 100

An initial step would increase focus and capacity to Utility management, customer growth, and regional leadership

Current Organization Structure Short-term Enhanced Alternative*

Manager (-112 Time) Manager (Full Time} Operations Operations I Team Lead Utility Operations Strategy & Customer Technologist (x4) Service Lead Utility Operations Technologist (x4) Utility Operations I System Operators System Operators Contractors Contractors

~ ROC KY VIEW COUNTY ~ ( ultl\,ltln(:. CommurHth.'~

Agenda Page 24 of 158 C-1 Current Organizational Structure Page 19 of 100

ROCKY VIEW COUNTY PtrrNnent- 7 • Cuhivadng Communities

• Generel Manager Exec.me Aasu•tari Byron Roemann I_ B

'I Manager Manager Mana~ Manager Manager Agnculturll & COrporate Properties 'i Openlbons Roads Melrienaru I, Englntenng 5eNices ~g~ ~ El1'olironmental SeMces Sholclon RKz Rick \l\ltjomao FMetSeNUS:JGlen Nieloen j Stuort Jewloon Colo Nelson ,.,..,. Howard Bel- !1 0001SO 000031 ~ 00011><

r:CHAHGED fROM JUNE 2015 SignatU'O Genofal Ma- .Uy 2016

Pag

~ ROC KY V I EW COUNTY ~ Cuh•\·.1on~ ( omnHII111h:'

Agenda Page 25 of 158 C-1 Current Organizational Structure Page 20 of 100

ROCKY VIEW COUNTY Pefl'T\Inent -12 • C ulrivating Communities

OPERATIONS DEPARTMENT • dtnoces st~ff count rs c.apt\.lred els.ewhere

• Mareger Operatoono Stuart .Iewison aooos.o I

Supervtlor UtUy Operations Rood~- Operations Michael French Armardo Rizzo I 001)101 I 000102

I Rood ()petitions uOperotions lnspector Mlchlet Footer Utility Operltions TechnologiSt (3) Toe/Ylologisl (4) ....l Cindy ();sher 000100 wade Bel Adrien Pedfo '- Tr.....,DIIhelm Alvi'!Varma Jaoon Oaotou 000104 I Wlann l

Unsogned -updated Nov 9, 2015 Slgnetue Gonorol Manoger July 2018

Poge 20

~ ROCKY VI [W COUNTY ~ C....ulll\'.lllll~ ( ornmun11 1n

Agenda Page 26 of 158 ROCKY VIEW COUNTY Permanent -11 C-1 Cultivating Communities Page 21 of 100

ENGINEERING SERVICES DEPARTMENT • denotes staff count is captured elsewhere

•Manager ~ Engineering Services Engineering Services Support Technician Rick Wiljamaa Angela Pare 0001 51 II 000031 11 ~ I I I Supervisor I Supervisor Capital Infrastructure Engineering I Projects Vince Diot Dale Caines 000074 l 000062 J J

Capital Projects Engineer r- Linda Hailar Municipal Engineer (4) 000040 Michele Habrylo '--- Gurbir Niilar Eric Schuh I Angela Yurkowski

Senior Capital Projects Technologist (3) 000060 '- Howard Christianson Rafeal Odie Gord Rowland

000072

Unsigned- updated June 28, 2016 Signature General Manager July 2016

Page 18 Agenda Page 27 of 158 C-1 Proposed Organizational Structure Page 22 of 100

...,___, • ~'?r~a?ng ~~;~u~t~UNTY

Current to August 10. 2016. Changes martced 1n UTILITY SERVICES DEPARTMENT • de:notu u~tf ~tIS Yellow smce last signl!d 1n 2015, nPw or moved uotu r~ ehiewhere staff. tttle or ~porting chances in Bold New positiOns marked In Gre..n

• Mlnlgef Ulllly..,_ I Sllaii.Jew'""" lllOO:Aj I I aer.e.gy.,dcu- I ~ ..,_ UUily(lperat.,.. Michael French y.,..... ,.,,., I 000101

I Wily Opor.tlora T er:l'nologlsl ( 4) ~Bel LJ T~O.IhHn Jaton Oostou \Mom Kruger

I 000103

Unsigned- updated August 10, 2016 Slgnah.re a -rot Manager AugUOC 2018

Page 20

~ ROCKY V I EW COUNTY ~ ( Uhi\·,Hm~ (,_ UIIIOHIIII IIl"-

Agenda Page 28 of 158 ~ROCKY VIEW COUNTY Permanent - 18 C-1 • Cultivating Communities Page 23 of 100

currentto?????,2ot7.changesmarkedin ENGINEERING SERVICES DEPARTMENT • denotes staff count is Yellow since last signed in 2015, new or moved captured else where staff, title or reporting changes in Bold. New positions marked in Green • Manager Engineering Services Engineering Services Support Technician f--- Rick VIJiljamaa Angela Pare 000151 000031 I I I I Supervisor Supervisor Supervisor Capital Infrastructure Engineering Road Operations Projects Vince Diot Armando Rizzo Dale Caines 000102 00007<4 000062 I I I

Capital Projects Road Operations Operations Inspector Engineer Municipal Engineer (4) Technologist (3) Michael Foster r- Linda Hajjar - Michele Habrylo - Cindy Disher ()0()()<4() Gurbir Nijjar Adrian Pedro 000100 - Eric Schuh Alvin Varma Angela Yurkowski 000104 Sign Person (2) Adam Frias 000060 I - Senior Capital Projects I Joao Sousa Technologist (3) 0000118 ..__ Howard Christianson Rafeal Odie Gord Rowland oooon

Unsigned- updated January 1, 2017 Signature General Manager January 2017

Page 18 Agenda Page 29 of 158 C-1 Next Steps Page 24 of 100

• No action required of Council

• Recommended changes were implemented Jan 1, 2017

Agenda Page 30 of 158 C-1 Page 25 of 100

Thank You

~ ROCKY V I EW COU NTY ~ Cuhl\';tllll{!. ( n mmun l tll''

Agenda Page 31 of 158 ATTACHMENT 'C' C-1 Page 26 of 100

CONSULTING UTILI'IY OPERATIONS SERVICE DELIVERY ALTERNATIVES REVIEW

Rocky Vie~7 County Final Report Date: January 25, 2017

700, 441 5th Avenue SW, Calgary AB, T2P 2V1

www.stackdconsultmg.com I P 403.454.71 25

Agenda Page 32 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 27 of 100

Table of Contents

0.0 Version History ...... 1 1.0 Executive Summary ...... 2 2.0 Report Context ...... 10 3.0 Project Approach ...... 11 4.0 Overview of Current Water & Wastewater Utilities ...... 13 4.1. Operational Overview ...... 13 4.1.1. Current Operations ...... 13 4.1.2. Potable Water Servicing Strategy ...... 14 4.1.3. Organizational Structure ...... 15 4.2. Current Governance Overview...... 16 4.3. Growth Projections ...... 17 5.0 Current State Review Observations ...... 19 5.1. Stakeholder Input ...... 19 5.1.1. Desired Outcomes...... 19 5.1.2. Key Utility Issues ...... 20 5.1.3. Rationale for Pursuing Aqueduct vs. Internal Solution...... 21 5.2. Operational & Financial Observations ...... 21 5.2.1. Water Utilities ...... 22 5.2.2. Wastewater Utilities ...... 23 5.2.3. Financial Summary...... 24 5.3. Rates Analysis...... 25 5.3.1. Regional Rate Comparisons ...... 25 5.3.2. Rate Making Practices ...... 25 5.4. Key Observations ...... 27 5.5. Alternative Service Delivery Model Evaluative Criteria ...... 28 6.0 External Research Observations ...... 29 6.1. Requirements for a Municipal Controlled Corporation ...... 29 6.2. Private vs. Public Utilities ...... 29 6.3. Market Supply of Certified Operators in Alberta ...... 31 7.0 Regional Context ...... 33 7.1. Water License Availability ...... 33 7.2. Calgary Regional Partnership ...... 33 7.3. Existing Regional Servicing Arrangements ...... 34

Agenda Page 33 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 28 of 100 8.0 Aqueduct Business Plan Proposal ...... 35 8.1. Mandate and Objectives ...... 35 8.1.1. Mandate ...... 35 8.1.2. Objectives ...... 36 8.2. Legal Context ...... 36 8.3. Governance Model ...... 37 8.4. Management & Operating Model ...... 40 8.5. Financial Plan ...... 42 8.5.1. Transfer of Existing Assets, Liabilities, & Obligations ...... 42 8.5.2. Transfer of Operating Resources ...... 43 8.5.3. Start-up & Incremental Costs ...... 44 8.5.4. Revenue Sources ...... 45 8.5.5. Capital Financing...... 45 8.5.6. Financial Projections ...... 46 8.5.7. Risk of Dissolution ...... 50 8.6. Implementation Plan ...... 51 9.0 Enhanced Internal Solution ...... 55 9.1. Internal Solution Objectives ...... 55 9.2. Short-Term Organizational Structure ...... 55 9.3. Longer-Term Organizational Roadmap ...... 56 9.4. Financial Reporting ...... 58 10.0 Evaluation of Alternatives & Recommendations ...... 59 10.1. Evaluation of Alternatives ...... 59 10.2. Recommendations ...... 60 Appendix A: Stack’d Consulting Inc. Team Resumes ...... 62 Appendix B: Financial Projections ...... 67

iii

Agenda Page 34 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 29 of 100

0.0 Version History

The following table illustrates the versioning history of this document including significant modifications:

Version & Date Description

V1.0 – April 20, 2015  Original Draft  Addition of bio’s and resumes for Stack’d consulting team members  Addition of applicable Rocky View County policies which oversee current water and wastewater servicing  Addition of current Calgary Region context for water and wastewater servicing  Updated growth assumptions based on feedback from Planning & V2.0 – May 6, 2015 Development Services and the recent “Conrich Area Structure Plan” document dated April 2, 2015  Updated financial forecast projections and “higher growth rate” sensitivity analysis  Added risk of dissolution mitigation strategies  Added Gantt chart of implementation plan  Shortened length of resumes for Stack’d consulting team members in V3.0 – May 22, 2015 appendix  Minor grammatical edits  Provision of additional Aqueduct capital financing discussion, asset net book Final – June 10, 2015 value projections, and debt balance level projections Final Re-Issued –  Re-issued for purposes of February 2017 Council meeting January 25, 2017 Table 1: Version History

Agenda Page 35 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 30 of 100

1.0 Executive Summary

Overview of Stack’d Consulting Team Stack’d Consulting Inc. (formerly the Alberta Consulting Practice of Conroy Ross Partners) was engaged by Rocky View County (the County) to conduct a Water and Wastewater Utility Service Delivery Alternatives Review in November, 2014. The following consulting team members were involved in the delivery of this project (please see Appendix A: Consulting Team Resumes): 1. Myron Moore, P. Eng., MBA, PMP: Myron has over 15 years of professional engineering, project management, and management consulting experience. He has extensive experience in the municipal utility sector, particularly within water treatment, wastewater treatment, drainage, waste management, and community energy. Myron has completed several applicable engagements with municipal utilities in Western Canada in regard to municipal utility rate models, rate-making approaches, funding policies, cost of service, and governance. In particular, Myron presented to the Alberta Government Finance Officers Association’s (GFOA) Conference in May 2013 and the Alberta Water and Wastewater Operator’s Association (AWWOA) Conference in March 2015 on the subject of “Utility Fiscal Policy”.

2. Tyler Shapka, BComm: Tyler’s municipal utility experience includes financial analysis and modelling, industry research for best practices, and policy analysis and recommendations in the areas of waste management, water, wastewater, and drainage. As an emerging subject matter expert in this field, he spoke at the Alberta GFOA Conference in May 2013 on the topic of Utility Fiscal Policy. He brings a strong ability to analyze complex situations, perform financial analysis, and develop and communicate recommendations at an executive level.

3. Dustin Anderson, MBA, BComm: With a focus on strategic planning, post-merger integration, organizational effectiveness and transformational change, Dustin assists his clients in solving some of their most difficult business challenges. With over fifteen years of management consulting experience, Dustin has extensive experience in organizational design and transformation, strategic planning and execution, change management and organizational business planning. Scope of Engagement The scope of the engagement was to provide the following deliverables:

1. Alternative 1: Develop a business plan and implementation plan to move the Utilities to Aqueduct Utilities Corporation, which would be a wholly-owned municipal controlled corporation operating at arms-length from Rocky View County;

2. Alternative 2: Provide recommendations for enhancing the operations of the Utilities within the County structure; and

3. Evaluate Alternatives: Compare the key advantages and disadvantages of each service delivery alternative and provide a recommendation on which alternative will provide the best long term solution for managing the County’s current and future utility operations.

Agenda Page 36 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 31 of 100

Evaluative Criteria Based on significant internal stakeholder engagement and review of organizational background materials, the following evaluative criteria were established as a means to compare Aqueduct against an Enhanced Internal Solution. These criteria are:

Table 2: Utility Service Delivery Model Evaluative Criteria Current State Review Observations In considering the current financial, capacity, and servicing status of the Water and Wastewater Utilities, the following overall observations were developed: 1. Overall, Utility infrastructure is still relatively new and currently has a total system design capacity which far exceeds its current customer demand levels:

 Only the East Rocky View Wastewater Plant is nearing capacity levels (approximately 80%1) and requires immediate capacity upgrades; 2. Given #1 above, current operating costs per m3 of customer demand are high as compared against regional, comparable rates. However, given the Utilities’ current fixed vs. variable cost structure, the expected operating costs per m3 of customer demand is forecasted to significantly decrease as the systems near rated design capacity levels.

 In regard to improving operating cost performance, increasing the number of customers for currently underutilized systems is the most important factor. 3. Forecasted 2015 utility operating revenues (from utility user fees) are not yet fully sustainable given that collectively they cover approximately 76% of direct operating costs.

 Additionally, if both corporate overhead costs and asset amortization expenses are considered, the current utility revenues only cover approximately 43% of total allocated costs to provide service. Aqueduct Business Plan Concept & Projections A detailed concept and implementation plan was developed for Aqueduct. It included specific roles between Council and the Board, a Management and Organizational Structure, and financial projections.

1 Based on current average day flow demands vs. system capacity 3

Agenda Page 37 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 32 of 100

The graphic below demonstrates the proposed governance structure. Council would effectively serve to review and approve annual business plans, budgets, and rate adjustment proposals. The Board would fully govern Aqueduct on an ongoing basis and oversee the management team. This would be a similar structure to what The City of Chestermere has developed for Chestermere Utilities Incorporated.

Graphic 1: Proposed Aqueduct Governance Structure Additionally, a recommended Management and Organizational Structure was developed. It would feature a seasoned General Manager leading a small management team. Utility system operations and maintenance activities would continue to be contracted out until the systems reach a critical mass which would warrant Aqueduct making the investment to insource operations.

Graphic 2: Proposed Aqueduct Organizational Structure Finally, with specific operational, revenue, growth, and financing assumptions, financial projections were developed. These projections were extended to the point of coverage for the existing off-site levies and system capacities vs. growth in average day flow levels. However, given the challenge to

Agenda Page 38 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 33 of 100 increase utility rates much further, incremental general and administrative costs Aqueduct would require, and projected growth rates, it was projected that Aqueduct would not be financially self- sustaining for the short-term. A summary projection of Aqueduct’s operating results is provided below:

Break-even occurs in 2023

Graphic 3: Aqueduct Projected Operating Results This analysis shows that Aqueduct would not operationally break even until after 8 years (considering how utility user revenues would cover corresponding operations and maintenance, replacement, general and administrative overhead, and start-up expenses). Additional operating, levy contribution vs. debt servicing expenses, and financial operating statement projections are provided in section 8.5.5. As well, sensitivity analysis was performed on how the projected rate of growth would impact forecasted operating results by increasing the assumed growth rate by 25%. This scenario indicated that, although the time to break-even would be slightly quicker (by 1 year), Aqueduct would not be financially self-sustainable for the short to mid-term. Despite these results, an implementation plan to transition Rocky View County’s water and wastewater utilities to Aqueduct was also developed. It considered a range of activities covering legal and regulatory, financial transitioning, organizational development, and customer / stakeholder communications and engagement deliverables. An implementation project plan which summarizes these steps is below:

Agenda Page 39 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 34 of 100

Graphic 4: Implementation Plan Schedule Enhanced Internal Solution Alternative In addition, an alternative concept was developed for an internal solution. This was focused on making structural changes within the Infrastructure and Operations Services Department. A focus of these changes would be to “flatten” the existing hierarchy and increase focus and capacity to Utility management, strategic analysis, regional leadership, and customer growth activities. The following graphic demonstrates these changes:

Agenda Page 40 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 35 of 100

Graphic 5: Proposed Enhanced Internal Utility Solution Organizational Structure It is noted that an in-depth workload capacity analysis should be performed prior to making this adjustment to ensure sufficient supervisory oversight of the four Utility Operations Technologists. Additionally, a longer-term Organizational Roadmap was developed to illustrate how Rocky View County can, over time, make a transition from its current state model to one wherein it could more easily make a transition to Aqueduct. This Organizational Roadmap is provided below:

Graphic 6: Proposed Organizational Roadmap The purpose of the Organizational Roadmap is to illustrate step-wise evolutions to the County’s current organizational structure in order to prepare for a potential spin-out to Aqueduct. The intent would be to add in Step 2 (finance lead) and Step 3 (operations lead and introduction of internal operators) based both on the expected increase in functional requirements and operational workload capacities. These increases are projected given the utility’s continued growth and execution of the draft Potable Water Servicing Strategy.

Agenda Page 41 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 36 of 100

Evaluation & Recommendations Based on the evaluative criteria established and the projected financial results of the proposed Aqueduct external alternative, the following analysis is provided to compare the two alternatives:

Criteria Aqueduct Enhanced Internal Favored Solution Alternative  Currently constrained by limited customer demand vs. system capacity  Able to subsidize utilities from  Challenged to raise rates tax base given currently limited sufficiently to be self-sustainable in customer demand short-term as rates are already  Can directly apply for grant Enhanced Internal Fiscal (short- high funding Solution Responsibility term)  Reliant on Rocky View County for  Avoid initial start-up and grant applications from senior incremental costs Aqueduct government requires  Would not meet MGA requirements today to form separate corporation

 Given current lack of financial self-  Enables close relationship with sustainability, short-term County Plan initiatives to drive investment focus would dominate & residential & non-residential may sacrifice appropriate longer- growth in target areas Enhanced Internal Sustainable term investments Short-term, provides greater Solution (short- Communities   Longer-term, has potential to means to push forward the term) provide a higher level of draft Potable Water Servicing governance and operational Strategy as an overall stability and sustainability municipal benefit

 Strong short-term incentive to cut Short-term priority should be costs and / or limit new investment on increasing the current customer base. Achieving Enhanced Internal Service Longer-term would have an  operating cost efficiencies is Solution (short- Excellence advantage given expert Board and secondary (for the time being, term) heightened management & until a critical mass of system operational focus utilization is achieved) Table 3: Summary of Evaluation of Alternative Governance Models Largely based on the inability for the Utility to be financially sustainable in the short to mid-term, it is not yet prudent to proceed with the Aqueduct external solution. Based on the large extent of capital infrastructure relative to the still low number of customer connections, it is clear that Aqueduct will still require ongoing funding assistance. Given the regulations as stipulated by the Alberta Municipal Government Act2, it would not pass the minimum test to be independent on its parent for its ongoing operations. Additionally, the Aqueduct management team would be restricted in its ability to raise rates beyond annual cost increases in the short-term, as (1); current rates are already well above regional comparisons, and (2); there is currently an insufficient number of customer connections to spread the entire system costs across (as the systems were designed to accommodate much higher customer demand levels).

2 Province of Alberta, “Municipal Government Act: Control of Corporations Regulation 284/2003”, Alberta Queen’s Printer, Consolidated up to 114/2013 8

Agenda Page 42 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 37 of 100

Based on the evaluation performed above, the following recommendations are provided:

1. Select the “Enhanced Internal Solution” alternative and keep the County Utilities in house, at least for the short-term; 2. Support resourcing to the Utilities to focus on implementing the draft Potable Water Servicing Strategy and increasing the scale of customer servicing by County-owned and operated utility infrastructure; 3. Take initial steps to start managing and treating the Utilities as if it were a distinct operating entity, particularly in regard to: i. Increasing the management capacity to a full-time manager position; and ii. Developing and providing more transparent and full-costing financial and operational performance reports to be reviewed and discussed by senior administration and Council.

 As noted previously, a workload capacity review should be performed to ensure sufficient management oversight of the four internal technologists; 4. Where feasible, evaluate how to add in currently unallocated cost components to utility customers (e.g. all applicable corporate overhead and infrastructure reinvestment and replacement costs to ensure long-term infrastructure and operational sustainability) as compared to current customer affordability and equity constraints. i. Specifically, more formal analysis and evaluative trade-offs should be performed to compare full cost recovery rates for existing customers vs. what fully-loaded rates would be if the utility systems were at full utilization; 5. As new customers are connected and the financial results approach break-even, consider adding in future organizational structure changes to slowly evolve towards the desired future- state model as described within the Aqueduct organizational roadmap proposal. 6. Consider transitioning to Aqueduct at a future date if and when the projected Utility operating results and cash flows can be fiscally self-sustaining and not dependent on Rocky View County for ongoing funding assistance. i. It would be prudent to re-assess the merits of spinning out Aqueduct at this time. Specifically, an evaluation of whether the future objectives for Rocky View County’s utilities can best be obtained through an internal service delivery model vs. Aqueduct would be required. ii. Based on Recommendation # 3 above to position the Utilities as a distinct operating entity, this could provide a tangible test on whether an enhanced internal solution could ultimately work for Rocky View County. Based on this test, a more informed evaluation could then be performed on whether to establish Aqueduct.

Agenda Page 43 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 38 of 100

2.0 Report Context

Rocky View County currently provides water and wastewater services to multiple communities and customers throughout the County. In 2007, it set up a Government Business Enterprise (GBE), Aqueduct Utilities Corporation (Aqueduct), with the intention of transferring water and wastewater assets and liabilities to the corporation and to have the corporation manage the County’s utility operations in an “arms-length” capacity. However, to date the transfer of operations has not occurred and Aqueduct has remained a “paper only” corporation with no financial transactions. In June 2014, Council approved funding for a project to develop an operating plan for the proposed County-owned utility company. Council also requested information on managing utilities through an enhanced internal department, alongside recommendations on a preferred strategic direction. In November, 2014, Stack’d Consulting Inc. (formerly the Alberta Consulting Practice of Conroy Ross Partners) was awarded the contract to perform this work based on a proposal in response to Rocky View County’s Request for Proposal # RFP 14-223. The deliverable objectives for this engagement included the following:

1. Alternative 1: Develop a business and implementation to move the Utilities to Aqueduct Utilities Corporation, which would be a wholly-owned municipal controlled corporation operating at arms-length from Rocky View County;

2. Alternative 2: Provide recommendations for enhancing the operations of utilities within the County structure; and

3 Rocky View County, Request for Proposal Number: RFP 14-022 “Utility Operations Service Delivery Alternatives Review”, Issued October 7, 2014 10

Agenda Page 44 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 39 of 100

3.0 Project Approach

To complete the required project deliverables, the following project approach was followed:

Graphic 7: Overview of Project Approach The activities performed to execute this project included:

Step I: Project Planning and Preparation 1. Complete Project Plan & Kick-off Meeting with Rocky View’s Steering Committee: This activity involved the development, documentation, and confirmation of the project plan. Learning’s from previous Aqueduct review, planning, and financial modeling efforts were incorporated so as to start the project based on its up-to-date status. A kick-off meeting with Rocky View County’s Steering Committee was facilitated to confirm the project expectations and key deliverable milestones. In addition, background materials were provided for review, and additional information requests were identified to support the “Current State Review” phase.

Step II: Current State Review A review of the current Water and Wastewater Utilities and the most relevant plans and projections was performed in this step. The high-level activities performed in this phase included:

1. Analysis of the Utility’s Operational & Financial Information: While primarily working with County staff, relevant organizational, operational, and financial information was received and clarified. The purpose of this was to understand the current Utility’s situation as it pertains to:

 Scope of operational activities and who provides these (i.e. internal staff vs. contractors);

 Customer base vs. services received;

 Current operational costs and sources of funding;

 Current and projected capital requirements (both replacement and growth); and

 Current financial situation (i.e. capital structure, long-term liabilities, and sources of funding). 11

Agenda Page 45 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 40 of 100

2. Rocky View County Stakeholders Interviews: Key Rocky View County stakeholders (i.e. Council, administrative leaders, utility subject-matter-experts, etc.) were interviewed to understand the current Utility’s context, desired future-state outcomes, key issues, and priority improvement opportunities. From this, priority evaluative criteria were developed and confirmed with Rocky View County’s Steering Committee. These criteria were intended to serve as a basis to compare an external arms-at-length entity (i.e. Aqueduct) alterative against an “enhanced” internal service delivery model.

3. External Research: Based on the key analytical areas and issues Rocky View faced, relevant lessons learned and leading practices from both comparable jurisdictions and industry leading knowledge sources (i.e. American Water Works Association (AWWA), Alberta Water and Wastewater Operator’s Association (AWWOA), Federation of Canadian Municipalities (FCM), etc.) were obtained. This provided a relative basis to support comparison of the alternatives. The Town of Banff and Chestermere Utilities Incorporated are two specific case studies that were examined as a part of this study. Both organizations have recently contemplated and made decisions similar to those facing the County and as such provided valuable insight.

Step III: Alternatives Analysis & Recommendations Development In this step required analysis on both alternatives and overall recommendations for Rocky View’s Water and Wastewater Utilities were completed. The following activities were completed:

1. Aqueduct Implementation Strategy and Business Plan: This step included a “deep-dive” into planning the implementation and business model for the proposed Aqueduct government business enterprise. The purpose of this step was to identify, confirm, and clarify at an appropriate level of detail how Aqueduct would be implemented and what it would look like from strategic, structural, operational, financial, and risk management perspectives.

2. Recommended Enhancements to the Current Service Delivery Model: This activity was focused on analyzing and developing recommendations for the “Internal” alternative. The purpose of this step was to plan what a desired go-forward alternative would look like if Rocky View decides not to pursue the external Aqueduct alternative. This also focused on the organizational, operational, and financial implications of the recommended changes. 3. Progress Review Meeting with Steering Committee: A workshop with the Rocky View Steering Committee was facilitated to review the analysis and recommendations. This included specific analytical details for both alternatives and how each alternative compares to the priority evaluative criteria (identified in Step II). This was intended to be a collaborative format, in which input from Rocky View was factored in the development of the final recommendations. Step IV: Final Report During this step a draft and final report was developed. The activities performed included:

1. Develop and present draft report: This activity involved the preparation and presentation of a draft report to The County’s Steering Committee. Feedback was obtained and utilized to develop a final report.

2. Deliver and present final report: Based on the feedback received from The County, the draft report was finalized. Subsequent to this, it was presented to Council in a working session.

Agenda Page 46 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 41 of 100

4.0 Overview of Current Water & Wastewater Utilities

This section provides a high-level overview of the current Rocky View County Water and Wastewater Utility operations, objectives, and future projections. 4.1. Operational Overview This subsection provides a high-level summary of the current scope and scale of the water and wastewater services provided, organizational structure, and financial summary. 4.1.1. Current Operations Rocky View County currently provides water and wastewater services to a range of communities within the County. These communities represent a blend of residential and non-residential customers (i.e. commercial, small industrial, and large industrial) which is dependent on the community served. The following table summarizes the utility operations provided and / or coordinated by the County for the various communities:

Community Water? Wastewater?

Bragg Creek Yes Yes Elkana Yes - Elbow Valley / Pinebrook - Yes Cochrane Lakes - Yes East Balzac Yes Yes Conrich Yes Yes Prince of Peace - Yes Langdon - Yes Table 4: Rocky View County Utility Servicing by Community It is also noted that Rocky View County presently owns the wastewater treatment plant at Watermark for legal and regulatory reasons. The County has “leased” the system back to the developer to operate and maintain at their expense until the system reaches an economic break-even point, when it will be turned over to the County to operate. It is estimated that this system will be ported to Rocky View County in approximately five years once this occurs, but that is only an estimate at this time. It is also noted that Rocky View County also has an assortment of miscellaneous operational agreements and utility assets. These include interests in the Aqua 7 Regional Water Commission, Morgan’s Rise, Tower Ridge Estates, Biggar Heights, Mountain Ridge Place, etc. However, it is also noted that none of these interests feature direct servicing from the County. The following provides an estimated of the financial summary of these miscellaneous items:

 Annual Revenue: $ 47,500

 Annual Operating Expenses: $114,000

 Net Book Value Assets: $586,103

Agenda Page 47 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 42 of 100

4.1.2. Potable Water Servicing Strategy In addition to the above County-provided water and wastewater utility servicing, it was noted that within the County there are several non-County water and wastewater servicing providers. An approximate total of seventy (70) distinct water and wastewater providers now operate and directly provide services to customers and constituents within various communities and neighborhoods. Historically, Rocky View County has not held a governance role in the investment, build, management, or operations of these non-County systems. That is, the overarching governance body for these systems is the Province of Alberta (through Alberta Environment and the Alberta Utilities Commission). However, in response to an increasing number of water quality issues by these non-County providers, Rocky View County has started to establish strategies and policies to better position it in an overarching leadership role for water and wastewater servicing for all customers within the County. In 2010/11, a series of “Potable Water Servicing Strategy” documents and Council discussions were held to direct these efforts. A key document produced as a result of this was the current “Domestic Potable Water System Servicing” Policy, dated April 20, 2010. Key policy statements as described within this document include: 1. “Rocky View is committed to taking all reasonable steps to support a long-term, safe and reliable potable water supply for its residents, and will consider this objective in all decisions related to planning, subdivision and development.” 2. “Rocky View may contract water delivery operations to private operators under agreement. In order to support a reliable water supply, all new and existing water delivery operators will be subject to clear expectations, operating procedures and standards.” 3. “In existing developments where Rocky View controls domestic water operations, Rocky View will supply water to residents through municipal water systems.” 4. “To support the long-term sustainability of a limited water supply, the municipal water rates will reflect the actual cost of water delivery, including the incorporation of capital replacement and other costs into user fees.” 5. “Prior to the approval of subdivision or development applications, an applicant must demonstrate the ability to provide a safe and reliable potable water supply. Rocky View shall also require a turnover strategy for the applicable water infrastructure and licensing.” 6. “Fire protection needs in proposed developments shall be taken into consideration and fire services shall be consulted with regard to fire protection flow requirements for the proposed developments.” 7. “In existing developments where Rocky View does not control domestic water operations, Rocky View will seek to negotiate a turnover strategy for water licenses and infrastructure that service its residents to achieve consistency in its domestic water supply systems.” 8. “Recognizing the importance of inter-municipal and regional cooperation with respect to water supply, the County will consider opportunities to partner with organizations, other jurisdictions and other levels of government on water strategies and initiatives to support efficient water servicing for its residents.”

Agenda Page 48 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 43 of 100

Based on these policy statements, Rocky View County has identified strategic intent to:

 Facilitate the consolidation of the number of water providers across the County to ensure reliable, safe provision of services to its constituents;

 Enter into franchise agreements with select potable water suppliers to outline water quality expectations, operator qualifications, franchise boundaries, emergency response plans, and reporting expectations; and

 Work with existing water suppliers to either operate under a franchise agreement or transfer operation responsibility and ownership (where practical) to the County. 4.1.3. Organizational Structure The following graphic outlines how the current Utilities are managed and operated. The current Utilities are managed and operated out of the Infrastructure and Operations Services Department.

Graphic 8: Overview of Current Organizational Structure The following summarizes the key utility management, administrative, and operational roles and responsibilities: i. A tiered management structure (County Manager, GM’s, & Managers) provides oversight of internal resources, accountability for performance, and utility strategic plans. ii. A variety of internal resources provide shared services to the Utility as required (e.g. Business Services, IT, HR, Communications, Engineering, etc.). iii. The Manager of the Utilities currently splits his time between the Utilities and Road Operations. A high-level estimate of 50% split was assumed. iv. The Utility Operations Team Lead performs oversight for the Utility Technologists and leads the development of utility strategies and plans.

Agenda Page 49 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 44 of 100

v. A team of internal Utility Operations Technologists now oversee and administer the contract operations of each Utility System. It is understood that a budget increase of two technologist positions was approved in March, 2015 which brings the total number of technologists to four. They oversee Contracted Operators and implement utility programs as appropriate. They are also tasked with taking a pro-active approach to asset management with the purposes of ensuring long-term asset and operational sustainability. vi. Contract Operators responsible for all system operations and maintenance, repair, testing, emergency response, and developing proposed asset management and capital replacement plans (which are reviewed by the internal Utility Operations Technologists). 4.2. Current Governance Overview The Utility function currently operates within the Infrastructure and Operations Services Department within the County, and therefore Rocky View County Council functions as the Utility’s governance body. As such, they are responsible for reviewing and approving proposed strategies, policies, bylaws, investments, annual operating and capital budgets, and annual rates for existing customers. It is noted that Council largely performs these governance functions for the Utilities as a subset of the overall Infrastructure and Operations Services Department. The following are existing County bylaws which direct and control its utility operations and capital investment activities:

 Bylaw C-7442-2015, Master Rates Bylaw

 Bylaw C-7273-2013, Off-Site Levies for Water and Wastewater Facilities

 Bylaw C-5083-99, Regulation of the Operation, Maintenance, Use, and Control of the Sewage Systems, Stormwater Drainage Systems

 Bylaw C-7259-2013, Fire Hydrant Water Suppression Additionally, the following are the individual Council-approved policies which direct the management of the Water and Wastewater Utilities:

 Policy #216 Tangible Capital Assets

 Policy #220 Debt Acquisition and Management

 Policy #322 Area Structure Plan Priority Policy

 Policy #406 Infrastructure Cost Recovery

 Policy #411 Residential Water and Sewer Requirements

 Policy #412 Servicing Requirements

 Policy #415 Domestic Potable Water System Servicing

 Policy #430 Communal Wastewater System Management

 Policy #434 Municipal Utility Connection Management

Agenda Page 50 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 45 of 100

 Policy #445 Water Supply for Fire Protection for East Balzac Commercial / Industrial Development

 Policy #449 Performance Requirements for Wastewater Treatment Systems

 Policy #600 Water Conservation The Province of Alberta’s Municipal Government Act provides the County with the legislated authority and legislative conditions to own and operate potable water distribution and wastewater collection and treatment systems within the County. In addition, it is noted that it contains special legislation specifically to recognize the previously-approved Aqueduct Utilities Corporation. In addition, senior levels of government (i.e. Province of Alberta and the Government of Canada) play key governance roles which the Utilities must align with. Specifically, together they provide overarching potable water quality and wastewater treatment quality / effluent discharge standards which are applicable to the County. As such, as the owner and licensed operator of the water and wastewater systems, Rocky View County must ensure that it meets these standards and abides by the operational and reporting protocols required. 4.3. Growth Projections A key part of the financial projections was to understand the best available projections for future growth within Rocky View County. Specifically, an understanding of projected growth of future residential and non-residential (i.e. commercial and industrial) customers of the County’s Utilities was required, as this significantly impacts future capital investment requirements, financing, off-site levies, and operating requirements (i.e. both direct operating costs and utility user fees). To understand these projections (and potential growth constraints), a review of the following documents was specifically performed:

 Land Inventory and Residential Development Capacity Report (2012)

 Residential Building Permits Breakdown – County Plan Report (2014)

 Industrial Land Capacity Study (2014) - DRAFT

 Assessment Ratio Calculations Spreadsheet (2014)

 Conrich Area Structure Plan (April 2015) Based on these documents and the identified communities presently serviced by the existing County- operated Utilities, the following annual growth assumptions were developed:

Agenda Page 51 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 46 of 100

Residential units/year Commercial Large Small Community Industrial Industrial 2015-2019 2020+ acres/year acres/year acres/year

Bragg Creek 3 3 0.24 - -

Elbow Valley 1.6 1.6 - - -

East Balzac 1.6 20 11.8 11.8 47.2

Langdon 66 66 0.68 - -

Conrich 23.7 47.4 9.04 5.2 20.8

Prince of 0 20 - - - Peace

Table 5: Community Annual Growth Assumptions Residential growth assumptions were based on the previous five-year averages for each community. In addition, internal Rocky View County representatives from Planning and Development Services provided context on development assumptions. It was noted that for East Balzac, Conrich, and Prince of Peace there were different growth rate assumptions for short-term (i.e. 2015-2010) vs. medium and long-term (i.e. 2020+). In addition, the 2012 Land Inventory and Residential Capacity Report noted that, at full build out, the Hamlet of Langdon will peak at a total of 2,303 units (or approximately 6,903 people assuming 3 people per unit). However, the current County Plan document notes that hamlets are intended to support a maximum population of 10,000 (or approximately 3,333 units). For modeling purposes, it was assumed that the County Plan provided an appropriate upper range constraint on growth. Accordingly, an upper limit of 3,333 units was used. Growth assumptions for commercial, large industrial, and small industrial were based on the Assessment Ratio calculations and Industrial Land Capacity Study. For these segments, a constant development rate per year was assumed.

Agenda Page 52 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 47 of 100

5.0 Current State Review Observations

This section provides a summary of the observations made during the internal review of Rocky View County Utilities. This factors in analysis of its current operational status, financial results, and input gained from interviewing internal stakeholders (i.e. Council, senior administration, and subject-matter- experts). 5.1. Stakeholder Input The initial activities of the Current State Review phase of work was focused on interviewing key internal stakeholders within Rocky View County. This included members of Council, senior administration, and other select staff as identified by the Steering Committee. The primary purpose of this activity was to understand:

 Desired outcomes or “descriptions of what success looks like” for the future of the Rocky View County Utilities;

 Rationale for preferring to transition the Utilities to an external Aqueduct government business enterprise;

 Rationale for preferring to keep the Utilities within the municipality as an enhanced internal entity; and

 Key issues and challenges which the current Utilities face. Based on the interviews conducted, the following summarizes the major themes identified from the stakeholder input obtained: 5.1.1. Desired Outcomes In discussing what the future of Rocky View County’s Utilities should be, there was consensus support for it to achieve a level of long-term sustainability, reliability, and stability for existing customers within the County. Supporting this notion for long-term sustainability included:

 Ensuring the provision of safe and reliable water and wastewater services;

 Ensuring long-term financial sustainability for the Utility Systems, including full-cost recovery and a commitment to ensure that proper lifecycle asset management and capital reinvestment activities are completed; and

 Ensuring that longer-term utility servicing rates are stable, competitive, and reasonable primarily through providing services in an efficient, prudent manner. However, there was a divide into how far the Utilities should progress with respect to growth, regional servicing, and financial return. On one hand, many stakeholders expressed a desire for the Utilities to take on a more pro-active and focused strategy aimed at growing the scale of services and customers currently provided. This strategy would include investing in utility servicing for targeted communities within the County to attract both residential and non-residential growth, entertaining regional servicing (i.e. providing services to customers outside County municipal boundaries), and operating the Utility in an efficient financial manner so as to provide the County an annual dividend payment (return).

Agenda Page 53 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 48 of 100

On the other hand, there were several stakeholders who expressed a desire to limit the future growth and mandate for the Utilities. This included focusing on utility servicing for existing customers and achieving a level of financial sustainability for infrastructure investments previously made. In addition, these views did not support a vision wherein new infrastructure investments are made as a vehicle to attract growth or to pursue regional servicing opportunities. Rather, there was support within this viewpoint to strongly manage growth to keep a desired rural feel to the County and not over-densify new residential development areas. Additionally, there were those who felt strongly against implementing a dividend or return payment as a revenue requirement for utility rate-payers. 5.1.2. Key Utility Issues Additionally, stakeholders were prompted to discuss key strategic or tactical issues which the Utilities needs to prioritize and focus on addressing. The following items represent the main themes noted for as input:

1. Non-County Water Servicing Providers: Many stakeholders acknowledged water quality issues resulting from the non-County provided water systems within the County. Further, many felt that as the municipal government, the County should take more of a leadership role in addressing these issues (as it was impacting basic constituent expectations for safe water servicing). Along this notion, many agreed with the draft Potable Water Servicing Strategy which would consolidate the number of non-County water providers within the County and port many of these systems (once at break-even status) to the County.

2. Current Operating Costs: Several stakeholders were concerned that Rocky View County was not being as efficient with operating the County-owned Utility Systems as it could be based on the extent of Contracted Operators now being used. Those who expressed a concern in this regard indicated perceived inefficient procurement practices (as a general feature of it being a public sector / government organization as opposed to any perceived internal inefficiencies specific to the County) and the perception that Contract Operators would typically build in a healthy profit margin into their pricing. Note: This was not a consensus view, as several other stakeholders prompted on this issue felt that current operator expenses were in line with competitive pricing.

3. Financial Management & Rate-Setting: On this topic, there was again a consensus that current rate-payers should be offered rates that reflect an efficient yet long-term sustainable organization. Specifically, there was majority support that rates should reflect the full lifecycle costs of ownership and operations. However, there were several who now questioned whether the annually proposed rate adjustments were fair due to perceived operating inefficiencies (see Key Utility Issue #2 above) or a lack of current customers vs. system capacity levels.

Agenda Page 54 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 49 of 100

5.1.3. Rationale for Pursuing Aqueduct vs. Internal Solution Additionally, stakeholders were prompted for which service delivery alternative they supported (as it was noted that the debate on whether to act on Aqueduct was now a decade in the making) and why. The following graphic illustrates the varying input received for these two alternatives:

Graphic 9: Summary of Input for Aqueduct vs. Internal Solution From the above, proponents on moving the Utilities to an external, arms-at-length model favor the perceived benefits a private enterprise can have on efficiently managing and growing the business. Additionally, it was noted that an external, fit-for-purpose Board could provide more utility-specific leadership and expertise. Conversely, proponents of keeping the Utilities within the County noted risks from lack of control of such an external model. There was concern that these risks could manifest themselves in regard to higher rates, an undesirable increase in the extent of urban densification, and an inability to access senior levels of government grants to pay for new capital investments. Additionally, it was felt by these proponents that there would be insufficient market demand to cover the costs for new infrastructure and servicing which the Utility would have to bear. 5.2. Operational & Financial Observations Detailed analysis was performed into the existing operational status and financial performance of the Utilities. The purpose of this was to ascertain their current level of operational and financial sustainability. The following sub-sections summarize the main operational and financial status for each Utility and key observations.

Agenda Page 55 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 50 of 100

5.2.1. Water Utilities The following table summarizes the key operational factors and financial status for the County’s Water Utilities as estimated for the 2015 fiscal year (balance sheet items are estimated as of the end of 2014):

Table 6: Estimated 2015 Operational & Financial Status of Water Utilities Currently, there are two primary Water Utilities which the County operates and directly provides potable water distribution services to various Rocky View County customers. Additionally, there are miscellaneous agreements and assets on record, but the County does not directly provide services through them. The following summarizes the key observations from this table:

 Given that all Water Utilities are still relatively new, the current customer demand vs. system capacity is low. For 2015, the estimated number of total customer connections is approximately 181, resulting in an estimated system utilization of 20%.

 There is a total of $80.1 million of net book value in tangible capital assets.

 A total of $16.92 million in debt was incurred to help fund these tangible capital assets. Of this, $12.59 million is earmarked to be paid from future off-site developer levies (as this debt was incurred to “front” growth). Approximately $4.33 million is earmarked to be paid from local improvement taxes for area constituents who benefited from the capital investments. No debt is currently scheduled to be recouped from utility user rates.

 Current user fee revenues cover approximately 81% of corresponding direct operating costs. Further, corporate overhead costs and asset amortization expenses are not yet factored into current rate-making practices. o However, it is acknowledged that since the number of customers now connected is still well below system design capacities, it is not surprising that rates do not yet cover total operating costs.

Agenda Page 56 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 51 of 100

5.2.2. Wastewater Utilities The following table summarizes the key operational factors and financial status for the County’s Wastewater Utilities as estimated for the 2015 fiscal year (balance sheet items are estimated as of the end of 2014):

Table 7: Estimated 2015 Operational & Financial Status of Wastewater Utilities Currently, there are four Wastewater Utilities which the County owns infrastructure and is responsible for operating requirements associated with wastewater collection and treatment services (although Cochrane Lakes is contracted to the Town of Cochrane, as infrastructure for this community is limited to the collection system and not treatment). Additionally, there are miscellaneous assets on record, but the County does not directly provide services through them. The following summarizes the key observations from this table:

 The East Rocky View System is nearing capacity, as it is estimated to be at 80% capacity. All others are well below system capacity levels.

 There is a total of $88.6 million of net book value in tangible capital assets. Additionally, it was noted that the East Rocky View System is currently planned to be upgraded to add system capacity by 2016.

 A total of $43.96 million in debt was incurred to help fund these tangible capital assets. Of this, $42.84 million is tabbed to be paid from future off-site developer levies (as this debt was incurred to “front” growth). Approximately $1.12 million is tabbed to be paid from local improvement taxes for area constituents who benefited from the capital investments. No debt is currently scheduled to be recouped from utility user rates.

 Current user fee revenues cover approximately 73% of corresponding direct operating costs. Further, corporate overhead costs and asset amortization expenses are not yet factored into current rate-making practices. o However, it is acknowledged that the Bragg Creek System is still relatively new with currently far fewer customers connected vs. total design capacity, so it is not surprising that this System is not yet covering total cost of service.

Agenda Page 57 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 52 of 100

5.2.3. Financial Summary The following are key high-level financial operating projections are budgeted for the 2015 fiscal year. Note that off-site levy contributions, capital debt servicing, corporate overhead, and amortization are not included.

Budget Item 2015 Revenues 2015 Expenses Surplus / Deficit

Water Utility Systems: East Rocky View System: $964,400 $998,500 -($ 33,900) Bragg Creek $132,000 $281,000 -($149,000) Aqua 7 $ 0 $ 66,500 -($ 66,500)

Wastewater Utility Systems: East Rocky View System: $1,889,400 $2,650,000 -($ 760,600) Bragg Creek $ 102,000 $ 388,000 -($ 286,000) Elbow Valley / Pinebrook $ 698,800 $ 698,800 $ 0 Cochrane Lakes $ 142,500 $ 142,500 $ 0

Water & Wastewater Utility Totals: $3,929,300 $5,225,300 -($1,296,000) Table 8: Projected 2015 Operating Estimates From analysis of assets and debt schedules, it is acknowledged that the majority of water and wastewater assets were debt financed. Further, these were largely financed on the basis that developer off-site levies (and in some minor instances local improvement taxes) would cover these debt financing charges over the long-term. The following are estimated for key utility-specific balance sheet items:

Balance Sheet Item 2015 Estimate

Total Asset Net Book Value, including: $185.1M  Fixed Assets (Infrastructure) $168.7M  Intangible Assets (Water Licenses) $ 16.4M Total Long-Term Debt $ 60.3M Total Equity in Tangible Capital Assets $108.4M Table 9: Estimated 2014 Balance Sheet Results Additionally, it was noted that Rocky View County has historically been making additional debt repayments above and beyond available off-site levy developer contributions. However, it was clarified that the off-site levies are still responsible for covering these additional payments. It was noted that $8,801,000 in debt payments have been made (above and beyond annual off-site levies) which will be required to be funded from the development community.

Agenda Page 58 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 53 of 100

5.3. Rates Analysis In this section, a comparison of current Utility rates was performed against regional, comparable utilities. In addition, a comparison of current rate revenue components vs. leading practices was provided. 5.3.1. Regional Rate Comparisons Based on the perceived concern that current Utility operating costs may be high, a high-level review of comparable water and wastewater rates was performed against regional water and wastewater utilities. The following graphic itemizes a summary of how the East Rocky View Water System and Wastewater System compares against: (1); an average of regional, municipally-provided water and wastewater rates4, and (2): an average of regional, private, and small water utility rates5. Comparisons are made for both residential rates and commercial rates (given that the vast majority of customers for the East Rocky View System are commercial customers).

Graphic 10: Summary of Regional Water and Wastewater Rate Comparisons From the above graphic, the following key observations are made: 1. Current water rates are very high as compared to regional municipally-managed utilities (approximately +70% for residential and +64% for commercial). However, when compared small private utility systems, this rate premium is significantly lower (+14%). 2. Current wastewater rates are also higher as compared to regional municipally-managed utilities, but these rates are much closer to the regional averages (+21% for residential and +16% for commercial). 3. Together, this analysis suggests that future rate increases may be difficult to establish given current levels and that future utility operating revenue increases need to primarily come from new customer connections. 5.3.2. Rate Making Practices A review of current rate-making practices was performed, as it was acknowledged that current utility rates were not yet covering the full cost of service. In the event that an external, arms-at-length service delivery model is selected, a high-level understanding of the additional, relevant costs not yet incorporated into existing rates is required.

4 Includes average of Calgary, Cochrane, Crossfield, Okotoks, Strathmore, Chestermere, MD of Foothills, & Red Deer County 5 Includes average of Langdon Waterworks, Corix Utilities (Foothills), Westridge, Monterra Cochrane Lakes, & Rocky View Water Co-op 25

Agenda Page 59 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 54 of 100

Leading practices for utility rate-making are focused at ensuring long-term financial and operational sustainability (the Utility Basis as per the American Water Works Association)6. As such, rates are typically designed to ensure full lifecycle costs and service continuity objectives are met. To do this, the following rate revenue requirements are typically included using the Utility Basis (which is typically used for government-managed utilities):

1. Direct Operating and Maintenance Costs: Including internal salaries, wages, benefits, materials, contracted expenses, purchased water, power, chemicals, and small equipment that does not extend the useful life of major facilities.

2. General Overhead Costs: This includes all relevant corporate, administrative overhead costs as required to sustainably manage the utility function. This would include all relevant governance, management, and shared services (e.g. Human Resources, Information Technology, Communications, etc.) activities.

3. Asset Amortization: Although a non-cash based expense, it represents a real part of the cost of operating a utility. This represents the loss in value of facilities which occurs because of wear and decay. The annual amortization amount allows the utility to recover a portion of its original capital costs which will ultimately be required for infrastructure reinvestment and replacement to ensure ongoing operational sustainability. It is generally viewed as a fair expense to charge to end-users who benefit from the use of the asset during its useful life.

4. Return on Rate Base: The return component is intended to cover the annual cost of capital, which is made up of the cost of debt (i.e. debt servicing charges applicable to rate payers) and the cost of equity (i.e. appropriate return to ensure that return-on-equity, working capital, construction work-in-progress, and infrastructure reinvestment objectives are met). The following table illustrates the current revenues against this leading practice:

Table 10: Comparison of Rate Making Practices

6 American Water Works Association (AWWA), “Principles of Water Rates, Fees, and Charges: M1 Manual, Sixth Edition”, 2012 26

Agenda Page 60 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 55 of 100

Based on this, the following rate revenue components are not yet included as part of leading rate- making practices: 1. 100% of all direct costs; 2. Fully-loaded general overhead costs; and 3. All relevant costs associated with ongoing infrastructure sustainability and replacement (with the exception being the Elbow Valley / Pinebrook System, which contributes $10,000 to a reserve). Given that current revenues do not yet cover direct operating and maintenance costs, adding in these additional revenue requirements to current rate-making practices would cause increased upwards pressure in current rates. Given this, end user rate affordability concerns need to be considered before these additional components are added to avoid unfairly overcharging current customers. 5.4. Key Observations In considering the individual observations of both the Water and Wastewater Utilities, the following overall observations were developed: 1. Overall, Utility infrastructure is still relatively new and currently has a total system design capacity which far exceeds its customer demand levels:

 Only the East Rocky View Wastewater Utility is nearing capacity levels (approximately 80% based on current average day demand vs. average day capacity) and requires immediate upgrades; 2. Given #1 above, current operating costs per m3 of customer demand are high as compared against regional, comparable rates. However, given the Utilities’ current fixed vs. variable cost structure, the expected operating costs per m3 of customer demand is forecasted to significantly decrease as the systems near rated design capacity levels.

 Additionally, if both corporate overhead costs and asset amortization expenses are considered, the current utility revenues only cover approximately 43% of total allocated costs to provide service. 4. Based on these observations, it is clear that Rocky View County has made significant investments in both water and wastewater infrastructure over the last decade to provide customers reliable servicing and help support County growth. At this point, for many of the systems, the customer base is still small as compared to the maximum capacities of the systems. This puts the County in a challenging position currently in that it requires future growth within the communities which these systems serve in order to achieve financial sustainability.

Agenda Page 61 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 56 of 100

5.5. Alternative Service Delivery Model Evaluative Criteria Based on the input received from stakeholder interviews and subsequent discussions with the Rocky View Steering Committee, a final list of evaluative criteria was confirmed. The purpose of these criteria are to provide a basis for evaluating and comparing alternative service delivery models. The following table summarizes and defines these criteria:

Table 11: Utility Service Delivery Model Evaluative Criteria

Agenda Page 62 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 57 of 100

6.0 External Research Observations

This section provides a summary of the observations made during an external research review of appropriate leading practices. This research was largely focused on obtaining leading practices and lessons learned specifically in regard to the desired outcomes and key issues raised by internal stakeholders during the Internal Review. 6.1. Requirements for a Municipal Controlled Corporation A review of the Alberta Municipal Government Act7 was performed to recap the minimum expectations of a municipally controlled corporation. The following key conditions are relevant for the purposes of ensuring that Aqueduct would be an appropriate solution for Rocky View County’s current Utilities:

 Section (3); Subsection (b); Part (i): The controlled corporation will acquire the assets of an entity that provides an existing municipal service for the purpose of providing that municipal service;

 Section (3); Subsection (d): The controlled corporation will not be dependent for its ongoing operation on the municipality or group of municipalities that controls it. The above content was specifically highlighted, as it is clear that the expectations from the Province are that any municipally controlled corporation needs to be fully sustainable on its own operational merits and capacities. Although a municipally controlled corporation does not need to operate for the purposes of providing a dividend to the controlling municipality, it does need to ensure sufficient cash flows and balance sheet integrity. 6.2. Private vs. Public Utilities A variety of leading practice and research publications were accessed in the discussion and evaluation of public vs. privatized water utilities. Of specific focus in this research was on leading practices for good governance conditions, typical advantages and disadvantages of municipally-managed vs. private utilities, and operational performance comparisons. Good Governance Principles To begin, suggested good governance principles for municipal water and wastewater utilities were obtained from the Federation of Canadian Municipalities’ “Good Governance in Restructuring Water Supply: A Handbook”8. These are itemized as follows:

Good Governance Principle Example

 Demonstrating adherence to capital plans for water and sewage Accountability infrastructure through publicly available audited financial statements  Developing a long-term plan to ensure water and sewage system Responsiveness capacity to accommodate future growth

Effectiveness & Efficiency  Scheduling water main repairs at the same time as road repairs

7 Province of Alberta, “Municipal Government Act: Control of Corporations Regulation”, Alberta Regulation 284/2003, Amended 2013 8 Dr. Karen Bakker, ““Good Governance in Restructuring Water Supply: A Handbook”, Jointly commissioned by the Federation of Canadian Municipalities (FCM) and the Program on Water Issues (POWI) at the University of Toronto’s Munk Centre for International Studies, 2004 29

Agenda Page 63 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 58 of 100

 Making results of raw and treated water quality testing publicly Transparency available

Participation  Soliciting public comments about restructuring options Financial Sustainability  Full lifecycle investment needs are the basis for program spending  Ensuring that minimum chlorine residuals are maintained in the water Respect for Rule of Law distribution system Table 14: Excerpt of Good Governance Principles from Bakker, Federation of Canadian From review of these principles, there is strong alignment with the Rocky View County evaluative criteria confirmed in the “Current State Review” phase of this project, being:

1. Fiscal Responsibility; 2. Sustainable Communities; and 3. Service Excellence. General Advantages vs. Disadvantages Additionally, a review of typical advantages vs. disadvantages of internal, municipally-managed utilities vs. corporatized public utilities was provided. Additionally, the research paper titled “The Contradictions “Alternative” Service Delivery: Governance, Business Models, and Sustainability in Municipal Water Supply”9 provided further information to this high-level assessment. The following table summarizes the conventional advantages and disadvantages of each:

Municipal Utility – Direct Management Corporatized Public Utility

 Clear and direct accountability exists  Provides easier access to finance through municipal council  Offers management independence  Traditional, not-for-profit business model is  Financing is autonomous politically acceptable  Features commercial discipline  Results in coordination with other municipal activities (e.g. road repair) and policies,  Mobilizes higher-quality governance and potentially management Advantages thereby supporting cost efficiencies and synergies expertise  Political oversight limits abuse of monopoly  Facilitates implementation of full- power and ensures protection of vulnerable cost pricing consumers (particularly with respect to pricing and disconnections)  Access to cheaper forms of financing  Capital costs are potentially higher  Small municipal governments may not have the resources and expertise required  Accountability to users is weakened  In the absence of a regulator, rates may be  Commercial confidentiality limits Disadvantages set above or below full-cost recovery. The access to information by consumers utility may receive subsidies from other and politicians orders of government, or may provide (often  May not be compatible with some hidden) subsidies to municipal government, public-service mandates

9 Kathryn Furlong and Karen Bakker, “The Contradictions “Alternative” Service Delivery: Governance, Business Models, and Sustainability in Municipal Water Supply, 2010 30

Agenda Page 64 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 59 of 100

particularly through deferment of investment,  Higher focus on supply-side which may lead to deterioration of assets programs (like water loss control) as  In the absence of a regulator and/or opposed to demand-side programs community accountability and oversight which could result in lost revenue mechanisms, municipal governments may  Tend to pursue water programs not have incentives to operate systems which do not demand high efficiently and effectively community outreach requirements  Financial requirements for major infrastructure expansion or renewal may be difficult for some municipal governments to support Table 15: Excerpt of General Advantages & Disadvantages of Municipally-Managed vs. Corporatized Public Utilities Operating Performance Comparisons Finally, research on documented operating performance comparisons between public vs. private utilities was performed, as this was raised as a perceived advantage for the external – Aqueduct service delivery model. Based on this, research was leveraged from the Pacific Institute10, which analyzed efficiencies between public vs. private water utilities in the United States. From this research, it was found that there was no statistical basis to suggest that either form of governance is inherently more economically efficient than the other. This was supported by the identification of different cost drivers and priorities between the two models. It was generally noted that public utilities feature higher operating costs due to a greater degree of risk aversion. Conversely, privately-managed utilities have a higher motive to ensure appropriate return on equity targets are met. Additionally, it was noted that the following key factors for success should be prioritized (regardless of which governance or business model is selected):

 Effective staffing;

 Consistent community support for adequate funding;

 Detailed asset management

 Performance measures and rewards aligned to organizational objectives; and

 Processes that are transparent and open to the public. 6.3. Market Supply of Certified Operators in Alberta Finally, the Alberta Water & Wastewater Operators Association (AWWOA) was leveraged to better assess the expected supply of certified operators within Alberta. From a survey of rural Alberta municipalities about rural capacity considerations11, survey responses were noted about the level of concern rural municipalities had about maintaining qualified operators. A total of 79 municipalities participated in the survey. Key findings included:

10 Gary Wolff, Eric Hallstein, “Beyond Privatization: Restructuring Water Systems to Improve Performance”, Pacific Institute, 2005 11 Closer to Home (C2H) – Smaller Centres Water & Wastewater Capacity Renewal Initiative “End-of-Project Municipal Survey Report”, 2014 31

Agenda Page 65 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 60 of 100

 Municipalities on average are “somewhat concerned” to “moderately concerned” about finding suitable workers with the skills to work in public works or regional treatment plants AND who can achieve the Certificate of Qualification(s) for water or wastewater facilities; and

 Municipalities on average are “somewhat concerned” to “moderately concerned” about retaining a certified operator locally once that person has a Certificate of Qualification(s). In addition, the perspective from the AWWOA on the subject of certified operator availability noted that, generally, it is hard for smaller centers to both attract and keep certified operators. A specific challenge for small communities is that they need an operator that has certification in all four disciplines (water treatment, water distribution, wastewater collection, and wastewater treatment). There are now approximately 2,500 certified operators within Alberta, but not all contain all four of these certifications. Overall, it was noted that should Rocky View County elect to insource operations and maintenance activities, it will face a significant risk to both attract and retain sufficient certified operators such that all Utility Systems are appropriately staffed.

Agenda Page 66 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 61 of 100

7.0 Regional Context

This section provides a summary of some key water licensing and servicing characteristics of the Calgary Region which impact Rocky View County’s Water and Wastewater Utilities.

7.1. Water License Availability In 2007 the Provincial Water Act was amended to reserve all water in the South Saskatchewan River Basin. This halted the issuance of any new water withdrawal applications. As a result, this has increased the competition for water supply. Without the ability to obtain any new allocation from the Bow and Elbow Rivers, municipalities and developers must turn to existing license holders to either negotiate license transfers or purchase treated potable water from them. In response to this, Rocky View County secured water access from the Western Irrigation District (6,700 m3 per day to serve eastern Rocky View), Elbow River (via a water license transfer to serve Bragg Creek residents), and its partnership interests with the Aqua 7 Regional Commission (to potentially serve northeast and eastern Rocky View). In addition, it is noted that several of the current non-County water providers have supply agreements with different jurisdictions, including Mountain View and Red Deer Counties. 7.2. Calgary Regional Partnership The Calgary Regional Partnership was formed in 1999 as a voluntary network of regional municipalities. The following are its current members:

 Airdrie

 Banff

 Black Diamond

 Calgary

 Canmore

 Chestermere

 Cochrane

 Irricana

 Nanton

 Okotoks

 Redwood Meadows

 Strathmore

 Turner Valley

Agenda Page 67 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 62 of 100

Through the Calgary Regional Partnership, The Calgary Metropolitan Plan (CMP)12 has been developed by its members to guide a variety of regional servicing priorities, including water, wastewater, and storm water systems. Within this, it has developed a strategy to provide a regional approach with the expected total savings of $400 million to its members. Although specific solutions have not yet been defined, The City of Calgary has developed and communicated its regional servicing policy as follows:

 “The City of Calgary is willing to provide water and wastewater services to members of the CRP in order to support the growth identified under the auspices of the CMP. Water and wastewater services may be accessed at Calgary’s boundaries at points where sufficient capacity exists. The full financial impacts of regional connections and growth on internal infrastructure will be recovered through rates and/or capital charges.” Given this position, The City of Calgary is willing to sell water and wastewater services to its regional neighbors who are members of the CRP. However, The City of Calgary is not interested in providing water distribution or wastewater collection services nor in owning infrastructure within the region.13 7.3. Existing Regional Servicing Arrangements There are several significant region servicing arrangements within the Calgary region. Within the vicinity of Rocky View County, these include arrangements between The City of Calgary and its regional neighbors, including:

 City of Airdrie (both water and wastewater)

 City of Chestermere (both water and wastewater)

 Town of Cochrane (wastewater)

 Town of Strathmore (water)

 Tsuu T’ina Nation (water) In addition, it is noted that the Town of Okotoks has recently applied for a $36 million provincial grant (through the Water For Life Program)14 for a water pipeline from The City of Calgary.

12 The Calgary Regional Partnership, “Calgary Metropolitan Plan”, 2014 13 The City of Calgary, “Regional Servicing Update”, CRP Executive Meeting, 2013 14 Erika Stark, “Okotoks seeks $36M provincial grant for Calgary water pipeline”, The Calgary Herald, October 2014 34

Agenda Page 68 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 63 of 100

8.0 Aqueduct Business Plan Proposal

This section provides details on the concept solution for Aqueduct Utilities Corporation as an external, arms-at-length service delivery alternative. This includes details on its strategic mandate, governance framework, management / organizational structure, operational plan, financial projections, risk management considerations, and implementation steps. 8.1. Mandate and Objectives This section describes the specific mandate and objectives of Aqueduct. All subsequent solution concept design elements have been selected to support these. 8.1.1. Mandate The proposed mandate for Aqueduct would be to assume responsibility and accountability for the future water and wastewater servicing for customers within Rocky View County. It would hold a franchise agreement with Rocky View County which would enable it to assume sole ownership of existing Rocky View County utility assets and provide water and wastewater services to customers within the County. Longer term, it may evolve this mandate to include storm water and solid waste15 management utility services. A unique aspect for Aqueduct and Rocky View County is the need to align the future of water and wastewater servicing across the County with both existing and new independent utility providers. As indicated in section 4.1.2, there are currently approximately 70 different non-County water delivery entities. Pursuant to the County’s draft Potable Water Strategy, it is intended that Aqueduct would assume ownership of this strategy and development agreements with independent utility providers to ensure all County constituents receive safe and reliable servicing. In addition, Aqueduct would be responsible for coordinating and implementing all new water and wastewater services for future growth customers within the County. This will be completed either through the capital expansion and operation of Aqueduct-owned utilities or through agreements with independent utility providers. As per the existing draft Potable Water Strategy, however, all new developments must feature plans on how new water and wastewater systems will be eventually ported to Aqueduct to ensure long-term sustainability and stability. Aqueduct’s initial focus will be on customers within the County’s municipal boundaries. It is not being established to specifically pursue regional opportunities (although it would be permitted to evaluate and act on specific regional opportunities as identified and appropriately justified through solid business case rationale, including potential taxation implications). Accordingly, its financial goal will be to provide the lowest rates possible to customers while maintaining long-term infrastructure and operational sustainability. It is not planned to provide a dividend or return to the County without there being sufficient regional business to support this.

15 Of note, storm water and solid waste are not within the scope of this study. 35

Agenda Page 69 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 64 of 100

8.1.2. Objectives The primary objectives of Aqueduct include: 1. Provide safe and reliable potable water distribution and wastewater collection and treatment services to customers within Rocky View County; 2. Support Rocky View County’s growth plans for both residential and non-residential development by making fiscally prudent investments in utility expansion and upgrades for new customers; and 3. Assume a leadership position for the provision of safe and reliable water and wastewater services across the County by: i. Entering into service agreements with non-County utility entities to document their individual operating area boundaries and ensure appropriate operational standards are met; ii. Facilitating the consolidation of non-County water delivery entities, including transfer to Aqueduct; and iii. Structuring agreements with new water delivery entities to ensure the provision of safe and reliable water services and to plan for the ultimate transfer to Aqueduct. 8.2. Legal Context Aqueduct Utilities Corporation was previously approved by the Province of Alberta’s Municipal Affairs and legislation for it already exists, as per Alberta regulation 92/2012 with amendments 45/2014. It was originally established as a municipally controlled corporation 2007, and is regulated by the Municipal Government Act, Business Corporations Act, Control of Corporations Regulation, and Debt Limit Regulation. Since its establishment, however, none of the assets, liabilities, nor servicing requirements have been transferred and it remained as a “paper organization”. A municipally controlled corporation is selected based on the desire to establish a separate governance entity from Rocky View County which would be wholly accountable for County water and wastewater utility servicing. As such, it would serve as a separate legal entity, which will allow it to directly employ staff, own assets, and raise financing independent of the County. As per the Chartered Accountants of Canada Accounting Handbook16 section 1300.28, the following characteristics apply: a) it is a separate legal entity with the power to contract in its own name and that can sue and be sued; b) it has been delegated the financial and operational authority to carry on a business; c) it sells goods and services to individuals and organizations outside of the government reporting entity as its principal activity; and d) it can, in the normal course of its operations, maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity.

16 The Canadian Institute of Chartered Accountants, “Summary document for controlled entities; Appendix B; CICA PSAB Handbook excerpt”, http://www2.gnb.ca/content/dam/gnb/Departments/lg-gl/pdf/PSAB-CCSP/CICA-PSABHandbookExcerpt.pdf, accessed April 2015 36

Agenda Page 70 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 65 of 100

To provide Aqueduct its desired mandate, it is expected that Rocky View County would establish a bylaw to provide exclusive rights to Aqueduct for all water and wastewater servicing within the County. As indicated above, this legislation would need to be complementary with existing non-County water and wastewater utilities within the County. In addition, it would establish a franchise agreement with Aqueduct to enable it to pursue its desired mandate as described above. Further, the Alberta Municipal Government Act sections 298 (1) and 362 provides provincial legislation for assessment and taxation. As indicated previously in the Brownlee report to Rocky View in 200617, it is planned that Aqueduct would seek an extension of these terms as provided to municipalities, regional service commissions, and not-for-profit corporations. Additionally, the Federal Government Income Tax Act18 provides legal guidelines as to income tax exemption status and limitations for Aqueduct. Specifically, Division H section 149 (1) states that no tax is payable when that person was: (d.3) a corporation, commission or association not less than 90% of the shares (except directors’ qualifying shares) or of the capital of which was owned by: (ii) one or more municipalities in Canada in combination with one or more persons each of which is Her Majesty in right of Canada or a province or a person to which paragraph 149(1)(d) or 149(1)(d.2) applies for the period; (d.5) subject to subsections (1.2) and (1.3), a corporation, commission or association not less than 90% of the capital of which was owned by one or more entities each of which is a municipality in Canada, or a municipal or public body performing a function of government in Canada, if the income for the period of the corporation, commission or association from activities carried on outside the geographical boundaries of the entities does not exceed 10% of its income for the period; The above Canada Revenue Agency legislation essentially provide Aqueduct income tax exemption so long as the corporate structure does not fall below 90% municipal ownership and regional revenues do not represent more than 10% of Aqueduct’s total revenues. 8.3. Governance Model It is acknowledged that a draft Unanimous Shareholders Agreement19 has previously been developed for Aqueduct Utilities Corporation. This was established for discussion purposes only and was not confirmed with Rocky View stakeholders or approved by the County. The purpose of this section is to describe the desired governance model and outline content which would ultimately be used to update and finalize the Unanimous Shareholders Agreement should Rocky View County elect to move on the Aqueduct alternative. The governance structure has been designed to support the mandate and objectives of Aqueduct. It has also been developed keeping in mind the good governance principles as highlighted in section 6.3.2.

17 Brownlee LLP, Letter to Municipal District of Rocky View No. 44 dated July 17, 2006, “Re: Municipal Water and Wastewater Services Corporate Reorganization and Transition” 18 Government of Canada, “Income Tax Act”, http://laws.justice.gc.ca/eng/acts/I-3.3/page-265.html#h-88, Accessed April 2015 19 Brownlee LLP, “Aqueduct Utilities Corporation Unanimous Shareholders Agreement”, provided by Rocky View County January 2015 37

Agenda Page 71 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 66 of 100

As a municipally controlled corporation Aqueduct will be responsible to the County Council as the shareholders’ designate. Oversight and responsibility for Aqueduct will be through a Board of Directors (the Board) made-up of primarily independent members with suitable expertise and qualifications. Accordingly, the following graphic visualizes the desired governance model, with following descriptions of the roles and responsibilities for Rocky View Council vs. the Board:

Graphic 11: Proposed Aqueduct Governance Structure Rocky View Council Following guidance from the good governance principles and key concerns raised by current Council, the proposed roles for Council reinforce desired transparency and participation characteristics. They have also been developed to promote an open and communicative relationship between Council and the Board. The governance model as proposed includes the following set of responsibilities for Council: i. Establish Aqueduct’s mandate and broad objectives through bylaws and policy; and monitors progress; ii. Empower Aqueduct’s Board to oversee its affairs; iii. Approve initial investment and transfer of County assets and liabilities on behalf of the shareholder; iv. Appoint the Board Directors and fix their remuneration; v. Appoint and remove the auditor of the Corporation; vi. Amend the articles, and to make, amend or repeal the bylaws; vii. Approve annual business plans and budgets; viii. Approve annual rate adjustments (as proposed by Aqueduct); and ix. Review and monitor Aqueduct’s performance.

Agenda Page 72 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 67 of 100

Aqueduct Board of Directors Aqueduct’s Board of Directors will supervise, directly and through committees, the administration and management of its commercial activities and its internal affairs within the business plan and budget approved annually by Council. In doing so, the Board will act at all times in the best interests of Aqueduct and its shareholder. The Board will foster Aqueduct’s short-term and long-term success consistent with its mandated objectives. Key responsibilities of the Board include: i. Keep an open, communicative relationship with Rocky View Council and other key stakeholders within the County and the Calgary region; ii. Select, assess, compensate and (if necessary) replace the General Manager and plan for the General Manager’s succession; iii. Oversee, review, and approve development of a strategic plan, key performance targets, business plan, budget, new infrastructure investments, and utility rates; iv. Monitor the organization’s performance against identified goals, objectives, and key performance targets; v. Ensure the integrity of the financial statements, internal controls, financial information systems, and audited statements; vi. Work with management to identify key risks to the organization and ensure that systems to manage those risks are in place; vii. Ensure that the organization is in compliance with regulatory and legislative requirements; viii. Approve the organization’s material policies and authorities; ix. Ensure that controls, guidelines, or codes of conduct are in place governing ethical conduct, conflict of interest, environmental protection, personal and public safety, equity, and similar concerns; and x. Provide for the Board’s good management and ongoing effectiveness, including establishing of the committees and work groups required to assist the Board in the effective discharge of its mandate and in its regular review of the Board’s performance. The Board will have three standing committees:

1. Finance and Audit Committee: Assists the Board in fulfilling its financial accountability and management oversight responsibilities;

2. Governance and Risk Management Committee: Oversees the Board’s nominating and governance activities. Monitor, evaluate and make recommendations to the Board on the process and structure used to manage the business and affairs of Aqueduct including information disclosure obligations, code of conduct, and implementation of risk management;

3. HR and Compensation Committee: Oversee the evaluation and compensation of the General Manager. Develop General Manager’s performance objectives. Ensure the organization has a sound plan for succession. Ensure the organization has appropriate human resources policies that satisfy Council. 39

Agenda Page 73 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 68 of 100

The Board will be made up of six total members, including a member of Council as ex-officio. The Board will collectively have the required expertise and qualifications to carry out their responsibilities effectively and which reflects the multidisciplinary and complex nature of providing water treatment, water distribution, wastewater collection, and wastewater treatment services. Collectively, the Board’s qualifications will consist of the following:

 Regulatory & legal;

 Financial, asset, and capital management;

 Construction project management;

 Utility servicing;

 Government and stakeholder relationship management;

 Long range planning; and

 Human resources and labor relations. 8.4. Management & Operating Model Given that current water and wastewater servicing is still “young” and growing, it is appreciated that the initial scale of management and staff must be minimized to avoid injecting unnecessary costs into Aqueduct’s business model. As such, management and staff required to operate Aqueduct will be limited to the level of activity required to effectively pursue its mandate and achieve its objectives. To develop an appropriate management and organizational structure, a review of the required organizational capabilities was first performed. Accordingly, the following capabilities were identified:

Graphic 12: Proposed Aqueduct Organizational Capabilities As per the identified capabilities, it is planned that Aqueduct will require strong capabilities within Finance, Strategic Analysis, Customer Service, Operations and Maintenance, Asset Management, Capital Infrastructure Development Project Management, and both supporting Managerial and Administrative Support Services. In particular, it will need to be proficient in the following activities:

Agenda Page 74 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 69 of 100

 Identify, analyze, and plan utility capacity expansion and consolidation opportunities;

 Execute the County’s Potable Water Servicing Strategy;

 Operate and maintain utility infrastructure;

 Asset management;

 Capital expansion / delivery management;

 Financial reporting; and

 County / regional leadership and engagement. Based on considering how these capabilities could be provided by a management structure, the following organizational structure is proposed:

Graphic 13: Proposed Aqueduct Organizational Structure Aqueduct will be led by a General Manager, who is accountable to the Board of Directors. The General Manager will be responsible for providing the strategic direction to the management team, as directed by the Board of Directors. Of pertinence will be the General Manager’s focus on growing the utility’s customer base to ensure appropriate financial and operating sustainability. Senior staff will report to the General Manager, and are responsible for the following areas: Finance; Strategic & Customer Service; and Operations & Infrastructure Management. There will be administrative personnel to support the team. Operational activities of the staff are directed by the Business Plan which includes instruments of delegation, and policies and procedures that have been developed by staff and approved by the Board. Initially, the current contract operations model for the individual utility systems will continue. This is appropriate given that:

Agenda Page 75 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 70 of 100

 The current Utility does not contain internal operating and maintenance core competencies, and adding these will require a significant step change to its organization to ensure it can provide these staff sufficient direction, performance management, and personal rewards and recognition benefits;

 The immediate management focus needs to be on growing the Utilities’ customer base and increasing the level of utilization of existing infrastructure capacity; and

 The current market for a suitable supply of certified operators within Alberta is tight and competitive. Although the current oil and gas downturn may provide opportunities for increased labor supply, subject-matter-experts within the utility industry prefer to employ utility-trained operators who wish to make utility operations their primary career focus. However, longer-term it is envisioned that once a critical mass of Utility Systems can be achieved, Aqueduct should consider insourcing operations and maintenance given the benefits that can be had by aligning the operating entity with the asset owner. 8.5. Financial Plan The operation of Aqueduct will be facilitated and governed by operating and capital budgets which will be developed based on a four year plan. These budgets will be reviewed and approved on an annual basis by the shareholder, alongside specific reviews for utility rates. 8.5.1. Transfer of Existing Assets, Liabilities, & Obligations The following denote specific balance sheet items and accounts which would be effectively transitioned and assumed by Aqueduct (including both accounts estimated at year end of 2014 and those identified for the 2015 year):

Fixed Asset Water Debt $M Internal Capital System NBV $M License BV County Reserves $k $M Financing $M East Rocky View $64.17M $15.75M $11.62M $139.2k Water

East Rocky View $72.33M - $41.59M $8.80M $139.2k Wastewater

Bragg Creek $15.95M $0.625M $5.20M - - Water

Bragg Creek $10.10M - $2.50M - - Wastewater

Elbow Valley $4.89M - - - $428.9k Wastewater

Cochrane Lakes $0.87M - $0.28M - - Wastewater

Miscellaneous $0.59M - $0.53M - - Assets Total: $168.9M $16.38M $61.72M $8.80M $707.3k Table 16: Summary of Existing Assets, Debt, Obligations, and Reserves for Transition to Aqueduct

Agenda Page 76 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 71 of 100

It is expected that all fixed assets and water licenses will be transferred to Aqueduct at no additional cost. As per appropriate public sector and tangible capital assets accounting practices, these will be recognized by their present net book value (which already is based on their fair market value). Fixed assets will continue to be amortized based on their current accepted amortization schedules. The water licenses are deemed as intangible assets and hence do not depreciate in value. Although not specifically itemized above, the asset ownership rights to the Watermark utility assets and current lease-back agreement would also be transferred to Aqueduct (as authorized through appropriate bylaws and franchise agreement with Aqueduct). In addition, all debt and obligations will also be transitioned to Aqueduct. It is assumed that similar long-term financing arrangements as what Rocky View currently receives will continue with the lending institution. Additionally, it was noted that Rocky View has previously made an additional $8.801 million in debt principal repayments ahead of scheduled off-site levy contributions. It is assumed that Aqueduct will pay back this amount to the County through future off-site levies received at zero financing charges once existing long-term debt commitments have been repaid. In addition, just over $700 thousand in capital reserves will also be transferred to Aqueduct, as these are previous reserve contributions made for the specific purpose of the current municipal utility function. Finally, it is expected that formal arrangements for ongoing capital contributions (such as off-site levy revenues from new development) will be transferred to Aqueduct. In addition, although Aqueduct is not able to directly apply for capital grant funding from senior levels of government (e.g. Alberta Water & Wastewater Partnership Program, Water for Life, etc.), Rocky View County will still be able to do this on their behalf. 8.5.2. Transfer of Operating Resources In addition to the transfer of balance sheet items, there would be a transfer of applicable operating expenditures and resources. Of specific note would be existing internal Utility staff and current Utility System contract operators. A formal arrangement would be made to offer the existing internal technologists employment with Aqueduct. Accordingly, they would cease employment with Rocky View County upon this move. It is assumed for initial financial modeling purposes that Aqueduct would be able to hire them at similar total compensation levels. However, due to the fact that Aqueduct would be a corporatized entity (and may not be able to provide a similar pension plan which the County now provides), an adjustment between salaries and benefits may be required in order to develop an appropriate attraction and retention total compensation band. Additionally, it is recommended that all current Contract Operator Agreements be transitioned to be directly managed and administered by Aqueduct at the same total expense levels. Finally, it is assumed that miscellaneous materials, goods, and supplies will be transitioned to Aqueduct as currently held / administered by the County. It is planned that corporate shared services the Utilities now receive from other departments (e.g. billing, engineering, fleet, HR, IT, etc.) will continue to be provided after transition temporarily as “gifted services”, but obviously the resources who provide these services will stay with Rocky View County.

Agenda Page 77 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 72 of 100

8.5.3. Start-up & Incremental Costs In addition to the transfer of capital assets, liabilities, and operating resources, it is expected that Aqueduct will require additional start-up funding. Additionally, due to incremental organizational requirements (e.g. Board of Directors and General Manager), there will be net new costs which Aqueduct will have to address. It is proposed that the following funding and “gifted services” from the County will be provided: i. To manage the implementation and establishment of Aqueduct, internal resources from Rocky View County will be required to manage and execute specific implementation activities. These efforts are described in section 8.6 Implementation Plan. ii. It is assumed that Rocky View County would “gift” shared services and administration for at least the 1st full year of operations. It is expected that these would be services such as information services, billing and accounts payable support, communications, human resources, fleet, engineering, etc. Additionally, it is assumed that the new Aqueduct staff would still be physically located within the Rocky View County facilities. Starting in Year #2 – 3, it is expected that Aqueduct would start to assume or source these services internally and potentially relocate to a separate administrative office space. iii. There may need to be recruiting fees required in order to attract the right General Manager and potentially Board members. These may need to be incurred above and beyond the scope of services which internal Human Resources can provide. iv. Start-up funding for initial business logistics, set-up, and services will need to be provided (above and beyond what internal Rocky View resources will be able to “gift”). These will cover things such as external communications (e.g. branding, web-site, notices to customers, etc.), legal fees, banking administrative fees, insurance, audit fees, contingency expenses, etc. v. Sufficient initial working capital will be required to ensure month-to-month cash sustainability. It is assumed that approximately 45 - 60 days of working capital (i.e. operating expenses minus amortization) will be required to ensure coverage for accounts payable. vi. Incremental annual general and administrative expenses will be required for the Board, General Manager, and additional key management. Based on the above assumptions, the following estimates are provided for initial start-up and incremental funds (note that the cost of “gifted” services are not included):

 Start-up Cost Contributions: $1,000,000

 Incremental G&A Costs: $ 500,000 It is assumed that the initial start-up cost contributions will be funded from Rocky View County via a temporary loan. It is further assumed that Aqueduct would pay back this loan over a five year period.

Agenda Page 78 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 73 of 100

8.5.4. Revenue Sources Accordingly, Aqueduct would gain all utility revenues as now listed within the County’s Master Rates Bylaw (i.e. ongoing utility fees, new connection / hook-up fees, and miscellaneous non-rate revenue fees). These fees will form the basis for Aqueduct’s annual operating revenues. Given that each Utility System is largely independent of each other and features unique cost structures, it is appropriate that each feature different rates (as each will have a unique cost of service). Annual rates will need to be analyzed and presented for justification and approval on an annual basis to both the Aqueduct Board and Rocky View County Council. Having said that, there may be opportunities to create more similar rate structures across different customers (i.e. mix between use of fixed vs. variable charges), as it is assumed that overall rate objectives will be similar across communities (e.g. desired level of support for conservation, revenue stability, revenue sufficiency, etc.). A review of the current rate structures and appropriate updates will be a key step required for the Aqueduct management team. Additionally, it is proposed that Aqueduct receive all future off-site levies for water and wastewater facilities as now defined in Bylaw No. C-7273-2013. It is noted that these need to align with applicable accounting standards for revenue recognition, as they represent capital funding contributions for specific capital projects which have either (1); already been fronted and financed by the County and now require ongoing debt financing expenses to be paid, or (2); been targeted for future capacity expansions, and as such levies received in this manner must be kept in deferred revenue / reserve accounts until the capital project expenditures occur. It is also noted there will be nominal, non-significant utility fee penalties and interest income revenues which will occur on an annual basis. Although franchise fees are another potential revenue source for the County, it is assumed that they will not be implemented for the time-being. It is noted that these would be flow-through back to the County. Finally, it is proposed that Rocky View County provide annual funding to help cover administrative efforts as part of the County’s draft Potable Water Servicing Strategy. This is proposed based on customer equity factors, as the true benefactors from these efforts will be customers of existing, non- County operated water and wastewater utilities. These efforts are primarily focused at providing “municipal good”, as opposed to specific services to existing County Utility customers. Based on this, it would not be equitable to include these efforts within the current utility rate revenue requirements. 8.5.5. Capital Financing For the purposes of financial projections, the scope of new capital financing requirements was focused on capacity expansion projects for existing Utilities as identified within Bylaw No. C-7273-2013 “Off-Site Levies for Water and Wastewater Facilities”. Financing for capital design and construction of any additional Utility Systems was not considered (as no details on any potential new Utility Systems was provided). Currently, all growth capital not funded by capital grants from senior levels of government is funded from the development community through off-site levies. Financing of capital projects is directly financed by Rocky View County through long-term debt arrangements (current debt with ATB functions much like a line-of-credit). In this manner, growth capital is “fronted” by the municipality. However, both the amount borrowed to fund the capital expenditure and annual debt financing charges are recouped over time from these developer levies. This technique provides the benefits of both providing

Agenda Page 79 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 74 of 100 upfront growth infrastructure so as not to “hold up” development and ensures that growth ultimately pays for growth. This financing technique is planned to continue after the transition to Aqueduct. Specific analysis was performed to evaluate Aqueduct’s ability to pay down long-term debt based on this technique (see section 8.5.6 Financial Projections which immediately follows). Based on projected development and off-site levy receipts applicable for each of the Utility Systems, it was found that this strategy would be satisfactory in meeting both existing and new debt financing obligations. It is also important to note that as a municipal controlled corporation, Aqueduct would have the capability to raise capital independently of Rocky View County in potentially more flexible manners. Other methods to raise financing could include bond issuances (another form of borrowing), commercial paper (short-term debt typically used to finance accounts receivables, inventories, and short-term liabilities), share issuances (i.e. raising equity), and quasi-equity investments (typically structured where the financial return is calculated as a percentage of the Utility’s future revenue streams). However, as compared to the existing financing method, there are other unique issues, risks, and limitations associated with each of these:

 Bond Issuances: for smaller corporations which may be challenged to meet future interest obligations, investors may view as a higher risk and hence may demand higher interest rates.

 Commercial Paper: only short-term in nature and not appropriate for long-term capital financing.

 Share Issuances: typically demands for return-on-equity is higher than current costs of debt. Additionally, as previously described in section 8.2 Legal Context, Aqueduct would risk its income-tax exemption should its corporate structure fall below 90% municipal ownership.

 Quasi-Equity: similar as bond issuances, the risk to which Aqueduct can achieve consistently positive revenues would limit the demand for this type of investment. Based on the projected new capital expenditures required, the feasibility analysis provided within this evaluation was limited to the current debt financing method based on its advantages. 8.5.6. Financial Projections Appendix B: Financial Projections contains proforma income statement, cash flow, and balance sheet projections. Specific “base” assumptions in regard to starting year, inflation, financing charges, customer growth, rates, operating costs, off-site levies, and new capital expansion projects (for existing Utility Systems) have been noted. Sensitivity analysis was provided to support this report’s conclusions and recommendations. First, a “base” scenario was developed from the “base” assumptions used. Then, given a review of the results, a second scenario was developed based on more aggressive growth rates. “Base” Scenario Projections A graph of the Aqueduct’s projected operating results under the base scenario is provided below:

Agenda Page 80 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 75 of 100

Break-even occurs in 2023

Graphic 14: Aqueduct Projected Operating Results – Base Scenario Based on projected development, off-site levy charges, and debt repayment assumptions, a graph of the projected levy contributions vs. debt financing expenses is provided below:

Drop in financing as existing debt is repaid

New debt for ERV East Balzac, Conrich, & Prince WW Upgrades of Peace Residential ramps up

Existing debt repaid

Graphic 15: Projected Off-site Levies vs. Debt Financing – Base Scenario Together, based on utility user revenues and off-site levy revenues (using appropriate accounting revenue recognition principles), a total income statement proforma was developed showing total revenues vs. expenses (including amortization):

Agenda Page 81 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 76 of 100

Increasing debt servicing and levy revenues with ERV WW Upgrades

Existing debt repaid leads East Balzac, Conrich, & Prince to temporary drop in debt of Peace Residential ramps up servicing & levy revenues

Graphic 16: Aqueduct Projected Income Statement Results – Base Scenario Based on above, the following key observations are made in regard to the projected financial results:

 Based on current and projected demand levels, the East Rocky View Wastewater System will require additional capacity by Year 2032 beyond the levels indicated by the current off-site levies. Based on this, it is only appropriate to project financial results until the end of Year 2031.

 Assuming future rate revenue increases which only match the rate of corresponding operating cost increases (given relatively high existing rates), Aqueduct would not initially be in a position to operate in a financially sustainable manner. Specifically, annual utility user fees would not cover corresponding operating and maintenance, capital replacement, general & administration overhead, and initial start-up expenses. Break even operating performance does not occur until Year 2023.

 When factoring in amortization expenses and revenue recognition principles for off-site levies, Aqueduct’s net income is projected to be almost consistently negative.

Please refer to Appendix B: Financial Projections for detailed “base” scenario financial projections, including operating statement projections itemized for each Utility System, off-site levies vs. debt repayments, cash flow projections, and total debt balance. “Higher Growth Rate” Scenario Projections To gauge how sensitive the results illustrated above are to future development, a second scenario was run based on a 25% increased rate of growth. All customer segments were assumed to grow at rates 25% higher than those assumed in the “base” scenario. A graph of the Aqueduct’s projected operating results under the “higher growth rate” scenario is provided below:

Agenda Page 82 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 77 of 100

Break-even occurs in 2022

Graphic 17: Aqueduct Projected Operating Results – Higher Growth Rate Scenario Based on a 25% higher development rate a graph of the projected levy contributions vs. debt financing expenses is provided below:

Drop in financing as existing debt is repaid

New debt for ERV WW Upgrades East Balzac, Conrich, & Prince of Peace Residential ramps up

Existing debt repaid

Graphic 18: Projected Off-site Levies vs. Debt Financing – Higher Growth Rate Scenario Together, based on utility user revenues and off-site levy revenues (using appropriate accounting revenue recognition principles), a total income statement proforma was developed showing total revenues vs. expenses (including amortization):

Agenda Page 83 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 78 of 100

Increasing debt servicing and levy revenues with ERV WW Upgrades

East Balzac, Conrich, & Existing debt repaid leads Prince of Peace Residential to temporary drop in debt ramps up servicing & levy revenues

Graphic 19: Aqueduct Projected Income Statement Results – Higher Growth Rate Scenario Based on above, the following key observations are made in regard to the projected financial results for the “higher growth rate” scenario:

 Based on current and projected demand levels, the East Rocky View Wastewater System will require additional capacity by Year 2029 beyond the levels indicated by the current off-site levies. Based on this, it is only appropriate to project financial results until the end of Year 2028.

 Assuming future rate revenue increases which only match the rate of corresponding operating cost increases (given relatively high existing rates), Aqueduct would still not initially be in a position to operate in a financially sustainable manner. Specifically, annual utility user fees would not cover corresponding operating and maintenance, capital replacement, general & administration overhead, and initial start-up expenses. Break even operating performance does occur quicker in this scenario, but still not until Year 2022. Given both scenarios, it is clear that Aqueduct will not be financially self-supporting for the short-term (i.e. approximately 7-8 years). As growth occurs for each system and more customers are brought on, it will eventually break even. However, given current growth projections, this will take some time.

Please refer to Appendix B: Financial Projections for detailed “higher growth rate” scenario financial projections, including operating statement projections itemized for each Utility System, off-site levies vs. debt repayments, cash flow projections, and total debt balance. 8.5.7. Risk of Dissolution A key consideration of moving the Utilities into a separate, arms-at-length organization will be to ensure it maintains its status as a “going concern” and does not dissolve. As per the recent MGA Review Discussion Paper20, it notes a risk in regard to current legislation (through the Business Corporations Act) which addresses the dissolution of a controlled corporation. Without sufficient risk mitigation strategies, there is potential that the dissolution of a controlled corporation may result in its assets being

20 The Province of Albert, “MGA Review Discussion Paper: Controlled Corporations”, http://mgareview.alberta.ca/wp- content/upLoads/media/Controlled-Corporations-Discussion-Paper.pdf, December 2013

Agenda Page 84 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 79 of 100 sold to non-municipal buyers. This could result in the controlled corporation becoming privatized and outside of the municipality’s control. Given the mandate for Rocky View County Water and Wastewater Utilities, this is not a preferable outcome. If it wishes to implement Aqueduct, it is sufficient operating and financial safeguards will need to be implemented to prevent dissolution. Or, in the event that the County elects to dissolve Aqueduct, it needs to ensure that it can reclaim all utility assets, liabilities, and operating mandate. This risk of dissolution is elevated given the initial negative operating losses forecasted for Aqueduct. Given these forecasted initial losses, Aqueduct will need annual cash-injections to maintain itself as a going concern and ensure all accounts payable obligations are met. Instead of 3rd party financing, it is assumed that Rocky View County would be willing to provide these additional funding requirements. It is noted that approximately $8.5 million in cash would be required over the 1st eight years to allow Aqueduct to break even. Also note that the existing $8.801 million which Rocky View County has paid down on debt in advance of off-site levy receipts would not be repaid until 2028 (as it is assumed that existing long-term debt would have a higher priority). Additionally, this does not consider the initial “gifted” services required to establish and start-up Aqueduct. In addition, it is recommended that Aqueduct implement a share structure with preferred and non- preferred shares, with the municipality holding the preferred (or common) shares. Any new share issuance to non-municipal investors (if Aqueduct decided that would be a prudent method to raise capital) could then be non-preferred. In this way, in the event of dissolution the preferred shares would have higher priority for claim on equity and assets than the non-preferred. Additionally, restrictions of new share issuances or transfers should be implemented, with transactions as such requiring special resolutions of approval. From review of Aqueduct’s original Unanimous Shareholders Agreement and Articles of Incorporation, it is noted that the share structure have already been established in this manner. At this time, it is planned that Rocky View County would serve as Aqueduct’s sole shareholder for the immediate and foreseeable future. This is a common shareholder arrangement for municipally controlled corporations, as it ensures that the municipality retains appropriate ownership of the entity. Upon the event sufficient regional opportunities and interests arise, there may be potential to partner with regional neighbors to evolve Aqueduct into a multiple municipally-owned entity (similar to Aquatera Utilities Inc.). 8.6. Implementation Plan The implementation of Aqueduct will require allocation of Rocky View County staff to complete a number of tasks prior to selection of the Board and ultimately permanent employees. It is recommended that a formal project be established to properly schedule and manage these tasks. This will require an allocation of County staff time to support this project, especially prior to Board selection and ultimately permanent employees.

 It is likely that such an internal transition team will need to be in effect for approximately 6 months.

 An internal project manager should be assigned on a full-time basis. In addition to project management, it is expected that such a resource can also lead the development and completion of specific tasks.

Agenda Page 85 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 80 of 100

 Additional team members with at least ½ time allocations should be representatives from the County’s finance and communications areas.

 Finally, additional team members with smaller roles should provide engineering, operations, and legal support. The following is a high-level description of the work streams and activities that the team will need to complete prior to final Council approval:

1. Regulatory & Legal: i. Ensure legislated good standing with Alberta Municipal Affairs and regulatory framework for Aqueduct ii. Engage Alberta Environment (ensure transfer of license to operate) iii. Update / refine draft Unanimous Shareholders Agreement and Articles of Incorporation (based on content within this business plan governance model and desired share structure, share restrictions, and directors) iv. Obtain legal tax opinion

 Given that Aqueduct’s mandate will initially only be on servicing customers within County boundaries, it is assumed it will be tax exempt as provided for in sections 298 and 362 in the Alberta MGA and section 149 in the Income Tax Act v. Draft and update municipal Bylaws and Franchise Agreement with Aqueduct vi. Prepare rights of way and road license / crossing agreements with Aqueduct (to ensure that Aqueduct has authority to (1) enter upon and utilize rights of way and easements, and (2) and to access roadways and public properties now held by the County). Typically these considerations can be part of the Franchise Agreement. Specific content should consider:

 System map for each utility

 Inventory of applicable right of way agreements

 Clarify responsibilities for relocating utility services in the event of road construction

2. Financial, Assets and Operations i. Due diligence on existing County assets, inventories, liabilities, and other obligations which will be transferred to Aqueduct ii. Ensure plan and financing requirements to directly assume long-term debt with ATB and AFSC iii. Confirm plan for transfer and handling of utility operating revenues and off-site levy contributions iv. Refine the operating model and related expenditures v. Refine Aqueduct financial plan

Agenda Page 86 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 81 of 100

3. Organization: i. Confirm recommended membership of Board ii. Develop the process for the recruitment of the General Manager (actual recruitment assumed to be completed by The Board) iii. Draft organizational policies (e.g. code of conduct, conflict of interest, media relations, human resources, recruitment and hiring practices, environmental policies, etc.) iv. Engage internal County Utility staff and provide change management support for employment offer to Aqueduct v. Plan for provision of County “gifted” shared services for Year #1 vi. Refine Aqueduct business plan for Year #1

4. Customer & Stakeholders Engagement: i. Notices and information dissemination to existing customers ii. Community engagement sessions as appropriate iii. Communications to non-County water and wastewater utility entities iv. Engage key suppliers (e.g. Water Irrigation District, Contract Operators) Upon completion of these work streams the team will be in a position to request Council approval for Aqueduct’s budget, asset and water license transfers, and Board of Directors. It is expected that this would take approximately six months to complete. Upon Council approval, Aqueduct will have its first Board meeting, and the Transition Team will hand-off activities to The Board. The Board will recruit a General Manager, who will then build out the desired management structure. Future refinement to the business plan and additional Council approval will be developed by Aqueduct’s management and brought forward to Council by the Board. A project plan has been developed to guide these activities:

Agenda Page 87 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 82 of 100

Aqueduct Implementation Activities Month #1 Month #2 Month #3 Month #4 Month #5 Month #6 Month #7 Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

STEP I - Develop Project Plan Identify Transition Team Project Manager & Allocate Time Identify Transition Team Project Resources Develop & Confirm Aqueduct Transition Project Plan

STEP II - Regulatory & Legal Ensure Provincial approval - Alberta Municipal Affairs Ensure Provincial approval - Alberta Environment Update Aqueduct Unanimous Shareholders Agreement Review / update Incorporation details as appropriate Obtain legal tax opinion Draft / update bylaws & franchise agreement with Aqueduct Prepare rights of way & roadway crossing agreements

STEP III - Financial Due Diligence & Asset Transfer Inventory & due dilgience of utilty assets (fixed, intangible, reserves) Inventory of all debt & obligations (ATB, AFSC, County-internal) Plan for transition of external debt (assignment & assumption) Plan for internal transfer of utility-related revenues Identify & plan for near-term capital requirements Confirm short-term operating & start-up funding requirements Finalize Aqueduct Financial Plan

STEP IV - Organizational Engage internal employees & plan transition to Aqueduct Review & confirm Board member requirements Identify recommended Board membership Develop Aqueduct General Manager recruitment process Plan for provision of County "gifted services" Finalize Aqueduct Business Plan Request Council approval for Aqueduct budget, Board, & financial transfers

STEP V - Customer / Stakeholder Engagement Customer announcement & communications Community engagement sessions (as required) Engage non-County water providers within County Engage key suppliers & arrange porting of existing agreements

Graphic 20: Implementation Plan Schedule

Agenda Page 88 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 83 of 100

9.0 Enhanced Internal Solution

This section provides details on an alternative solution for enhancing internal service delivery activities. Based on the assumption that an internal solution would have the same strategic mandate as Aqueduct, this section focuses on the key management, organizational, and financial changes. 9.1. Internal Solution Objectives When discussing what characteristics would describe an alternative internal solution with internal stakeholders, the top change requested was a greater level of financial transparency and reporting. In this regard, the point was raised that both County administration and Council would benefit from seeing a full financial picture of the Utilities. When combining this input with an analysis of the current operational and financial status of the Utilities, the following priority objectives for an alternative internal solution were developed:

1. Provide Full Utility Financial Reporting:  Identify, confirm, and allocate all applicable internal costs, assets, and debts to the Utility; and

 Generate regular internally-focused reports on the Utility’s fully-loaded costs, revenues, assets, obligations, and system performance.

2. Grow Customer Connections:  Provide focused leadership at increasing the number of customer connections, demand, and user revenues for existing systems; and

 Support municipal growth objectives by anticipating and analyzing utility growth opportunities as appropriate.

3. Assume County Water Leadership:  Facilitate consolidation of non-County water delivery entities;

 Develop franchise agreements with consolidated entities; and

 Plan for consolidation of non-County infrastructure and operations to the County. 9.2. Short-Term Organizational Structure Based on the above objectives, a short-term organizational model alternative was developed. It is shown below in the following graphic:

Agenda Page 89 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 84 of 100

Graphic 21: Proposed Enhanced Internal Utility Solution Organizational Structure From review of the current-state structure, it is somewhat hierarchical. Leading practices typically feature a larger span-of-control in the number of direct reports to a supervisor. A focus of this change would be “flatten” this hierarchy and increase focus and capacity to Utility management, customer growth, and regional leadership. The following specific changes are recommended: 1. Increase the capacity of the Manager to a full-time position, as the operational scale and scope of the Utilities has increased. This will allow for additional management capacity of operations and to oversee customer connection growth and potable water servicing strategy activities. It will also allow for additional operational, financial, and performance reporting of the County Utility function. 2. Develop a focused “Strategy & Customer Service” Lead position. This position would take on more focused role at evaluating new growth / capital expansion opportunities, working with existing home-owners to connect to existing utility infrastructure (this is more specific for the Bragg Creek Systems), and taking a leadership role in moving forward on the County’s draft Potable Water Servicing Strategy. The implication of this suggested organizational change is an additional ½ of a Manager position. Existing Utility Systems would continue to be contracted out and overseen by the team of internal Technologists. It is noted that an in-depth workload capacity analysis should be performed prior to making this adjustment to ensure sufficient supervisory oversight of the four Utility Operations Technologists. 9.3. Longer-Term Organizational Roadmap Given that the organizational structure as proposed within the Aqueduct model represents a preferred long-term structure, the question is then raised on how the County could move from its current status to this model. Typically, and especially for utilities, organizational adjustments are made in a step-by-step

Agenda Page 90 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 85 of 100 manner in order to minimize organizational change and maintain stability. As such, the following roadmap of organizational changes are recommended to support the longer-term vision:

Graphic 22: Proposed Organizational Roadmap As can be seen, the recommendation is to add in the required capabilities as identified previously. The second step would include the establishment of a dedicated Finance Lead. Finally, an Operations Lead can be brought on at the time wherein the Utilities see a critical mass and sustainability in scale of their operations. An initial insourcing of operations and maintenance activities can also be completed during this step, as many utilities find that having a mix of internal vs. contract activities can help to mitigate the risks of labor supply and keep pricing competitive. The purpose of the Organizational Roadmap is to illustrate step-wise evolutions to the County’s current organizational structure in order to prepare for a potential spin-out to Aqueduct. The intent would be to add in Step 2 (finance lead) and Step 3 (operations lead and introduction of internal operators) based both on the expected increase in functional requirements and workload capacity given the utility’s continued growth and execution of the draft Potable Water Servicing Strategy. Adding a dedicated finance lead would be required to analyze and plan both the consolidation of existing non-County water providers and potential new utility capacity extensions, perform all financial management activities, and ensure transparent and comprehensive financial reporting. It is expected that this functional requirement will be necessary to ensure the appropriate financial management of net-new operations to the Rocky View portfolio of utility systems and communities served. Similarly, as the scope and scale of utility systems and communities increases, it is expected that higher workload capacity demands will require both increased focus on system operations. At this point, it is envisioned that Rocky View would have acquired a sufficient customer base wherein their system capacities are better utilized. As such, the next stage of operational improvement will be on driving operational and infrastructure lifecycle management efficiencies. To do this, it is envisioned that a dedicated and qualified operations lead would be required. In addition, it would be assumed that the Utilities would then have sufficient “critical mass” to warrant evaluating and introducing internal operating and maintenance resources (instead of entirely contracting this out).

Agenda Page 91 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 86 of 100

9.4. Financial Reporting Finally, a key “enhancement” to this alternative relative to the current state would be to feature fuller and more transparent financial and operational reporting. In effect, the goal would be to allocate costs and assets directly to the Utility Function and provide reporting as if it were a distinct department or business entity. Key components of this increase in financial and operational reporting would include: i. Allocating all relevant internal, corporate overhead costs to the Utility; ii. Reporting on annual amortization as an operating expense; iii. Allocating assets and reporting on key balance sheet accounts specific to the Utility; iv. Reporting on both received and forecasted off-site levies as they compare to:

 Long-term debt incurred for growth and annual debt financing requirements; and

 Planned capital expansion projects which will utilize new off-site levy payments. v. Reporting on overall utility operating and cash flow results; vi. Reporting on year-over-year growth and projected forecasts as it pertains to:

 Growth in customer connections and volumes;

 Operational changes and costs; and

 Financial management adjustments. vii. Reporting on progress made in finalizing, confirming, and implementing the Potable Water Servicing Strategy.

Agenda Page 92 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 87 of 100

10.0 Evaluation of Alternatives & Recommendations

This section provides an evaluation of the two alternatives requested and recommendations for Rocky View County’s go-forward strategic direction. 10.1. Evaluation of Alternatives Based on the evaluative criteria established and the projected financial results of the proposed Aqueduct external alternative, the following analysis is provided to compare the two alternatives:

Criteria Aqueduct Enhanced Internal Favored Solution Alternative  Currently constrained by limited customer demand vs. system capacity  Able to subsidize utilities from tax base given  Challenged to raise rates currently limited customer sufficiently to be self- demand  Enhanced sustainable in short-term Fiscal  Can directly apply for grant Internal (short- Responsibility  Reliant on Rocky View County funding Solution for grant applications from term) senior government  Avoid initial start-up and incremental costs Aqueduct  Would not meet MGA requires requirements today to form separate corporation  Given current lack of financial  Enables close relationship self-sustainability, short-term with County Plan initiatives investment focus would to drive residential & non- dominate and may sacrifice residential growth in target  Enhanced appropriate longer-term Sustainable areas Internal Communities investments Solution (short-  Short-term, provides  Longer-term, has potential to term) greater means to push provide a higher level of forward the draft Potable governance and operational Water Servicing Strategy stability and sustainability

 Strong short-term incentive to  Short-term priority should cut costs in order to conserve be on increasing customer cash and minimize operating revenues. Achieving  Enhanced Service losses operating cost efficiencies Internal Excellence  Longer-term would have an is secondary (for the time Solution (short- advantage given expert Board being, until a critical mass term) and heightened management & of system utilization is operational focus achieved) Table 17: Summary of Evaluation of Alternative Governance Models Largely based on the inability for the Utility to be financially sustainable in the short-term, it is not yet prudent to proceed with the Aqueduct external solution. Based on the large extent of capital infrastructure relative to the still low number of customer connections, it is clear that Aqueduct will still require ongoing funding assistance. Given the regulations as stipulated by the Alberta Municipal Government Act, it would not pass the minimum test to be independent on its parent for its ongoing

Agenda Page 93 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 88 of 100 operations. Additionally, the Aqueduct management team would be restricted in its ability to raise rates in the short-term, as (1); current rates are already well above regional comparisons, and (2); there is currently an insufficient number of customer connections to spread the entire system costs across (as the systems were designed to accommodate much higher customer demand levels). 10.2. Recommendations Based on the evaluation performed above and observations made during the Current State Review phase, the following recommendations are provided:

 As noted previously, a workload capacity review should be performed to ensure sufficient management oversight of the four internal technologists; 4. Where feasible, evaluate how to add in currently unallocated cost components to utility customers (e.g. all applicable corporate overhead and infrastructure reinvestment and replacement costs to ensure long-term infrastructure and operational sustainability) as compared to current customer affordability and equity constraints. i. Specifically, more formal analysis and evaluative trade-offs should be performed to compare full cost recovery rates for existing customers vs. what fully-loaded rates would be if the utility systems were at full utilization; 5. As new customers are connected and the financial results approach break-even, consider adding in future organizational structure changes to slowly evolve towards the desired future- state model as described within the Aqueduct organizational roadmap proposal. 6. Consider transitioning to Aqueduct at a future date if and when the projected Utility operating results and cash flows can be fiscally self-sustaining and not dependent on Rocky View County for ongoing funding assistance. i. It would then be prudent to re-assess the merits of spinning out Aqueduct at this time. Specifically, an evaluation of whether the future objectives for Rocky View County’s utilities can best be obtained through an internal service delivery model vs. Aqueduct would be required. ii. Based on Recommendation # 3 above to position the Utilities as a distinct operating entity, this could provide a tangible test on whether an enhanced internal solution could

Agenda Page 94 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 89 of 100

ultimately work for Rocky View County. Based on this test, a more informed evaluation could then be performed on whether to establish Aqueduct.

Agenda Page 95 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 90 of 100

Appendix A: Stack’d Consulting Inc. Team Resumes

This appendix provides the full resumes for each team member involved in the delivery of this project. Myron Moore

Profile Summary A founding team member of Stack’d, Myron brings over fifteen years of professional services experience with strong capabilities in consulting engineering, project management, and management consulting. He has successfully delivered a variety of strategic engagements focused on improving client’s organizational performance and sustainability. His experience ranges from post-merger integration to planning and building core capabilities in enterprise-wide business practices such as asset management, portfolio management and project management. Myron has also successfully delivered several organizational performance and costing reviews, including detailed financial analysis and modeling.

Myron holds a Masters of Business Administration from the Rotman School of Management (University of Toronto), where he graduated as a Rotman Scholar. He also obtained a Bachelors of Applied Science in Engineering Science at the University of Toronto, and currently holds Professional Engineering designations both in Alberta and Ontario. In addition, Myron has achieved accreditation from the Project Management Institute as a certified Project Management Professional.

Education 2004 Masters of Business Administration (Honours Standing), Rotman School of Management, University of Toronto 1997 Bachelors of Applied Science, Engineering Science, University of Toronto, Faculty of Engineering

Relevant Experience Municipal Water & Wastewater Utility: Provided program management assistance in the post-merger integration of the wastewater and water services business units of a large municipality. This included coordinating the development of future-state organizational designs, processes, roles definitions, business cases for improvement opportunities, and implementation plans.

Municipal Water, Sanitary, Storm Water, and Waste Management Utility: Performed a Utility Fiscal Policy Review for an Alberta-based municipal utility. The Utility was in a situation where significant rate increases had been made, forecasted capital expenditures were projected to triple, and historically were not permitted to take on long term debt. A review of the Utility’s current financial situation was performed, including the existing rate model and rate structure, operating requirements, and both historical and projected capital expenditures and sources of funding. Additionally, industry research was performed on comparable municipalities and industry best practices (i.e. AWWA, GFOA, EPA, etc.). As well, a 10-year financial forecasting model was designed and developed to identify annual revenue requirements and to evaluate the implications to the Utility’s financial situation based on alternative financial management policies. Detailed recommendations were developed in regard to self-financing sustainability polices, financing practices (including specific focus on cash vs. debt financing and measures to support economic development), reserves management, and rate-making practices.

Municipal Water, Sanitary, Storm Water, and Waste Management Utility: Performed a Utility Fiscal Policy Review for an Alberta-based municipal utility. The Utility was in a situation where significant rate increases had been made and the organization had almost maximized its MGA-governed debt limit. A concern of the municipality was how to reinvest in its infrastructure and fund both its capital and operating requirements to

Agenda Page 96 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 91 of 100 support long-term sustainability. A review of the Utility’s current financial situation was performed, including the existing life cycle accounting model and rate structure, operating requirements, and both historical and projected capital expenditures and sources of funding. A 25-year financial forecasting model was designed and developed to identify annual rate revenue requirements and to evaluate the implications to the Utility’s financial situation based on alternative financial management policies. Detailed recommendations were developed in regard to self- financing sustainability polices, financing practices (including specific focus on cash vs. debt financing and measures to support economic development), reserves management, and rate-making practices.

Municipal Sanitary, Storm Water, and Waste Management Utilities: Project manager of separate engagements focused on completing cost of service study projects for each utility within a large municipality. This included accurately allocating both operating and capital costs to existing customer classes and analyzing against actual revenues received to determine the extent of customer equity in the existing rate structures.

Municipal Water & Wastewater Utility: Project managed the organizational and strategic planning of how asset management decision-making principles and concepts will be implemented for the organization. The approach involved engaging key stakeholders, documenting current-state functionalities, benchmarking of selected organizations, and developing asset management program mission, vision, goals, objectives, and a 3-year implementation plan.

Regional Solid Waste Commission: Led a project focused at completing a cost of service study and rate model development for a regional solid waste management commission. This included accurately allocating both operating and capital costs across seven different waste streams and residential, commercial, and external customer classes. A rate model was developed to guide future planning and setting of rates for each service and customer class based on desired rate-making principles as set by the Board.

Municipal Waste Management Utility: Successfully managed and delivered a project which designed and developed a custom 10-year financial model. The model provided sufficient bottom-up forecasting of total costs and funding required to support the planned introduction of new waste management services.

Municipal Utilities Department: Successfully managed and completed a comprehensive performance review for a water, wastewater, waste & recycling, and community energy utility. The results and recommendations were formally presented to Council, who indicated that the level of quality and comprehensiveness was of the highest they had reviewed.

Municipal Waste Management Utility: Delivered a comprehensive external scan engagement for a large waste & recycling services utility. This engagement compared key business metrics over comparative organizations across Canada, including strategic initiatives, sources of and uses of funds, rates, productivity levels, and operational cost drivers. In addition, a predictive model was developed to estimate specific operational costs against predictive variables.

Regional Solid Waste Authority: Delivered an engagement focused at evaluating the “as-is” governance structure for a regional solid waste authority and recommending structural changes. This authority was comprised of 12 total rural municipalities, including a First Nations reserve. The project included the facilitation of a recommended future state mandate (relative to the activities provided by member municipalities) and development of a regional governance structure to best support it.

Municipal Waste Management Utility: Successfully managed and delivered a project which developed a governance model and roadmap for the municipality’s waste management function. The result was recommendations for appropriate short-term and long-term governance structures to support the evolution of the waste management function throughout the planned introduction of new waste management services and operations (e.g. waste minimization and regional services).

Municipal Water & Wastewater Utility: Successfully managed and delivered organizational design projects for both the Wastewater and Water Treatment divisions of a large municipal utility. These focused on reviewing the

Agenda Page 97 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 92 of 100 existing organizational situation and identifying improvement opportunities and organizational changes to achieve desired future-state goals.

Municipal Water & Wastewater Utility: Managed and delivered a project which defined a system controls, monitoring, and reporting (SCADA / DCS) governance model and accountability framework across the engineering and operations departments. The result was a clear definition of decision-making rights and required roles and responsibilities for key activities across the engineering value-chain.

Other Accomplishments 2015 Guest Speaker on “Utility Fiscal Policy” Alberta Water Wastewater Operator’s Association, Banff 2013 Guest Speaker on “Utility Fiscal Policy” Alberta GFOA Conference, Jasper 2013 American Water Works Association Member (AWWA) 2009 Certified Project Management Professional (PMP) 2007 Project Management Institute (PMI) Member, South Alberta Chapter 2007 Association of Professional Engineers, Geologists, and Geophysicists of Alberta (APEGGA) Member 2005 Ontario Society of Professional Engineers (OSPE) Professional Engineering License

Tyler Shapka

Profile Summary Tyler is a Senior Consultant for Stack’d Consulting and is based in Edmonton. He works with senior-leaders in both the private and public sectors to help them make and execute business decisions. His specific areas of expertise include strategic planning and execution (including program and project management), financial modeling and analysis, and executive level performance evaluations

Tyler holds a Bachelor of Commerce Cooperative Education degree from the Alberta School of Business at the University of Alberta where he graduated with Distinction.

Education April 2009 Alberta School of Business at the University of Alberta, Bachelor of Commerce Cooperative Education with Distinction

Relevant Experience Waste Management Commission: Analysed and developed a new rate structure for the commission, which operates a landfill. This includes completing a cost-of-service study to understand the total cost of operations and using this to develop rates for different customer types to ensure sustainable revenues for the life of the landfill.

Waste Management Commission: Led the evaluation of various options to address cost escalation. As an operator of a landfill, the commission specifically asked for an evaluation of its long-term leachate disposal options. The evaluation combined NPV and high-level feasibility analysis to arrive at a recommended option.

Municipal Utility: As part of a Utility fiscal policy review, developed a financial model to analyze the impact potential new policies would have on the revenue requirement of the Utility and the corresponding rates required from customers. In addition to analyzing internal data from our client municipality, the project also included an external

Agenda Page 98 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 93 of 100 scan of similar municipalities in order to learn leading practices. The resulting fiscal policy recommendations were a product of the financial analysis, internal analysis, and external leading practices.

Not-For-Profit Organization: Project Manager in developing a reusable tool to the assist the organization in utilizing its distribution network more efficiently. A secondary objective was to facilitate collaboration and cooperation across similar organizations. Using extensive stakeholder consultation and incorporating GIS data into a MS Excel model, we developed recommendations and solutions to issues, many of which were implemented. A reusable tool in MS Excel was also delivered, with a positive reaction from staff.

Provincial Government Agency: Completed a financial analysis and engaged stakeholders to determine the impact of changing the way their service was provided and the financial implications. Based on analysis, a new service delivery model was recommended and was fully adopted and implemented.

Government Body Focused on Innovation: Program Manager of a program of seven strategic projects developed by the executives to fundamentally shift operations of the organization. Includes managing project interdependencies, change across the program, resourcing, budgets, and resolving issues to ensure the program of projects achieves the intended outcomes.

Government Body Focused on Innovation: Program Coordinator to set up and manage a Program Management Office for the purpose of executing six strategic projects. Included: tracking project interdependencies, issue tracking and resolution, tracking overall program budget, and the development and implementation of project management tools, templates, and processes. In addition, working on the team to design a future state operating model and organizational structure.

Other Accomplishments 2013 Speaker on Municipal Utility Fiscal Policy, Government Financial Officers Association Conference, Jasper, AB

Dustin Anderson

Profile Summary Dustin is the Managing Partner and founder of Stack’d Consulting. Dustin is an experienced management consultant who works with senior executives to solve some of their most challenging leadership problems. Dustin’s primary areas of focus include: Board and Senior Executive facilitation, strategic planning, organizational design, post-merger integration, and business transformation and improvement initiatives.

Dustin holds a Masters of Business Administration from the Richard Ivey School of Business where he graduated with Distinction and as an “Ivey Scholar”. In addition, Dustin holds a Bachelor of Commerce with Distinction from the Haskayne School of Business.

Education April 2005 Richard Ivey School of Business, Masters of Business Administration with Distinction June 2000 University of Calgary, Bachelor of Commerce with Distinction

Relevant Experience

Agenda Page 99 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 94 of 100

Provincial Government Ministry: Co-facilitator of a planning initiative between the Ministries leadership team (e.g. ADMs) to identify how to develop and prioritize sector strategies for the provinces investments in innovation based on a ‘collaboratory’ model between the Ministry and the Province’s innovation bodies. Government Body Focused on Innovation: Project Partner and Project Manager to develop a new business planning and budgeting process to support their new strategic direction and organizational structure. In addition, help facilitate the development of the annual business plan and budget across 10 operational units and corporate services.

Independent System Operator: Project manager to assist the Operations’ department analyze its processes and develop a three year business plan.

Industry Association: Project manager to assist the association develop a two year strategic plan that was intended to revitalize the association after the appointment of a new CEO.

Industry Association: Project manager and lead facilitator to validate the association’s mandate and strategic direction. Project resulted in developing a new strategic plan for the association and refined governance model to oversee the association.

Independent System Operator: Project manager to develop and implement a balanced scorecard to measure the organization’s performance against executing upon the strategic plan.

Independent System Operator: Project manager for the development of the organization’s five year strategic plan including objectives, initiatives and tactics which were co-developed with the senior executive and Board of Directors.

Not-for-Profit Industry Association: Project manager of a strategic assessment to identify what services the association should offer to its membership and improve financial performance. Government Body Focused on Innovation: Project Partner to oversee the evaluation and the development of recommendations for the organization’s financial policies and procedures with the intent of better aligning them with the new operating model for the organization and increasing financial transparency.

Government Body Focused on Innovation: Project Partner to oversee the development of a new financial allocation process (i.e. portfolio management) and the development of a new operating model for the organization.

Independent System Operator: Client engagement manager to oversee the development of an Enterprise Portfolio Management Office to assist the organization validate, prioritize and govern the organization’s project portfolio. Independent System Operator: Project manager to develop an enterprise project portfolio management process to assist the organization prioritize and sequence the >150 projects across the organization.

Public Private Partnership: Project lead and facilitator to apply the concepts of design thinking to improve processes, decrease operating costs and improve technologies used for municipal infrastructure.

Other Accomplishments 2005 Ivey Scholar Graduated as an Ivey Scholar (Awarded to students in the top ten percent of the MBA class in consecutive years) 2003 Deloitte Scholar Selected as one of three candidates across Deloitte Canada to be financially sponsored to attend a top 25 MBA school 2000 Beta Gamma Sigma Honors Society of the Association to Advance Collegiate Schools of Business

Agenda Page 100 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 95 of 100

Appendix B: Financial Projections

This appendix provides both assumptions and projections for the financial modeling completed to support this project’s analysis. Financial Modeling “Base” Assumptions Topic Assumptions

Annual Inflation (Applicable to 3% both Utility Rates and Expenses) Desired Ratio of Total Revenues 1 (i.e. rates are increased annually by inflation until cost recovery, including amortization and capital vs. Total Expenses replacement, is realized) County Debt Repayment Obligations for Future Levies $8.801 million (all applicable to the East Rocky View Wastewater System) (end of 2014)

Original Annual Annual Service 2014 Ending Principal Amount Interest Repayment on Debt $ Amount

Wastewater Langdon WW Facility #2 Treatment Plant 2,523,537 30,553 100,941 141,685 1,000,188

Facility #3 E Rocky View 34,953,000 788,465 1,398,120 3,008,969 25,526,620

Facility #3 Weed Lake 1,582,000 38,248 63,280 145,954 1,275,210

Long Term Utility Debt (end of Facility #4 Cochrane Lake 1,750,000 11,360 137,819 149,179 275,638 2014) Facility #5 Langdon Treatment 18,481,000 405,978 739,240 1,328,825 13,781,172

Facility #7 Bragg Creek 2,090,000 57,475 83,600 168,750 2,090,000

Water -

Facility #7 Bragg Creek 2,090,000 57,475 83,600 168,750 2,090,000

Facility #8 Elkana 2,650,000 73,723 108,320 183,657 2,650,000

Facility #6 Balzac Water 21,357,178 371,874 854,287 1,397,174 11,623,012

87,476,715 1,835,151 3,569,208 6,692,943 60,311,840

New Debt Interest Rate & Target  2.75% Repayment Term  25 years (with exception of Cochrane Lake, as it is now funded from the Town of Cochrane) 1. Existing long-term debt (i.e. ATB and AFSC) Debt Repayment Priority 2. County internal financing (i.e. the $8.801 million the County has paid above and beyond levy receipts) 3. New debt (for new capital projects as indicated by the off-site levies bylaw)

Wastewater Wastewater Water Demand Water Demand Customer Segment Demand Demand (m3/day/ac) (m3/day/unit) (m3/day/ac) (m3/day/unit) Average Consumption for Customer Segments Residential* 0.95 0.855 Commercial 2.6 2.34 Industrial (large lot) 1.14 1.03 Industrial (small lot) 0.16 0.14

Agenda Page 101 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 96 of 100

1. Langdon Wastewater Treatment Plant Upgrades (Phases 0, 1, & 2); $25,400,000 New Capital Projects Required 2. ERVWWTM & Regional Lift Stations Upgrades: $1,020,000 During Forecast Period 3. Langdon Wastewater Utility Lift Station Upgrades (West Lift Station, Industrial Lift Station, Boulder Creek Lift Station): $399,000 (i.e. 2015-2031) 4. East Rocky View Back-up Loop; $17,900,000  Capital investments were triggered when system usage = 80% of system capacity

Utility System Average Levy ($/m3) Water East Rocky View $17,029.76 + assumed debt financing* Average Levy Payments per Bragg Creek Exactly matches annual minimum debt financing requirements Applicable Water and Wastewater Wastewater Utility System East Rocky View $18,943.71 + assumed debt financing** Bragg Creek Exactly matches annual minimum debt financing requirements * assume weighted average of 2.75% & original debt issuance in 2009 ** assume weighted average of 2.75% & original debt issuance in 2006

Water Water Utility System Growth Residential Commercial Industrial (large lot) Industrial (small lot) System 2015-2019 Growth (BPs) 2020-2040 Growth (BPs) Annual Growth (ac) Annual Growth (ac) Annual Growth (ac) Assumptions East Rocky View 25.3 87.3 20.81 17.00 68.00 Bragg Creek 3.0 3.0 0.23 n/a n/a Wastewater Residential Commercial Industrial (large lot) Industrial (small lot) Wastewater Utility System System 2015-2019 Growth (BPs) 2020-2040 Growth (BPs) Annual Growth (ac) Annual Growth (ac) Annual Growth (ac) Cochrane Lakes 0 0 0 n/a n/a Growth Assumptions East Rocky View 91.3 153.3 21.51 17.00 68.00 Elbow Valley Pinebrook 1.6 1.6 0 n/a n/a Bragg Creek 3.0 3.0 0.23 n/a n/a Annual Capital Replacement  Assume that Aqueduct will slowly start to realize capital reinvestment & replacement costs which will Expenditure as % of Fixed Asset gradually grow as the infrastructure ages. The following schedule was assumed: Book Value 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.28% 0.30% 0.33% 0.37% 0.40% 0.44% 0.49% 0.54% 0.59% 0.65% 0.71% Elbow Valley / Pinebrook  Variable Costs = $1.55 / m3 Wastewater System O&M Cost  Fixed Costs = $229,000 / yr Structure (2015) Bragg Creek Wastewater System  Variable Costs = $0.98 / m3 O&M Cost Structure (2015)  Fixed Costs = $367,666 / yr Cochrane Lakes Wastewater  Fixed Costs = $143,489 / yr System O&M Cost Structure o Assumed that annual operating costs are exactly covered from the Town of Cochrane (2015) East Rocky View Wastewater  Variable Costs = $0.48 / m3 System O&M Cost Structure  Fixed Costs = $1,763,511 / yr (2015) Bragg Creek Water System O&M  Variable Costs = $1.19 / m3 Cost Structure (2015)  Fixed Costs = $229,000 / yr East Rocky View Water System  Variable Costs = $1.12 / m3 O&M Cost Structure (2015)  Fixed Costs = $681,500 / yr

Agenda Page 102 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 97 of 100 Financial Modeling Assumptions “Base” Scenario: Summary Income Statement Results

Income Statement 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Revenues Utility Usage Charges Elbow Valley Wastewater System $ 722,278 $ 755,614 $ 790,310 $ 826,417 $ 863,989 $ 903,080 $ 943,749 $ 986,055 $ 1,030,059 $ 1,075,825 $ 1,123,419 $ 1,172,911 $ 1,224,370 $ 1,257,587 $ 1,295,383 $ 1,334,593 $ 1,375,285 Bragg Creek Wastewater System $ 102,000 $ 190,035 $ 295,991 $ 408,134 $ 526,738 $ 652,092 $ 784,492 $ 924,250 $ 958,397 $ 1,009,210 $ 1,062,579 $ 1,099,974 $ 1,131,466 $ 1,164,286 $ 1,198,507 $ 1,234,210 $ 1,271,482 Cochrane Lakes Wastewater System $ 143,489 $ 147,794 $ 152,228 $ 156,795 $ 161,498 $ 166,343 $ 171,334 $ 176,474 $ 181,768 $ 187,221 $ 192,838 $ 198,623 $ 204,581 $ 210,719 $ 217,040 $ 223,552 $ 230,258 East Rocky View Wastewater System $ 1,889,400 $ 2,085,448 $ 2,275,555 $ 2,475,193 $ 2,684,760 $ 2,904,674 $ 3,185,204 $ 3,479,952 $ 3,789,518 $ 4,114,525 $ 4,455,623 $ 4,813,484 $ 5,188,806 $ 5,582,315 $ 5,994,765 $ 6,426,938 $ 6,879,646 Bragg Creek Water System $ 132,000 $ 161,691 $ 222,866 $ 287,566 $ 355,947 $ 428,173 $ 504,411 $ 584,839 $ 669,638 $ 758,999 $ 853,119 $ 902,356 $ 933,481 $ 965,661 $ 998,931 $ 1,033,329 $ 1,068,892 East Rocky View Water System $ 964,400 $ 1,134,632 $ 1,316,147 $ 1,507,531 $ 1,709,214 $ 1,921,641 $ 2,235,577 $ 2,566,621 $ 2,915,515 $ 3,283,033 $ 3,669,977 $ 3,797,436 $ 4,004,274 $ 4,222,961 $ 4,454,205 $ 4,698,766 $ 4,957,456 Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Sub-total: $ 3,953,567 $ 4,475,214 $ 5,053,097 $ 5,661,635 $ 6,302,146 $ 6,976,003 $ 7,824,768 $ 8,718,190 $ 9,544,895 $ 10,428,813 $ 11,357,556 $ 11,984,782 $ 12,686,978 $ 13,403,529 $ 14,158,832 $ 14,951,388 $ 15,783,019 Development & Off-Site Levies Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 75,616 $ 87,425 $ 86,001 $ 84,576 $ 83,151 $ 81,727 $ 80,302 $ 78,877 $ 77,452 $ 76,028 $ 74,603 $ 73,178 $ 71,754 $ 70,329 $ 68,904 $ 67,479 $ 66,055 Cochrane Lakes Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 3,758,682 $ 3,862,154 $ 3,886,970 $ 3,987,595 $ 4,089,208 $ 5,291,188 $ 5,222,505 $ 5,276,059 $ 5,297,128 $ 5,265,007 $ 5,141,409 $ 4,373,964 $ 4,411,514 $ 4,496,064 $ 3,026,296 $ 4,688,261 $ 4,793,307 Bragg Creek Water System $ 75,616 $ 87,425 $ 86,001 $ 84,576 $ 83,151 $ 81,727 $ 80,302 $ 78,877 $ 77,452 $ 76,028 $ 74,603 $ 73,178 $ 71,754 $ 70,329 $ 68,904 $ 67,479 $ 66,055 East Rocky View Water System $ 2,172,316 $ 2,232,117 $ 2,293,564 $ 2,356,703 $ 2,421,580 $ 3,027,833 $ 3,039,618 $ 3,091,717 $ 3,176,828 $ 3,264,282 $ 3,354,144 $ 2,868,106 $ - $ - $ - $ - $ - Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Sub-total: $ 6,082,230 $ 6,269,121 $ 6,352,536 $ 6,513,450 $ 6,677,090 $ 8,482,474 $ 8,422,727 $ 8,525,530 $ 8,628,861 $ 8,681,345 $ 8,644,759 $ 7,388,427 $ 4,555,021 $ 4,636,722 $ 3,164,104 $ 4,823,220 $ 4,925,416 Local Improvement / Frontage Taxes Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 65,459 $ 75,682 $ 74,448 $ 73,215 $ 71,982 $ 70,748 $ 69,515 $ 68,282 $ 67,048 $ 65,815 $ 64,582 $ 63,348 $ 62,115 $ 60,882 $ 59,648 $ 58,415 $ 57,182 Cochrane Lakes Wastewater System $ 145,399 $ 141,609 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Water System $ 245,182 $ 252,456 $ 248,273 $ 244,091 $ 239,909 $ 235,727 $ 231,544 $ 227,362 $ 223,180 $ 218,998 $ 214,815 $ 210,633 $ 206,451 $ 202,269 $ 198,086 $ 193,904 $ 189,722 East Rocky View Water System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Miscellaneous $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 Sub-total: $ 503,532 $ 517,238 $ 370,214 $ 364,798 $ 359,383 $ 353,967 $ 348,551 $ 343,136 $ 337,720 $ 332,305 $ 326,889 $ 321,474 $ 316,058 $ 310,642 $ 305,227 $ 299,811 $ 294,396

Total Levies & Local Improvement / Frontage Taxes $ 6,585,762 $ 6,786,360 $ 6,722,750 $ 6,878,248 $ 7,036,473 $ 8,836,441 $ 8,771,278 $ 8,868,666 $ 8,966,581 $ 9,013,649 $ 8,971,648 $ 7,709,900 $ 4,871,079 $ 4,947,364 $ 3,469,331 $ 5,123,031 $ 5,219,812

Total Revenues: $ 10,539,329 $ 11,261,574 $ 11,775,847 $ 12,539,883 $ 13,338,619 $ 15,812,444 $ 16,596,046 $ 17,586,857 $ 18,511,476 $ 19,442,463 $ 20,329,203 $ 19,694,683 $ 17,558,057 $ 18,350,893 $ 17,628,163 $ 20,074,419 $ 21,002,831

Expenditures System Operating & Maintenance Costs $ 5,268,543 $ 5,102,324 $ 5,381,377 $ 5,672,640 $ 5,976,596 $ 6,293,744 $ 6,665,348 $ 7,053,644 $ 7,459,299 $ 7,883,004 $ 8,325,479 $ 8,743,515 $ 9,161,303 $ 9,596,348 $ 10,049,311 $ 10,520,875 $ 11,011,748 Elbow Valley Wastewater System $ 741,054 $ 764,107 $ 787,876 $ 812,383 $ 837,652 $ 863,705 $ 890,568 $ 918,266 $ 946,824 $ 976,269 $ 1,006,628 $ 1,037,930 $ 1,070,205 $ 1,103,482 $ 1,137,792 $ 1,173,167 $ 1,209,642 Bragg Creek Wastewater System $ 388,000 $ 431,280 $ 465,370 $ 501,117 $ 538,590 $ 577,860 $ 619,002 $ 662,093 $ 707,211 $ 754,441 $ 803,869 $ 836,928 $ 863,652 $ 891,225 $ 919,676 $ 949,032 $ 979,321 Cochrane Lakes Wastewater System $ 143,489 $ 147,794 $ 152,228 $ 156,795 $ 161,498 $ 166,343 $ 171,334 $ 176,474 $ 181,768 $ 187,221 $ 192,838 $ 198,623 $ 204,581 $ 210,719 $ 217,040 $ 223,552 $ 230,258 East Rocky View Wastewater System $ 2,650,000 $ 2,283,238 $ 2,380,617 $ 2,481,784 $ 2,586,879 $ 2,696,046 $ 2,820,537 $ 2,950,070 $ 3,084,837 $ 3,225,034 $ 3,370,868 $ 3,522,548 $ 3,680,296 $ 3,844,338 $ 4,014,911 $ 4,192,258 $ 4,376,633 Bragg Creek Water System $ 281,000 $ 326,091 $ 364,558 $ 405,039 $ 447,621 $ 492,393 $ 539,449 $ 588,885 $ 640,802 $ 695,304 $ 752,499 $ 787,203 $ 813,010 $ 839,657 $ 867,171 $ 895,580 $ 924,914 East Rocky View Water System $ 998,500 $ 1,083,315 $ 1,164,229 $ 1,249,023 $ 1,337,856 $ 1,430,895 $ 1,557,958 $ 1,691,357 $ 1,831,357 $ 1,978,235 $ 2,132,278 $ 2,293,783 $ 2,463,059 $ 2,640,427 $ 2,826,220 $ 3,020,785 $ 3,224,480 Miscellaneous $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 Debt Financing Costs $ 6,585,643 $ 6,786,241 $ 6,722,631 $ 6,878,129 $ 7,036,354 $ 8,836,322 $ 8,771,159 $ 8,868,547 $ 8,966,462 $ 9,013,530 $ 8,971,529 $ 5,839,989 $ 2,240,967 $ 2,203,170 $ 3,469,212 $ 5,122,912 $ 5,219,693 Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 141,075 $ 163,107 $ 160,449 $ 157,791 $ 155,133 $ 152,475 $ 149,817 $ 147,159 $ 144,501 $ 141,843 $ 139,185 $ 136,527 $ 133,869 $ 131,211 $ 128,552 $ 125,894 $ 123,236 Cochrane Lakes Wastewater System $ 145,399 $ 141,609 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 3,758,682 $ 3,862,154 $ 3,886,970 $ 3,987,595 $ 4,089,208 $ 5,291,188 $ 5,222,505 $ 5,276,059 $ 5,297,128 $ 5,265,007 $ 5,141,409 $ 2,504,172 $ 1,781,520 $ 1,751,989 $ 3,026,296 $ 4,688,261 $ 4,793,307 Bragg Creek Water System $ 320,798 $ 339,881 $ 334,274 $ 328,667 $ 323,060 $ 317,453 $ 311,846 $ 306,239 $ 300,632 $ 295,025 $ 289,418 $ 283,811 $ 278,205 $ 272,598 $ 266,991 $ 261,384 $ 255,777 East Rocky View Water System $ 2,172,316 $ 2,232,117 $ 2,293,564 $ 2,356,703 $ 2,421,580 $ 3,027,833 $ 3,039,618 $ 3,091,717 $ 3,176,828 $ 3,264,282 $ 3,354,144 $ 2,868,106 $ - $ - $ - $ - $ - Miscellaneous $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 Amortization $ 3,291,230 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,819 $ 3,778,789 Elbow Valley Wastewater System $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 Bragg Creek Wastewater System $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 Cochrane Lakes Wastewater System $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 East Rocky View Wastewater System $ 1,469,477 $ 1,524,022 $ 1,524,022 $ 1,524,022 $ 1,524,022 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,957,095 $ 1,957,095 $ 1,957,095 $ 1,957,095 $ 1,957,095 $ 1,957,095 Bragg Creek Water System $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 East Rocky View Water System $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 Miscellaneous $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,375 $ 12,345 Return - Infrastructure Replacement Costs $ - $ 92,719 $ 185,439 $ 278,158 $ 406,678 $ 533,345 $ 586,679 $ 645,347 $ 709,882 $ 780,870 $ 858,957 $ 1,006,060 $ 1,106,666 $ 1,217,332 $ 1,339,066 $ 1,472,972 $ 1,620,269 Elbow Valley Wastewater System $ - $ 3,252 $ 6,504 $ 9,757 $ 13,009 $ 16,261 $ 17,887 $ 19,676 $ 21,643 $ 23,808 $ 26,188 $ 28,807 $ 31,688 $ 34,857 $ 38,342 $ 42,177 $ 46,394 Bragg Creek Wastewater System $ - $ 5,384 $ 10,768 $ 16,152 $ 21,536 $ 26,919 $ 29,611 $ 32,573 $ 35,830 $ 39,413 $ 43,354 $ 47,689 $ 52,458 $ 57,704 $ 63,475 $ 69,822 $ 76,804 Cochrane Lakes Wastewater System $ - $ 489 $ 978 $ 1,466 $ 1,955 $ 2,444 $ 2,688 $ 2,957 $ 3,253 $ 3,578 $ 3,936 $ 4,330 $ 4,763 $ 5,239 $ 5,763 $ 6,339 $ 6,973 East Rocky View Wastewater System $ - $ 41,796 $ 83,593 $ 125,389 $ 167,185 $ 233,979 $ 257,377 $ 283,114 $ 311,426 $ 342,568 $ 376,825 $ 475,715 $ 523,287 $ 575,616 $ 633,177 $ 696,495 $ 766,144 Bragg Creek Water System $ - $ 8,342 $ 16,684 $ 25,026 $ 33,368 $ 41,710 $ 45,881 $ 50,470 $ 55,517 $ 61,068 $ 67,175 $ 73,893 $ 81,282 $ 89,410 $ 98,351 $ 108,186 $ 119,005 East Rocky View Water System $ - $ 33,456 $ 66,912 $ 100,369 $ 169,625 $ 212,031 $ 233,234 $ 256,557 $ 282,213 $ 310,434 $ 341,478 $ 375,626 $ 413,188 $ 454,507 $ 499,958 $ 549,954 $ 604,949 Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - General & Administration - Annual Costs $ 500,000 $ 515,000 $ 620,450 $ 819,064 $ 1,113,635 $ 1,147,044 $ 1,181,456 $ 1,216,899 $ 1,253,406 $ 1,291,009 $ 1,329,739 $ 1,369,631 $ 1,410,720 $ 1,453,042 $ 1,496,633 $ 1,541,532 $ 1,587,778 Aqueduct Start-up Costs $ 250,000 Total O&M, Replacement, G&A, & Start-up Costs $ 6,018,543 $ 5,710,044 $ 6,187,266 $ 6,769,862 $ 7,496,909 $ 7,974,133 $ 8,433,483 $ 8,915,891 $ 9,422,587 $ 9,954,883 $ 10,514,174 $ 11,119,206 $ 11,678,688 $ 12,266,722 $ 12,885,010 $ 13,535,379 $ 14,219,795

Total Expenses: $ 15,895,417 $ 15,842,060 $ 16,255,672 $ 16,993,767 $ 17,879,039 $ 20,338,031 $ 20,732,218 $ 21,312,014 $ 21,916,625 $ 22,495,989 $ 23,013,279 $ 20,738,043 $ 17,698,504 $ 18,248,741 $ 20,133,070 $ 22,437,110 $ 23,218,277

Excess of Utility Charges over O&M, Replacement, -$ 2,064,976 -$ 1,234,830 -$ 1,134,169 -$ 1,108,227 -$ 1,194,763 -$ 998,131 -$ 608,715 -$ 197,700 $ 122,308 $ 473,930 $ 843,381 $ 865,577 $ 1,008,290 $ 1,136,807 $ 1,273,823 $ 1,416,009 $ 1,563,224 G&A, & Start-up Costs Net Income (Loss) -$ 5,356,087 -$ 4,580,486 -$ 4,479,825 -$ 4,453,884 -$ 4,540,420 -$ 4,525,587 -$ 4,136,172 -$ 3,725,157 -$ 3,405,149 -$ 3,053,526 -$ 2,684,076 -$ 1,043,360 -$ 140,447 $ 102,152 -$ 2,504,907 -$ 2,362,691 -$ 2,215,446

Agenda Page 103 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 98 of 100 “Base” Scenario: Summary Off-Site Levies vs. Debt Financing

Off-Site Levies 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Opening balance -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 6,352,834 -$ 873,018 $ 4,720,880 $ 9,127,842 $ 11,977,665 Off-Site Levy Contributions $ 6,082,230 $ 6,269,121 $ 6,352,536 $ 6,513,450 $ 6,677,090 $ 8,482,474 $ 8,422,727 $ 8,525,530 $ 8,628,861 $ 8,681,345 $ 8,644,759 $ 7,966,800 $ 7,404,844 $ 7,486,545 $ 7,571,066 $ 7,673,043 $ 7,775,239 Growth expenditure (debt financing for growth) $ 6,082,230 $ 6,269,121 $ 6,352,536 $ 6,513,450 $ 6,677,090 $ 8,482,474 $ 8,422,727 $ 8,525,530 $ 8,628,861 $ 8,681,345 $ 8,644,759 $ 5,518,634 $ 1,925,028 $ 1,892,646 $ 3,164,104 $ 4,823,220 $ 4,925,416 Annual Surplus / Deficit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 2,448,166 $ 5,479,816 $ 5,593,898 $ 4,406,962 $ 2,849,823 $ 2,849,823 Levy closing balance -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 6,352,834 -$ 873,018 $ 4,720,880 $ 9,127,842 $ 11,977,665 $ 14,827,488 “Base” Scenario: Summary Cash Flows

Cash Flows 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Operating Activities Net Income -$ 5,356,087 -$ 4,580,486 -$ 4,479,825 -$ 4,453,884 -$ 4,540,420 -$ 4,525,587 -$ 4,136,172 -$ 3,725,157 -$ 3,405,149 -$ 3,053,526 -$ 2,684,076 -$ 1,043,360 -$ 140,447 $ 102,152 -$ 2,504,907 -$ 2,362,691 -$ 2,215,446 Non-Cash - Amortization $ 3,291,230 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,819 $ 3,778,789 Sub-total Operating Cash Flows: -$ 2,064,857 -$ 1,234,711 -$ 1,134,050 -$ 1,108,108 -$ 1,194,644 -$ 998,012 -$ 608,596 -$ 197,581 $ 122,427 $ 474,049 $ 843,500 $ 2,735,488 $ 3,638,402 $ 3,881,001 $ 1,273,942 $ 1,416,128 $ 1,563,343 Investing Activities Additions to Property & Equipment $ - -$ 3,000,000 $ - $ - -$ 17,900,000 -$ 9,999,000 $ - $ - $ - $ - $ - -$ 13,820,000 $ - $ - $ - $ - $ - Sub-total Investing Cash Flows: $ - -$ 3,000,000 $ - $ - -$ 17,900,000 -$ 9,999,000 $ - $ - $ - $ - $ - -$ 13,820,000 $ - $ - $ - $ - $ - Financing Activities New Debt $ - $ 3,000,000 $ - $ - $ 17,900,000 $ 9,999,000 $ - $ - $ - $ - $ - $ 13,820,000 $ - $ - $ - $ - $ - Off-Site Levy Surplus / Deficit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 2,448,166 $ 5,479,816 $ 5,593,898 $ 4,406,962 $ 2,849,823 $ 2,849,823 Repay County Internal Levy Obligations $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - -$ 2,448,166 -$ 5,479,816 -$ 153,018 $ - $ - $ - County Temporary Loan $ 1,000,000 Repay County Temporary Loan -$ 200,000 -$ 200,000 -$ 200,000 -$ 200,000 -$ 200,000 Sub-total Financing Cash Flows: $ 1,000,000 $ 2,800,000 -$ 200,000 -$ 200,000 $ 17,700,000 $ 9,799,000 $ - $ - $ - $ - $ - $ 13,820,000 $ - $ 5,440,880 $ 4,406,962 $ 2,849,823 $ 2,849,823

Total Cash Flows -$ 1,064,857 -$ 1,434,711 -$ 1,334,050 -$ 1,308,108 -$ 1,394,644 -$ 1,198,012 -$ 608,596 -$ 197,581 $ 122,427 $ 474,049 $ 843,500 $ 2,735,488 $ 3,638,402 $ 9,321,881 $ 5,680,904 $ 4,265,951 $ 4,413,166 “Base” Scenario: Summary Asset Net Book Value*

Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Fixed Assets NBV $ 162,929,454 $ 162,638,224 $ 159,292,448 $ 155,946,672 $ 170,500,896 $ 176,850,731 $ 173,019,765 $ 169,188,799 $ 165,357,834 $ 161,526,868 $ 157,695,902 $ 167,684,937 $ 163,602,698 $ 159,520,460 $ 155,438,221 $ 151,355,983 $ 147,273,775 Elbow Valley Wastewater System $ 4,770,102 $ 4,650,854 $ 4,531,605 $ 4,412,357 $ 4,293,108 $ 4,173,860 $ 4,054,611 $ 3,935,363 $ 3,816,114 $ 3,696,866 $ 3,577,617 $ 3,458,369 $ 3,339,120 $ 3,219,872 $ 3,100,623 $ 2,981,375 $ 2,862,126 Bragg Creek Wastewater System $ 10,298,077 $ 10,082,722 $ 9,867,366 $ 9,652,010 $ 9,436,655 $ 9,221,299 $ 9,005,943 $ 8,790,588 $ 8,575,232 $ 8,359,876 $ 8,144,521 $ 7,929,165 $ 7,713,809 $ 7,498,454 $ 7,283,098 $ 7,067,742 $ 6,852,387 Cochrane Lakes Wastewater System $ 853,784 $ 840,749 $ 827,714 $ 814,679 $ 801,644 $ 788,609 $ 775,575 $ 762,540 $ 749,505 $ 736,470 $ 723,435 $ 710,400 $ 697,365 $ 684,330 $ 671,296 $ 658,261 $ 645,226 East Rocky View Wastewater System $ 67,362,799 $ 68,893,322 $ 67,369,300 $ 65,845,278 $ 64,321,256 $ 72,796,234 $ 71,090,412 $ 69,384,590 $ 67,678,768 $ 65,972,946 $ 64,267,124 $ 76,381,302 $ 74,424,207 $ 72,467,113 $ 70,510,018 $ 68,552,923 $ 66,595,828 Bragg Creek Water System $ 16,032,922 $ 15,699,238 $ 15,365,555 $ 15,031,872 $ 14,698,189 $ 14,364,506 $ 14,030,822 $ 13,697,139 $ 13,363,456 $ 13,029,773 $ 12,696,090 $ 12,362,406 $ 12,028,723 $ 11,695,040 $ 11,361,357 $ 11,027,674 $ 10,693,990 East Rocky View Water System $ 63,038,072 $ 61,910,045 $ 60,782,018 $ 59,653,991 $ 76,425,964 $ 74,994,548 $ 73,563,131 $ 72,131,714 $ 70,700,297 $ 69,268,880 $ 67,837,464 $ 66,406,047 $ 64,974,630 $ 63,543,213 $ 62,111,796 $ 60,680,379 $ 59,248,963 Miscellaneous $ 573,698 $ 561,293 $ 548,889 $ 536,484 $ 524,080 $ 511,675 $ 499,270 $ 486,866 $ 474,461 $ 462,057 $ 449,652 $ 437,247 $ 424,843 $ 412,438 $ 400,034 $ 387,629 $ 375,255 Intangible Assets $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 Bragg Creek Water System $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 East Rocky View Water System $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 Capital Reserves $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 Cash -$ 1,064,857 -$ 2,499,568 -$ 3,833,617 -$ 5,141,725 -$ 6,536,369 -$ 7,734,381 -$ 8,342,977 -$ 8,540,558 -$ 8,418,132 -$ 7,944,082 -$ 7,100,582 -$ 4,365,094 -$ 726,693 $ 8,595,188 $ 14,276,092 $ 18,542,043 $ 22,955,209 Total Assets $ 178,946,913 $ 177,220,972 $ 172,541,147 $ 167,887,263 $ 181,046,843 $ 186,198,666 $ 181,759,104 $ 177,730,557 $ 174,022,018 $ 170,665,102 $ 167,677,636 $ 180,402,158 $ 179,958,322 $ 185,197,964 $ 186,796,629 $ 186,980,342 $ 187,311,299 * Does not include additional cash funding required in order to break even

“Base” Scenario: Summary Debt Balance

Debt 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Long-Term Debt $ 56,252,593 $ 54,143,707 $ 48,957,942 $ 43,474,077 $ 56,073,954 $ 59,102,347 $ 52,005,204 $ 44,615,447 $ 36,924,476 $ 28,974,849 $ 20,848,519 $ 29,830,608 $ 28,458,536 $ 27,086,464 $ 24,410,553 $ 21,346,984 $ 19,840,335 Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 2,416,400 $ 2,319,744 $ 2,223,088 $ 2,126,432 $ 2,029,776 $ 1,933,120 $ 1,836,464 $ 1,739,808 $ 1,643,152 $ 1,546,496 $ 1,449,840 $ 1,353,184 $ 1,256,528 $ 1,159,872 $ 1,063,216 $ 966,560 $ 869,904 Cochrane Lakes Wastewater System $ 137,819 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 38,967,768 $ 39,259,553 $ 36,452,064 $ 33,466,762 $ 30,297,772 $ 36,113,936 $ 31,884,782 $ 27,485,801 $ 22,944,809 $ 18,311,090 $ 13,673,573 $ 25,746,240 $ 24,673,480 $ 23,600,720 $ 21,224,121 $ 18,459,864 $ 17,252,527 Bragg Creek Water System $ 4,960,400 $ 4,757,744 $ 4,555,088 $ 4,352,432 $ 4,149,776 $ 3,947,120 $ 3,744,464 $ 3,541,808 $ 3,339,152 $ 3,136,496 $ 2,933,840 $ 2,731,184 $ 2,528,528 $ 2,325,872 $ 2,123,216 $ 1,920,560 $ 1,717,904 East Rocky View Water System $ 9,770,206 $ 7,806,666 $ 5,727,703 $ 3,528,451 $ 19,596,630 $ 17,108,172 $ 14,539,494 $ 11,848,030 $ 8,997,363 $ 5,980,767 $ 2,791,266 $ - $ - $ - $ - $ - $ - Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - County Internal Levy Obligations $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 5,632,834 $ 153,018 $ - $ - $ - $ - County Temporary Loan $ 1,000,000 $ 800,000 $ 600,000 $ 400,000 $ 200,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Total Debt $ 65,333,593 $ 63,024,707 $ 57,638,942 $ 51,955,077 $ 64,354,954 $ 67,183,347 $ 60,086,204 $ 52,696,447 $ 45,005,476 $ 37,055,849 $ 28,929,519 $ 35,463,442 $ 28,611,554 $ 27,086,464 $ 24,410,553 $ 21,346,984 $ 19,840,335

Agenda Page 104 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 99 of 100 “Higher Growth Rate” Scenario: Summary Income Statement Results

Income Statement 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Revenues Utility Usage Charges Elbow Valley Wastewater System $ 722,278 $ 755,614 $ 790,310 $ 826,417 $ 863,989 $ 903,080 $ 943,749 $ 986,055 $ 1,030,059 $ 1,075,825 $ 1,123,419 $ 1,172,911 $ 1,224,370 $ 1,277,870 Bragg Creek Wastewater System $ 102,000 $ 190,035 $ 295,991 $ 408,134 $ 526,738 $ 652,092 $ 784,492 $ 924,250 $ 961,268 $ 1,012,537 $ 1,066,386 $ 1,104,287 $ 1,136,313 $ 1,169,694 Cochrane Lakes Wastewater System $ 143,489 $ 147,794 $ 152,228 $ 156,795 $ 161,498 $ 166,343 $ 171,334 $ 176,474 $ 181,768 $ 187,221 $ 192,838 $ 198,623 $ 204,581 $ 210,719 East Rocky View Wastewater System $ 1,889,400 $ 2,116,405 $ 2,339,328 $ 2,573,720 $ 2,820,072 $ 3,078,887 $ 3,412,991 $ 3,764,371 $ 4,133,761 $ 4,521,927 $ 4,929,662 $ 5,357,792 $ 5,807,173 $ 6,278,695 Bragg Creek Water System $ 132,000 $ 162,423 $ 224,374 $ 289,896 $ 359,147 $ 432,293 $ 509,504 $ 590,959 $ 676,842 $ 767,347 $ 862,673 $ 913,180 $ 945,643 $ 979,231 East Rocky View Water System $ 964,400 $ 1,170,427 $ 1,389,885 $ 1,621,456 $ 1,865,670 $ 2,123,079 $ 2,507,130 $ 2,912,314 $ 3,339,553 $ 3,789,805 $ 3,796,815 $ 4,022,702 $ 4,261,415 $ 4,513,685 Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Sub-total: $ 3,953,567 $ 4,542,699 $ 5,192,115 $ 5,876,418 $ 6,597,115 $ 7,355,775 $ 8,329,201 $ 9,354,423 $ 10,323,251 $ 11,354,662 $ 11,971,792 $ 12,769,495 $ 13,579,494 $ 14,429,894 Development & Off-Site Levies Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 75,616 $ 87,425 $ 86,001 $ 84,576 $ 83,151 $ 81,727 $ 80,302 $ 78,877 $ 77,452 $ 76,028 $ 74,603 $ 73,178 $ 71,754 $ 70,329 Cochrane Lakes Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 4,698,353 $ 4,827,692 $ 4,853,500 $ 4,974,692 $ 4,691,244 $ 6,395,315 $ 6,431,280 $ 6,399,200 $ 6,240,360 $ 5,353,354 $ 5,434,399 $ 3,523,203 $ 5,665,175 $ 5,799,132 Bragg Creek Water System $ 75,616 $ 87,425 $ 86,001 $ 84,576 $ 83,151 $ 81,727 $ 80,302 $ 78,877 $ 77,452 $ 76,028 $ 74,603 $ 73,178 $ 71,754 $ 70,329 East Rocky View Water System $ 2,715,395 $ 2,790,146 $ 2,866,955 $ 2,945,879 $ 2,345,936 $ 3,664,202 $ 3,761,108 $ 3,864,647 $ 3,971,035 $ 3,434,070 $ - $ - $ - $ - Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Sub-total: $ 7,564,980 $ 7,792,689 $ 7,892,456 $ 8,089,722 $ 7,203,482 $ 10,222,970 $ 10,352,992 $ 10,421,601 $ 10,366,300 $ 8,939,479 $ 5,583,605 $ 3,669,559 $ 5,808,682 $ 5,939,789 Local Improvement / Frontage Taxes Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 65,459 $ 75,682 $ 74,448 $ 73,215 $ 71,982 $ 70,748 $ 69,515 $ 68,282 $ 67,048 $ 65,815 $ 64,582 $ 63,348 $ 62,115 $ 60,882 Cochrane Lakes Wastewater System $ 145,399 $ 141,609 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Water System $ 245,182 $ 252,456 $ 248,273 $ 244,091 $ 239,909 $ 235,727 $ 231,544 $ 227,362 $ 223,180 $ 218,998 $ 214,815 $ 210,633 $ 206,451 $ 202,269 East Rocky View Water System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Miscellaneous $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 $ 47,492 Sub-total: $ 503,532 $ 517,238 $ 370,214 $ 364,798 $ 359,383 $ 353,967 $ 348,551 $ 343,136 $ 337,720 $ 332,305 $ 326,889 $ 321,474 $ 316,058 $ 310,642

Total Levies & Local Improvement / Frontage Taxes $ 8,068,512 $ 8,309,927 $ 8,262,670 $ 8,454,521 $ 7,562,865 $ 10,576,937 $ 10,701,543 $ 10,764,737 $ 10,704,020 $ 9,271,784 $ 5,910,495 $ 3,991,033 $ 6,124,740 $ 6,250,432

Total Revenues: $ 12,022,079 $ 12,852,626 $ 13,454,785 $ 14,330,938 $ 14,159,980 $ 17,932,712 $ 19,030,745 $ 20,119,159 $ 21,027,272 $ 20,626,445 $ 17,882,287 $ 16,760,528 $ 19,704,234 $ 20,680,325

Expenditures System Operating & Maintenance Costs $ 5,268,543 $ 5,121,978 $ 5,421,864 $ 5,735,194 $ 6,062,503 $ 6,404,348 $ 6,812,242 $ 7,238,905 $ 7,685,097 $ 8,151,605 $ 8,639,246 $ 9,104,918 $ 9,572,917 $ 10,060,861 Elbow Valley Wastewater System $ 741,054 $ 764,312 $ 788,299 $ 813,036 $ 838,549 $ 864,861 $ 891,996 $ 919,982 $ 948,843 $ 978,609 $ 1,009,306 $ 1,040,965 $ 1,073,614 $ 1,107,286 Bragg Creek Wastewater System $ 388,000 $ 431,572 $ 465,971 $ 502,045 $ 539,865 $ 579,502 $ 621,032 $ 664,532 $ 710,082 $ 757,768 $ 807,676 $ 841,242 $ 868,499 $ 896,634 Cochrane Lakes Wastewater System $ 143,489 $ 147,794 $ 152,228 $ 156,795 $ 161,498 $ 166,343 $ 171,334 $ 176,474 $ 181,768 $ 187,221 $ 192,838 $ 198,623 $ 204,581 $ 210,719 East Rocky View Wastewater System $ 2,650,000 $ 2,290,248 $ 2,395,058 $ 2,504,096 $ 2,617,521 $ 2,735,497 $ 2,872,073 $ 3,014,382 $ 3,162,644 $ 3,317,089 $ 3,477,955 $ 3,645,487 $ 3,819,940 $ 4,001,580 Bragg Creek Water System $ 281,000 $ 326,487 $ 365,373 $ 406,298 $ 449,351 $ 494,620 $ 542,202 $ 592,193 $ 644,696 $ 699,816 $ 757,662 $ 793,053 $ 819,583 $ 846,991 East Rocky View Water System $ 998,500 $ 1,095,066 $ 1,188,436 $ 1,286,423 $ 1,389,219 $ 1,497,025 $ 1,647,105 $ 1,804,843 $ 1,970,563 $ 2,144,602 $ 2,327,310 $ 2,519,049 $ 2,720,199 $ 2,931,151 Miscellaneous $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 $ 66,500 Debt Financing Costs $ 8,068,393 $ 8,309,808 $ 8,262,551 $ 8,454,402 $ 7,562,746 $ 10,576,818 $ 10,701,424 $ 10,764,618 $ 10,703,901 $ 6,148,464 $ 2,257,497 $ 3,990,914 $ 6,124,621 $ 6,250,313 Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 141,075 $ 163,107 $ 160,449 $ 157,791 $ 155,133 $ 152,475 $ 149,817 $ 147,159 $ 144,501 $ 141,843 $ 139,185 $ 136,527 $ 133,869 $ 131,211 Cochrane Lakes Wastewater System $ 145,399 $ 141,609 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 4,698,353 $ 4,827,692 $ 4,853,500 $ 4,974,692 $ 4,691,244 $ 6,395,315 $ 6,431,280 $ 6,399,200 $ 6,240,360 $ 2,230,153 $ 1,781,520 $ 3,523,203 $ 5,665,175 $ 5,799,132 Bragg Creek Water System $ 320,798 $ 339,881 $ 334,274 $ 328,667 $ 323,060 $ 317,453 $ 311,846 $ 306,239 $ 300,632 $ 295,025 $ 289,418 $ 283,811 $ 278,205 $ 272,598 East Rocky View Water System $ 2,715,395 $ 2,790,146 $ 2,866,955 $ 2,945,879 $ 2,345,936 $ 3,664,202 $ 3,761,108 $ 3,864,647 $ 3,971,035 $ 3,434,070 $ - $ - $ - $ - Miscellaneous $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 $ 47,373 Amortization $ 3,291,230 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 Elbow Valley Wastewater System $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 $ 119,249 Bragg Creek Wastewater System $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 $ 215,356 Cochrane Lakes Wastewater System $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 $ 13,035 East Rocky View Wastewater System $ 1,469,477 $ 1,524,022 $ 1,524,022 $ 1,524,022 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,705,822 $ 1,957,095 $ 1,957,095 $ 1,957,095 $ 1,957,095 $ 1,957,095 Bragg Creek Water System $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 $ 333,683 East Rocky View Water System $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 $ 1,128,027 Miscellaneous $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 $ 12,405 Return - Infrastructure Replacement Costs $ - $ 92,719 $ 185,439 $ 278,158 $ 426,676 $ 533,345 $ 586,679 $ 645,347 $ 709,882 $ 831,454 $ 914,600 $ 1,006,060 $ 1,106,666 $ 1,217,332 Elbow Valley Wastewater System $ - $ 3,252 $ 6,504 $ 9,757 $ 13,009 $ 16,261 $ 17,887 $ 19,676 $ 21,643 $ 23,808 $ 26,188 $ 28,807 $ 31,688 $ 34,857 Bragg Creek Wastewater System $ - $ 5,384 $ 10,768 $ 16,152 $ 21,536 $ 26,919 $ 29,611 $ 32,573 $ 35,830 $ 39,413 $ 43,354 $ 47,689 $ 52,458 $ 57,704 Cochrane Lakes Wastewater System $ - $ 489 $ 978 $ 1,466 $ 1,955 $ 2,444 $ 2,688 $ 2,957 $ 3,253 $ 3,578 $ 3,936 $ 4,330 $ 4,763 $ 5,239 East Rocky View Wastewater System $ - $ 41,796 $ 83,593 $ 125,389 $ 187,183 $ 233,979 $ 257,377 $ 283,114 $ 311,426 $ 393,153 $ 432,468 $ 475,715 $ 523,287 $ 575,616 Bragg Creek Water System $ - $ 8,342 $ 16,684 $ 25,026 $ 33,368 $ 41,710 $ 45,881 $ 50,470 $ 55,517 $ 61,068 $ 67,175 $ 73,893 $ 81,282 $ 89,410 East Rocky View Water System $ - $ 33,456 $ 66,912 $ 100,369 $ 169,625 $ 212,031 $ 233,234 $ 256,557 $ 282,213 $ 310,434 $ 341,478 $ 375,626 $ 413,188 $ 454,507 Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - General & Administration - Annual Costs $ 500,000 $ 515,000 $ 620,450 $ 819,064 $ 1,113,635 $ 1,147,044 $ 1,181,456 $ 1,216,899 $ 1,253,406 $ 1,291,009 $ 1,329,739 $ 1,369,631 $ 1,410,720 $ 1,453,042 Aqueduct Start-up Costs $ 250,000 Total O&M, Replacement, G&A, & Start-up Costs $ 6,018,543 $ 5,729,698 $ 6,227,753 $ 6,832,415 $ 7,602,814 $ 8,084,738 $ 8,580,377 $ 9,101,151 $ 9,648,385 $ 10,274,068 $ 10,883,585 $ 11,480,609 $ 12,090,303 $ 12,731,235

Total Expenses: $ 17,378,166 $ 17,385,282 $ 17,836,080 $ 18,632,593 $ 18,693,135 $ 22,189,132 $ 22,809,377 $ 23,393,345 $ 23,879,862 $ 20,201,380 $ 16,919,930 $ 19,250,371 $ 21,993,773 $ 22,760,397

Excess of Utility Charges over O&M, Replacement, -$ 2,064,976 -$ 1,186,999 -$ 1,035,638 -$ 955,998 -$ 1,005,699 -$ 728,963 -$ 251,175 $ 253,271 $ 674,867 $ 1,080,594 $ 1,088,207 $ 1,288,886 $ 1,489,191 $ 1,698,658 G&A, & Start-up Costs Net Income (Loss) -$ 5,356,087 -$ 4,532,656 -$ 4,381,295 -$ 4,301,654 -$ 4,533,156 -$ 4,256,420 -$ 3,778,632 -$ 3,274,185 -$ 2,852,590 $ 425,065 $ 962,357 -$ 2,489,844 -$ 2,289,538 -$ 2,080,071

Agenda Page 105 of 158 Rocky View County Utility Service Delivery Alternatives Review Report – Final C-1 Page 100 of 100 “Higher Growth Rate” Scenario: Summary Off-Site Levies vs. Debt Financing

Off-Site Levies 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Opening balance -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 5,031,516 $ 2,183,641 $ 7,770,840 $ 11,333,119 Off-Site Levy Contributions $ 7,564,980 $ 7,792,689 $ 7,892,456 $ 8,089,722 $ 7,203,482 $ 10,222,970 $ 10,352,992 $ 10,421,601 $ 10,366,300 $ 9,585,762 $ 9,145,884 $ 9,256,758 $ 9,370,961 $ 9,502,068 Growth expenditure (debt financing for growth) $ 7,564,980 $ 7,792,689 $ 7,892,456 $ 8,089,722 $ 7,203,482 $ 10,222,970 $ 10,352,992 $ 10,421,601 $ 10,366,300 $ 5,816,278 $ 1,930,726 $ 3,669,559 $ 5,808,682 $ 5,939,789 Annual Surplus / Deficit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,769,484 $ 7,215,158 $ 5,587,199 $ 3,562,279 $ 3,562,279 Levy closing balance -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 8,801,000 -$ 5,031,516 $ 2,183,641 $ 7,770,840 $ 11,333,119 $ 14,895,398 “Higher Growth Rate” Scenario: Summary Cash Flows

Cash Flows 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Operating Activities Net Income -$ 5,356,087 -$ 4,532,656 -$ 4,381,295 -$ 4,301,654 -$ 4,533,156 -$ 4,256,420 -$ 3,778,632 -$ 3,274,185 -$ 2,852,590 $ 425,065 $ 962,357 -$ 2,489,844 -$ 2,289,538 -$ 2,080,071 Non-Cash - Amortization $ 3,291,230 $ 3,345,776 $ 3,345,776 $ 3,345,776 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,527,576 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 $ 3,778,849 Sub-total Operating Cash Flows: -$ 2,064,857 -$ 1,186,880 -$ 1,035,519 -$ 955,879 -$ 1,005,580 -$ 728,844 -$ 251,056 $ 253,390 $ 674,986 $ 4,203,914 $ 4,741,205 $ 1,289,005 $ 1,489,310 $ 1,698,777 Investing Activities Additions to Property & Equipment $ - -$ 3,000,000 $ - $ - -$ 27,899,000 $ - $ - $ - $ - -$ 13,820,000 $ - $ - $ - $ - Sub-total Investing Cash Flows: $ - -$ 3,000,000 $ - $ - -$ 27,899,000 $ - $ - $ - $ - -$ 13,820,000 $ - $ - $ - $ - Financing Activities New Debt $ - $ 3,000,000 $ - $ - $ 27,899,000 $ - $ - $ - $ - $ 13,820,000 $ - $ - $ - $ - Off-Site Levy Surplus / Deficit $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 3,769,484 $ 7,215,158 $ 5,587,199 $ 3,562,279 $ 3,562,279 Repay County Internal Levy Obligations $ - $ - $ - $ - $ - $ - $ - $ - $ - -$ 3,769,484 -$ 4,311,516 $ - $ - $ - County Temporary Loan $ 1,000,000 Repay County Temporary Loan -$ 200,000 -$ 200,000 -$ 200,000 -$ 200,000 -$ 200,000 Sub-total Financing Cash Flows: $ 1,000,000 $ 2,800,000 -$ 200,000 -$ 200,000 $ 27,699,000 -$ 200,000 $ - $ - $ - $ 13,820,000 $ 2,903,641 $ 5,587,199 $ 3,562,279 $ 3,562,279 Total Cash Flows -$ 1,064,857 -$ 1,386,880 -$ 1,235,519 -$ 1,155,879 -$ 1,205,580 -$ 928,844 -$ 251,056 $ 253,390 $ 674,986 $ 4,203,914 $ 7,644,846 $ 6,876,204 $ 5,051,589 $ 5,261,056 “Higher Growth Rate” Scenario: Summary Asset Net Book Value*

Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Fixed Assets NBV $ 162,929,454 $ 162,638,224 $ 159,292,448 $ 155,946,672 $ 180,499,896 $ 176,668,931 $ 172,837,965 $ 169,006,999 $ 165,176,034 $ 175,165,068 $ 171,082,830 $ 167,000,591 $ 162,918,353 $ 158,836,114 Elbow Valley Wastewater System $ 4,770,102 $ 4,650,854 $ 4,531,605 $ 4,412,357 $ 4,293,108 $ 4,173,860 $ 4,054,611 $ 3,935,363 $ 3,816,114 $ 3,696,866 $ 3,577,617 $ 3,458,369 $ 3,339,120 $ 3,219,872 Bragg Creek Wastewater System $ 10,298,077 $ 10,082,722 $ 9,867,366 $ 9,652,010 $ 9,436,655 $ 9,221,299 $ 9,005,943 $ 8,790,588 $ 8,575,232 $ 8,359,876 $ 8,144,521 $ 7,929,165 $ 7,713,809 $ 7,498,454 Cochrane Lakes Wastewater System $ 853,784 $ 840,749 $ 827,714 $ 814,679 $ 801,644 $ 788,609 $ 775,575 $ 762,540 $ 749,505 $ 736,470 $ 723,435 $ 710,400 $ 697,365 $ 684,330 East Rocky View Wastewater System $ 67,362,799 $ 68,893,322 $ 67,369,300 $ 65,845,278 $ 74,320,256 $ 72,614,434 $ 70,908,612 $ 69,202,790 $ 67,496,968 $ 79,611,146 $ 77,654,051 $ 75,696,957 $ 73,739,862 $ 71,782,767 Bragg Creek Water System $ 16,032,922 $ 15,699,238 $ 15,365,555 $ 15,031,872 $ 14,698,189 $ 14,364,506 $ 14,030,822 $ 13,697,139 $ 13,363,456 $ 13,029,773 $ 12,696,090 $ 12,362,406 $ 12,028,723 $ 11,695,040 East Rocky View Water System $ 63,038,072 $ 61,910,045 $ 60,782,018 $ 59,653,991 $ 76,425,964 $ 74,994,548 $ 73,563,131 $ 72,131,714 $ 70,700,297 $ 69,268,880 $ 67,837,464 $ 66,406,047 $ 64,974,630 $ 63,543,213 Miscellaneous $ 573,698 $ 561,293 $ 548,889 $ 536,484 $ 524,080 $ 511,675 $ 499,270 $ 486,866 $ 474,461 $ 462,057 $ 449,652 $ 437,247 $ 424,843 $ 412,438 Intangible Assets $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 $ 16,375,000 Bragg Creek Water System $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 $ 625,000 East Rocky View Water System $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 $ 15,750,000 Capital Reserves $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 $ 707,316 Cash -$ 1,064,857 -$ 2,451,737 -$ 3,687,256 -$ 4,843,135 -$ 6,048,714 -$ 6,977,558 -$ 7,228,615 -$ 6,975,224 -$ 6,300,239 -$ 2,096,325 $ 5,548,522 $ 12,424,725 $ 17,476,314 $ 22,737,370 Total Assets $ 178,946,913 $ 177,268,803 $ 172,687,508 $ 168,185,854 $ 191,533,498 $ 186,773,688 $ 182,691,666 $ 179,114,091 $ 175,958,111 $ 190,151,059 $ 193,713,667 $ 196,507,632 $ 197,476,983 $ 198,655,800 * Does not include additional cash funding required in order to break even

“Higher Growth Rate” Scenario: Summary Debt Balance

Debt 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Long-Term Debt $ 54,769,843 $ 51,096,626 $ 44,287,171 $ 37,098,625 $ 59,271,097 $ 50,372,998 $ 41,105,508 $ 31,519,876 $ 21,731,258 $ 30,429,232 $ 29,057,160 $ 25,913,874 $ 22,370,298 $ 20,834,738 Elbow Valley Wastewater System $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Bragg Creek Wastewater System $ 2,416,400 $ 2,319,744 $ 2,223,088 $ 2,126,432 $ 2,029,776 $ 1,933,120 $ 1,836,464 $ 1,739,808 $ 1,643,152 $ 1,546,496 $ 1,449,840 $ 1,353,184 $ 1,256,528 $ 1,159,872 Cochrane Lakes Wastewater System $ 137,819 $ 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - East Rocky View Wastewater System $ 38,028,097 $ 37,328,509 $ 33,501,400 $ 29,447,878 $ 35,840,619 $ 30,431,141 $ 24,836,974 $ 19,121,085 $ 13,406,886 $ 25,746,240 $ 24,673,480 $ 21,829,506 $ 18,585,242 $ 17,348,994 Bragg Creek Water System $ 4,960,400 $ 4,757,744 $ 4,555,088 $ 4,352,432 $ 4,149,776 $ 3,947,120 $ 3,744,464 $ 3,541,808 $ 3,339,152 $ 3,136,496 $ 2,933,840 $ 2,731,184 $ 2,528,528 $ 2,325,872 East Rocky View Water System $ 9,227,127 $ 6,690,629 $ 4,007,595 $ 1,171,883 $ 17,250,926 $ 14,061,617 $ 10,687,606 $ 7,117,176 $ 3,342,067 $ - $ - $ - $ - $ - Miscellaneous $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - County Internal Levy Obligations $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 8,081,000 $ 4,311,516 $ - $ - $ - $ - County Temporary Loan $ 1,000,000 $ 800,000 $ 600,000 $ 400,000 $ 200,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - Total Debt $ 63,850,843 $ 59,977,626 $ 52,968,171 $ 45,579,625 $ 67,552,097 $ 58,453,998 $ 49,186,508 $ 39,600,876 $ 29,812,258 $ 34,740,748 $ 29,057,160 $ 25,913,874 $ 22,370,298 $ 20,834,738

Agenda Page 106 of 158 C-2 Page 1 of 29

ROADS MAINTENANCE TO: Policies and Priorities Committee DATE: February 7, 2017 DIVISION: All FILE: 4050-100 SUBJECT: Review of Gravel Road Research and Development Program 1ADMINISTRATION RECOMMENDATION: THAT the 2016 Gravel Road Research and Development Program presentation be received as information.

EXECUTIVE SUMMARY: This report and attached presentation are intended to provide an overview of the Gravel Road Research and Development (R&D) Program initiated in 2011. Russell Pinchak from the engineering firm of WSP will be presenting his technical findings on some of the County’s work as part of the presentation. BACKGROUND: Council has identified roads in the Strategic Plan as one of its four key priorities. For the past five years, Council has provided budget monies for gravel road R&D in order to invest in the County’s road network infrastructure and maximize our service levels. The objectives were to investigate new products and new techniques, benchmark ourselves against our peers and use best practices to provide the best possible service levels to our residents. Those products, tools and methodologies which have proven themselves to have potential for improving the quality and longevity of the County’s gravel roads have been incorporated into regular gravel road maintenance activities. Other products and ideas will continue to be tested and evaluated as part of the ongoing research. Administration recommends Option #1. DISCUSSION: A number of different tools and products have been tried including different grader blades, different calcium chloride mixtures, weed control products, road milling machines and gravel reclaimers. As well, there has been some promising research into the current gravel specification used for road resurfacing (an Alberta Transportation specification) and the potential changes which could be made. Those products, tools and methodologies which have been trialed initially under the R&D program and which have proven themselves to have potential for improving the quality and longevity of the County’s gravel roads have already been incorporated into regular gravel road maintenance activities. These include things such as shoulder spraying to control weeds, aggressive shoulder pulling and crown re-shaping, gravel reclaiming from ditches and road compacting with pull-behind packers. The success of these changes has demonstrated itself through a steady downward trend of gravel road issues such as fugitive dust and washboard service requests being brought forward to the Roads Maintenance department.

______1Administrative Resources Howard Bell, Roads Maintenance

Agenda Page 107 of 158 C-2 Page 2 of 29

The surface stabilization program using calcium chloride injection has also provided excellent information so far and will continue, including further test sections in order to provide additional data on longer term wear patterns, longevity of the process and optimal mixture rates. BUDGET IMPLICATION(S): There are no budget implications.

OPTIONS: Option #1 THAT the 2016 Gravel Road Research and Development Program presentation be received as information. Option #2 THAT alternative direction be provided.

Byron Riemann Kevin Greig

General Manager County Manager BR/bg

ATTACHMENT ‘A’ - Presentation

Agenda Page 108 of 158 C-2 Page 3 of 29

Gravel Road R&D Update

February 7th , 2017

Agenda Page 109 of 158 C-2 Page 4 of 29 Gravel Road R&D Goals

• Improve driveability of gravel roads

• Reduce required maintenance frequency by extending blading cycle

• Reduce gravel loss

• Reduce fugitive dust from traffic

• Reduce overall long term County gravel requirements

Agenda Page 110 of 158 · H ! H · H I· H -~~~-:_H · H H ! j! 1'..1! I !U ! H ~ -~ 1·1· H ! I'! 1~· ~· ~· ,. i·~· ~· ~:.. .~ .·... :: ;· · C-2 Overview of Work Completed Page 5 of 29

R5 R• I R3 R2 i \ R 27 R26 t R~

ROCKY VIEW COUNlY c...Juv.uu"Communuoa

- . ~ ~ '--r-1---.---'-'-+----{.----""'"

¥----~ 1: l· j. a· j. Tr l· ;. J. l· 1: i. J. ~j. ~· ~· •..:=- -N••><•••oo-..o ~· ~· ~ 2011 - 2016 Surface Stabilised Gravel •.. For Internal Maintenance Use Only

t~:==- R.29

~ROCKY VIEW COUNTY ~ Culrivaring CoAgendammunities Page 111 of 158 C-2 Page 6 of 29 Overview of R&D Work To-Date

Between 2011 and 2016, approx. 77 kms of gravel roads addressed with one or more of the following procedures:

 Drainage improvements

 Reshaping including shoulder pulling re-establishing crown [see pic]

 Addition of fresh gravel (compacted depth of 4” optimal)

 Addition of calcium chloride at stabilization concentrations

 Milling surface gravel and calcium to get thorough mixing of

 Compaction with rubber-tired and steel drum rollers

Agenda Page 112 of 158

C-2 Page 7 of 29 R&D Work: Shoulder Pulling, Re-Crown

~ROCKY VIEW COUNTY ~ Culrivaring CoAgendammunities Page 113 of 158 C-2 Page 8 of 29 RR14 Test Section Overview

• RR14 chosen due to steady traffic patterns (Soderglen Ranch) and limited intersections • Interest from Lethbridge County, MD of Provost, Vulcan County and City of Calgary • RVC is at the leading edge: first in Alberta to have a MillRazor; Northern Sunrise & Lethbridge Counties have subsequently purchased as a result of our success; Ledcor and Lafarge are investigating the technology and process for haul road maintenance • WSP Engineering assisting Rocky View with RR14 test & monitoring

Agenda Page 114 of 158

C-2 Page 9 of 29

Range Road 14 Aggregate Test Project

February 2017

Agenda Page 115 of 158 C-2 PageWSP 10 of 29

Agenda Page 116 of 158 C-2 GRAVEL ROAD RESEARCH AND DEVELOPMENT Page 11 of 29

Objectives: • Improve Surface Condition of Gravel Roads

• Reduce Dust

• Reduce Maintenance

• Reduce Gravel Loss

• Reduce Overall Long Term Gravel Requirements

Parameters:

• Road Condition Index (Ruts, Potholes, Washboards, Dust)

• Construction and Maintenance Costs

• Gravel Loss Agenda Page 117 of 158

C-2 SURFACING AGGREGATE TEST PROJECT Page 12 of 29

• Range Road 14

• 3.2 km in Length

• 10 Test Sections

• Modified vs Standard AT 4-20

• CaCl2 Stabilized and Untreated

• Different Types of CaCl2

• Different Concentrations of CaCl2

Agenda Page 118 of 158 C-2 CALCIUM CHLORIDE Page 13 of 29

• Highly Soluble in Water

• Hygroscopic (Attracts and Holds Water)

• Typically Used as a Dust Control Agent

• Dry and Liquid Forms

• 32%, 35% and 38% Liquid Brines

• 94% Dry Pellet

Agenda Page 119 of 158 C-2 MODIFIED SURFACING GRAVEL Page 14 of 29

• Higher Fracture Content (75+)

• More Fines (Sand/Silt/Clay)

• Higher Plasticity

• Hard Road Crust

• Sheds Water

• Reduces Rutting, Raveling and

Surface Defects

Agenda Page 120 of 158 C-2 MODIFIED SURFACING GRAVEL - UNTREATED Page 15 of 29

Agenda Page 121 of 158 C-2 Page 16 of 29 MODIFIED SURFACING GRAVEL WITH CACL2

\ \ \ \ I \ \

Agenda Page 122 of 158 C-2 STANDARD 4-20 SURFACING GRAVEL Page 17 of 29

• Lower Fracture Content (40+)

• Less Fines (Sand/Silt/Clay)

• Lower Plasticity

• Less Cohesive

• More Permeable

• Prone to Rutting, Raveling

and Surface Defects

Agenda Page 123 of 158 C-2 4-20 SURFACING GRAVEL - UNTREATED Page 18 of 29

Agenda Page 124 of 158 C-2 Page 19 of 29 4-20 SURFACING GRAVEL WITH CACL2

Agenda Page 125 of 158 C-2 ROADWAY SURFACE CONDITION Page 20 of 29

• Rating Method – US Army Corps of Engineers

ROAD CONDITION INDEX AVERAGE RATING BY AGGREGATE TYPE

CACL TREATED UNTREATED 90 2

-10

-30

-50

-70

-90 Treated Treated Untreated Untreated 4-20 Modified 4-20 Modified

Agenda Page 126 of 158 C-2 CONSTRUCTION AND MAINTENANCE COSTS Page 21 of 29

• Costs Tracked During and After Construction

• Costs Include All Materials, Equipment and Labour

• Significantly Less Maintenance Required for Modified Gravel

CAPITAL COSTS MAINTENANCE COSTS

$70,000.00 $1,000.00 $60,000.00 $800.00 $50,000.00 $40,000.00 $600.00

$30,000.00 $400.00 $20,000.00 $200.00 $10,000.00 $- $-

AT 4-20 Treated AT 4-20 Untreated Modified Treated Modified Untreated AT 4-20 Treated AT 4-20 Untreated Modified Treated Modified Untreated

Agenda Page 127 of 158 C-2 PROJECTED LIFE CYCLE COSTS Page 22 of 29

ESTIMATED 30 YEAR LIFE CYCLE COSTS $350,000.00

$300,000.00

$250,000.00

$200,000.00

$150,000.00

$100,000.00

$50,000.00

$- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

AT 4-20 Untreated Modified Untreated

Agenda Page 128 of 158 C-2 FINDINGS/CONCLUSIONS Page 23 of 29

• Gravel Gradation and Fracture Impact Performance

• Modified Gravel had Significantly Better Performance

• Modified Gravel had Significantly Lower Maintenance Costs

• Higher Concentrations of CaCl2 Performed Better

• Precipitation Impacts Condition of CaCl2 Roads

• CaCl2 Improves Compaction

• Further Monitoring of the Test Project is Recommended

Agenda Page 129 of 158

C-2 Page 24 of 29 Gravel Road R&D Learnings

• Preliminary learnings from stabilized roads:

 dry calcium pellets provide the best stabilizing results but pellets are currently not available locally and are more costly to apply

 38% liquid is readily available and provides close to the same performance as pellets

 current gravel inventory is not optimal for stabilization purposes: need a much higher fracture face % to mitigate raveling [see pics]

 high fracture percent is essential for binding gravel road surface – this will be incorporated into future gravel crushing specifications (still within AT 4-20 spec)

 use pothole repair for small localized failures [see pic]; cutting a surface-stabilised road destroys the adhesion and road must then be re-milled and repacked

 most County gravel roads do not have adequate surface gravel for stabilization purposes: 4” is required for optimal results. As a trial, the regravelling program in the spring of 2017 will be adjusted to provide a larger amount of gravel to fewer roads.

Agenda Page 130 of 158

C-2 Pothole Repair Page 25 of 29

~ROCKY VIEW COUNTY ~ Culrivaring CoAgendammunities Page 131 of 158 C-2 Page 26 of 29 Changes to Gravel Road Maintenance Procedure

• Adequate moisture content in roads is critical for effective maintenance blading. Incremental use of contracted water trucks working in conjunction with divisional graders and packers will continue.

• Shoulders of all gravel roads sprayed with herbicide in past 3 years to reduce weed growth; 3-year rotation will continue

• use of gravel reclaimer to pull lost material from side slopes

Agenda Page 132 of 158

C-2 Page 27 of 29 Changes to Regular Blading Procedure

• Techniques incorporated during last 5 years as a result of R&D work:

• Current grader blades are much more effective than straight blades or the old style Sandvik blades at cutting, mixing and reducing the amount of gravel pulverized during blading activity

• use of pull-behind packers on divisional graders (3 purchased in 2012, 3 more in 2013)

• more aggressive program of shoulder pulling over past 4 years: 80% of all roads completed

Agenda Page 133 of 158

C-2 2017, Roads Scheduled For StabilizationPage 28 of 29 j ~ \ R2 nc 95 9 ~ ~ \ !il ~ ~ ~ 12017 Capital Project ~ $' \ 1-f- ---\-- -t----=---+---+--+-"- ...--....-+-+--,CROS7FIE w )" --- ~ 0~ I O l ~ /t ,~. 0 u ~ \ -~t- -iU~I "',.__+;~-'--t--F=J-Mlu ~ \ '?,. ~t.. .,.~ J "~ V ~<')_ 1\ 'ti

( w"' \\ w"' () "'w [? "'Q_ ~ ili" I "' ! I I 7

' AIRD IE n \-L

~RO C KY V I EW COUNTY ~ Cultiv;ning Communities ~ ~~~~~&~~.~;,;_5,?,VNTY

Information u depicted Is subject to change, therefore Rocky View Coonty lnfO!lTVIbon as depiCted s subjeCt ttl change, therefore Rocky V~ew County assumes no responsibility for discrepancies after date of printng. C> 2012 Rocky View County Printed: Nov 22, 2016 .ssumes no responsibllt'/ for discrepancies after date of pnnt.ng. ~ 2012 lbci.'f V1ew County Pnnted:1 Nov 22, 2016 I I

~ROCKY VIEW COUNTY ~ Culrivaring CommunitiesAgenda Page 134 of 158 C-2 Goal Page 29 of 29

~ROCKY VIEW COUNTY ~ Culrivaring CoAgendammunities Page 135 of 158 C-1 Page 1 of 12

“FIRE SERVICES” TO: Policy & Priorities Committee DATE: February 7, 2017 DIVISION: All FILE: N/A SUBJECT: STARS Air Ambulance Service Update & Funding Request

ADMINISTRATION RECOMMENDATION: Motion #1: THAT the STARS Air Ambulance update and funding request presentation be received for information. Motion #2: THAT the STARS Air Ambulance funding request be referred to the 2017 Budget deliberations for consideration.

EXECUTIVE SUMMARY: STARS Air Ambulance service will provide Council with an overview of the services currently provided in Alberta. BACKGROUND: The STARS Air Ambulance has now been in operation for 30 year and flown over 30,000 missions. Operating a fleet of 11 helicopters they provide 24/7 service to 249 communities in Alberta, Saskatchewan and Manitoba. On average the service responds to 8 missions per day, 5 of those in Alberta. BUDGET IMPLICATION: At the direction of Council the funding request would be incorporated into the 2017 operational budget. DISCUSSION: Administration recommends that the STARS Air Ambulance funding request be referred to the 2017 Budget deliberations for consideration. OPTIONS: Option #1 1. THAT the STARS Air Ambulance Update and Funding Request presentation be received for information. 2. THAT the STARS Air Ambulance funding request be referred to the 2017 Budget deliberations for consideration; Option #2 THAT alternative direction be provided.

Agenda Page 136 of 158 C-1 Page 2 of 12

Respectfully submitted, Concurrence,

“KENT ROBINSON” “KEVIN GREIG’

General Manager County Manager

ATTACHMENT ‘A’ – STARS PowerPoint Presentation.

Agenda Page 137 of 158 C-1 Page 3 of 12

SHOCK TRAUMA AIR RESCUE SERVICE STARS

Agenda Page 138 of 158 C-1 Page 4 of 12

RED PATIENT REFERRAL SYSTEM STARS Medical Oversight - All Critical Care Calls

• Best mode of transport / Best destination / Ground Ambulance /Fixed Wing /STARS • Scene-to-bed advantage / reduces stress on critical patients • CAMTS Commission on Accreditation of Medical Transport Systems (1 of 3 in Canada)

Agenda Page 139 of 158 C-1 Page 5 of 12

CARING FOR THE PATIENT Leading Edge – Advanced Technology

Hamilton T-1 Ventilator I-Stat Lab Video Laryngoscope Fully Featured ICU Hgb / Gases / Lytes Adult / Pediatric / Neonatal

Portable Ultrasound 12 Lead ECG EZ-IO Drill Defibrillator

Agenda Page 140 of 158 C-1 Page 6 of 12

UNIVERSAL BLOOD ON BOARD Saving Lives! STARS - 1st in Canada!

Jenn Oakes – STARS ‘VIP’ Rio 2016 Paralympics Canadian Women’s Sitting Volleyball Team

Agenda Page 141 of 158 C-1 Page 7 of 12

TYPES OF MISSIONS FLOWN Need and Demand

2% Industry 10% 1% Agricultural Recreation Types of Missions

Medical Emergencies 52% 15% Motor Vehicle Collisions 20% Trauma Related 52% Trauma Related 15% Medical Emergencies Recreational Accidents 10%

20% Industry/Workplace Accidents 2% Motor Vehicle Collisions Agricultural Accidents 1%

Agenda Page 142 of 158 C-1 Page 8 of 12

ROCKY VIEW COUNTY@ DECEMBER 31, 2016 Rural scene or search & rescue calls occurred near these communities

Rocky View County Overview 2010 2011 2012 2013 2014 2015 2016 Total Near Airdrie 328454127 Near Balzac 1 1 2 Near Beiseker 3 2 3 4 2 14 Near BraggCreek 545842331 Near Chestermere 1 2 3 3 9 Chestermere Lake scene and SAR 2 3 4 2 3 14 Near Cochrane 10 9 13 8 4 12 6 62 Near Crossfield 2 2 3342218 Near Delacour 1 1 Near Elbow Falls/Forestry Station 1 3 4 Near Indus 11 Near Irricana 2 2 3 6 1 1 15 Near Kathryn 1 1 2 Near Keoma 1 1 Near Langdon 1 2 3 1 3 10 Near Madden 1 1 1 3 Near Redwood Meadows 1 1 Near Scott Lake Hill within Rocky View 1 1 Near Springbank 1 1 2 4 Total avg. = 31 missions per year 31 31 40 33 33 30 22 220

Agenda Page 143 of 158 C-1 Page 9 of 12

OUR RURAL NEIGHBORS Mission Overview @ SEPTEMBER 30, 2016

Our Neighbors 2010 2011 2012 2013 2014 2015 2016 Total Rural Municipalities Rocky View County* 31 31 40 33 33 30 22 220 M.D. of Bighorn* 27 29 26 30 32 25 23 192 Mountain View County* 55 44 46 57 77 55 50 384 Kneehill County* 9 20 13 13 11 12 7 85 Wheatland County* 29 32 39 29 24 32 23 208 M.D. of Foothills* 56 62 63 57 46 55 19 358 Total 207 218 227 219 223 209 144 1447 Avg. 207 per year / 4 per week

Agenda Page 144 of 158 C-1 Page 10 of 12

STARS Alberta Expenditures (3 Bases)

Funding in Thousands AB Government Funding $ 7,014 Total Operating Costs /Capital Expenditures $ 38,623 AB Government Funding as a Percent of Costs 21%

STARS Gross Fundraising $ 15,421 AB Lottery $ 11,937 Calendar $ 953 Site Registration / Emergency Contact Centre $ 3,298

Agenda Page 145 of 158 C-1 Page 11 of 12

Mackenzie County Rural Alberta Municipal Initiative

Northeastern British Columbia (7) Peace River Regional District

Strathcona Over ¾ Rural Municipalities + Urban Municipalities Majority - $2 per capita up to $65 Up to $200,000 annually Collectively generating over $1.6M annual Special Areas 6 Municipalities proudly represented Albertans – A privileged few Join together to protect and preserve for the future

Crowsnest Pass

Agenda Page 146 of 158 C-1 Page 12 of 12

THANK YOU ROCKY VIEW COUNTY A Partner Saving Many Lives Since 1991!

OUR REQUEST • Join municipal partnerships in saving lives for Albertans • $2 per capita annual commitment • Recognize STARS as valued part of emergency protective services • Enhance safety and a quality of life for your residents • Ensure sustainability for generations to come

Agenda Page 147 of 158 C-4 Page 1 of 11

UTILITY SERVICES TO: Policy & Priorities Committee DATE: February 07, 2017 DIVISION: All FILE: 5051-400 APPLICATION: N/A SUBJECT: Mountain View Regional Water Services Commission

1ADMINISTRATION RECOMMENDATION: THAT the Mountain View Regional Water Services Commission presentation be received as information.

EXECUTIVE SUMMARY: Representatives from the Mountain View Regional Water Services Commission are in attendance today to provide information on their system and to answer any related questions of Council in that regard. Administration will follow up with Council at a later date with a full report once all previously requested information regarding water supply from the Commission is assembled.

BUDGET IMPLICATION(S): No Budget Implications at this time as this report is for information only.

BACKGROUND: On October 25, 2016, Administration presented Council with a report and a recommendation (Attachment ‘A’) advising that the Mountain View Regional Water Services Commission is currently in the process of planning an upgrade to its water delivery system to meet the growing needs of its current and future customers, and requires a volume commitment from Rocky View County to appropriately size the upgrade. Required cost contributions for various volume commitments were discussed with Council on October 25, 2016 as was the County’s projected needs for a water supply in the area. Council then referred the matter back to Administration to provide the following additional information: 1. The cost of the pipeline; 2. The length of the pipeline; 3. The opportunity for a return along the line; 4. The opportunity for cost recovery; 5. The urban license volumes; 6. The County’s proportionate share and how that relates to capital; 7. Water volumes from the Area Structure Plan contemplated; 8. The cost to increase from 500 to 2000 cubic meters; 9. A comparison to servicing through the Aqua 7 Commission; 10. The terms that could be achieved if the County chooses max consumption; 11. The process to transfer the licence allotment to Aqua 7; and 12. The comparison to bring water to the Crossfield area with Aqua 7. In preparing to gather the requested information, Administration contacted the Mountain View Regional Water Services Commission for certain information that only it could provide. In response, ______1Administrative Resources Stuart Jewison, Manager, Utility Services

Agenda Page 148 of 158 C-4 Page 2 of 11

the Commission requested a meeting with Rocky View Council to provide the information first hand and to answer any further questions of Council in relation to the subject matter. Administration has accommodated the Commission’s request by scheduling them for a presentation at the February 07, 2017 Policy and Priorities Committee meeting.

Administration recommends Option #1.

OPTIONS: Option #1 THAT the Mountain View Regional Water Services Commission presentation be received as information. Option #2 THAT alternative direction be provided.

Respectfully submitted, Concurrence,

Byron Riemann Kevin Greig

General Manager County Manager

SJ/bg

ATTACHMENT ‘A’ – October 25, 2016 Council Report ATTACHMENT ‘B’ – Mountain View Regional Water Services Commission Presentation

Agenda Page 149 of 158 C-4 Page 3 of 11

ATTACHMENT 'A'

ROCKY VIEW COUNTY • Cultivating Communities

OPERATIONS TO: Council DATE: October 25, 2016 DIVISION: All FILE: 5051-400 APPLICATION: N/A SUBJECT: Water Service Expansion- Mountain View Regional Water Services Commission

*ADMINISTRATION RECOMMENDATION: THAT Administration be directed to:

a) Negotiate an agreement with the Mountain View Regional Water Services Commission to secure 500 cubic meters per day of water through the Commission's system. b) Approve the attached budget adjustment of $1,600,000 from the Tax Stabilization Reserve to fund the required infrastructure costs to be recovered through developer off-site levies.

EXECUTIVE SUMMARY: The Mountain View Regional Water Services Commission holds a Water Act Licence allowing it to divert 7,333 cubic meters of water per day from the Red Deer River for end use in Rocky View County. In order for the Commission to be able to supply Rocky View County with water, upgrades to its water delivery system are required. The Commission is currently in the process of planning an upgrade to its water delivery system to meet the growing needs of its current customers, and requires a volume commitment from Rocky View County to appropriately size the upgrade. For a commitment of the full licenced amount (7,333 cubic meters per day) a cost contribution of approximately $10,600,000 would be required of Rocky View County. For a commitment of up to 500 cubic meters per day, a cost contribution of approximately $1,600,000 would be required. Given the significant increase in cost associated with a volume commitment of over 500 cubic meters per day, and given the limited development expected in the area, Administration would support a commitment to secure 500 cubic meters per day of water from the Commission. The County's investment would be recoverable through the implementation of off-site levy bylaw charges to area developers.

BUDGET IMPLICATION(S): Option 1. $1 ,600,000 (500 cubic meters per day) Option 2. $10,600,000 (7,333 cubic meters per day) Option 3. No Budget Implications. The applicable amount to be drawn from the Tax Stabilization Reserve and added to the water and wastewater off-site levy bylaw. Off-site levy funds collected from developers connecting to the system would be used to repay the Tax Stabilization Reserve, which is anticipated to occur over a period of 15 to 30 years. The current balance in the Tax Stabilization Reserve is $32,221 ,527.93. Any Provincial or Federal funding received by either Rocky View County or the Commission related to Rocky View County's portion of the upgrade would be deducted from the amount required to be drawn from the Tax Stabilization Reserve. Government funding for the project has been applied for, but no funding approval has been received to date.

*Administrative Resources Stuart Jewison, Manager, Operations

Agenda Page 150 of 158 C-4 Page 4 of 11

ROCKY VIEW COUNTY • Cultivating Communities BACKGROUND: The Mountain View Regional Water Services Commission (the Commission) owns and operates the Anthony Henday Water Treatment Plant located on the banks of the Red Deer River northwest of lnnisfail, Alberta. The Commission supplies treated water to Commission members (Towns of lnnisfail, Bowden, Olds, Didsbury, Carstairs and Crossfield} and other approved municipal and industrial customers through a water transmission main running from the plant and terminating at the Town of Crossfield. In 2014, the Commission received from Alberta Environment a separate licence to divert 9,263 cubic meters per day of water from the Red Deer River to service the needs of both Mountain View County and Rocky View County. In anticipation of the licence, Rocky View County, along with Mountain View County, entered into an agreement with the Commission for the allocation of the licence between Mountain View County (1 ,930 cubic meters per day) and Rocky View County (7,333 cubic meters per day). Rocky View County's allocation was based on the servicing of the Highway 2 Major Business Corridor, the Crossfield Business Node, and the Madden Existing Community using the Rocky View 2060 Growth Management Strategy as justification to Alberta Environment. The Commission is currently in the process of planning an upgrade to its water delivery system in order to meet the growing needs of its current members and customers, and have asked Rocky View County for a commitment in terms of its water requirements so that an appropriately sized upgrade can be designed and constructed. Rocky View County Administration has met several times with the Commission to better understand the benefrts and consequences of making a commitment, and as directed by Council at the March 24, 2016 County Manager Workshop, can advise Council as follows: Should Rocky View County make a volume commitment to the Commission at this time, the Commission will plan and construct the upgrade to accommodate Rocky View County along with the requirements of its members and other approved users. Should Rocky View County make a volume commitment to the Commission at this time, Rocky View County would need to agree to pay its proportionate share of the Commission's capital costs to bring water to Rocky View County (transmission line from the water treatment plant to the end of the line in Crossfield). The Commission has estimated that Rock View County's proportionate share of capital costs for delivery of the full allocated 7,333 cubic meters per day is $10,600,000, and for the delivery of up to 500 cubic meters per day is $1 ,600,000. To secure its volume commitment with the Commission, Rocky View County would be required to enter into a water supply agreement with the Commission prior to construction of the upgrade project with the condition that payment of 50% of the County's proportionate share of capital costs be made at the time of signing the agreement, and that payment of the remaining 50% be paid over a ten year period thereafter. Any Provincial or Federal funding received by the Commission for the upgrade will be deducted from the total project costs before Rocky View County's proportionate share is determined. To date no such funding has been secured by the Commission. Payment of Rocky View County's proportionate share of capital costs through the user rates charged by the Commission after construction of the upgrade is not an option. After construction of the upgrade, water would be delivered to Rocky View County at the end of the Commission's line inside the Town of Crossfield. Rocky View County would either have to enter into an agreement with the Town of Crossfield for servicing through Crossfield's reservoir, or build its own reservoir directly off the Commission's line and enter into a servicing agreement directly with the Commission.

Agenda Page 151 of 158 C-4 Page 5 of 11

ROCKY VIEW COUNTY • Cultivating Communities Should Rocky View County elect to receive servicing through the Town of Crossfield, Crossfield would require that Rocky View County pay for its proportionate share of the reservoir capital and operating cost.

After construction of the upgrade, user fees for Rocky View County would be set at the rate charged to Commission members plus 10%. Currently this non-member rate is approximately $1 .55 per cubic meter. Membership into the Commission for Rocky View County is not available and is not negotiable. Should Rocky View County decide not to make a volume commitment to the Commission at this point in time, the Commission will design and construct the upgrade to accommodate the future requirements of its members and other contracted users only. There will be excess capacity in the Commission's system over what the other users require after construction of the upgrade under this scenario; however this excess capacity will only be available to Rocky View County if it has not been secured by another Commission member or other contracted user.

There are several factors complicating a decision for Rocky View County respecting a volume commitment to the Commission at this time including: The uncertainty with how the yet-to-be-determined regulations of the proposed mandated Provincial Growth Management Boards will determine the ability to develop in the envisioned service area of the Commission in Rocky View County. The uncertainty of development interest and market conditions affecting the feasibility of being able to use the full licence allocation of 7,333 cubic meters per day. The uncertainty of the outcome of the Town of Crossfield/Rocky View County Joint Area Structure Plan currently under development. The unknown cost involved to bring water into Rocky View County from end of the Commission's line in the Town of Crossfield. The unknown cost and methods to treat and dispose of wastewater generated from areas in Rocky View County serviced through the Commission. (Rocky View solution or leverage the Town of Crossfield wastewater system??). The unknown financing and cost recovery mechanisms for Rocky View County's capital costs for water and wastewater servicing . Rocky View County Planning and Economic Development departments have advised that the most likely scenario for development in Rocky View County in the subject area is development associated with the Town of Crossfield/Rocky View County Joint Area Structure Plan, and that there does not appear to be significant development interest outside of the joint area structure plan area. Given the significant increase in proportionate infrastructure cost associated with a volume commitment of over 500 cubic meters per day, and given the limited development expected in the area, Administration would support a commitment to secure 500 cubic meters per day from the Commission at an approximate cost of $1 .6 million less any related proportionate provincial or federal funding received by the Commission.

Administration recommends Option #1.

Agenda Page 152 of 158 C-4 Page 6 of 11

ROCKY VIEW COUNlY • Cultivating Communities OPTIONS: OPTION #1 THAT Administration be directed to: a) Negotiate an agreement with the Mountain View Regional Water Services Commission to secure 500 cubic meters per day of water through the Commission's system. b) Approve the attached budget adjustment of $1,600,000 from the Tax Stabilization Reserve to fund the required infrastructure costs to be recovered through developer off-site levies. Option #2 THAT Administration be directed to : a) Negotiate an agreement with the Mountain View Regional Water Services Commission to secure 7,333 cubic meters per day of water through the Commission's system. b) Approve the attached budget adjustment of $10,600,000 from the Tax Stabilization Reserve to fund the required infrastructure costs to be recovered though developer off-site levies. Option #3 THAT Administration be directed to advise the Mountain View Regional Water Services Commission that Rocky View County will not be making a water supply volume commitment at this time. Option #4 THAT alternative direction be provided.

Respectfully submitted, Concurrence,

Byron Riemann Kevin Greig

General Manager County Manager

SJ/bg

ATTACHMENT 'A' - Budget Adjustment (Option #1) ATTACHMENT 'B' - Budget Adjustment (Option #2)

Agenda Page 153 of 158 C-4 Page 7 of 11

ATIACHMENT 'A' ROCKY VIEW COUNTY BUDGET ADJUSTMENT REQUEST FORM BUDGET YEAR: 2016

Budget Description Adjustment EXPENDITURES: Water Supply Agreement - Mountain View Regional Water Services Commission 1,600,000 (500 cubic meters per day)

TOTAL EXPENSE: 1,600,000 REVENUES: Transfer from Tax Stabilization Reserve (1,600,000)

TOTAL REVENUE: (1,600,000) NET BUDGET REVISION: 0 REASON FOR BUDGET REVISION : To secure the supply of 500 cubic meters per day of water through the works of the Mountain View Regional Water Services Commission.

AUTHORIZATION:

County Manager: Council Meeting Date: Kevin Greig

Gen. Manager Corp . Services: Council Motion Reference: Kent Robinson

Manager: Date:

Budget AJE No:

Posting Date:

Agenda Page 154 of 158 C-4 Page 8 of 11

ATIACHMENT 'B' ROCKY VIEW COUNTY BUDGET ADJUSTMENT REQUEST FORM BUDGET YEAR: 2016

Budget Description Adjustment EXPENDITURES: Water Supply Agreement- Mountain View Regional Water Services Commission 10,600,000 (7,333 cubic meters per day)

TOTAL EXPENSE: 10,600,000 REVENUES: Transfer from Tax Sta bilization Reserve (10,600,000)

TOTAL REVENUE: (10,600,000) NET BUDGET REVISION : 0 REASON FOR BUDGET REVISION: To secure the supply of 7,333 cubic meters per day of water through the works of the Mountain View Regional Water Services Commission.

AUTHORIZATION:

County Manager: Council Meeting Date: Kevin Greig

Gen. Manager Corp. Services : Council Motion Reference: Kent Robinson

Manager: Date:

Budget AJE No:

Posting Date:

Agenda Page 155 of 158 C-4 Page 9 of 11

ATIACHMENT 'B'

ROCKY VIEW 2017

Moun,..,..,.~l n View RcliOr•l Waitt ~lc.t:l Cofnl'l"''l11.on ;Comlniulon)ls comDrtatd or 6

TO!frrmOI""*~il TowndBowde., TOrlltndCY.dS Town d CWdsbuly Town o1 tarltl"' Town d CroufiekS

.,. addlioft lhe tOmmisslotllUHite$ ~tet to the Bowoel' tMt iC~. anc1 has a tup:*t COIIIJic:t With \4ountaltl YitwCc.uf'I:Y

MAP ROCKY VIEW 2017

lwiMin(

P~sc 1 - Anlhory Htrdly to Olds

Th• Commaion l.ne trotn the Anchony Het~dl)' plant to Oleil ""been ~Mid 11'1 2014

Cos.t ollhe Tw1nnlnt WIS 41.000,000 wtlh a Cfant d 10,000.000 fill CCI61 wU ~ 31.000.000 The \IIIOiurn.e tot Dnt is 20.000 cvblc tntt.trs per

Agenda Page 156 of 158 C-4 Page 10 of 11

ROCKY VIEW- 2017

Pl•nrrlr& lOt '~'~•~ 2 hu •~ned ..-o request IOII~ndlr& ''" beO"' ton-·erdee to tnt: Pr(lll(ltlel Pro)ec:ted con It 1g 7 \Wifon

Cost Pt'O;.a.on Wlh ~oeky vr.w County

ew.cos31 fOf upsr:rtnc ~ uD to 500 no cnarp In SIZe ot pope • 2000 tUblt meters· 11 wullon ea:oa c:ott

7000 c:ubiC meters 18 mlllon ~v• c:ost

ROCKY VIEW 2017 ROCKY VIEW 2017 ...... ""'"'"Cost 01 W.IW 2015 tl S \ $0 oet CUOM: meter L \'oiUtne of Wllter Rod\)' 1/WN Coun()' wants 1 Rode)' vtew Ucwtst Water Ucen.e 4 7000 tub'c meters '*o-r but w\11 be uo tOf 2 Gtant lor St.ce 2 rev.. w k15 ~Nf'l 3 Tlmtlr.os. to proeecO 4 Oee4lon ftam lloekyVIew Coullry to costs can be ulcutted Fonnu•a tot ClpitJI eo5lS

Stace 1 Voklme Percent~te 1 Ntt Cost o4 31.000.000

Agenda Page 157 of 158 C-4 Page 11 of 11

ROCKY VIEW 2017 ROCKY VIEW 2017

Tl'lar.k you for rou Ume

Olaiunan Rlc:lt BUll• - 403 852 9712

Agenda Page 158 of 158