As an Improvement District, we are a “user pay” organization. That means all our costs must be borne by the customers using the system.
Local governments including improvement districts require a range of revenue sources to provide for stable, predictable and administratively fair funding for expenditures. Primary sources of funding for NSSWD are tolls and taxes, including surcharges. Tax and toll revenues are set to meet the current and future expenditures of NSSWD. The rationale to allocate taxes to ratepayers includes consideration of broad principals of:
• How land is used;
• Parcel size;
• Affordability for residential and farm land; and
• Typical demand for the different classes of user.
A slightly higher proportion of tax and toll revenue comes from tolls. This reflects the need for water use conservation. Tolls are based on the actual water consumption of individual lands.
Taxes are allocated to broad categories based on parcel size, land use and typical demand. Tax amounts allocated to each category of land use are similar to one another and reflect the wide range of consumption patterns that exist between and within land use categories. These considerations provide reasonable fairness to land owners in that those who fall in a category of land use that typically uses the system the most should fund a higher proportion of the District’s costs. This rationale also applies to non-metered properties that do not consume water but contribute some parcel tax because infrastructure and costs includes capacity to provide water to them.
Some parcels of land in the District contain more than one residential, business or commercial unit. Due to its statutory constraints, the District cannot impose a parcel tax directly on each unit, despite the fact that each unit represents an additional potential demand for water. In such cases, taxes are also imposed based on the number of distinct units within each parcel. The District believes it is fair to base tax rates on such properties on the number of units the property contains because the typically larger amount of consumption from such properties imposes a heavier burden on the District’s infrastructure and operating costs than parcels that contain only one residential, business or commercial unit.
Tax revenue is made up of “parcel tax” and “surcharge” and, as discussed above, additional amounts for additional units. The base parcel tax rate for each class of property is set using the rate for a single family dwelling or farm up to one acre as a reference point and puts a lower tax burden on residential and farm lands. The parcel tax base is incremented up to 23% for parcels with larger land areas and 15% for commercial properties. Parcel tax rates for residential modular homes and strata title properties are further set as a proportion of the base parcel tax to reflect typical water use patterns amongst residential properties. Typical water use patterns of single family dwellings, modular homes and strata title lands were verified during 2018. An additional parcel tax is added for multi-unit properties to reflect additional potential demand. Residential modular homes and strata properties pay the same parcel tax for each residential
unit. Other additional units are typically secondary to the primary unit and are set at a smaller proportion of their parcel tax rate.
A surcharge has been established to fund long term debt costs and increase potential for further reserve contributions. A greater desire for stable long term debt funding led to the surcharge being set at the same fixed base surcharge per parcel, including strata units, and the same additional surcharge per additional modular home. Each strata units and modular home is considered as an individual residential unit. Additional surcharges for additional units are charged a proportion of the base surcharge on a similar basis as for parcel taxes.
Allocation of taxes as described more reasonably reflects the cost of providing services to different classes of customers and that provides a consistent revenue stream to pay for operating costs, debt repayment, and future infrastructure requirements, and maintaining a prudent operating reserve.