Answers to Frequently Asked Questions - Rose Valley Water Local Area Service Debt Repayment Options

Thursday, May 1, 2025

Dear Rose Valley Water Local Area Service Customers,

We are following up with you today to provide answers to frequently asked questions regarding the debt repayment letter, which customers are receiving through the mail this week.

We also wish to address an elephant in the room – the short notice. We apologize and recognize that we should have sent out information earlier in the year.

We are hopeful that these answers to frequently asked questions may alleviate some of your concerns or provide additional information. We will continue to build out these FAQs. If your question is not answered, we ask that you please email us at ub.finance@westkelownacity.ca, or call us at 778-797-8850 and leave a message. Staff will get back to you as soon as possible.

Please note, although this information does not apply to our customers who receive utility bills for the Powers Creek Water Service Area, it may still be of some interest to you or someone you know, and we believe it is important to include you.

Q. To whom has the City sent the letter and request for debt repayment?

A. The City of West Kelowna sent the letter to all parcels within the Rose Valley Water Local Area Service – those that receive service from the Rose Valley Water Treatment Plant and connecting transmission mains project.

This debt does not apply to all West Kelowna parcels. For example, parcels within the Powers Creek Water Service Area have been paying their own debt for their treatment plant for more than 20 years, and others may be on private systems.

Q. Why has the City provided only one month for Option 2, the one-time prepayment?

A. We should have provided more time. Our apologies.

The letter was mailed April 25 to meet legislative processes and final deadlines for borrowing. However, we acknowledge that we could have juggled some things to try to send the letters sooner.

Those who are choosing Option 1, which would be to transfer the payment of $181.00 to property taxes, starting in 2026, do not need to do anything at this point. Only those who wish to pay the $2,750 up front, to avoid paying interest charges, are asked to meet the May 31 prepayment deadline.

Again, for those who are not interested in paying this up-front amount, they do not need to do anything currently. The levy will show up as a parcel tax, currently estimated at $181, based on the current interest rate of 4.02 per cent. The amount will appear as a separate line on your property tax bill, annually, starting in 2026.

Please note, if the interest rate changes between now and the estimated time of borrowing in August, the $181 may be slightly different. However, once the borrowing occurs, the rate will be set for the maximum 10-year first term. In 2035, the 25-year debt must be refinanced for a subsequent 10-year term, which would be based on the rate at that time. It would then be refinanced again in 2045, based on the interest rate at that time, for the remaining five-year term of the 25-year debt.

Q. Why were customers not told about this before?

A. Sorry. We should have provided information earlier this year, as a reminder, since it has been five years since the original Subject to Petition Against process, which approved the borrowing.

Q. Why is this debt being repaid now if the Rose Valley Water Treatment Plant and connecting transmission mains were completed months ago?

A. During the construction phase, short-term borrowing, over a five-year period was used to finance the project. The five years is coming to an end, and the borrowing must be transferred to long-term borrowing.

The end of the short-term borrowing and the process for obtaining long-term borrowing through the Regional District of Central Okanagan, with approval from the B.C. Ministry of Finance, from the Municipal Finance Authority, have left a one-month window. However, the May 31 prepayment deadline only applies to those who choose to pay the up-front, one-time, lump sum of $2,750.

Q. Why can I only prepay in person, if I choose the prepayment option?

A. This is a specific debt repayment, approved through a Subject to Petition Against process in 2020, and it must be paid, tracked and reconciled separately as part of the borrowing process.

Paying through a financial institution is not an option because our arrangements are set up to take payments for quarterly utility bills or annual property taxes, and the prepayment would be neither. If the bank applies the online prepayment to your utility bill or property tax account, it will appear on your utility bill or property tax account as an overpayment and be refunded.

The municipality accepts cash, cheques made out to the City of West Kelowna, or debit; please ensure sufficient debit limits. The City does not accept credit cards due to fees charged by the companies, which increase costs to the not-for-profit, ratepayer-funded system.

City Hall is open from 8:30 a.m. to 4:30 p.m. Monday to Friday, excluding Victoria Day, May 19.

We do not recommend paying by mail because a possible postal strike may occur as early as May 22, and this could result in us not receiving your pre-payment in time. You can use the marked drop box on the south side of City Hall, across from the electric vehicle charging stations, or courier payments to City Hall, 3731 Old Okanagan Highway, West Kelowna, BC V4T 0G7.

Q. Will the flat charge for water be cancelled on my next utility bill?

A. No, but in 2026, your quarterly utility bill will be somewhat reduced.

The flat charge on your water bill contained $150 annually (or $37.50 per quarter), which was being placed into reserves and has paid for a $4.4 million portion of the water treatment plant and connecting water transmission mains project. Total costs of the project remained on budget at $75 million. A $41 million grant from the federal and provincial governments was greatly appreciated as it covered a large portion of the project, and $6.1 million came from cost charges on new development, leaving borrowing of $23.5 million, which must now be repaid over a 25-year term.

An amount of $37.50 will be removed from your quarterly bill starting in 2026. However, this also does not mean the flat rate on your first bill in January 2026 will necessarily be $37.50 lower than your January 2025 bill. That’s because the water system continues to face increasing operating costs, which are also contained in the flat rate. For example, increased operating costs for 2025 included covering the higher prices for treatment chemicals. Rates increase annually to ensure the non-profit, self-funded system, which the City operates on behalf of ratepayers, remains sustainable.

If you choose, Option 1, which is to do nothing and allow the debt repayment to be moved to property taxes, it will appear on your property tax notices as an annual parcel tax line in the amount of $181. This is the amount based on the current interest rate of 4.02 per cent. The $150, as presented in 2020, was based on an interest rate of 0.91 per cent at the time.

For those who prepay the $2,750, by May 31, 2025, the amount of up to $37.50 will be removed from your quarterly utility bill and you will not see a parcel tax on your property tax bill in 2026 or beyond for the Rose Valley Water Treatment Plant and connecting transmission mains project.

Those customers opting for the annual payment option will receive another letter in the spring of 2026 as a friendly reminder that the $181 will be appearing as a parcel tax on your 2026 property tax bill.

Q. What happens if I have prepaid the debt, but then I end up selling my home?

A. If you have prepaid your parcel’s portion of the Rose Valley Water Local Area Service debt, of $2,750, you may wish to consider this amount, or the remaining portion thereof, at the time of sale, in setting your selling price. You may also wish to consider providing this information in the listing as a selling feature to potential buyers.

If you have not prepaid, the debt remains with the property and transfers to the new homeowner.

Q. What happens when more homes are added to the Rose Valley Local Area Service?

A. When a new home is added, the parcel tax will be included in their property tax bill going forward as they too must share in the debt.

The debt will be reconciled each year and will be recalculated, at that time, based on the interest rate and the number of parcels contributing to the debt repayment.

Q. Why is this not an interest-free loan? Why are you charging interest to taxpayers?

A. The City, like other local governments, borrows money from the Municipal Finance Authority (MFA), which lends money to municipalities at competitive rates. Interest is payable to the MFA and is not money that the City of West Kelowna keeps.

Q. How does this affect strata or manufactured home parks?

A. Strata and manufactured home parks are an exception to the per parcel debt servicing because all properties with a folio number, within the Rose Valley Water Local Area Service are being charged in keeping with two applicable bylaws – Rose Valley Water Service Area (0239) and Rose Valley Water Treatment Plant Service Area (0280).

Therefore, even homes that are within strata have folios that have been included for repayment of the debt.

If owners are collectively billed water through strata, the strata will see a reduction in their flat charges in 2026 and the strata should pass on the reduction.

If a manufactured home was to move, they must de-register before moving; and if a new manufactured home were to replace it, the new folio would be added into the debt servicing.