Calgary underinvested in water system for 20 years report

Calgary Officials Address Water Utility Report Findings

City of Calgary officials are developing plans to implement key recommendations from an independent panel’s report on the 2024 failure of the Bearspaw feeder main. The report indicates that the city’s water utility has “steadily eroded” due to “chronic underinvesting” over the past 20 years.

The report, released publicly on Wednesday, highlighted “systemic gaps” in the city’s water utility. These gaps were caused by external pressures, issues with risk and asset integrity processes, ineffective management, unclear accountability, and a lack of effective governance oversight.

These factors led to the critical rupture of the Bearspaw feeder main in June 2024.

City council met late into Wednesday night to question the panel. They unanimously directed city administration to return with recommendations on how to implement the panel’s suggestions.

“In some ways, we’re all playing chicken with the state of repair of our infrastructure and when you do that for long enough, the odds tell you that things are going to break down,” said Matti Siemiatycki, director of the Infrastructure Institute at the University of Toronto.

Investigation Findings

As part of its nine-month investigation, the panel reviewed the historical evolution of the city’s water utility, including city budgets and external pressures like population growth.

The report showed that between 2000 and 2010, the city’s water utility experienced “a stable environment.” During this time, Calgary’s population grew by 25 percent, while water consumption declined by 30 percent due to water efficiency planning.

However, offsite levies paid by developers did not cover water or wastewater. This led the utility to become “over reliant on debt financing” for growth projects, putting it in “a weakened financial position.”

The report also noted that council did not approve a water utility rate increase in 2008 due to economic pressures.

Over the next decade, as population growth slowed to 20 percent, the water utility identified financial stress from rising debt. The city re-established offsite levies to cover water and wastewater infrastructure, which “gradually stabilized” funding.

A funding shortfall occurred in 2017 due to reduced development amid an economic slowdown.

“This uneven fiscal recovery coincided with a period of weakening system resilience as the water utility was repeatedly asked to ‘do more with less,’” the report stated.

Water rates were also kept flat due to “poor economic conditions.” The report showed that rates only increased between zero and two percent from 2012 to 2020.

A timeline in the report indicated that zero-based reviews of city spending found millions of dollars in “cost avoidance” between 2017 and 2021.

“The city was growing at a remarkable pace, and quite often growth investments overtook some of the resilience and redundancy investments that should have been undertaken at the time,” said Siegfried Kiefer, chair of the independent panel.

Between 2020 and 2024, the report noted that the city’s population grew by 15 percent, increasing water demand. The water utility’s operating and maintenance costs quickly surpassed the national average, indicating a system under mounting strain.

Kerry Black, a civil engineering professor at the University of Calgary, stated that a lack of resources is a challenge for public works departments.

“You don’t get elected on raising water rates, and you don’t get on fixing pipes underground that nobody sees,” she said. “That is really important for people to understand; it is not easy to work in public works and it’s not a sexy topic that people care about, and that’s why often it gets forgotten.”

Capital Budget and Governance Changes

The report found that the water utility only spent its entire capital budget twice in the last 20 years, in 2016 and 2024. The report stated this was due to “chronically underinvesting and deferring important projects that could have increased the resilience of the system to outages.”

Michael Thompson, the city’s infrastructure services general manager, said the city has historically spent about 60 percent of its capital budget each year. This number has improved to 90 percent in recent years.

“We re-focused our efforts to make sure we were really delivering the investments that council had made,” he said. “There have been a number of issues across the city that kept our capital delivery lower.”

Ward 6 Coun. John Pantazopoulos found the report “quite sobering.” He noted a lack of a mechanism for escalating concerns to decision-makers at city hall.

“Imagine a situation when you have a couple of directors talking about capital spending, and not one person advocating, whether it’s from a risk mitigation perspective or just capital costs,” he said. “It was clearly not one single decision that was made during that last 21 years; it was a combination.”

Among the recommendations in the report is a change to the governance structure. This includes creating a dedicated water utility department with a single executive and an independent expert water utility oversight board.

Pantazopoulos believes an independent board would aid long-term planning based on expert input and data.

“Now we have a clear path; we’re going to have experts coming in based on the capital needs of water for the next 20, 30, 40 years, well beyond my council term,” he said. “You’re going to take politics out of it and you’re going to come down to the facts.”