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Calgary's increasing reliance on debt financing for water and sewer is like getting a mortgage to pay for your furnance.

Calgary’s economic boom was one hell of a ride: High energy prices turned small oil players into millionaires, women bared their breasts on the Red Mile and cookie-cutter McMansions sprouted up like weeds in the city’s burbs.

It was, for a short time, all about the bucks, imported fast cars and flipping cavernous homes.

But like all boom-time bashes, someone has to foot the bill when it goes bust. And the bill Calgarians are now stuck with is a 10-digit liability — $1.3 billion and growing, to be exact.

That bloated figure is the city’s water and sewer debt, which, left unchecked, could hit $2.4 billion by 2019, warns a financial policy report recently reviewed by city council members.

It’s an unsustainable debt load that threatens the city’s credit rating and its ability to borrow in the future. And any Calgarian who pays a water and sewer bill will soon be asked to pay the piper.

Until administration crunches the numbers, no one knows exactly how painful the bill will be, though it will be “substantial,” says Ald. Druh Farrell. “We don’t know the number,” she says. “The reality is stark. It isn’t insurmountable, but it will be if we continue to neglect this.”

The bulk of the debt is due to a 10-year agreement the city has had with developers, in which Calgarians have been subsidizing water and sewer infrastructure for new suburbs.

The city and the development industry are currently haggling over a new five-year deal. Developers say new homebuyers may get dinged $10,000 more for their new homes if the industry is forced to foot the bill.

Between 2001 and 2004, capital spending for water and sewer averaged less than $100 million a year. Between 2002 and 2006, more than 137,000 Calgarians, flush with available credit, flocked to the suburbs. During that time, then-mayor Dave Bronconnier famously quipped: “There’s no such thing as urban sprawl in Calgary.”

Meanwhile, pressure began to mount on the city’s utilities. People need their taps to run and toilets to flush. Upgrades to the Glenmore and Bearspaw water treatment plants, and building the Pine Creek sewage plant cost taxpayers $730 million — $300 million more than originally projected.

“Construction costs were escalating quite rapidly at the time,” says Ald. Dale Hodges. “And those projects got caught up in the whole matter of cost escalation of all these major projects, including road projects.”

In 2006, Ald. Gord Lowe, then chair of the utilities and environment committee, said the cost overruns of those water and sewage plant projects were “not a concern.” He now says the debt figures aren’t surprising.

“I could see these numbers coming,” he says. “That last spurt of growth, there’s lots of residual effects from it that we’re going to have to deal with in the next few years.”

According to the city, the average annual water and sewer bill for a single-family home is $900 (water bills have increased by 15.8 per cent since 2009). Each new home built in the city requires about $9,000 for water and sewer infrastructure.

Unlike other departments, the city’s utility operates entirely on the backs of users. But the cost of new infrastructure has outpaced revenue and the city became increasingly reliant on loans instead of paying cash.

Between 2004 and 2009, debt financing of capital projects rose from 53 per cent to more than 96 per cent. By 2009, $242.9 million of the $253 million spent on water and wastewater projects was paid by taking on more debt.

Imagine paying 96 per cent of your home bills with a credit card — it’s a credit counsellor’s nightmare, yet that’s essentially what the city is doing: incurring more debt to pay for maintenance, such as water main replacements, when “we should be paying for that with cash,” says Paul Fesko, manager of strategic services for the city’s water resources. “It’s not a good thing.”

“If you were doing this in your house it would be like taking out a mortgage to replace the motor in your furnace, when you should just be paying it out of cash,” he says. “It’s making the overall debt of the utility increase.”

Today’s $1.3-billion water and sewer utility debt makes up more than half the city’s $2.4-billion debt (excluding an additional $500,000 of Enmax’s debt). Each Calgarian now owes almost $1,300 of that $1.3-billion debt — exceeding the province’s debt-limit regulation, which would be “viewed as a significant challenge to increasing tax-supported debt,” says the recent report to council.

“The status quo is not an option,” says Ald. Farrell. “We still have a good waste water system. The last thing we want to do is neglect the maintenance of that system.”

Calgary isn’t alone. Several municipalities across the province are also struggling to pay for water and sewer upgrades and are expected to hike water and sewer rates.

The Mountain View Regional Water Services Commission, a regional water treatment plant serving Innisfail, Bowden, Olds, Didsbury, Carstairs and Crossfield, recently hiked water rates 20 per cent.

Didsbury residents, for example, will see an average annual $125 increase to their water and sewer bills. Further north, Spruce Grove’s city council approved a 10 per cent increase to its water rates in December. That same month, Canmore’s town administration recommended a 28 per cent hike to residents’ utility bills.

Water, says Fesko, is “never going to get cheaper in this region” and Calgarians should get used to paying a premium for a clean, safe and stable water supply.

“If you want to keep growing, have high-quality services and want to protect public health… all of those things have to be considered and that’s what people are paying for through their water and waste water rates,” he adds.

Email: thowell@ffwd.greatwest.ca