City administration is to come back with a plan in less than a month to implement recommendations from an independent panel that reviewed the ailing Bearspaw South feeder main.

After more than eight hours of questions, Calgary city councillors unanimously approved recommendations to direct administration to come back with an implementation plan and resource requirements to the Executive Committee by Feb. 3.

The report, delivered Wednesday morning, highlighted two decades of inadequate asset management, risk assessment and governance of Calgary’s water services.

“Basically, we found that there were systemic gaps that have existed for a long period of time in the city’s water utility and the way it’s been operated,” panel chair Siegfried Kiefer told councillors in his presentation.

“Those gaps existed in the risk and asset management processes, where risks were not sufficiently identified, escalated, dealt with at a senior executive level. There was unclear accountability within the leadership teams managing the water utility over the last 20 years.”

Councillors heard that there is an urgency needed to fix then replace the Bearspaw feeder main, then they must chart a path to having the water utility become a standalone branch with its own Chief Operating Officer and water expertise, along with clear, segmented financial reporting to ensure accountability. Eventually, the panel suggested turning the water utility into a wholly owned subsidiary of the City of Calgary, to ensure it had a focused mandate on delivering water over the long term.

One of the problems highlighted in the report was a fragmented City of Calgary organizational structure that didn’t have a single accountable executive, nor a culture of escalating risks and finding solutions.

“We need to get a management team that’s dedicated to executing and delivering the outcomes of the water utility, and we need to have a qualified group of experts that can challenge the thinking of management and ensure the long-term best interests are being addressed in the decisions being taken,” Kiefer told councillors.

City of Calgary organizational realignment

Chief Administrative Officer David Duckworth said that the panel’s recommendations, particularly around a different organizational structure with a separated water utility, will be a conversation he has with Calgary city council.

He said they stand ready to implement the recommendations the panel brought forward.

“I personally take responsibility, (I’m) accountable for the services that we deliver every single day, and so does my team. We take this very seriously,” Duckworth told reporters.

“We apologize to Calgarians for being where we are today. We don’t want to be where we are, so we have a plan in place to get out of this emergency as quickly as possible and build a resilient water system going forward.”

When asked why water pipe issues, which were reported as far back as 2004, weren’t brought forward for action, Duckworth said it was concerning.

“I want to make sure that people, our staff throughout the organization, are escalating when they need to, and so I’m taking the tools that the independent panel review provided for us, for improving our asset integrity, asset management programs, our risk profiles, to make sure that we have a better knowledge and are using state of the art tools to identify when senior leaders like myself in the organization and city council needs to understand things,” he said.

Roughly three years ago, the City of Calgary administration completed a major reorganization. While there were organizational issues before 2021, the change was something the report said exacerbated accountability and process gaps.

“Following the restructuring, management of the Water Utility became fragmented across multiple teams, with no single owner responsible for end-to-end outcomes,” the report read.

Budget and growth pressures

The report went into some detail around Calgary’s substantial growth over the past 20 years, along with budget fluctuations and decisions over rates.

It looked back to a period between 2000 and 2010, when there was stable population growth, and a period of reduction in per-capita water use. At this time, there were no water or wastewater offsite levies, only stormwater levies, according to the report.

“As a result, the Water Utility had become over reliant on debt financing to fund growth projects and subsequently entered the next decade in a weakened financial position,” the report read.

From 2010 to 2020, the report indicated that the City identified financial stress in the water utility resulting from the rising debt. Off-site levies were re-established, and it stabilized the water utility’s funding base and reserves.

It outlined a period of uneven fiscal recovery that coincided with a period of weakening system resilience with the water utility being asked “to do more with less.”

In 2011, they changed design day standards with redundancy from average day demand to typical day demand, which was eight per cent lower. That aligned with the cost containment goals of the day, the report read.

This was changed in 2021 and resulted in plans for higher capital spending on projects that are in development today.

Between 2020 and 2024, Calgary’s population grew by 15 per cent, and with little water efficiency improvement, it drove up water demand. It put pressure on aging infrastructure that had suffered deferred maintenance, according to the report.  

“This historical overview demonstrates how the resilience of Calgary’s Water Utility has steadily eroded, as successive cycles of shifting priorities, fiscal constraint, deferred investment, and fragmented planning left critical assets operating with reduced redundancy and limited margin for error,” the report read.

“Only twice over this twenty-year period did the Water Utility spend its budgeted capital, chronically underinvesting and deferring important projects that could have increased the resilience of the system to outages.”

When asked by Ward 4 Coun. DJ Kelly about the culture of deferral of maintenance, panel chair Kiefer said that municipalities in Canada struggle with this.

“I think there is a propensity in councils to think about their term and their mandate,” he said.

“I don’t think too many voters vote on the fact that you’re going to look after stuff that’s in the ground, not visible and just expect it to work flawlessly. That’s not a very appealing set of facts to run on, but it is essential.”