Friday, January 29, 2021 - 9:15 AM

Fast Facts on Galway Streetlights

In 2016, Dewcor approached the City with a proposal that they purchase and install decorative lights at their cost and the City would take ownership of the lights including the cost of operation, maintenance, and replacement in addition to the normal cost of electricity.
 
Typically, streetlights in new developments in our City and other municipalities in this province are owned and operated by the provincially regulated utility company, Newfoundland Power. The City pays a monthly rate to Newfoundland Power which includes electricity and the cost to operate, maintain and replace the lights forever. The City generally does not own, operate or maintain streetlights.
 
Rather than using standard streetlights throughout Galway, Dewcor wished to install decorative LED streetlights to enhance the aesthetics and distinctiveness in certain areas of the development. Newfoundland Power indicated that they were not interested in owning or maintaining these streetlights, so the developer approached the City with its proposal.  
 
The City agreed to allow the installation for two reasons; firstly, to support the developer’s vision, and secondly to potentially achieve cost savings into the future. 
 
Using a preliminary cost analysis with assumptions on the anticipated life expectancy of the infrastructure, the costs of maintenance and anticipated savings in electricity, the City believed it may save money over the life expectancy of these fixtures. At no point was it considered that the City would be passing potential or real savings to the developer. While cost savings may be achieved over time, savings are not guaranteed.  Maintenance costs increase with the age of any infrastructure, particularly in our climate.
 
In 2017, after the lights were installed, Dewcor requested that any savings the City may realize into the future be paid to Dewcor. At that time City staff advised Dewcor that it did not support the request as it was contrary to the conditions in Council’s approval of the lights. However, Dewcor wanted the matter brought to Council for a decision, based on its new position that “the City must remain revenue/cost neutral with city taxpayers paying no more and no less.” The amount Dewcor was seeking at that time overstated the potential savings so City staff worked with Dewcor to determine a more accurate accounting of potential savings prior to the issue being brought to Council.
 
At the Committee of the Whole on Wednesday, January 27, Council reviewed the request from the developer and recommendations from staff and rejected the request.
 
Understanding Council’s Decision
  • All developers are required to install public infrastructure to support their development such as water, sewer, roads, etc. When a development phase is completed, inspected and accepted, the City assumes ownership of that infrastructure. This is a process that ensures that long after the development is complete and developers have moved on to other projects, property owners are protected. This also avoids taxpayers from having to bear the cost of expansion of public infrastructure to the benefit of a single developer.
  • In 2016, Council agreed to the installation of these non-standard streetlights for this development. Council would assume the liability and costs for electricity and maintenance as construction was completed by the developer and approved by the City. 
  • Dewcor asked the City to pay them the potential savings. This is contrary to the conditions considered when the approval for these non-standard lights was given.
  • We disagree with the developer’s opinion that the City is obligated to remain cost neutral when it comes to saving taxpayers money. In this case, Council carefully considered the installation of these non-standard lights in 2016 and the associated risks and benefits. It decided to support the developer with the condition that any savings would ultimately be for the benefit of all taxpayers of the City.
  • Most importantly, there is no certainty that owning the Galway decorative lights will save the City money at the end of the day. We cannot agree to take money from the current budget on a potential savings that may or may not be achieved over the lifetime of these lights.
  • The basis for the City agreeing to be responsible for non-standard lighting into the future was that the potential risk and liability associated with the lights would be offset by potential savings.
  • It is important to note that this was not a City driven initiative or even a mutually driven initiative. The developer wished to install non-standard lights to achieve a marketable distinction from other developments. This was a business decision by the developer who is now asking the taxpayers of the City to bear the risk of this non-standard infrastructure.

It is important that municipalities own municipal infrastructure so that it can be protected for residents. If the City permitted private developers to own municipal infrastructure there is no guarantee that the developer would will be willing or able to maintain or replace the infrastructure into the future. Newfoundland Power is a regulated utility that provides a service in perpetuity.  Dewcor is not a regulated utility, it is a private corporation. A private corporation will provide the service until it is no longer in its best interest to do so. In 15, 20 or 30 years, it is entirely possible that Dewcor will not even exist. It is for these reasons that long term ownership of street lights should rest with the municipality or Newfoundland Power.