KITCHENER - It was a bit of a bombshell at Kitchener's budget meeting earlier this month.

Hans Gross, the city's director of engineering services, was talking about city plans to replace aging infrastructure. Then he mentioned the need to keep raising rates for water, sewer and storm water services, every year, until 2032.

Council was clearly unhappy with the news. Taxpayers already face soaring electricity costs, and a 10-per-cent increase in natural gas bills this year.

"I think we need to look at some different projections," said Coun. John Gazzola. "Maybe we need to say, 'Maybe we fix the furnace this year but we can't put the money into the RRSPs'."

"We can't go on like this. People are having trouble putting food on the table."

How did Kitchener get to this point?

Back in 2002, council approved an "accelerated infrastructure replacement program," aimed at beefing up spending to replace aging sewer and water pipes.

The idea was that the city would replace 260 kilometres of roads (and all the services under those roads) over the 30 years. At the end of that time, the city would have replaced all the infrastructure older than 80 years old, its expected lifespan. Once caught up, the city would simply spend what was needed each year to replace the infrastructure that had reached the end of its life that year.

"The plan was always to continue accelerated infrastructure replacement to 2032," said Ryan Hagey, Kitchener's director of financial planning.

But the costs of doing the work have skyrocketed since that plan, Gross said. In 2002, the cost of rebuilding a road and replacing all subsurface services was $1,800 a metre, Gross said. By 2015, that had jumped to $5,000 a metre.

The extra cost meant the city wasn't able to do as much work as planned. As a result, 14 years in, the city has only replaced about 50 kilometres of the 260 planned.

"If we want to finish up the program by 2032, we've got about 210 kilometres of road to go through," with a total price tag of about $1 billion, Gross said.

That led city staff to sound the alarm in 2015, when they convinced council that utility rates needed to jump drastically. They called for a combined increase of 9.3 per cent for storm water, water and sanitary sewers every year for the next decade.

Those increases, compounded over the 10 years, mean that utility rates in Kitchener will have jumped from $746 in 2014 to $1,838 in 2025.

Much of the discussion around the council chambers has centred on those steep increases to 2025. Gross reminded them at the budget meeting that increases beyond inflation were always planned to run until 2032.

"It's likely there will be above inflationary increases in water, sewer and storm water for the long term, but they will not be as high as 9.3 per cent," Hagey said.

Whether those kinds of increases will be politically palatable remains to be seen.

Mayor Berry Vrbanovic was among those expressing alarm at plans for hefty utility rate increases, year after year, for the next 16 years.

"These types of increase for the next number of years just aren't sustainable," Vrbanovic said. "While I am extremely committed to infrastructure replacement, in the long term we need to find something that's more sustainable."

While Kitchener ratepayers may be facing 16 years of rate hikes, those increases may not be as high as originally planned, city staff say.

"The rate increase of 9.3 per cent is required for 2017," Hagey said. "Beyond that, staff believe there are reasonable options to reduce that."

Hagey said it's possible the city won't need to raise rates by the projected 9.3 per cent for the whole decade - that could drop to around 7.3 per cent within three years, as the city gets ahead of its maintenance backlog.

As well, "we are very hopeful for some significant federal funding," Hagey said, noting that Kitchener was able to tap into $3.6 million for the first phase of a new federal-provincial infrastructure program that's supposed to run for a decade.

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City council has to find ways to reduce the hit on taxpayers, such as possibly introducing "some kind of program for seniors on limited incomes," Vrbanovic said.

Technology may help cut costs too. New materials for water mains seem to be lasting longer than 80 years, which could lower costs over the long term, Gross said. As well, trenchless technology is improving, so that it's often possible to replace some pipes much more cheaply, without having to dig up the whole street.

It all goes back to the fact that municipalities own about 60 per cent of the country's infrastructure, but collect just eight per cent of the taxes, Vrbanovic said. "That's not a sustainable model to fund on the backs of property taxpayers," he said.