Ownership Types for Small Water Systems

Introduction

You have a choice of several ownership structures for your small water system in British Columbia. It is an important choice to make early in your planning, because the business structure of your system will dictate what laws and rules must be followed, how decisions will be made for future upgrades and how funds can be collected. The ownership type will also determine the governance structure.

Glossary of Terms
potable water

Water that does not contain objectionable pollution, contamination, minerals, or infective agents and is considered satisfactory for drinking.

surface water

All water naturally open to the atmosphere (rivers, lakes, reservoirs, streams, impoundments, seas, estuaries, etc.); also refers to springs, wells, or other collectors that are directly influenced by surface water.

The right ownership type will help you strengthen the sustainability of your water system and increase your management of risk to ensure good water quality, as it should help make business planning and change easier.

Keep in mind that the ownership type may define other regulatory obligations beyond those outlined under the Drinking Water Protection Act and the Water Sustainability Act. The Drinking Water Protection Act defines the "owner" as the person or persons (if the system is owned, or parts of the system are owned, by different peoples) "(i) responsible for the ongoing operation of the water supply system, or (ii) in charge of managing that operation".

Also keep in mind that according to the BC Ministry of Health's Small Water System Guidebook, water systems with less than 50 connections are at higher financial and operational risk over time. Conscientious oversight is as important in small systems as in large.

The information on water system ownership type found below is of the most common ownership types; others may be more applicable to your situation. Good information can be found on the various Province of BC websites listed in the Resources section at the bottom of this page. More details on business structures can be found in the Small Water System Guidebook in Section 8.

Good Neighbour Water Systems and Informal Water Service Agreements

Good Neighbour Water Systems and Informal Water Service Agreements often represent very small water systems where one neighbour shares water with another. In most cases, one property owner owns a well or has a surface water license, and water is shared from one property to another.

If you have a good neighbour system and own the water source, you might be considered to be a water purveyor (provider) and specific responsibilities under the Drinking Water Protection Act may apply to you. Meeting those requirements could be expensive. Over and above the requirements of the Act, a water system can be expensive to maintain, or as time goes on, neighbour relations can break down.

Recommendations:

  • Consider formalizing your agreement with your neighbour by creating a written agreement that outlines utility costs, water allotment (how much water your neighbour can use or expect), contingency funding and dispute resolution. Any agreement should be reviewed by your lawyer.
  • You may also consider a joint works agreement. If you have questions about Joint Works Agreements read the information below or talk to Front Counter BC.
Water Users’ Communities

A water users’ community is a group of water users that has been incorporated under Section 51 of the Water Users’ Communities Act. Typically, water users' communities are formed for the purpose of delivering water from a water source, using a single distribution system.

There are advantages to becoming a water users’ community, in that they can acquire water licenses, water storage and water distribution systems.

As with any water ownership type, there are economies of scale that apply: As the number of members in the water users’ community increases, operation costs are shared across a greater number of members. In theory, you should see a decrease in overall cost for daily operation.

But as water users’ communities become bigger, they can become harder to administer and operate. Water users’ communities that are struggling to operate or are looking at significant costs for upgrades should speak to their local government or regional government about being acquired (i.e., transfer ownership to the local or regional government).

The BC government’s Water Users’ Communities webpage provides links to many useful documents and tools.

Stratas, Cooperatives and Societies

In a similar fashion to water users’ communities, working under an incorporated structure, such as a strata corporation, co-op association or water society, has some advantages over non-incorporated water system.

By incorporating, specific regulations apply that provide rules and processes for the operation and administration of the water system. These rules help to guide finance, membership and administration.

As with other water system business types, economies of scale determine the affordability of water system maintenance and the overall sustainability of the water system.

If you are thinking about forming a strata corporation, co-op association or society, it is recommended you seek legal advice as to which would be your best option in your situation.

For more information on societies, cooperatives and incorporated companies, visit the BC Government’s BC Registries and Online Services webpage.

Private Water Utilities

As a private water utility, you are responsible for the delivery of water services to 5 or more people and can own or operate infrastructure and bill for that service. In addition to the regulations related to your permit to operate and your water license, utilities are also regulated under the Utilities Commission Act. This Act ensures that water systems are designed and operated in a safe and sustainable manner.

Visit the BC Government’s Private Water Utilities webpage for more information on utilities.

Irrigation Districts and Improvement Districts

Irrigation Districts are public utilities with elected boards. They are considered as a public utility and fall under the governance rules administered by the Ministry of Municipal Affairs and Housing. While some of the many irrigation districts that exist in BC. have permits to act as large water suppliers (> 500 people per day), there are a number of these public utilities that hold small water system permits. 

Improvement Districts are autonomous local government bodies, usually in rural areas, responsible for providing one or more local services for the benefit of the residents in a community, where a regional district is unable or unwilling to establish a service area. They are similar in structure to a municipality but are more informal and only provide direct services such as waterworks, fire protection or street lighting.

  • The Improvement District Manual was prepared by the province as a guide for improvement district trustees and staff on matters of policy, governance, finance,planning and engineering, but has information of interest to anyone within such a district.

Visit the BC Government's Improvement Districts page for more information.

Acquisition Planning

Many local governments have policies and bylaws that speak to how a water systems may be considered for acquisition. From our experience, the first place to start is to discuss acquisition with your area director or as a petition to the local municipality. In some cases, you will need the agreement from the water users to proceed with the acquisition. Check ahead with your regional district to see what rules apply.

Acquisition can take time, sometimes many years. But there are advantages to acquisition: Local governments can apply for senior government funding for water infrastructure improvements, have or can hire professional staff, and are more financially stable.

Resources