Saltair Water System Treatment Upgrade Project

Overview
The Saltair Water System draws its supply from Stocking Lake, a source jointly managed by the Cowichan Valley Regional District (CVRD) and the Town of Ladysmith (ToL). Although the potable water is of good quality, the system does not comply with the provincial Surface Water Treatment Objectives (SWTO) and has been operating under a longstanding Contravention Order issued by Island Health. Additional treatment, specifically filtration, is required to meet regulatory requirements.

In 2015, the operating permit for the Saltair Water System was amended by Island Health Authority to require compliance with SWTO. The original compliance deadline of January 31, 2018 was not met and in 2020 Island Health Authority issued a Contravention Order under the Drinking Water Protection Act for failing to meet the terms and conditions set out in the Saltair Water System operating permit.

The CVRD is committed to achieving compliance with the SWTO; however, due to the significant costs associated with meeting these requirements, a comprehensive evaluation of options has been undertaken. The project timeline summary shown below outlines key events completed between 2015 and 2025:

• 2015 – Operating permit amended to require filtration treatment.
• 2016 - Grant funding application submitted for Saltair Water System Upgrade Project (grant application was unsuccessful.
• 2017 – Potential compliance approaches identified.
• 2018 – Original compliance deadline.
• 2018 - Grant funding application submitted for Saltair Water Treatment Expansion Project (grant application was unsuccessful).
• 2017 - 2020 – Feasibility studies, pilot testing, community engagement.
• 2020 – Contravention Order issued by Island Health Athority.
• 2020- 2021 – Alternate Approval Process (AAP) completed; borrowing authority approved for up to $3.7 million for treatment upgrades.
• 2020 - 2021 - Grant funding application submitted for the Saltair Water Treatment Expansion Project through the Investing in Canada Infrastructure Program (ICIP) grant funding for standalone filtration facility. Grant application was successful.
• 2022 – Standalone filtration facility advanced to detailed design. Cost increased from 2020 estimate and a required hydro upgrade was identified.
• 2022 – Technical feasibility issues were discovered with the proposed treatment technology, and the proposed capital and annual operational cost increases.
• 2023 - Standalone treatment approach reassessed following detailed design and cost escalation.
• 2023–2025 – Updated technical and financial review and analysis of potential solutions.
• 2022-2025 - Well development and construction

Options to achieve compliance with the SWTO included pursuing groundwater sources, constructing a standalone filtration system, and securing a bulk water supply from the Town of Ladysmith. After conducting feasibility studies, pilot testing, and community engagement, a standalone filtration facility was initially identified as the most beneficial long‑term solution for the Saltair community.

In 2021, the CVRD obtained grant funding through the Investing in Canada Infrastructure Program (ICIP) to begin developing a standalone filtration plant. Engineering work commenced; however, escalating costs, increased technical complexity, and concerns about long‑term operations made the project increasingly challenging and ultimately unsustainable. In 2023, the CVRD paused the standalone plant project to reassess the best long-term compliance approach and revisited other previously studied alternatives, including a potential treatment partnership with the Town of Ladysmith. Updated capital cost projections for constructing and operating a standalone filtration facility are now expected to be in the range of $11–$17 million.

Hybrid option - Treated Groundwater Supplemented with Bulk Water Supply from the Town of Ladysmith's Water System

The groundwater exploration program successfully identified a source capable of producing a substantial volume of groundwater. The CVRD has advanced development and construction of two groundwater wells. These wells are expected to be connected to the water system in Spring 2026. While groundwater is anticipated to make up the majority of the supply needed for existing demand, supplemental supply will still be required during higher use periods. These wells are expected to supply up to 30% of peak demand (summer) and up to 70% of annual demand, enhancing both system's flexibility and overall resilience.

To meet remaining demand during peak usage, a bulk water supply connection to the Town of Ladysmith’s system has been identified as a viable approach to reliably meet system demand. Portions of the two distribution systems are located adjacent to one another, making an interconnection both practical and cost‑effective. This partnership builds on the existing collaborative relationship between the CVRD and the Town of Ladysmith; for example, the jointly owned Stocking Lake dam. This approach would eliminate the need to construct a new standalone treatment plant within 10 km of Ladysmith’s existing facility. Further, this approach would eliminate the replacement cost of replacing the aging 3.5 km high-pressure supply main from Stocking Lake, which has an estimated replacement cost of an additional $5 - 8 million representing an additional future capital replacement obligation. The Saltair Water System will continue to be independently owned and operated by the CVRD.

This integrated approach would:

• Use proven infrastructure already in place
• Maintain Saltair Water System ownership and operations under CVRD (wells, storage and distribution system)
• Provide redundancy by providing two separate sources
• Utilize the two groundwater wells for base supply and a bulk treated water supply agreement with Town of Ladysmith to be utilized during higher demand periods
• Comply with Island Health Authority regulations efficiently and cost-effectively

This plan will achieve SWTO compliance and will result in reduced capital cost and lower projected lifecycle costs compared to constructing a new standalone facility, with shared infrastructure responsibilities across a broader customer base.

Cost estimates for the hybrid approach are $4–$5.5 million in capital cost, with projected annual operating impacts of approximately $1,100–$1,300 per parcel per year. These preliminary estimates include groundwater infrastructure work, connection works, and allowance for capacity-related contributions or upgrades within Ladysmith’s system where required for long-term supply. Final costs will depend on detailed design, procurement, and development of a mutually beneficial water supply agreement, subject to formal approvals.

High-level Cost Comparison of Standalone Filtration System and Hybrid Groundwater and Town of Ladysmith Option

The following tables provides an overview of the cost and risk summary of a stand-alone treatment facility for Saltair and the Hybrid Saltair/Ladysmith approach:

Why is the Town of Ladysmith Option Being Reconsidered

• In 2017 a similar approach was considered but with a slightly different scope of work; however due to higher projected costs, this option was discontinued.
• The Town of Ladysmith's treatment plant has since been constructed and operating efficiently servicing the Town of Ladysmith, Diamond Improvement District and Stz'uminus Nation.
• A re-assessment of the option was completed and determined to be less expensive to build and operate than a standalone plant.
• This option eliminates the need to replace Saltair’s aging 3.5 km high-pressure supply line from Stocking Lake to the Saltair water treatment facility (estimated at $5 - 8 million).
• Reduces CVRD operator committments and energy usage, shares long-term costs and risks with more users and better aligns with CVRD's strategic direction for system integration and financial sustainability.

Grant and Public Approval Funding Considerations

In 2021, public approval to borrow funds of up to $3.7 million for the treatment upgrades was obtained through an Alternate Approval Process. Further in 2021, the CVRD was awarded Investing in Canada Infrastructure Program (ICIP) grant funding based on an earlier estimate for the standalone filtration project. The grant funds cover up to 73% of eligible costs based on the estimated total project cost of $5.3 million prepared prior to detailed design and prior to the significant construction market escalation experienced between 2020 and 2023.

The CVRD will continue to engage with the funding program regarding the implications of an updated and modified project scope. This ensures funding continues to directly benefit Saltair’s water system.

Next Steps

The CVRD is continuing technical and financial work to refine the hybrid approach, including working with the Town of Ladysmith. Subject to formal approvals, the next phase would involve finalizing a bulk water supply agreement framework and confirming an implementation timeline.

The CVRD will continue to engage with the funding program regarding the implications of an updated and modified project scope.