A gravel extraction agreement between the municipality and Cantex-Okanagan Construction Ltd. is expected to bring in roughly $90,000 a year to the municipality.
The 20-year lease agreement is for a property adjacent to 16700 Prairie Valley Road and the Summerland Landfill.
The lease payments are $50,000 a year, plus property taxes.
In addition, a royalty of $1.25 per tonne will be charged.
For 30,000 tonnes a year, the royalty fee will be $37,500.
The terms of the lease will be reviewed every five years.
The money from the agreement will go to infrastructure improvements.
Mayor Janice Perrino said last year’s infrastructure maintenance costs came to $2.6 million.
Coun. Bruce Hallquist said the revenues from this agreement will help to offset the costs of replacing or upgrading Summerland’s aging infrastructure.
“I’m very supportive of these kinds of initiatives,” he said.
“I’m excited about the alternative revenue source,” said Coun. Martin Van Alphen.
Coun. Peter Waterman said the anticipated $90,000 a year is roughly the same as a 1.33 per cent tax increase.
While the agreement will bring in money for the municipality, Perrino said it will not result in a tax reduction for Summerlanders.
“This is a supplement to taxes,” she said. “It does not reduce taxes. It’s just a help.”
Summerland’s 2014 municipal budget was close to $11 million.
After the gravel has been extracted, the land will be rehabilitated for a secondary use.
The municipality will then have the option to lease or sell the land.