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Additions to Council Oct 29, 2007ADDITIONS TO COUNCIL, MONDAY, OCTOBER 29, 2007 Corporate Services 1. Revised Corporate Services Agenda #2 Deputations 2. Information provided by Ed Bielawski for CPS-2007-03 Council 1. Communication -Request to Proclaim the month of November as Diabetes Awareness Month. 2. Business Development Matters -revised report BDD-2007-05 REVISED CORPORATE SERVICES COMMITTEE AGENDA TWELFTH MEETING Monday, October 29, 2007 COMMITTEE ROOM #2 - 4:30 PM 1. REPORTS: STAFF CONTACT a) F-2007-35 Todd Harrison 2006 Financial Statements Presentation by Mark Pa/umbi, Crawford, Smith and Swa//ow b) CPS-2007-03 Water and Sewer Rates Review Deputation from Mr, Ed Bie/awski COUNCIL CHAMBERS - 6:00 PM 2. 2008 FUNDING REQUESTS Deputations Niagara Falls Public Library GNGH Foundation Niagara Falls Board of Museums Winter Festival of Lights Niagara Falls Tourism Women's Place of South Niagara Inc. Additions/Attachments forlnformation Purposes; Niagara Chair-A-Van Project S.H.A.RE. YWCA Niagara Region United Way of Niagara Falls Niagara District Airport Commission Ken Burden Niagara Falls Big Brothers Big Sisters Association Mr. Victor Pietrangelo, Chair and Member of the Corporate Service Committee City of Niagara Falls Members: re: I submit for your review my response to Staff's report to members dated September 24, 2007. I have attempted to keep the verbage to a minimum and let the data speak for itself. I respectfully await your critique and solicit your comments and am prepared to answer any and all questions my response may generate. ielawski, P Eng SUMMARY On December 11,2000 Council approved the new water rate structure which they were lead to believe was "user-pay" and designed for water conservation. The rate structure was not "user pay" and not designed to promote water conservation. Exhibit 2, attached to the report, is purported to show that the rates equitably share the cost of the Water/Sewer Utility among the customers that are served by the City. However the data when restructured in Exhibit A shows exactly the opposite. The Consultants in their November 2000 report recommended a "user pay" rate structure that was simple, fair, equitable and designed to promote water conservation. The recommendation was never implemented and as a result the residential homeowners were overcharged millions of dollars each year since the present rate structure was approved. I met with Mr. Dujlovic, Director of Municipal Works, in early July 2006 to discuss the data which showed the purported "user pay" rate structure was not fair and not equitable as stated in the report to Council. He had no interest in reviewing the data and stated "somebody has to pay". Fifteen months after my first meeting with Mr. Dujlovic, the Committee received a response to some of the conclusions I presented to the Corporate Services Committee meeting held on July 23, 2007. Note: The largest customer whose water usage in 2006 was 656,270 cu. metres (11 months) paid a service charge of $15,420.24. 1 The data presented to Members of the Corporate Services Committee on July 23, 2007 was only a small part of the data submitted to Staff for their critical review and subsequent response. To date I have not received a response. The following information is provided in response to Staff's report CPS-2007-3. In report MW-95-98 WaterM/astewater Utility, it is stated: "The second part of the Public Awareness Program will be undertaken after the Implementation Strategy is authorized. It is particularly important in the now flat rate sector where the greatest impact and reductions are anticipated." In the consultant's first report the water conservation is eliminated. The consultant states that: "Rate structures that are designed to promote water conservation were ruled out since the City has no specific plan or target for water conservation." Staff states that "On December 11,2000 Council approved the following recommendations from the Corporate Services Committee which were based on the Loudon and Fortin November 2000 report". Staff states that "the basic recommendation from the consultant's report provides for atwo- part rate structure. The first part is a service charge distributed on the basis of the number of meters (constant rate regardless of meter size) o the number and size of meters (varies with meter size). The consultant's recommendation is shown on page 9 of their report and reads as follows: That water and sewer tariffs be billed as one combined rate. This is done in several municipalities in Ontario, the largest being the City of Toronto. This was also the practice followed in many of the six local municipalities in Metropolitan Toronto previously. The Town of Markham has also followed this practice for many years. The Town of Markham is provider of water and sewer services inside the Region of York which bills for both wholesale services based on volume (both water and sewer are billed based on water volumes at the wholesale level, however). The use of a combined charge provides much greater flexibility fluctuations." The consultant's recommendation is a "user pay" water/sewer rate structure, whereas the present rate structure is not "user pay". Staff in their report state that the data in Exhibit 2 shows "the rates as proposed equitably share the cost of the Water/Sewer Utility among the consumers that are serviced by the City. Table 1 shows the cost data in Exhibit 2 is meaningless since for a constant usage the consumption cost will be the same regardless of meter size Table 1 Usaae(cu m/mo). 150 300 900 1,300 2,200 3,100 4,000 5, 000 6, 000 8,000 10, 000 15, 000 20, 000 25, 000 Service Charge Monthly Consumption cost for 2000 Metered Rates Meter size 15mm 18mm 25mm 37mm 50mm 75mm 100mm 150mm $168.45 $168.45 $336.90 $336.90 $1,010.70 $20.01 $20.01 $168.45 $168.45 $168.45 $168.45 $168.45 $168.45 $336.90 $336.90 $336.90 $336.90 $336.90 $336.90 $1,010.70 $1,010.70 $1,010.70 $1,010.70 $1,010.70 $1,010.70 $1,459.90 $1,459.90 $1,459.90 $1,459.90 $1,459.90 $1,459.90 $2,470.60 $2,470.60 $2,470.60 $2,470.60 $2,470.60 $3,481.30 $3,481.30 $3,481.30 $3,481.30 $4,492.00 $4,492.00 $4,492.00 $4,492.00 $5,615.00 $5,615.00 $5,615.00 $5,615.00 $6,738.00 $6,738.00 $8,984.00 $8,984.00 $11,230.00 $11,230.00 $16, 845.00 $22,460.00 $28,075.00 $20.01 $60.03 $120.06 $240.12 $400.22 $840.43 Table 2 shows that the water/sewer expenditures are not equitably distributed among ratepayers and does not provide ause-based system that fairly charges the small consumption ratepayer. The residential customer pays a service charge of $240.12 for a water usage of 60 cubic metres. The non-residential user pays $240.12 for a water usage of 15,800 cubic metres. The large user pays $19,085.16 for a water usage of 37,200 cubic metres and the largest user pays the same service charge for 300,000 cubic metres. Note: In 2006 anon-residential customer had a water usage of 656,270 cubic metres (11 months) and paid $15,420.24. Table 2 Annual Service Charge versus Usage Monthly Annual Service U- sage Usage Charge Residential 5 60 $240.12 Non-Residential 900 10,800 $240.12 Non-Residential 1,300 15,800 $240.12 Large User(100mm) 3,100 37,200 $4,802.64 Large User 5,000 60,000 $4,802.64 Large User 10,000 120,000 $4,802.64 Large User(150mm) 3,100 37,200 $10,085.16 Large User 5, 000 60, 000 $10, 085.16 Large User 25,000 300,000 $10,085.16 In the Consultant's first report page 26, the consultant states: "Under existing rates, residential customers contribute 59% of rate revenues and non-residential customers contribute 41 %. This cost share is unjustly skewed in favour of the non-residential customer since water usage is fairly evenly split between the two classes. The single block rate structure shifts the residential/non-residential cost share to a 55%/45% split which is more in keeping with water usage. The new rate structure is therefore more equitable." Table 3 shows that using the 2000 rate structure residential customers pay 75% of the service charge. The same relationship holds for 2006. As a result, since the new rate structure was implemented residential customers have been overcharged by millions of dollars. The most seriously impacted are the homeowners with the lowest usage. TABLE 3 Service charges By-law 2000-268 Meter Size~mm~ # of Meters Commercial 15 18 25 37 50 75 100 150 200 1, 746 387 343 221 291 52 42 18 3 Total Residential 15mm Meter 22,500 Residential Service Charge Commercial Service Charge Annual Cost $419, 279.52 92, 926.44 82, 361.16 159,199.56 419,249.52 149, 834.88 221,870.88 172,892.88 54,027.36 $1,771,642.20 $5,402,700.00 $5,402,700.00 75.3% $1,771,642.20 24.7% The city has Directors of Planning & Development, Building Services, Transportation Services, Infrastructure Services, Parks, Recreation and Culture Services, Financial Services, Human Resources Services, Information Services, Legal Services and City Solicitor, Council Services and City Clerk. However, no Director of Water/ Sewer utility and no single person has the authority and responsibility for the utility. For the Water/Sewer Utility Staff advises: - City Council is the management authority and is responsible for the water and sewer systems - the operations part is administered by the Municipal Works division - the billing/collection part is administered by the Finance division That type of organization structure can only be described as fra mented. In the most recent information package titled "City of Niagara Falls Water & Sewer Utility" the conclusions listed on the last page are - $854 million in water and sewer assets - $84 million in works identified - $8.5 million capital funding Recognizing the above conclusions, who can be held responsible and accountable for management of the Water/Sewer Utility? The fragmented management of the Utility has resulted in a water and sewer rate structure that is: - Not "user pay" - Not Fair - Not Equitable - Not Designed for Water Conservation 2 2. In report MW95-58 one of the objectives was for the water/sewer utility to "Establish a fair and equitable pricing system based on the cost of providing water and sewer service". In 1997 R.M. Loudon Ltd were retained to provide a "STUDY OF METERING AND WATER AND SEWER RATES". One of the study's objectives, Exhibit 1, was to develop a water and sewer rate structure that is reflective of the "user pay" principle. As stated previously, the consultants provide a "user-pay" structure in their November 2000 report recommendation: "That the water and sewer tariffs be billed as one combined cost. This is done in several Municipalities in Ontario ..." The present rate structure is not "user pay". The consumption component of the billing is "user pay". The service charge component is structured so that the more you use the less you pay. In 2007 a residential homeowner using 60 cubic metres per year pays a service charge of $463.80. A non- residential customer using 15,600 cubic metres pays the same service charge $463.80. EXHIBIT 1 -1- 1.0 [NTRODUCTION In response to increasing concerns from the public regarding the cost for water and sewer services, the City of Niagara Falls' Council has directed City Staff to proceed with the review of the existing water and se~~ ~r rate structure and the implementation of a water metering program for the flat rate: custorers. Z.O. BACKGROUND The City of Niagat•a Falls has approximately 22,000 water accounts servicing approximately 70,000 people. Of the 22,000 accounts, 20,000 are charged a flat rate and 2,000 are metered. The flat rate customers are comprised of single family residential homes with industrial, commercial, institutional and large multi-residential (triplex and above) units being metered. In the early 1990's, Council approved in principle, the concept of a user pay system for water and sewer services. At the time that Council approved this new direction, the water budget derived all its revenue from the water bills. The majority of the sewer system funding was derived from the property tax bill with a small portion of funding from the 35% sewer surcharge levied upon the water bill. With Council's direction to proceed towards the user pay system, the sewer surcharge has been increased with the result being that for 1997, the sewer surcharge stands at 140%. However, even with this increase, approximately 1/3 of the sewer budget is still funded by property taxes. In conjunction with increases to the sewer surcharge and increases. in the water and sewer charges to the Municipality by the Region that were passed on to the consumer, the City has received an increasing number of complaints regarding the water and sewer bill. The most vocal group has been the flat rate customers, in particular, those where there are only one or two people in the household. The small households have raised the point that they are paying the same amount as is a large family yet they use. considerably less water. Accordingly, Council has directed Staff to cnnduct this study. 3.0 STUDY OBJECTIVES The objectives of the study are summarized as follows: .:-~--~' 1. To develop a water and sewer rate structure that is reflective of the "user pay principle" 2. Implementation of a t.uiiversal water metering program. The development of a public education program with respect to water efficiency, 3 3. "Staff Advises that the AWMA standard is recognized and approved in Municipalities throughout Ontario, Canada and the United States" Table 1, clearly demonstrates that the standard must be subject to interpretations since the service charges for the different municipalities appear to have used a different standard for the same meter size. Staff further advises "both the water and sanitary sewer systems are engineered to accommodate the variant sizes of both water flows and sewer usage. Table 2 shows the monthly water demand for the 4 inch meter customer. The demand ranges from 120 to 18,700 cubic metres. To suggest that meter sizes are engineered to demand is ludicrous. Note: The Holiday Inn has 122 rooms and a 4 inch water meter. The Embassy Suites Hotel has 512 Suites and also has a 4 inch meter. Are the meter sizes engineered using the same standard? TABLE 1 Comparison of Service Chases Mleter Size. A Ni~c~~ra Falls B 5/8 8.36 33, 85 7.89 3I4 8.36 33.85 11.88 1 8.36 33,85 19.82 1.5 9.41 100.13 39.67 2 17.13 20,26 63,47 3 28.21 400.53 119.03 4 47.00 734.50 198.43 ~ 159.86 1,401.84 396.89 8 1.97.15 2,503,20 635.05 10 226.21 3,054.60 912.92 TABLE 2 METERSIZE DATERUN DATEBILL DATE FROM- DATE_TO # DAYS MULTIPLIER CONSUMP 4 8/18/06 8/1/06 7/1/06 8/1'/06 31 1.00 120.00 4 8/18/06 8/1/06 7/1/06 $/?106 31 1.00 127.00 4 8J18/06 8/1/06 7/1106 8/1/06 31 1.00 200.0.0 4 8/18!06 811/06 7/1/06 8!1/06 31 1.00 213`:00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 219.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 251.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 672.00 4 8/18106 8/1/06 7/1/06 .8/1!06 31 1.00 684.00 4 8/18106 8/1/06 7/1/06 8/1/06 31 1.00 728.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 822.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 939.00 4 8/18/06 8/1/06 7/1/06 8!1/06 31 1.00 1014.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1..00 1040.00 4 8/18/06. 8/1/06 7/1/06 8/1/06 31 1.00 1186.00 4 8/18/06 8/1 /06 7/1 /06 8/1 /06 31 1.00 1193.00 4 8/18/06 8/1!06 7/1/06 8/1/06 31 1.00 1249.00 4 8!18/06 811/06 7/1/06 8/1/06 31 1.00 1295.00 4 8/18/06 8/1/06. 711/06- 8/1/06 31 1.00 1397.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 1560.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 1605.00 4 8/18106 8/1/06 7/1/06 8/1/06 31 1.00 1660,00 4 8!18/06 8!1/06 7/1./06 8/1/06 31 1.00 2047.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 2146.00 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 2385.00 4 8/18/06. 8/1/06 7/1/06 8/1/06 31 1.00 2499.0.0 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 2561.00 4 8/18/06 .8/1/06. 711/06 8/1/06 31 1.00 2610.00 4 8/18/06 8/1.106 7/1/06 8/1/06 31 1.00 2646.00 4 $/18/06 8/1/06 7/1106 8/1/06 31 1.00 2755.00. 4 8/18106 8/1/06 7/1106 811/06 31 1.00 4132.00 4 8118/06. 811/06 7/1/06 811/06 31 1.00 5"180.00. 4 8/18/06 8/1/06 7/1/06 8/1/06 31 1.00 6204.00 4 8/1$/06 8/1/06 7/1/06 8/1/06 31 1.00 7303.OQ 4 8118/06 8/1/06 7/1/06- 811/06 31 1.00 8571..00 ~ 8118/06 811/06 7/1106 8/1/06 31 1.00 11443.00 4 8/18/06 811/06 7/1106 871./06 31 1.00 ? 3070.00 4 8!18106 8/1/06 7/1/06- 811/06 31 1.00 1334$.00 4 8118/06 811:106 7/1/06. 811/06 31 1.00 18700.0Q 4 4. Staff advises that acost/unit analysis may be interpreted as a Poll tax. The emphasis of the analysis is focused on the number of customers served, even though some of the customers are not separately served by water and sewer systems. The analysis could be expanded to any water meter that serves more than one identifiable customer, eg. hotel rooms, retail mall tenants, business mall tenants, apartment building units. Staff advises that this same concern is evident in other municipalities where water services to condominium units are charged differently. Exhibit 1 shows how one Ontario Municipality addressed the same problem. Exhibit 2 shows an example of a "user pay" rate structure. Did this municipality use the AMWA Standard? As stated previously the consultant's report recommended: "that water and sewer tariffs be billed as a combined rate ..." The recommended rate structure was: FAIR EQUITABLE SIMPLE DESIGNED FOR WATER CONSERVATION Exhibit 1 Schedule A to By-law 4129-07 b) WATER RATES (MULTIPLE OCCUPANCY CUSTOMERS) Where more than one self contained dwelling unit or commercial or industrial unit are supplied through a common water meter, the monthly billing amount shall be the combination of the Fixed Charge multiplied by the number of units plus the Uniform Rate multiplied by the water consumption, in cubic metres, from the water meter readings in accordance with 1.a) above. b)WASTE WATER RATES (MULTIPLE OCCUPANCY CUSTOMERS Where more than one self contained dwelling unit or commercial or industrial unit are supplied through a common water meter, the monthly billing amount shall be the combination of the Fixed Charge multiplied by the number of units plus the Uniform Rate multiplied by the water consumption, in cubic metres, from the water meter readings in accordance with 2.a) above. Exhi-bit 2 The water and sewer rates are applied on a'User Pay' hasis that benefits users who conserve water. The Province of 4r~tario hats-instituted new requirements for suppliers of municipal water. The City of Cambridge is' in full compliance with the new regulation .and. this is reflected in the new rates for water supply, The monthly service charges represent-the fixed cast to the City to provide these services regardless of valurt~e_ The ccinsumption or volume rates- represent the cost of purchase and delivery Qf water and the-cost of receiving .and treating the sewage: The monthly service charges. may also apply as a minmum monthly billing. Any inquiries regarding the follow@ rates orany problems pertaining to the water or sewer- system should be made to the City of Cambridge Transportation & Public Works Depa~xnent at 519.740.46$2 or'S19.740.458~: Water.Rate (as-of 1 Apr 2OU'7): Total water consumed @ $0.9620/cubic meter plus. the monthly service charge. Sewer Rate (as of 1 Apr 204'x: Total water consumed @$0.9265/cubic meter plus the monthly-service charge. ,~ - Monthly Service Charges 1 (as of 1 Apr 2007) .:Meter Size Water Service <25 rnrn 3 7 rnm 5 0 rnm 75 rnm 100 mm 150 mm 200 rnm 250 mm 300 mm Monthly Charge based on water meter size 5.25 s.z7 7.91 15.79- 26..31 63.15 89.45 112.13 126.04 Sewer Service IVlonthty Charge 3.11 4.14 6.22 12..42 20.71 49.76 70.41- 89.02 100.07 5 5. Staff advices that "the water/sewer rate structure was established in 2001 when metering was implemented". The structure was recommended in the Loudon & Fortin report which Mr. Loudon addressed in his follow-up report. The report did examine a variety of methods to charge for water and sewer services. As stated previously, Loudon and Fortin did not recommend the present rate structure. Table 1 shows a price comparison for the residential and non-residential customers by meter size class. The residential customer and the 1 inch meter customer pay the same service charge $38.65/month. The low income, 5 cubic metres customer pays $9.17 a cubic meter and the non- residential customer who uses 1,000 cubic metres pay $1.49 a cubic metre. Table 2 shows the 2006 monthly usage and selected price comparisons for various customers in the 4 inch meter class. The data also shows the low water usage customer and the large usage customer paying the same service charge. TABLE 1 2007 Water Cost /Cubic Metre Customer Monthly Cost Water Usage ~$/cu. metre) Service charge Residential 5 $9.17 $38.65 30 2.78 38.65 1" Meter 200 1.65 38.65 1000 1.49 38.65 2" Meter 1000 1.68 231.90 2000 1.57 231.90 3000 1.53 231.90 4" Meter 2000 1.88 850.28 15000 1.51 850.28 6" Meter 2000 2.27 1,623.28 10000 1.62 1, 623.28 50000 1.49 1, 623.28 TABLE 2 2006 4 inch meter Cu metres Consumption Service Billing Cost/cubic metre per month Charge Cost 166 $241.70 $734.30 $976.00 $5.88 291 423.70 1158.00 3.98 309 449.90 1184.20 3.83 393 572.21 1306.51 3.32 440 640.64 1374.94 3.12 647 942.03 1676.33 2.59 682 992.99 1727.29 2.53 688 1001.73 1736.03 2.52 730 1062.88 1797.18 2.46 840 1223.04 1957.34 2.33 900 1310.40 2044.70 1118 1627.81 2362.11 1149 1672.94 2407.24 1155 1681.68 2415.98 1167 1699.15 2433.45 1181 1719.54 2453.84 TABLE 2 (CONTD) 1231 1,972.34 2,706.64 1250 1,820.00 2,554.30 1501 2,185.46 2,919.76 1518 2,210.21 2,944.51 2212 3,220.67 3,954.97 2492 3,628.35 4,362.65 3300 4,804.80 5,539.10 3412 4, 967.87 5, 702.17 4209 6,128.30 6, 862.60 4636 6,750.02 7,484.32 6163 8, 973.33 9, 707.63 6797 9,896.43 10,630.73 7019 10, 219.66 10, 953.96 7969 11,602.86 12,337.16 8270 12,041.12 12,775.42 1.68 1.61 1.56 1.54 6 6. "In Mr. Bielawski's water rate study he provides an analysis of the 2007 percentage increases for homeowners whose monthly usage of water is different". The report presented to committee showed only the "homeowner" increase since the percentage increase reported by staff to the press was 6.8% when in fact the factual increase was 7.4%. The 2004,2005 , 2006 rate increases were all based on 26 cubic metres. Therefore, fora "factual" rate increase for 2007 it is mandatory that the comparison for 2007 be calculated for a usage of 26 cubic metres. To suggest that 30 cubic metres was used for comparison with other municipalities is "stretching the truth"! TABLE 1 shows the comparative yearly percentage rate increases for the residential and non-residential customers since 2004. The increase for the poor elderly widow on fixed income, using only 5 cubic metres the percentage increase is 13 %. The rate increase for the non-residential customers with high water usage are 0.35%, 0.76%, 0.46%, and 0.248%. The data submitted to Staff for the yearly percentage increases for different commercial classes are shown in Tables 2 and 3. Table 1 Comparative Yearly Percentage Rate Increases Residential Non-residential Meter size (mm) 15 15 15 25 100 100 150 2004 10.7 9.8 7.1 2.4 2.7 1.6 2.3 2005 6.9 6.6 5.2 2.5 2.6 2.6 2.5 2006 2.2 2.5 2.0 1.2 1.27 1.2 1.21 2007 13.0 11.0 7.4 0.35 0.76 0.46 0.248 Monthly Usage 5 10 26 1, 000 10, 000 17, 000 60, 000 (cubic metres) TABLE 2 LARGE USER (6" meter) Year Service Consumption Total 2003 1,101.71 68, 750.00 69, 851.71 2004 1, 252.17 70, 250.00 71, 502.17 2005 1, 360.59 71, 950.00 73, 310.59 2006 1,401.84 72,800.00 74,201.84 2007 1,622.28 72,800.00 74,423.28 Increase 2.4 1.0 1.22 0.298 The percentage increase is based on an average usage of 50,000 cubic metre /month. (4" meter) Year Service Consumption Total % Increase 2003 577.09 13, 750.00 14, 327.09 2004 656.21 14, 050.00 14, 716.21 2 7 2005 712.69 14,390.00 15,102.69 . g % 2 2006 734.30 14,560.00 15,294.30 . 1 27 2007 850.29 14,560.00 15,410.29 . 0.758 The percentage increase is based on an average usage of 10,000 cubic metre /month. Year Service Consumption Total % Increase 2003 577.09 23, 375.00 24,152.09 2004 656.21 23, 885.00 24, 541.21 1 6 2005 712.69 24,463.00 25,175.69 . 2 6 2006 734.30 24,752.00 25,486.30 . 1 23 2007 850.29 24,752.00 25,602.29 . 0.455 The percentage increase is based on an average usage of 17,000 cubic metre /month. TABLE 3 _H_ OMEOWNER Year Service Consumption Total % Increase 2003 26.23 35.75 61.98 2004 29.83 36.53 66.36 7.1 2005 32.40 37.41 69.81 5.2 % 2006 33.38 37.86 71.24 2.0 2007 38.65 37.86 76.51 7.4 The percentage increase for water and sewer billing is base on the average usage o f 26 cubic metres /month. Year Service Consumption Total % Increase 2003 26.23 13.75 3g. gg 2004 29.83 14.05 43.88 9.8 2005 32.40 14.39 46.79 6.6 2006 33.38 14.56 47.94 2.5 % 2007 38.65 14.56 53.21 11.00 The percentage increase for water and sewer billing is base on the average usage of 10 cubic metr es /month. Year Service Consumption Total % Increase 2003 26.23 6.88 33.11 2004 29.83 7.03 36.86 11.3 2005 32.40 7.19 39.59 7.4 2006 33.38 7.28 40.66 2.7 2007 38.65 7.28 45.93 13.00 The percentage increase for water and sewer billing is base on the average usage of 5 cubic metres /month. 7 7. During meetings with staff my remark could never have been directed at "the use of the AMWA Standard for differentiating between the size of meter" since the subject was never discussed. It is well known Municipalities set their own rate structures for water billing. Table 1 shows a comparison of the Niagara Falls Service Charges with two other Municipalities. The only conclusion one can draw when comparing the Niagara Falls rate structure with other Municipalities is that the Niagara Falls water rate structure is not fair and equitable. The consultant provided the appropriate rate structure for Niagara Falls but for reasons unknown it was never put in place. Table 2 shows a comparison of factors. One can only conclude that there is no one standard for calculating service charges in different municipalities. Table 3 shows the factors used by the City of Niagara Falls to calculate the service charge. In simple terms the factor used for the 150 mm (6" meter) is 42 which suggest that the water use is equivalent to "42" residences and therefore the service charge is calculated by multiplying the residence monthly service charge of $38.65 by 42.. Table 4 shows the schedule of water rates and service charges for 1999. The factors used are different than the factors used in the new rate structure. The consultant states "this is the same approach as is currently used, except that the service charges proposed are higher for larger sized meters than those currently applied." TABLE 1 Comparison of Service Charges Meter Size A Niagara Falls B 5/8 8.36 38.65 7.89 3/4 8.36 38.65 11.88 1 8.36 38.65 19.82 1.5 9.41 115.95 39.67 2 17.13 231.90 63.47 3 28.21 463.79 119.03 4 47.00 850.28 198.43 6 159.86 1,623.28 396.89 8 197.15 2,898.69 635.05 10 226.21 4,058.18 912.92 TABLE 2 Comparison of Factors Meter Size A Niagara Falls B 5/8 1 ,l 1 3/4 1 1 1.5 1 1 1 2.5 1.5 1.1 3 5.0 2 2.1 g 8.0 3 3.4 15 15.1 4 5.6 22 25..2 6 19.1 42 50.3 8 23.6 75 80.5 10 27.1 100 115.7. Table 3 Fa-~- tOr Meter Size ~ unmetered 1 15mm 1 18mm 1 25mm 3 37mm 6 50mm 12 75mm 22 100mm 42 150mm 75 200mm 105 250mm Table 4 CITY OF NIAGARA FALLS BY-LAS NO.75-20 AS ASriENDED BY BY-LAV4~ N4 ............. 99-fl7..........,........, SCi-iEDULE OF WATER RATES AND SERVICE CHARGES item l MATER RATES FUR FLAT RATE SERVICE, - $74.03 for four months (minimum rate ). Item 2 METERED- IVATER RATES (a} FOR'~NATER SUPPLiEi~ TO INDUSTRIAL PitEEMISES 0 - 99,000 Imperial gallons per quarter $2.89 per 1,000 gallons 144,440 - 199,004 Imperial gallons per quarter $2.53 per 1,004 gallons 2fl0,040 - 299,004 Imperial gallons per quarter $2.17 per 1,044 gallons 3fl4,040 - 499,000 Imperial gallons per quarter $2.04 per I,Ofl4 gallons 504,040' -699,000 Imperial gallons per quarter $1.89 per 1,00U gallons 700,000 -and over Imperial gallons per quarter $1, 73 per I ,044 gallons ,,~} FOR V~ATER SUPPLIED TO COMMERCIAL PREMISES AND RESIDENTIAL PREMISES 4 - 99,Ofl0 imperial gallons per quarter $3.25 per 1,040 gallons i fl0,044 -199,000 imperial gallons per quarter $2.89 per 1,044 gallons 2{}4,000 - 299,OOfl Imperial. gallons per quarter $2.53 per 1,000 gallons 300,000 - 499,000 Imperial gallons. per quarter $2.17 per l,Ofl0 gallons. 504,444 - 699,004 imperial gallons per quarter $2.44 per 1,000 gallons 704,044 -and over imperial gallons per quarter $ 1.89 per 1,fl44 gallons Note: For defi~si#on of"industrial premises'=, commercial prenuses" and "residential premises" see clauses {i}, (d} and (n} of section I of by-Iaw. Item. 3 ~NATER RATES FOR METERED ACCOUNTS 518" Diameter meter 3/4" Diameter meter I" Diameter meter I -I/2'* Diameter meter 2" Diameter meter 3" Diameter meter 4.n Diameter meter 6" D~:ameti er meter 8" Diameter meter $ X9.04 per quarter $ 52.4€1 per quarter $ BZ.OQ per quarter $ 143.QQ per quarter $ 2I3.Oflper quarter $ 355.d€1-per q~ter $ ?49.04 per quarter $ I,Q~9.44 Per quarter $ 2,784.4Q per quarter -, Strt~y of ~Clt2Y ~ Se'~er c~cttes Followirrg~letering 1~'~rr~rl Re~or~t CITY OI' ~+L~G. FALLS STUDY OF W.A,TER & SEWER RTES FOLLOWING iVIETERL'VG SY1vOPSIs This report reviews the current water and sewer rates and makes recommendations on future rates to be implemented as a result of the metering program. The level of the rates is based on preliminary budget data and should be reviewed and revised based on final budget data once it is available. The following summarizes the report findings: ~ieteri~tg Program -The City has completed the metering of approximately ?2,00 customers billed flat rates. ~1ost of these are residential, but there are a few commercial customers. Current Si~atiau -There are approximately x,100 customers currently billed metered rates. The current rates are two-part with a fixed charge variable by meter size and a volumetric charge with b declining rate blocks. proposed Two-Part Gatos -The proposed rates are also two-part with a t~.xed charge variable by meter size and a volumetric :,barge. "one proposed volumetrc ::barge s single block -there are no reduced volumetric rates for large volume users. This proposed change to a single rate block is recommended due to the fact that water is purchased wholesale from the Region at a constant rate for all usage and as a result There are no large-volume savings realized by the City that could be passed on to large volume users, ~L~ater/Sewer Co~abined -The sewer charges are currently billed as a ? ~0°% surcharge on the water bill. The City 2000 water and sewer budgets are prepared with the water and sanitary sewer costs combined. As a result, a single combined water and sewer rate has bean calculated. This approach is increasingly used as it simplifies the customer billing and improves she flexibility of financially managing the water and sewer utilities. Toronto has followed this approach for years. Recommended Vfllun~etricRate Option -Two options are provided far the volumetric rates. Option 1 links the retail volumetric .charge to the Region's volumetric charges. The. volumetric charge would recover about two-thirds of the user rate revenues. Option 1 is recommended since it minimizes revenue uncertainty while maintaining a high enough proportion of charges based on volume to encourage conservation.- Option Z is provided as an alternative. It allocates &Q% of the costs to the volumetric charge, which would increase the conservation element,. would allow more corrtroI by customer's of their water bills, but would decrease revenue security during years. with low seasonal use. • Recommended Service Charge Opti©n -Two service charge alternarives are provided. Alternative ~ is a single service- charge for all customers, It has the advantage of simplicity. hltemative B has service charges variable by meter size. This is recommended as it more cIasely allocates the costs to each customer. This is the same approach as is currently used, except that the service charges proposed are. higher for larger sized meters . than those currently applied. ~~lFRateReport.doe 1 Loudon & Fortin ;November 2000 Corporate Services Department The City of Finance Niagara Falis 4310 Queen Street P.O. Box 1023 Canada Niagara Falls, ON L2E 6X5 web site: www.city.niagarafalls.on.ca Tel: {905j 356-7521 Fax: (905j 357-2016 E-mail: kburdenQclty.niagarafalls.on.ca December 11, 2000 Alderman Wayne Campbell, Chair and Members of the Corporate Services Committee City of Niagara Falls, Ontario Members; Re: F-2000-74 -Utility Rate Structure RECOMMENDATION: ~-ZOaoa4 Ken Burden Director 1) That the proposed use-based billing structure be adopted for determining water/sewer utility rates and 2) That the proposed use-based billing structure be applied to the 2000 Budget expenditures to set rates for the new Water By-law. BACKGROUND: In February of 1999, Council approved the installation of water meters for the residential sector. Council permitted the flat rate billing structure to continue until Staff could study and recommend a use-based billing structure that provides fox the equitable distribution of costs. In the spring of 2000, R.M. Loudon Ltd. was engaged to assist Staff with the study of future rate structure recommendations. A copy of the Consultant's Report is attached for the Committee's consideration. The basicxecommendation from the consultant's report provides for atwo-part rate structure. The First part is a service charge distributed on the basis of the number afineters (constant rate regardless of meter size) or the number and size of meters (varies with meter size). 'This service charge funds the maintenance of bath the water and sewer systems. It is charged commencing with the connection of a private water system to the City water system and terminates when the private water system is permanently disconnected. The second part of the rate structure is the volumetric or consumption charge. It is designed to fund the expenditures for water and sewer charges from the Region. The volumetric charge only occurs when water is consumed. Working Together to Serve Our Community Clerk's Finance Human Resources Information Systems Legs! Planning & Oeve/opment December 11, 2000 - 2 - F•2o0o•74 Staff recommends that the utility rate structure be based on the service charge that apportions maintenance expenditures based on meter size, and a volumetric charge that allocates water and sewer services charged to the City by the Region. This rate structure distributes the Water/Sewer Utility Expenditures equitably among ratepayers and provides cruse-based system that fairly charges the small consumption ratepayers or those ratepayers who have historically controlled usage through conservation methods. Restating rates for the 2000 Budget according to this recommended utility rate structure indicates that the average residential consumer will find this rate structure revenue neutral, low consumption consumers will save but high consumption consumers may experience billing increases (Exhibit 1). Commercial consumers as shown in Exhibit 2 may experience billing increases, however, the rates as proposed equitably share the cost of the Water/Sewer Utility among the consumers that are serviced by the City. In addition, Staff also recommends that rates based on the 2000 Budget be shown in the new Water By-law until the 2001 Budget is adopted by Council. With the adoption of the 2001 Budget, the schedules of rates accompanying the Water By-law will be amended accordingly. Prepared by: Res tfully submit T• E.P. Lustig Manager of Revenue Chief Administrative Officer Recommended by: K.E. Burden Director of Finance Approved by: .~~,~ T. Ravenda Executive Director of Corporate Services Attach. H:lWFF1I.ES1ContmittalF-2000.74 • Utility lYa[e Sttutttue.wpd Exhibit 1 1Nater/Sewer Utility Rate Structure Comparison Annuat $soo ---- $700 ..'~ • . $600 .......•~••-••. $500 $400 - - ..~.-...._~,•- ....- ......a ~-' -- - - --------~ i $300 '(0 'I 5 20 25 30 35 40 Monthly Consumption Rate ( Cubic Meters) -~- 2000 Flat Rate •-~••- 2000 Revised Metered Water/Sewer Utfiity Rate Structure Comparison Cu M 2000 Flat Rate 2000 Revised (Decrease) per month Metered Increase 10 $599.88 $374.91 ($224.97) 15 $599.88 $442.33 ($157.55) 20 $599.88 $509.75 ($90.13) 25 $599.88 $577.17 ($22.71) 30 $599.88 $644.60 $44.72 35 $599.88 $712.02 $112.14 40 $599.88 $779.44 $179.5fi City of Niagara 1=a11s Exhibit 2 Comparison of 2000 Metered Rates Cu Meters per month 37 mm Meter Revised 2000 Existing 2000 Increase (Decrease) Cu Meters per month - 50 mm Meter Revised 2000 Existing 2000 Increase (Decrease) 150 826.96 $2 3,496.80 {669.84) 150 $3,569.28 3,500.80 68.48 900 , 96 248 $13 '!8,604.20 (5,355.24} 900 $13,991.28 18,608.20 (4,616.92) 1300 . , 807.36 $18 23,521.20 (4,713.84) 1300 $19,549.fi8 23,525.20 {3,975.52} 2200 , 313.76 $31 34,134.00 (2,820.24) 2200 $32,056.08 34,138.00 (2,081.92) 3100 , $43,820.16 45,024.00 {1,203.84) 3100 4000 $44,562.48 88 068 $57 45,028.00 872.00 53 (465.52} 3,196.88 4000 5000 $56,326.56 $70,222.56 53,868.00 67,332.00 2,458.56 2,890.56 5000 . , $70,964.88 , 67,336.00 3,628.88 Cu Meters 75 mm Meter Increase Cu Meters 100 mm Meter Increase per month Revised 2000 Existing 2000 {Decrease) per month 150 Revised 2000 04 529 $7 Existing 2000 80 532 3 (Decrease) 996.24 3 150 900 $5,054.16 16 476 $15 3,514.80 18,622.20 1,539.36 (3,146.04) 900 . , $17,951.04 . , 18,640.20 , (689.16) 1300 . , $21,034.56 23,539.20 {2,504.64) 1300 2200 $23,509.44 84 015 $36 23,557.20 170.00 34 {47.76) 1,845.84 2200 3100 $33,540.96 047.36 $46 34,152.00 45,042.00 {611.04) 1,005.36 - 3100 . , $48,522.24 , 45,060.00 3,462.24 4000 , 553.76 $58 53,886.00 4,667.76 4000 $61,028.64 53,904.00 7,124.64 5000 , $72,449.76 67,350.00 5,099.76 5000 $74,924.64 67,368.00 7,556.64 Cu Meters 150 mm d 2000 i Meter 2000 Existin Increase {Decrease) Cu Meters per month 200 mm Revised 2000 Meter Existing 2000 Increase (Decrease) per month 150 se Rev 478.68 $12 g 3,604.80 8,873.88 150 $20,645.76 3,684.80 16,960.96 900 , 900.68 $22 18,712.20 4,188.48 900 $31,067.76 18,792.20 12,275.56 1300 , $28,459.08 23,629.20 00 2 4,829.88 48 723 6 1300 2200 $36,626.16 132.56 $49 23,709.20 34,322.00 12,916.96 14,810.56 2200 3100 $40,965.48 471.88 $53 . 34,24 45,132.00 . , 8,339.88 3100 , $61,638.96 45,212.00 ~ 16,426.96 4000 , 978.28 $65 53,976.00 12,002.28 4000 $74,145.36 54,056.00 20,089.36 5000 , $79,874.28 67,440.00 12,434.28 5000 $88,041.36 67,520.00 20,521.36 CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING DETAILED REPORT INTRODUCTION During i 999 and 2000, the City of Niagara Falls has carried out a prolnam of installing meters on the water services to all customers, Formerly oniynnn-residential customers were metered. The metering program mostly is for single family dwellings, but has had the benefit of identifying some other larger customers that escaped metering in the past and that are also now being metered. A previous study was carried out of water rates following metering that provided preliminary rates recommendations. That study recommended two-part water rates with a single volumetric charge and a service chazge variable by meter size. The method used was as set out in the Canadian Water & Wastewater Association Municipal Water Rate Manual. In the following study, the estimate of water consumption following metering has been refined based on preliminary readings taken on the newly metered customers. Expenditure data is also based on preliminary 2001 budgets. 2 CURRENT WATER & SEWER RATES The 2000 water and sewer rates are as follows: Exhibit 1 2000 Volumetric Water User Rates (quarterly basis) Note that some lazger metered customers are billed monthly rather than the quarterly basis used for most metered customers. Exhibit 2 2000 Service & Minimum Charges (quarterly) 5 rrun _ ._,._..1...25.-. ._.._ _-.,..$43:0..0.. _.. _-.. ...-._ _ _ . _ ..__-.. _ ,_....1..1.,00.0.._ ----..---- - - - -----~ _lg ~-__ ..-~z:0o. _ ~-_$~~aa.. -... _ _ _ . ~..rsooa .._- __-_ __-- . 25 mrti ... ...$2:50._ _.. _ ..$95:06... _ .. .._ .. ;..25;000.... _ __. _--- -~ ;_37 mm ...._ ! _$3:00_ _ _ _ ..$.1..55:0.0_ .__.._. . .. .... .......... _. a..... _ ... _._..__.... __.. _.._ 44,000._-_... __.. ,_ __. ._SOmiri.... ....,..$4.0.0....._.._.._ '$231:00 _...._ _..__.._ ... +6b,600-.... _...._ ..- -_._ . 75 -. _ _ :...$.7..5.0.._ - -_.. __ ,_.$385:00_...... _ .._ __ . ... ...... _ ;._..1.256.0.0 ... ... __ _ __ __ .___ _ -- - ----r ` T00 mm _ - $1-2:60 ___ .._.$768:00 - _ .. .. ..-- -. ~ jj~ _.. _ _ ._..__...~_28:5;b0.0.- -- ---..._ _-__--------__I ,....1.50_mrri_. ... . ' -$30;00.._.._._... ._..... -$1-;I$8:00__.._ _......_ .... ..... .... .__ -;--527;000._..__..._ ..-_ _.....____ ---..--.; ~- 200 min-_ ... $50:60 _......_ _ .L-$1;932:00. ..._.. .-- -- _. .-. _ _ - _.. i_..9b7;000--__ .............._ . __._.... ____ NU'l l;: The minimum consumption allowance valiilxie is volume is applied rather than the published volume. The metered rates are mostly applied every three months (quarterly). The flat rate charge is billed every four months at $82.46. Sewer charges are levied on the water bill as a surcharge. The sewer surcharge is currently 150% of the water charge. 3 CUSTOMERS By the time the metering program is complete, about 22,500 unmetered customers are expected to be converted to meters. When added to the 3,100 customers previously metered, this will bring the total number of meters to the following: ~1Cifete rfii~P ~m~iTimP~. re~e-l.__.._.__..--------....._..__ ;_.,,75.x.. _ _.....__. _..__......__ 4 CONSUMPTION Wholesale -The City pays wholesale charges for the volume of water supplied and the sewage treated by the Region of Niagara, which is responsible for this service. The City only has jurisdiction over the retail operation of distributing water and collecting sewage. Exhibit 3 Number of Metered Customers by 2041 The Region charges the same wholesale rates year-round and to all of the area municipalities. The wholesale rates over the past 3 years are as shown below in ,bit 4. Exhibit 4 Niagara Region Water & Sewer Charges ($/m3) 'Water Sewer T998 _ _.._ ....1.999. _ __ . .~OOa .___.. ..`.....0:275 $0.291 ...__.__. _....------ __..... $0.x.0.0_.. _ ...._...... _... The 1999 water and sewage volumes which the Region billed the City are summarized in Exhibit ~ below: Exhibit 5 1999 Water & Sewage Volumes Billed to Niagara Falls by Region (m3) on stet ewer - ~ anuary , , , T;8T~ e ruary i , ~ arc ~ ~ , I Pn ay ; , une , uy i ~ _ ~~> ~ ugust j ~31 eptem er I ~ , ~ cto er j - , ovem er ~ , ecem er , of The monthly water and sewage flows billed by the Region starting in 1998 and up to September 2000 are graphed in xhibit 6. This graphically illustrates the normal seasonality of the water purchases. Monthly water flows in the suirimer of 1999 reached almost three times the spring level. There was much less of an increase in 2000, a wet year. The sewage flows, on the other hand, show less variation, with only a modest decrease in the summer and occasional higher flows in the spring and fall, no doubt due to inflow and infiltration. There are sewage flow variations in the summer of 2000 are not consistent with historical trends, but could relate to the dates that the meters were read. Consumption by Currently Metered Customers -There are about 3,100 customers currently charged metered rates. Most are billed quarterly, but the larger customers are billed monthly. Their consumption for the past 2 years is as shown in Fxli~. Exhibit 7 1998 & 1999 Metered Customer Consumption (m3) l9 8 _. . _ .. ..._ _ ... ..._1999... _.._..__.. . uarfe . _ r y rnetere _ . _ _ ~ . ~ fi172;98b _.6;7.3.6,80.5- _ __ ..._.. __ . _.___ _~..--- . Ivloritlly metered_ _ __ ;.....671._.5.8.2._..... ____ ..._ ...._...__ . -699 4R3 ~--... Totalmeteied__ _ ~ 7~844;Sb8 _ _ _ 7~43b,28.$ _ _ _ __ ._._...___._. ... umpage ; 19;541;56.4_.. __ _ ._-._ __... _-19;~4C;1.2.7_ _ __...__.----------._. ... ,..Unmetered use... _ . -.. _ ..1-1:b9b_99.b __.. _ -. .. __-- -- . _ _... ..,i2=2~z~:R.,t.~.._._ . _.-. _-__ ___. ____ Unmetered Use - To narrow down the likely range of unit consumption by the newly metered customers, meter readings were specially taken in May and June of all meters installed to that point. There were 17,823 meters read. There were 105 customers with meter reading dates errors. There were some very large meter readings -the largest 10% or 178 customers were as a result treated separately. The results of the reading program aze summarized in Exhibit g. Exhibit 8 Newly Metered Customer Consumption Results Summary to June 2000 Uate errors -6-reading--- -Larger customers ... . .I~ririaI+I.atger _- tvote: i ne reading Gates were not tensible such as after the date of the latest meter reading or The customer name and address, meter serial number, meter installation and reading dates and volumes were input in Excel spreadsheet format. Meter installation was spread out from about May 1999 until the date of the special readings. The average monthly usage for all customers was 26.5 m3/month. Much of this consumption was not in the summer. Only about 20% of the customers had been metered by the end of last summer. The customers are mostly residential, but there are some non-residential customers including some larger users. If the lazgest 1 % of users is removed from the calculation, the average use drops to 24.5 m3/month. 99% of the customers used less than 90 m3/month. Usage by the top 1 % ranged up to in excess of 1,000 m3/month. Ex~ illustrates the average consumption by customers and includes the variance in level depending on haw long customers have been metered. Customers that have been metered the longest include both summer and winter usage. These are plotted on the right hand side of the graph. The average monthly consumption level of customers that were metered prior to Juty 1999 was about 29.5 m3/month. 7"hese customers were metered for a full year. But as customers are progressively metered and customers with only winter consumption are included in the average, the level drops. This can be seen by as the vertical bars get shorter during the winter since usage by these customers only includes winter usage. Based on the initial consumption levels, and recognizing the fact that summer usage is much higher than winter, it seems feasible that the average usage for these newly metered customers might well be about 28 m3/month. Unrnetered use is a combination of unaccounted for water (UFW) losses such as watermain leakage, hydrant flushing, sewer flushing etc plus water used by unmetered customers (i.e. flat rate customers). Fxh~bit l 0l 0 illustrates possible combinations of UFW and unmetered customer consumption in 1998 and 1999 based on 22,500 unmetered customers. An average level of 28 m3 /month /customer over a full year is equivalent to 23%UFW. This is relatively high, but not unreasonable compared to previous staff estimates of about 19%UFW. Full meter reading will clarify this calculation. If the top 1 % of newly metered customers are excluded, then this is equivalent to about 2b m3 /month /customer for residential customers. In the original metering financial study it was concluded that residential usage by unmetered residential customer is about 27 m3 /month /customer. That conclusion was based on other municipalities as well as a small sample of metered flat rate customers in the City. Impact of Metering -Experience with the impact of metering varies, There are many influences, primarily cost level and amount of discretionary use (primarily summer use). Often there is an initial impact followed by a rebound; since the water is not really high compared to other utilities. Water and sewer combined is less than cable television charges. A typical residential customer is likely to use in the range of 18 to 22 m3/month, based on experience in other similar Ontario municipalities. Excluding the 1 % lazgest users in the newly metered group, the likely consumption now is about 26 m3/month. According to research by Environment Canada reduction in water use doe to metering is likely to be 30% or more. A drop to 20 m3/month after metering would represent a decrease from 26 m3/month of 23%. Combining this information, it is assumed that consumption will drop by 25% in the first year. The level of consumption following metering is calculated in Exhibit 12. Financial The 2001 draft water and sewer budget has been prepared with water and sewer costs combined. In the past these costs have been kept separate and the water and sewer tariffs set separately. There is a trend in Ontario towards issuing a single combined water and sewer charge -see Section 6 below. The water and sewer budgets are summarized in xhibit 11. Tariff Calcula~ons The current water tariffs are two-part with both fixed (variable by meter size) and volumetric (decreasing block). The following is recommended: That water and sewer tariffs be billed as one combined rate. This is done in several municipalities in Ontario, the largest being the City of Toronto. This was also the practice followed in many of the six local municipalities in Metropolitan Toronto previously. The Town of Markham has also followed this practice for many years. The Town of Markham is similar to the City of Niagara Falls with respect to their being the retail provider of water and sewer services inside the Region of York which bills for both wholesale services based on volume (both water and sewer are billed based on water volumes at the wholesale level, however). This year the Town of Newmazket has also switched to a combined water /sewer charge. The use of a combined charge provides much greater flexibility with regard to budgeting these services and allowing for annual revenue fluctuations: Eliminate Declining Block Rates - There is little or no cost justification for declining block rates in Niagara Falls. There are economies of scale for large water users, but these occur mostly in the water production area, which is a Regional responsibility. It does not affect the City's costs. The following comments are also added regarding the water and sewer rates: • Note that the use of water consumption as a basis for billing sewer charges is common in Ontario. This is the most feasible way of approaching user pay for recovering sewer costs. Water meter readings are a surrogate for measuring sewage flows. During 1999, total Niagara Falls sewage flows billed by the Region were close to total water flows, only about 5% higher and in 1998 sewage flows were about 10% higher than water flows, In Niagara Falls, as in most other municipalities, customer metered water flows are used in the calculation of a customer's sewage charges. Overall this is a fair way of achieving user pay for the sewage costs. It is meant to allocate sewer costs in proportion to each customer's use of the system. Although there are flow differentials between water and sewer systems due to seasonal water use in the summer and for sewer due to inflow and infiltration, these variations more or less even out over the year. The use of water consumption is a reasonable surrogate for sewage flows and is the only practical way of achieving user pay for sanitary sewer charges. • Seasonal Charges -Note that water consumption normally has a very high seasonal component in Niagara Falls. Water consumption in the summers of 1998 and 1999 exhibited very high increases -see F~hi~jt 6. The wet summer of 2000 showed very little increase. Since the cost of meeting summer peaks occurs at the Regional level, there is little justification for the City to consider seasonal rates. This may have to be reconsidered if the Region decides to utilize some form of seasonal rates to moderate the high summer peak water.flows. The combined water and sewer rates are calculated in F~ ibit 12. Two options are provided: Option 1 -Recover Regional Volumetric Charges from Volumetric Rate -This approach is based on revenue security plus relating obviously variable charges to the volumetric rate and largely.fixed charges to the fixed service charge. It is a fair approach. Unfoz'kunately, the conservation aspect of metering is weakened since only about two-thirds of costs in the volumetric rate. • Option 2 -Recover $0% of Costs in the Volumetric Rate -This alternative would recover all of the Regional costs in the volumetric.rate, plus some of the City costs. It would have a higher conservation element, which may translate into reduced usage and reduced Regional charges as a result. The service charge is calculated both as (A} a single charge for all customers and (B) one variable by meter size. The volumetric rates and service charges are provided in ~~thibit l2. 7 Impact The impact of the proposed rates compared to the current rates is provided in Exhibit 13. For flat rate customers, those that use below average volumes pay less and above-average users pay more. The average customer pays slightly less. For currently metered customers, most pay mare due to the elimination of the volume discounts. Implementation The following suggestions for implementation are made. • There should be public notices in advance of the impending rates and how they might affect customers. • The bill should include a phone number where customers can ask questions about their bill. • The new tariffs should not be first applied during the summer season as the differential from the flat rate charges will highest at that time. • The billing staff should be prepared to answer questions about why customers' bills have changed. They should also be helpful in suggesting ways to reduce usage. • Also there will be high residential water users who will not be happy with paying for what they use. It must be emphasized that this is now a user pay system and that customers have a measure of control over the size of their bill. • For larger customers, notification should go out in advance of their expected increase. This will often avoid adverse reaction once the bills aze received. • Some municipalities choose to initially send out demonstration bills to illustrate the potential impact of the metered rate charges, so that customers can adjust usage before the real billings start. J 7 ~• 7 J k~ r x n n v v o_ r v i ~ ~,~ ~` EXHfBtT 6 NIAGARA FALLS MaNTHLY WATER & SEWER FLAWS 3.50 .~. £ 3.00 0 0 O a 2.50 O C O rn 1.00 m .Q ~ 1.50 as u 0 a ~ 1.00 m ~.5~ 0.00 ,i ~~ ~,~~. ~~c ~~~ Oa71-ZO Niagara FafFs rNeterea water Retc ~ Ln~xlon Fartirt Month EXH(B!T 9 ' i 3 3. ~~. r r' 0 n v v D S T 7 v I I CONSUMPTION versus MONTH WHEN CUSTOMERS METERED I X0.0 29.0 C O ~a ~ ~ 28.0 3 p C C 0 O V ~ 27.0 m 1 C O o 26.C ~ ~ E ~ E 25.0 Q 24.0 ' ~~.~ Jun-OQ May-00 Apr-00 Ma~-00 Fete-00 Jars-OQ Dec-99 Nov-99 Oct-99 Sep-99 Aug-99 Jul-99 Month Customer Metered NEda6u0s. OQi f 20 1DO°~ 9096 $0% ~ C 7Q°~b ~ 0 6096 a ~ c 5096 ~' .cc^ //~/~p~ m v/ +PV J'~ sag6 ~ i 20°~ a 'i 096 ~A~ Nf~an FNis Tav~7is FaU°w5q MetelFnB La~dort Fut1n J r r a n v s D T l 7 7 v 1 I ExHiB~T ~o -Ji~ads 009120 Niagara Fake Mrter~ed Rats SfuAy Lazes Fatln CITY OF NIAGARA FALLS WATER & SEWER SYSTEM 2000 BUDGET b 2001 DRAFT BUDGET t~) 2000 EXHIBIT 11 Revenues Sewer Succharpe . Water Sales Service Charges Sewer Latest Cleaning Fees Discount Total EYpendtwrea Administration Regional Costs Sewer Maintenance b Operation Water Maintenance ~ Operation New b Rep[acernent Mains New Equtpmen# • Contribution to Capital Budget Water Metering Program Cathodic Protection Debt Charges tt 4._.~RA~ ~I~11~F ~ ~RFM~nr?s total l?xpenditures Less other Revenues Water Sales Service Charges Sewer Lateral Cleaning Fees Total User Rate Revenue Requiremenjls Less Regional Charges {tn volumetric rates) Local Costs On fixed charge)' Nfdata.xla 1 14,338,000 13,514,300 13,514,300 8,677,000 11,347,400 11,347,400 89,000 40,000 34,000 74,000 25,000 25,000 25,000 -612,000 0 23,517,000 11,412,400 13,548,300 24,960,700 832,500 245,600 245,800 491,200 18,244,800 5,500,00011,300,00016,840,000 2,105,100 ~ 2,214,300 2,214,300 1,230,300 1,298,500 1,268,500 45o,ooa 1,000,000 1,0oo,ooa 17,500 17,500 17,500 720,000 1,000,000. 1,000,000 50,000 61,000 81,OOo 250,000 800,000 800,000 1,81.7,000 1,198,500 283,700 1,4@0,200 23,517,000 10.917,100 14,043.800 24,960,700 2~3 517,000 10,917,100 14,043,800 24,980,700 89,000 40,000 34,000 74,000 25,000 25,000 0 25,000 -812,000 ~ 0 0 0 -498,000 85,000 34,000 99,000_ 24,015,000 10,852,100.14,009,600 24,881,700 18,244,600 5,500,00011,300,00016,800,000 7,770.400 5,352,1Qt7 2,709,800 8,061,700 'Finar-cia[" Z4•Nov-()0 .°._ ."^^^^, ~~ ••~ ti-,ta S~~ ctb ic~~ct n~-tT-00. CITY OF NIAGARA FALLS EXHi61T 12 COMBINED WATER & SEWER RATE CALCULATION PROPOSED 20Q1 $jgg~ - Gon~umctlon iaubl~ r,Y-etresl ' Consumption Current Consumption Levels Reductjon ,, Leve{ for Cons./month Cons. Cons. Oue to Metered Rate • Customers /customer Monthly Annually Metering Calcuietion Metered now -billed quarterly Metered now -billed monthly Newly metered -top 196 178 x 241 Newly metered -residual 22,322 x 25 Total Annual (with resulting percentage dilterence} 6,700,000 1% 8,833,000 700,000 196 693,000 = 42,898 514,776 15°~6 437,580 - 549,121 6,589,454 2394 5 073 B80 _ 14,504,230 1196 12.837.439 Volurno Uaor for Rate CsJculatlon (r»') 12,837,439 lea Z - Volu~e_~Ng Rate Calculation Optlonl • Recover Regions! Charges Annual Regional Charges = S 16,800,000 Volumetric Chargo = 3 16,800,000 S 12,837,439 = 3 1.309 /cubic metre Option 2 -Percentage Cost Recovery Cost Share = ~ S 24,881,700 z 8096 = S16,889,360 Volumetric Charge = S 18,889,360 + S 12,837,438 = S 1.549 /cubic metre 8teo ~,-Servia~ Charge Cateulation Option 1 Option 2 Local Costs 2096 Cost included in seMce charge S 8,061,700 54,972,340 A - 8ingle Service Uniform Charge Number of meters 25,607 25,607 Monthly Charge (3Jmonth) S 26.235 3 18.182 6 - 8ervke Charge Variable by Meter Sizs (see also belovr} Equivalont Number of Meters 29,808 28,808 Equtvalent Monthly Service Charge S 22538 S 13.901 Charges distributed by meter size (see Options 1 8 2 below} Dlstributton of Service Charge Coot by Meter 81ze eter Size eters Allocation Rstio Equivalent Number of Meter SeMce Charg 0 lion 1 e SJmoMh O tion 2 16 mm 24,250 1 24,250 S 22.54 S 13.80 18 mm 387 1 387 S 22.54 S 13.90 25 mm 343 1 343 S 22.64 S 13.60 37 mm 224 3 553 S 58.35 S 34.75 50 mm 291 8 1,746 S 135.23 i 63.41 75 mm 52 12 824 S 270.46 S 188.82 100 mm 42 22 824 S 485.84 S 305.83 150 mm 18 42 758 S 946.81 S 583.85 200 mm 3 75 225 S 1,860.37 S 1,042.59 Total 25 607 29 808 t~rsleb.ate 'Rite G{c' 24Nov-00 r s ^* ~~~~ •nl-1 ninnnn~ •I_i .y 1,1,to G77 Oti, If.'.frT' n~-11-nn Mayor Ted Salci ~_ ~, Inter-Department Memorandum ~"~~ ~ .~' _ TO: Dean Iorfida DATE: October 24, 2007 FROM: R. T. (Ted) Salci Mayor Ext. 4201 RE: Council Information October 24, 2007 Dean: Would you please have the attached email from Michelle Miller, Canadian Diabetes Association regarding a request for proclamation, distributed to Council? "Thank you. Carey (10/24/2007) Ted Salci Proclamation of Diabetes Awareness Month From: <michelle.miller@diabetes.ca> To: <tsalci@niagarafalls.ca> Date: 10/24/2007 11:36 AM Subject: Proclamation of Diabetes Awareness Month Attachments: Proclamation of Diabetes Month 07 Niagarafalls.doc Dear Mayor Ted Salci: I am writing on behalf of the Central South Ontario Region of the Canadian Diabetes Association to request that, as Mayor of the City of Niagara Falls you officially proclaim the month of November as Diabetes Awareness Month. Over 2 million Canadians have diabetes and in Central South Ontario volunteers of the Canadian Diabetes Association are observing Diabetes Awareness Month as a time to acknowledge the seriousness of diabetes and the need for all Canadians to prevent the growth of diabetes in our community. The health of the people in our community is important. During the month of November, volunteers will be sharing important information about the seriousness of diabetes in various ways, including World Diabetes Day on November 14. We hope you will give official recognition to our undertaking by issuing a proclamation (sample is attached) of Diabetes Awareness Month. Thank you for supporting our efforts to promote the health of Canadians in communities across the country. (See attached file: Proclamation of Diabetes Month 07 Niagarafalls.doc) Yours truly, Kerry Bruder Regional Director Canadian Diabetes Association Michelle Miller Coordinator of Volunteer Development Canadian Diabetes Association Central South Region (905) 528-3111 ext. 2515 or 1-800 - BANTING Page 1 (10/24/2007) Ted Salci -Proclamation of Diabetes Awareness Month www.diabetes.ca Page 2 Join Team Diabetes in San Diego, Reykjavik, Dublin, or Honolulu in 2007! Visit www.teamdiabetes.ca for more details! aw why to turn to CANAt71AN ASSOCIATION C3IABET~3 GANAaIeNNE ASSOCIATION DU DIAB~TE Proclamation of Diabetes Awareness Month /World Diabetes Day: WHEREAS Diabetes is a serious condition affecting more than two million Canadians and is a leading cause of death by disease, and WHEREAS There is a great need to raise funds for research into better methods of treatment, and ultimately a cure, and WHEREAS The Canadian Diabetes Association is focusing public attention on the need for funds for diabetes research, education, service and advocacy. TI-IEREFORE I hereby proclaim the month of November 2007 as "Diabetes Awareness Month" in the City of Niagara Falls. Dated at (your city), this (day) day of (month), 200. II~ the municipality has already proclaimed November in the name of another charity, please proclaim November 14 as World Diabetes Day. October 29, 2007 His Worship Mayor Ted Salci and Members of the Municipal Council City of Niagara Falls, Ontario Members: Re: BDD-2007-05 Niagara Convention & Civic Centre RECOMMENDATION: BDD-2007-05 1. That Council authorize staff to issue an Request for Proposal (RFP) for the selection of a project and program management firm. 2. That the City accept the assignment from Niagara Convention and Civic Centre Inc. of the option to purchase approximately 2.62 acres of land fronting on the west side of Stanley Avenue, located approximately 1,190 feet from the north west corner of the intersection of Stanley Avenue and Dunn Street, in the City of Niagara Falls, from The Monastery of Mount Carmel and that the Mayor and Clerk be authorized to execute any and all documentation required to accomplish this end. 3. That the City accept the assignment from Niagara Convention and Civic Centre Inc. of the option to purchase approximately 4.0 acres of land fronting on the west side of Stanley Avenue, located approximately 900 feet from the north west corner of the intersection of Stanley Avenue and Dunn Street, in the City of Niagara Falls, from 1149948 Ontario Limited (Alfredo Varalli and Anthony Zappitelli) and that the Mayor and Clerk be authorized to execute any and all documentation required to accomplish this end. 4. That the City accept the pledge of the Board of Management of the Fallsview Business Improvement Area to contribute $15,000,000.00 towards the operation of the Niagara Falls Convention and Civic Centre by way of annual installments of $1,000,000.00, for a period of 15 years and that the Mayor and Clerk be authorized to execute any and all documentation required to accomplish this end. 5. That the City accept the pledge of the Board of Management of the Victoria Centre Business Improvement Area to contribute $1,500,000.00 towards the operation of the Niagara Falls Convention and Civic Centre by way of annual installments of $100,000.00, for a period of 15 years and that the Mayor and Clerk be authorized to execute any and all documentation required to accomplish this end. Working Together to Serve Our Community Business Development ~,, , ' .z 4 Ir' '4: 4~. i 4. October 29, 2007 - 2 - BDD-2007-05 BACKGROUND: One of the key goals for the city has been to establish Niagara Falls as a year round tourism destination. It has been determined that a critical piece of infrastructure needed to achieve this goal is the development of a Convention Centre. Such a facilitywould serve as a catalyst to increase visitation, visitor expenditure and length of stay, thereby stimulating economic activity and growth in the City, resulting in the protection and enhancement of employment opportunities. Over the years the city has been involved supporting and participating in efforts related to convention centre development. City Council engaged PKF to undertake a feasibility study which detailed the economic impact, marketing strategies, planning and development, funding model and site selection for a convention centre. As a result of market conditions impacting the tourism industry, the development of a convention centre was seen by tourism stakeholders as a key priority to compete in today's marketplace. Tourism stakeholders felt so strongly about the need for a convention centre that they had taken a lead role in the project. Over the past two years, tourism stakeholders, particularly the Fallsview and Victoria Centre BIA's, have undertaken efforts to accelerate the effort to bring this project to fruition. The BIA's had appointed Dr. Dragan Matovic to represent the private sector interest and to manage the Niagara Convention and Civic Centre (NCCC) project. The BIA also secured the services of Ed Lustig to provide legal services and advice. At the Community Services meeting of July 10, 2006, Dr. Dragan Matovic sent Council a letter highlighting the efforts of the Convention Centre project team as follows: 1. In 2004 the Fallsview BIA engaged PKF to update their 2001 Convention Centre study. The updated study confirmed the compelling economic benefits that would be delivered from such a facility. The key highlights are: Benefits to the Accommodation Sector The convention centre will increase the city wide occupancy levels by as much as 5% on an annual basis. The convention centre will generate 173,000 new room nights and $22.6 million in room revenue annually. 70% of this new demand will occur during the September to May period. Visitor Impact By Year 3 the NCCC will generate over 514,000 visitors per year, half of which will be new visitors to the Region. $93 million in new expenditures annually (excluding gaming), 75% outside of the accommodation sector. 1,000 person years of employment. Impact on Provincial and Federal Government October 29, 2007 - 3 - BDD-2007-05 The Province would receive over $45 million from NCCC's first five years of operation. The Federal Government would receive over $75 million from NCCC's first five years of operation. The Niagara Convention & Civic Centre Development Program The facility is projected to be 231,000 sq. ft. segmented as follows: Main Exhibit Hall Meeting space Support space Total Funding Model Capital Budget 100,000 sq. ft. 31,000 sq. ft. 100.000 sq. ft. 231,000 sq. ft. Federal Government $ 35 million Provincial Government $ 35 million Falls Management Company (FMC) $ 15 million Fallsview BIA $ 2 million Sub-total Capital Budget $87 million Operating Budget Fallsview BIA $ 13 million Victoria/Centre BIA $ 1.5 million Other Stakeholders $ 0.5 million Sub-total Operating $15 million Total $102 million 2. 3 4 5 The PKF study identified that the tax exempt status for the convention centre was an integral component of the financial model and the centre's economic success. The tax exempt status would be achieved by structuring the convention centre as a capital municipal facility as allowed under the Municipal Act. Under this model, the city would own the convention centre building and site, and would lease out the operation of the centre to Niagara Convention & Civic Centre Inc. The Fallsview BIA and Victoria Centre BIA's are using a corporation called Niagara Convention and Civic Centre Inc. as a vehicle for this project. A site selection RFP process was successfully concluded confirming the preferred site for the convention centre. An option for the main 4 acre site of land had been obtained. The Fallsview BIA has passed a resolution committing itself to the expenditure of $15,000,000 for capital and operational funding for the project October 29, 2007 - 4 - BDD-2007-05 6. The Victoria Centre BIA passed a resolution committing itself to the expenditure of $1,500,000 for the same purposes. The correspondence requested Council to support the project team's effort to engage the Provincial and Federal government to secure financial support for the Convention & Civic Centre. The following motion was ratified in open Council. "That the Council support the project team efforts to engage the Federal and Provincial Government and its agencies for financial support of the Convention Centre Project." Over the next several months, the following project milestones were achieved: • An option agreement was secured with the Monastery of Mount Carmel for 2.62 acres located adjacent to the 4 acre parcel creating a core building site of 6.62 acres. • An agreement with the Region of Niagara to lease their 20 acre parcel for parking located behind the 6.62 acre parcel. • Negotiations commenced with Hydro One to obtain an option forthe hydro right- of-way which separates the 6.62 acre parcel and Regional lands as identified on the attached illustration. • Both the Provincial and Federal Government announced their respective contributions of $35 million towards the development of the Convention Centre project. • FMC has also committed the attractor funds to the Convention Centre project. Implementation Phase: Now that the required funding has been committed, the project will move into the implementation phase. As the facility will be a capital municipal facility, all capital funds outlined earlier in the report will be directed to the municipality. The City's role will be to oversee the construction of the Convention Centre and own the Project. In this regard, the City has established a project team that is working closely with representatives of NCCC Inc., Dr. Dragan Matovic and Ed Lustig. A series of legal agreements are required as part of the development as outlined below: 1. The Municipal Capital Facility Agreement. In this Agreement, the City will commit to establishing the Convention Centre as a Municipal Capital Facility. When the Convention Centre has the status of a Municipal Capital Facility, it is not subject to municipal taxation. October 29, 2007 - 5 - BDD-2007-05 2. The Convention Centre Lease and Operating Agreement. This Agreement will govern the use of the property and define the relationship between the City and the operator of the Convention Centre. In order for the Convention Centre to be operated as a Municipal Capital Facility, there has to be a Lease and it has to be owned by the City. 3. The Federal Funding Agreement. StaffanticipatesthattheFederal Governmentwill require the City to make certain commitments before advancing its share of the funding for the Convention Centre. These commitments are likely to involve some specified degree of oversight of the financial management of the Convention Centre (such as requiring that the City be provided with annual Financial Statements). 4. The Provincial Funding Agreement. Staff anticipates that the Provincial Government will require the City to make certain commitments before advancing its share of the funding for the Convention Centre. These commitments are likely to involve some specified degree of oversight of the financial management of the Convention Centre. 5. The Fallsview Business Improvement Area Pledge Agreement. In this Agreement the Board of Management of the Fallsview Business Improvement Area acknowledge and pledge to make its specified financial commitment ($15,000,000 over fifteen years). 6. The Victoria Centre Business Improvement Area Pledge Agreement. In this Agreementthe Board of ManagementoftheVictoria Centre Business Improvement Area acknowledge and pledge to make its specified financial commitment ($1,500,000 over fifteen years). 7. An Acknowledgment for Falls Management Corporation. Staff anticipates that Falls Management Corporation will want an Acknowledgment from the City that Falls Management Corporation can present to Ontario Lottery and Gaming (OLG) in order to satisfy OLG that Falls Management Corporation has fulfilled this part of the commitment it made at the time it received the Contract to operate the Niagara Falls Casinos. The commitment is for a one time payment of $15,000,000. 8. The Project Contract with the Project/Program Management firm who will oversee the construction of the building on behalf of the City. 9. The Construction Contract for the Convention Centre. 10. The Assignment of the Option to Purchase the lands of 1149948 Ontario Limited. More details on this Option (see Attachment A) 11. The Assignment of the Option to Purchase the lands of the Monastery of Mount Carmel. More details on this Option (See Attachment A). 12. The Agreements of Purchase and Sale required to complete the transactions related to the Options described in paragraphs 10 and 11 above. October 29, 2007 - 6 - BDD-2007-05 13. A Lease with Hydro One Networks Inc. permitting the City to use the Hydro corridor immediately abutting the lands to be purchased to the east, pursuant to the Agreements of Purchase and Sale described in paragraph 12. This Lease is intended to enable the City to use the Hydro corridor for a parking lot and vehicle access in connection with the Convention Centre. 14. A Lease with the Region of Niagara. The Region of Niagara owns a 20 acre parcel of land immediately to the east of the Hydro corridor. The Convention Centre project requires this area for use as a parking lot. This Lease will enable the City to secure the use of those lands for a parking lot. Project/Program Management Firm In order to move the project into the construction phase in a truly efficient and effective manner, staff is recommending to secure the services of a project/program management firm. The firm will provide the necessary services and fulfill multiple needs of the Convention Centre project team throughout the construction phase. The project management firm will have the necessary capacity and expertise to guide the project from pre-construction to completion. The successful firm will provide the following services: • Project Implementation Planning • Management of Construction • Procurement Management • Contract Administration • Project Financial Management • Risk Management • Project Due Diligence Review • Project Management Process Audit • Cost Management Process • Cost Management Planning • Cost Control & Reporting • Project Cost Accounting • Project Planning & Schedule Development • Schedule Monitoring & Reporting • Ability to Evaluate, Recommend and Guide Contractors Staff wishes to proceed with the RFP process immediately to retain the project management firm in order to begin the construction process for the new Niagara Convention and Civic Centre. Funds to cover the fees of the project/program management firm and the land acquisitions will come from the capital funds secured to date. Recommended by: Respectfully submitted: S F/Iw hn MacDonald, Chief Administrative Serge Felicetti, Director of Business Development ~y ' Attachments (2) Attachment A The following are the details of the Option and Pledge Agreements that City Staff is recommending that the City execute at this time. DETAILS OF THE MOUNT CARMEL MONASTERY OPTION Principals: Area: Price to Purchase Land: Price to Exercise Option: Expiry Date of Option: Sale Completion Date: Conditions: Carmelite Fathers Approximately 2.62 acres $1,000,000 per acre $100,000 December 31, 2007 180 days from the date the Option is exercised A restrictive covenant must be registered in favour of neighbouring lands requiring the City to begin construction of a minimum 200,000 square foot Convention Centre within ten months of closing The City must provide the Vendorwith an Option to repurchase the subject property for $1,000,000 per acre, should the City fail to commence construction of the Convention Centre within ten months of closing DETAILS OF 1149948 ONTARIO LIMITED OPTION Principals: Area: Price to Purchase Land: Price to Exercise Option: Expiry Date of Option: Sale Completion Date: Alfredo Varalli Anthony Zappitelli Approximately 4 acres $1,000,000 per acre $100,000 December 31, 2007 120 days from the date the Option is exercised Conditions: A restrictive covenant must be registered in favour of neighbouring lands requiring the City to begin construction of a minimum 200,000 square foot Convention Centre within ten months of closing The City must provide the Vendor with an Option to repurchase the subject property for $1,000,000 per acre, should the City fail to commence construction of the Convention Centre within ten months of closing