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2008/04/14SEVENTH MEETING Monday, April 14, 2008 4:00 p.m. City Hall, Committee Room #2A & B 1) Approval of the March 31, 2008 Community Services Minutes. 2) REPORTS: a) R-2008-15 Bob Gale Complex Construction Update b) R-2008-14 Dr. Afrukhteh Art Collection 3) NEW BUSINESS: 4) ADJOURNMENT: STAFF CONTACT: Denyse Morrissey Denyse Morrissey 1) Approval of the February 25, 2008 Corporate Services Minutes. 2) REPORTS: STAFF CONTACT: a) CPS-2008-17 Water & Sewer Rate Structure Review Ken Burden 3) NEW BUSINESS: 4) ADJOURNMENT: a) Resolution to go into Closed Meeting. MINUTES OF COMMUNITY SERVICES COMMITTEE MEETING MONDAY, March 31, 2008, CITY HALL, ROOM 2 AT 6:10 P.M. PRESENT: Chair Councillor Carolynra loannoni -, Mayor Ted Salci, Councillors: Jim Diodati, Vince Kerrio, Victor Pietrangelo, Bart Maves, Wayne Thomson, Janice Wing and Shirley 'Fisher. ABSENT: STAFF: John MacDonald, Ed Dujlovic, Ken Burden, Ken Beaman, Denyse Morrissey, Lee Smith, Dean lorfida, Geoff Holman, Karl Dren, Serge Felicetti, Alex Herlovitch, Todd Harrison, Marianne Tikky- Steno. GUEST: Victor Morcon - 6292 Emma Street, Tony & Angela Volpini - 6304 Emma Street, Robert Carniello - 6301 Emma Street, Sam Mannella - 6284 Emma Street. PRESS: Corey Larocque, Niagara Falls Review, Rob Lapensee, Niagara This Week MINUTES It was ORDERED on the motion of Councillor Fisher and seconded by Mayor Salci, that the March 17, 2008 minutes be approved with thefollowing amendment. That under report PD-2008-12 Additional Planning Workwithin the Elgin Industrial Area (Pilot Project Area) - Cytec Lands and Buttrey Street Area part three of the motion should read, "That the consultant include the CN Rail land area for regeneration." Motion: Carried. Action: Recommendation submitted to Council 2008103/21. REPORTS a) PD-2008-20 SPC-23/2007, Site Plan Application, 2799 St. Paul Avenue It was ORDERED on the motion of Councillor Thomson and seconded by Mayor Salci that staff be directed to meet with the developer to advise that the residents wish to split the cost difference to plant 25' trees. Motion: Carried Action: Recommendation submitted to Council 2008/03/21. It was ORDERED on the motion of CouncillorThomson and seconded by Councillor Pietrangelo that staff prepare a report on the Site Plan Approval Process. Motion: Carried Action. Recommendation submitted to Council 2008/03121. -2- b) R-2008-12 Request to Rename Fern Park, E.E. Michelson Park or Kalar Park It was ORDERED on the motion of CouncillorThomsonsnd seconded by Councillor Wing that Council approvethe recommendation ofthe Recreation Committee to not rename Fern Park, or E.E. Mitchelson Park and Kalar Road Park. Motion: Carried Action: Recommendation submitted to Council 2008/03/21. c) TS-2008-04 Bella Senior Care Parking Concerns It was ORDERED on the motion of Mayor Salci and seconded by Councillor Fisher that Council approve atwenty-five (25) meter extension of the permissible parking area on Willoughby Drive, adjacent to the Bella Senior Care Residence. Motion: Carried Action: Recommendation submitted to Council 2008/03/21. NEW BUSINESS a) It was ORDERED on the motion of Councillor Wing and seconded by Councillor Fisher that pre-hearing consultation proceed and that staff indicate that Council supports the position of the parishioners to have the Conservation Review Board Hearing delayed. Motion: Carried Action: Recommendation submitted to Council 2008/03/21. ADJOURNMENT It was ORDERED on the motion of Councillor Pietrangelo and seconded by Councillor Diodati that the regular meeting of the Community Services Committee be adjourned at 6:44 p.m. Motion: Carried Apri{ 14, 2008 ~~ '~~-~~~~~~~~~~5 c,tneon Councillor Carolynn loannoni, Chair and Members of Community Services Committee City of Niagara Falls, Ontario Members Re: R-2008-15 Bob Gale Complex Construction Schedule Update RECOMMENDATION: That the update report be received for information. BACKGROUND: R-2008-15 The following information is being provided as an update to Council as to the ongoing work that has been done by the project team for the construction of the Bob Gale Complex. Project Construction Schedule Update The original project schedule, noted at the time as being aggressive, anticipated a September 2009 opening. Site issues have caused delays of approximately three months to the site preparation schedule The site preparation work was completed by April 11, 2008 This delay has impacted the project schedule. A number of general contractors with experience in building similar arena facilities were consulted in order to determine a realistic schedule for the completion of the project. Taking into accountthe current construction activity and availabilityoftrades in the Niagara Region, a 20-month construction schedule was recommended as a realistic project time line for the size and complexity of the Bob Gale Complex. Based on the above, the following as provided by Barry-Bryan Associates (1991) Limited, is the revised project schedule Finalize Pre-qualification of Contractors Completion of Design/Specifications Tender Call and Awards Contract Start 6i''orkrn~; Togetlrcr to Serve Our Cotnnauniry March 2008 May 2008 July 2008 August 2008 Community Services Department Parks, Recreation & Culture ,,a. April 14, 2008 - 2 - R-2008-15 Arena/Site construction substantial completion April 2010 Arena Opening May 2010 Arena Building Size Expansion: Impacts to the Budget The Bob Gale Complex has been designed in consultation with many user groups and community stakeholders. Every effort has been made to accommodate the variety of space requests and expectations. In orderto meet these requests the size of the complex increased to approximately 211,000 square feet from the original 196,660 square feet an increase in size of about 7%. Cost estimates were prepared by the cost consultant (BTY Group) based on the above square footage and the requests of the various groups. The estimate indicated that the budget was exceeded by $2.42 million. Accordingly, a list of potential cost reductions was prepared that could be made to reduce the capital.cost of the arena building and at the same time maintain the key community features of the project. The main costs reductions were achieved through the reduction of space. Space Assignments General Review Increased space for five user group offices and a board meeting room was provided on the second floor. The Sports Wall of Fame developed into a combined display wall and multipurpose meeting area of approximately 1,300 square feet (Convenor's room/viewing area). The large convenor's room was reduced in size along with the main corridor. The Sport Wall of Fame remains in the centre spine of the main lobby. New space was provided for a dressing room, offices, first aid room and storage area for the Jr. "C"hockey team. A visitors dressing room and a dry training area for the Jr. B's and Jr. C's was also provided. The additional cost for finishing these new spaces is estimated to be $250,000. The size of the area provided has been reduced. Expanded enhancements to the Memorial Room increased the size of this key gathering place to over 5,000 square feet. The room was reduced in size and remains very spacious at approximately 3,200 square feet. The design concept included a large area on the second floor far food & beverage area (licensed). This was eliminated and standard concessions will be constructed on the first floor and second floor, with service (including licensed events) in the Niagara Falls Memorial Room when required. The changes have resulted in the complex being reduced in size to 202,766 square feet and within the Council approved t-udget of $34.7 million. April 14, 2008 - 3 - R-2008-15 Recommended by' Approved by: Denys Morrissey, DirgEtor of Parks, Recreation & Culture Ed Dujlavic, Executive Director of Community Services f ~ ;;,: ~~ Respectfully submitted. ~.~r'=~- = - Jo~ih MacDonald, Chief Administrative Officer S:\CouncillCouncil 2008\R-2008-15 -Bob Gale Complex Construction Update.wpd J April 14, 2408 ..- ~. c~.tvnnt~ Councillor Carolynn ioannoni, Chair and Members of Community Services Committee City of Niagara Falls, Ontario Members: Re: R-2008-14 Dr. Afrukhteh Art Collectiion RECOMMENDATION: R-2008-14 That the information regarding the Dr. Afrukhteh Art Collec#ion be received for the direction of CounciL~ that staff ;pursue funding and partnering alternatives for the display ' of the Dr. Afrukhteh Art Collection.: BACKGROUND: At the Council meeting of February 11, 2008, staff uvas requested to meet with Dr. Afrukhteh regarding his:art collection. Report R-2004-12-Armoury and an excerpt from the Council minutes dated February 23, 2004, are attached for information. Staff met with Dr. Afrukhteh on March 7, 2008. The following summarizes general information confirmed at the meeting. • he is interested in donating the collection to the Gity of Niagara Falls for display in a dedicated and stand-alone gallery; • the donation would be made with expectation that the City would be responsible for the appraisal, gallery facility, and all gallery operating associated costs; • the collection is made up of 407 paintings (no artifacts, ceramics, rugs, e#c.); • the collection is said to include valuable pieces by Canadian Artists; • the collection is stored partly in home garage, Niagara-On-The-Lake, and partly off site at an undisclosed location (no special temperature and humidity controls have been installed at either location); • the collection has remained in storage since 2002 when PRC staff catalogued each painting by taking digital photos (CD attached); • conveyed that other agencies/organizations in On#ario have been approached at different points over the years to accept collection. A letter dated Aprii 3, 2008 (attached) confirms the terms of the donation. Worki~ig Togetleer to Serve Uitr Comnuur.ity ~ Community Services Department ~ Parks, Recreation & Culture April 14, 2008 - 2 - R-2008.14 Considerations from Acceptance to Gallery Operation Acceptance of the art collection involves the following general steps along with their inherent financial considerations: appraisal, temporary storage, insurance, building and gallery facility, gallery operations and staffing. Financial Considerations Financial considerations from acceptance to operation were outlined in the "Capital Budget Workshop. Financial Considerations Dr. Afrukhteh Art Collection" Memorandum that was reviewed during April 7, 2008, Capital Budget Workshop. As outlined, there was no capital or operating costs related to acceptance, housing and display of Dr. Afrukhteh's Art Coliection included in the budgets. Acceptance Suitable Facility" $ 2 M to $6 M Appraisal $50,000 up to $200,000 Restoration/Conservation unknown without appraisal Temporary Storage (Climate Con#rolled) unknown without further review °renovation may include renovation of Old Court House. Basic Operating Costs Curator $70,000 Assistant Curator $50,000 Support Staff $40,000 Cashier/Reception Staff $65,000 Custodial Services $25,000 Insurance unknown without appraisal Collection Maintenance unknown without appraisal Facility Costs (heat, hydro, water) $50,000/year Total Basic Operating Costs I $300,000 (plus insurance & collection maintenance) Revenue ~ $0 - $40,000 April 14, 2008 - 3 - Appraisal and Insurance R-2008-14 The condition and authenticity of the collection will need to be thoroughly investigated as a component of the appraisal process. The cost of having the collection appraised by a qualified expert is estimated to be up to $200,000. An estimated range has been provided as the professionals consulted indicated that based on their experience, but without viewing the collection, the condition of the collection will have a tremendous impact on the time required to appraise and authenticate the collection. The appraisal will be necessary to establish stand-alone insurance rates for the collection. In February and March 2008, staff contacted a variety of organizations and professionals in the field regarding appraisals which included: Niagara Falls Museums, Riverbrink, Rodman Hall, Jordan Historical Museum, and Jon Jouppien. All indicated that the large size of the collection, the condition of the collection, and difficulty that is expected to authenticate will all contribute to the cost. The professionals were able to provide information on professional appraisals completed on theircollections. The collection would need to be assessed by a certified member of either the Professional Association of Art Dealers in Canada or the Certified Appraisers Guild of America. In 2004, City of Niagara Falls Museum staff had provided an estimate regarding the 'Cost of Collecting'. The initial cost of an acquisition at that time was calculated at $135 per object which includes curatorial costs, documentation costs, conservation costs, and the cost of providing storage. The initial cost of accepting a 400-piece collection based on this formula would be $54,000 if there were an existing facility and operational context. In addition, the report highlights the cost over time to maintain and would include an additional $743 endowment per object at an interest rate of 10% in order to cover the annual costs. Based on these 2004 figures, a donation of 400 objects would require a donation of $297,200 in order to keep and store the objects forever. Temporary Storage If the art collection was accepted, an immediate climate controlled location for storage would have to be secured Currently there are no City-owned facilities that staff is aware ofto properly store the collection. The costoftemporary storage is unknown withoutfurther review. Permanent Display Gallery Currently there are no City-owned buildings that staff is aware of that could serve in its current state as a gallery. Such a facility would be a capital project whether a new building (design/build) or purchase of a building for renovation, or renovation of an existing City owned building such as the Old Court House. Building costs are estimated at $2M to $6M for purposes of this report and needs to be further validated. April 14, 2008 - 4 - Basic Operating Costs R-2008-14 In order to operate an Art Gallery the following staff compliment would be necessary: Curator, Assistant Curator, Support Staff, Cashier/Reception Staff, Custodial Services. In addition, there will be annual casts associated with col{ections management and maintenance and facility management and maintenance. The annual operating costs are estimated at $300,000 plus insurance and collection maintenance. The revenue associated with the Art Gallery could range from $0 to $40,000. Traditionally, Public Art Galleries are heavily subsidized with low admission fees. A quick investigation of different facilities indicates that admissions vary from $0 to $20. Niagara Falls Art Gallery suggested a donation of $4.00 per person, Rodman Hall offers free admission, Grimsby Public Art Gallery is free admission, National Gallery of Canada in Ottawa is $9 adults, $7 senior(student, $4 youth, 12 and under free, and Art Gallery of Ontario in Toronto prices are not available at this time as it is closed far renovation and installation. Future Gallery Operational Option Given the mandate of the Niagara Falls Art Gallery, an option is to request the organization to consider accepting, maintaining, and managing the collection. The Niagara Falls Art Gallery has some prior involvement with the Dr. Afrukhteh Art Collection. In 2001 they began the process of cataloguing the art until the project was suspended. Based on the Community Development model utilized by PRC, the City could provide the necessary funds for the annual operations of the new gallery. The City currently provides the Niagara Falls Art Gallery with a grant of $56,000 per year. Revenue Canada Revenue Canada also formally comments on donations. In order for the donor to receive a tax receipt, the Canada Revenue Agency recommends property be appraised ifthe value is more than $1,000. ft an appraisal is not completed, the organization must be able to substantiate the value of the property. The name and address of the appraiser must be included. Under Review: Public Art Policy Revision The City of Niagara Falls has established a Public Art Policy in order to handle public art matters consistently and efficiently. The Public Art Policy is currently being revised and updated. The policy was last reviewed by the Arts & Culture Committee on March 27, 2008. Staff is working toward having a report to Council on April 28, 2008. It is recommended that policy be utilized as a key part of the process with respect to the donations of any art. In revising and updating the current Public Art Policy, other municipalities were contacted. The City of St. Catharines, City of London and City of Burlington require appraisals for art donations to be done at the donors expense. The Board of Museums, City of Niagara Falls has the same policy regarding appraisals being the responsibility of the donor. Additionally, the City of London requests "Donated art wilt also include a funding donation for the maintenance and conservation/restoration of the work being donated, the amount of which will be negotiated as part of the acceptance agreement." April 14, 2008 - 5 - R-2008.14 Thefollowing excerptfrom the proposed Draft Policy would have implications regarding the acceptance of public art as a gift, particularly as it requires the donor to be responsible for the appraisal costs "Proposed Procedures For The Acceptance of A Giff: The proposed gift is reviewed by the Public Art Advisory Task Force ff a gift is acceptable, under the acquisitions criteria, the steps are taken as follows. a) All donated items for the art collection should be appraised at the Time of donation fo determine fair market value Acceptable appraisals will be from certified members of eitherthe Professional Association ofArt Dealers in Canada orfhe Certified Appraisers Guild of America. The donor is responsible for this cost. b) !f the decision is favorable, a formal agreement will be drawn up outlining the responsibilities of each party. The agreement will address all relevant issues such as project funding, fabrication, siting, installation, maintenance, transfer to title, identification labels, deaccessioning. !n a!1 cases only unrestricted donations will be considered. !f the donation is accepted, the donor must submit a legal instrument of conveyance oftitle. c) In accordance with the criteria established in the Income Tax Acf (Canada), the City of Niagara Falls will issue a tax receipt to the donor based up an appraisal for fair market value. d) The donor will be recognized and acknowledged in a manner suitable to the object on display and in accordance with professional collections management procedures and standards. e) Ifa proposed gift is declined afterreview as described above, the prospective donorwil! be informed and the object will be returned if it is in the possession of the City." Recommended by' Approved by: Denyse Morrissey, Director of Parks, Recreation & Culture ;~_ Ed Dujlovic, Executive Director of Community Services I i y _ r~i i~ yt-~Y~-., Y Respectfully submitted: Joh acDonald, Chief Administrative O S:1CouncillCouncil 20081R-2008-1 Q~'br Afrukhteh Art Collection.wpd ~. ~i~~~~R~~a~~~ April ?, 201)8 Dr D~anrii Afrukhteh 67 Shakespeare Niagara-On-The-Lake, ON Jear Dr Afi-ukhteh. LOS 1.i0 Thailh you iof' meetulu ~i~ith us In your home on March 7, ?nUS, t~ disctiss your an collecuon As a result of that meenne. City Staff understand that. 1 Yoe are ieterested m donaung year collectiol; to the City of Niagara Falls for evervorle tc eil~oy- ? ~-aur expectation is that the i-ity ~sould be respci3sihle For the appraisal aad all other associated costs; The c:~llecuoil is made up of 40- paintings u~o aruFacts, cerattucs. rugs. e.tc t, -t , 2li Deif<be [iiaf ^k CUiiCC.1Jl] !I-iC lLlueti ial Ga r`ib pI CU Cb i . 'L 3i;auiaii '-,rti 5 s. ~. You Katie no appraisal of the collechon- b The collecuon is stored partly in your home garage in Nlu,ara-On-The-Labe. and p~u1l; uf~ site ai another iocatten, 7 No special tempea~anlre and humidity controls ha~~e been nlstalled at either location, S The collection has remained ul storave smee =002 when Parhs- k°crea?lou ~ Culaire Stafl catalogued each painting by talzmg dtgna] photos- ~ You do not want the collecuon divldc'd and expect the Crty to accept. store and maintain the entire collecuon, 16'orking Together to Serge Our Canununiq~ 'Community Services Department 'Parks, Recreation & Gu!ture Ext 3331 Fax 905-356-7404 'dmorrissey@niagarafalls. ca Dr Afrukhteh - _ - April i, ?UU8 1(3 You expect the collection to he displayed in a stand alenr dedicated gailerv; and ll. They'ityiseapectedtopayailofthecostsassoctated~~n~ithappraising,stonng.dtsplayro~and pronxitin~ the collection. K~ndl~~ confim~ cur ~u~derstanding o1 vr'ur cxpectauous hi'signm~ this letter helrna- yours trui~~. Denvse 1Vlonissev Du-ectorofP'arL•s P.ecreatton~: ~'ulhue 1 confirm that these are the terms upon ~n~hich i ~o-~ould cor~sderdonaum~ nn~ art collection cons~stin~ of ~u7 pamtinus. to the Cite of Nia~*ara Falls. ,! ~~- Dr. Djanr~'~afizii.hteh Date S. >In!I~ht~~L -ail ~ nllcci'.un ,Dr .?irul<hieh Ic_ry cr «'~: Community Services Department The Clty of Parks, Recreation & Culture Nld afa Falls 4310 Queen Street 9 P.O. Box 1023 ~anad~ Niagara Falls, ON 1.2E 6X5 web site: www.city.niagarafalls.on.ca Tel.: (905j 356=7521 Fax: (905) 356-7404 E-mail: akon@city.nlagarafalls.on.ca February 23, 2004 IN CAMERA His Worship Mayor Ted Salci and Members of the Municipal Council City of Niagara Falis, Qntario Members: Re: R 2004-12 Armoury That Council receive and table this report. BACKGROUND: R-2004-12 Adele Kon Director If Members of City Council concur with the following staff recommendafions, meetings will be scheduled to inform the groups/individuals who have expressed interest in utilizing the Armoury. The tecommendations are as follows: that Federal Government staff be advised that the City is no longer interested in acquiring ownership of the Niagara Falls Armoury; 2. that staff advise Dr. Afivkhteh that the City will no longer accept his donation because of lack of adequate space to store and display the artworks; and 3. that. the matter of the Armoury be referred to the Heritage Master Plan process. Council has been dealing with the matter of the Armoury for approximately four (4) yeazs. During that course of time, Council has continually expressed interest in obtaining ownership of the land and building. Letters supporting the acquisition/preservation of the land and building have been received from the Arts & Culture Commission, the Municipal Heritage Committee (formerly LACAC), the Military Museum, Sherman Zavitz, City Historian, and the Board of Museums. Working Together to Serve Our Community Municipal Works • Fire Services • Parks, Recreation & Culture • Business Development • Building 8 8y-Law Services February 23, 3004 - 2 - R-2004-'t2• ~ Initially, five (5) community groups expressed interest in utilizing the Armoury building. A review was conductedbyDavid Schram ofDavid Schram & Associates Inc. who completed aBusiness Plan nn the potential use of the building. He recommended that the operation of the Annourybe assumed by thel3iagaraFails Art Gallery, and that it, on behalfof the City, assume curatorship responsibility for the art donation from Dr. Afmkhteh. The Business Plan also recommended that space be provided for both the Military Museum and the Niagara District Art Association. With this partnership model, the annual cost to operate the building was estimated at $90,000. If this partnership did not exist and the building was used solely for the display of Dr. Afntkhteh's works of art, then the annual operating cost would increase to approximately $320,000 per annum. - As part of the review process, Council also commissioned Trow Consulting Engineers Ltd. to conduct a building condition survey. This report was presented to Council and outlined the cost associatedtorestore/renovatethebuilding. The cost es6matedwas$1,016,SOO,exclusiveofinterior renovations for a specific tenant(s) or for equipment/furnishings. Following a discussion regarding phis report, Council directed staff to advise the Federal Government that for a nominal fee, the City was willing to assume ownership of the land and building. Fttrfher, Council dtrected that the cost ($40,000) of the roof replacement be included in the budget. Irt a subsequentmeeting, Council approved the Terms ofReference and appointments to anAdvisory Committee. The Committee's mandate was to recommend to Council the potential use of the building. A letter was received from Dr. Afrukhteh outlining his proposal to assume full responsibility for the restoration/renovation ofthe building. Council agreed to his proposal and the Advisory Committee was therefore temporarily put on hold. In subsequent staff meetings with Dr. Afntkhteh, he stated ) that he would withdraw his offer if the building was not cleaned of all asbestos ($240,000} and if ownership of the building was not transferred to his foundation. He also informed staff that he intended to phase the required restoration/renovationtyork over a number of years and that he was only willing to provide $60,000 per yeaz toward the project. Staff now has serious doubt that Dr. Afntkhteh can cover the cost to restore the building. Staff also provided pictures of the 400 plus pieces of art work that the Dr. Afntkhteh intends to donate to the City to a Conservator. )n her opinion, there will be a fair amount of restoration required in order to eventually display the art works. In its current state, she views it as a significant financial liability and recommends that the City not accept the donation unless there is an endowment provided to restore and care for the art work. The City received an Offer to Purchase the Armoury from the Federal Government. The offer raised a ntunber of concerns and Council directed that staff meet with representatives of the Federal Government for purposes of clarification. A summary of these concerns is as follows: ~ The exterior of the building requires considerable remedial work and will cost an estimated $559,808. The interior of the building has potential environmental concerns as identified in a Phase I Property Transfer Assessment Report. ~ Property is known to contain asbestos-containing materials. ~ The City must satisfy itself of the extent of the hazardous materials at its expense, remove February 23, 2004 - 3 - R-2004-12 and dispose of the material after closing. ~ No time frames to do remedial work or envirorunental work. Heritage terms restrict alterations. The Federal Govemment confirmed that it would not release the City of its obligations and interest with respect to enviromnental issues if the City in turn transferred the Armoury building to any third parry such as Dr. Afiukhteh. In fact, they advised the City that they would not transfer the land and building to an individual but only to a public body such as the City. In November 2003, the City received a Memorandum of Agreement. The Agreement outlined strict protocols regazding the disposal of any shells that might be uncovered on the property. The Offer to Purchase which was signed by the Mayor and Clerk has lapsed and therefore there is no binding Agreement with the Federal Government. Conclusion: It is recognized that the Armoury is an important heritage landmazk. The building has been designated by the Federal Government as well as the City. However, the high cost to restore/renovatethe building will place a significant financial burden on the municipality for many years to come. Staff is recommending that the Federal Government be advised that the City is no longer interested in obtaining ownership of the building. Staff is also recommending that Dr. Afrukhteh be advised that unfortunately, the City is no longer in a position to accept his generous donation because of a lack of adequate space to both store and display the art work. Prepazed and Recomme ed by: Adele Kon i City Solicitor AK/ROK/das Recreation & Culture Respectfull/y~submitted: /~~ f'!C `~Ocn~t'c`~G John MacDonald Chief Administrative Officer S:1CouncillCouncil 20041R-2004-12 Armoury.wpd -14- February 23 2004 Couac' Minutes 3. Armoury Building on Victoria Avenue -that the Federal Government staff be advised that the City is nc longer interested in acquiring ownership of the Niagara Falls Armoury; that staff advise Dr. Afrukhteh that the City will no longer accept his donation because of lack of adequate space to store and display the artworks; and that the matter of the Armoury be referred to the Heritage Master Plan process; 4 Postponement of cost$haring Agreement for Harvey Ho, Regency Hotel - thatthe Chy postpone its rights and interests in the Servicing Agreement to a new first mortgage in favour of the State Bank of India (Canada) with respect to 8128 Mountain Road; 5. Agreement of Purchase and Sale to sell part of Stanley Business Park to 1149962 Ontario Limited (Matovfc lands) -that the City offer the identical Agreement of Purchase & Sale that was terminated two weeks ago, with tha exception that the purchaser shall have 120 days from the date of the offer, which is today's date, to perform its due diligence; and with all other matters being adjusted accordingly; and further, if that is not satisfactory to the propo sed purchaser, then such documents as reflect the intention of Council in that regard. 6. That Council supports Management's rights to deal with personnel matters. The motion Carried with Alderman Wing voting contrary to the motion dealing with the Armoury matter and to Management's rights matter; Alderman Kercio abstained from the vote on the matter dealing with the purchase and sale of Stanley Business Park due to a conflict of interest and Alderman Campbell abstained from the vote on the Armoury matter because he resides in the area. BY-LAWS His Worship Mayor Salci received a negative response to his request on whether therewas anyone present that had an interest in the lands being sold as per by-law 2004-39. Hearing none, a motion to introduce the by-laws was requested. ORDERED on the motion of Alderman Pietrangelo, seconded by Alderman Morocco, that leave be granted to introduce the By-laws and the By-laws be read a first time: 2004.39 A by-law to authorize the conveyance of Parts 2 and 10 on Reference Plan 59R-12076, Part 10 subject to R0162711, to The Regional Municipality of Niagara, for $34,840.00. 2004.40 A by-law to amend ey-law No. 2002-081, being a by-law to appoint City employees, agents and third parties for the enforcement of provincial or municipal by-laws. 2004-01 A by-law to amend By-law No. 89-2000, being a by-law to regulate parking and traffic on City Roads. (Parking Prohibited, Yield Signs at Intersections, stop Signs at Intersections, Through Highways) 2004st2 A by-law to amend By-law No. 77-75, being a by-law to prescribe the height and description of lawful fences. 20043 A by-law to establish Part 1 on Reference Plant 59R-11421 as a public highway, to be known as and to form part of Church's Lane. 2004-44 A by-law to authorize the execution of a Renewal Licence Agreement with Her Majesty the Queen, in Right of the Province of Ontario as represented by the Chair of the Management Board of Cabinet respecting a renewal of existing Licence Agreements for parking and recreational purposes on Swayze Drive. FOURTH MEETING IN CAMERA MEETING Committee Room 2 Fet~ruary 25, 2008 Council met on Monday, February 25, 20D8 at4:00 p.m. in an In Camera Session. Councillors Thomson, Kerrio, loannoni and Wing were absent due to a conflict on the matter. Councillor Pietrangelo presided as Chairman. Following consideration of the items presented, the In Camera Session did rise and report in open session. DEAN 10~1/DA, CITY CLERK R.T ED SALCI, MAYOR y}}*k REGULAR COUNCIL MEETING Council met on Monday, February 25, 2008 at 7:00 p.m. for the purpose of considering Regular Business matters. All members of Council were present. Councillor Kerdo offered the Opening Prayer. Following the opening prayer, Eilis Wilson, a g rade 8 student at St. Gabriel Lalemant School sang the National Anthem. yy}Ry ADOPTION OF MINUTES Councillor Wing indicated an addition to the wording of the motion regarding the Afrukhteh Art Collection, page 15 to include that information on the condition and cost of the collection be provided for Council's information. ORDERED on the motion of Councillor Kerrlo, seconded by Councilor Maves that the minutes of February 25, 2008 be approved as amended. Carried Unanimously *k*k* DISCLOSURES OF PECUNIARY INTEREST Councillor Kerrio indicated conflicts from the February 11" meeting, for which he was absent, for PD-2008-14 and the In camera matter regarding Development Charges. He continues to have a conflict on the In Camera matter re: Development Charges on the agenda for this meeting. Councillor Thomson indicated a conflict to an In Camera matter, re: Development Charges. Councillor loannoni indicated a conflict to an In Camera matter, re: Development Charges. Councllor Wing indicated a conflict to an In Camera matter, re: Development Charges. 2 - February 25, 20D8 Council Minutes CORPORATE SERVICES COMMITTEE AGENDA Councillor Pietrangelo presided as Chair for the Corporate Services meeting. Municipal Utilit~Budget F-2008.10 -Chief Administrative Officer - 2008 Municipal Utility Budget It is recommended that the Corporate Services Committee recommends: -the approval of the 2008 Municipal Utility Budget -the approval of the 2008 water and sewer rates and charges per Schedule A. -the approval of the amending bylaw to Bylaw 2007-161 for the imposition and collection of rates - the 2008 water and sewer rates be reviewed following the consideration of the Water and Sewer Rate Structure Review report ORDERED on the motion of Mayor Salci, seconded by Councillor Moves that the report be approved pending possible amendments after Council receives the Loudon Report. Motion Carried with Councillor Thomson and Fisher opposed. ~.,.. Ooerat{ons Budget F-2008-11 -Chief Administrative Officer- 2008 General Purposes Budget It is recommended that the Corporate Services Committee recommends that approval of the 2008 General Purposed Budget as amended. ORDERED on the motion of Councillor Diodati, seconded by Mayor Salci that the report be approved. Motion Carried with Councillors Kemio, Thomson and Fisher opposed. TS-2008-15 - Chiet Administrative Officer -Proposed Adjustment to Parking Fines It is recommended that: 1. Council approve the proposed adjustment to set f nes; 2. That staff forward the attached schedule to the Ministry of the Attorney Generals's Offce for approval; and 3. That Council forward a resolution to the Regional Municipality of Niagara requesting that they adjust their set fines to align with the proposed adjustments outlined in this report. As well, that they eliminate the voluntary payment option. ORDERED on the motion of Councillor loannoni, seconded by Mayor Salci that the report be approved as recommended. Carried Unanimously .<.«, ORDERED on the motion of Councillor Kerrio, seconded by Councillor Thomson that Council listen to the Board of Museums presentation next followed by the capital budgetpresentation. Carried Unanimousiv 3 - February 25, 2008 Council Minutes Presentation by the Board of Museums Don Jackson, Board member and Kathy Powell, Museum Manager made a brief presentation outlining expansion plans for the Lundy's Lane Historical Museum and how these plans fit with War of 1812 bicentennial initiatives. The costs and the timelines of the project were outlined. ttishopedthatmatchingFederalandProvincialfundswiilbesought and available. Jon Neuert, Architect, Baird Sampson Neuert, gave a brief presentation on the concept plan for the Lundy's Lane Historical Museum proposed expansion. ORDERED on the motion of Mayor Salci, seconded by Councilor Wing that the proposed expansion to the Lundy's Lane Historical Museum be referred to the 5 year capital budget forecast for consideration. Motion Carried with Councillor loannoni opposed. •k Rff Caoital Budget The Chief Administrative Officer made a brief powerpoint presentation on the proposed 2008 Capital Budget. ORDERED on the motion of Mayor Salci, seconded by Councillor Diodati that the capital budget discussions be deferred to a future strategic planning meeting. Motion Carried with Councillors Wing, loannoni, Fisher and Kerrio opposed. ORDERED on the motion of Councillor loannoni, seconded by Mayor Salci thatstaff investigate and report back on possible funding opportunities for Grade Separation forthe future strategic planning session. Carried Unanimously ORDERED on the motion of Councillor Wing, seconded by Councillor loannoni that an update on the consultants roads and infrastructure report be provided for the future strategic planning session. Carried Unanimously +.,.» Miscellaneous CAO-2008A1 -Chief Administrative Officer- Council Strategic Priorities 2007-2010 It is recommended that this report be received for information. ORDERED on the motion of Mayor Salci, seconded by Councillor Kerrio that the report be received far information. Carried Unanimously x~s~• ORDERED on the motion of Councillor Fisher, seconded by Councillor Moves that the Corporate Services meeting be adjourned at 9:35 p.m. Carried Unanimously ~.+~. MAYOR'S REPORTS. ANNOUNCEMENTS Mayor Salci extended condolences to Jim Moves, a Niagara Transit Employee, on the recent loss of his step-father William Miller. Mayor Salci advised of some recent events: Bill Clark, a long time employee of the City for 33 years has announced his retirement; St. Michael's High School held its 3'" Annual Valentine's Day Semi Formal, the Bowl for Kids Sake fundraiserwhich was a huge success and the Niagara Falls Civic Convention Centre has announced their executive team. April 14, 2008 CPS-2008-01 ~~ a - Councillor Victor Pietrangelo, Chair c n w ~ n ,~ and Members of the Corporate Services Committee City of Niagara Falls, Ontario Members: Re: CPS-2008-01 Water and Sewer Rate Structure Review RECOMMENDATION: 1. That Committee receive the Water and Sewer Rate Structure Review report prepared by R.M. Loudon Ltd., dated April 2, 2008. 2. That Committee recommends that Council adopt the list of principles as identified in the Loudon report. 3. That Committee recommends to Council the formation of a Public Consultation Committee for Water and Sewer Rate Structure Review. 4 That Committee recommends that Council directs the Public Consultation Committee to make recommendations on rate structures that comply with the adopted principles. BACKGROUND: On December 10, 2007, Council approved the engagement of R.M.Loudon Ltd. to conduct a Water and Sewer Rate Structure Review The review took place immediately as outlined in the report of April 2, 2008, a copy which has already been distributed to Council. Staff worked with Michael Loudon and with Mr Ed Bielawski, who provided several documents of information for Mr. Loudon's review. The report does not give a recommendation for a particular rate structure but identifies several principles that could be the criteria for considering a different rate structure The Principles are as follows: • Revenue Adequacy & Revenue Security • Legality • Practicality • Fairness & User Pay • Affordability • Simplicity • Conservation & Water Use Efficiency • Encourage Development Mr. Loudon has suggested t„t~attithie°Principle of Fairness and Equity is the most important principle related to the water and sewer rates, as identified at the public consultation sessions. Staff sugge~s#sfh next step is that Corporate Services Committee recommends to Council the~dbgtio"`ri of the Principles. j WOYk11t TO ether t0 Serve Ol[Y CO[timl[[tIt I Corporate Services oepartme-t g g y Municipal Works April 14, 2008 - 2 - CPS•2008-01 Mr Loudon's review provides an examination of the components of a rate structure, whether it is a fixed cost or a variable expense, either a monthly charge or a volumetric rate. To explain the impact of changing the rate structure, Mr. Loudon chose a sample rate structure for comparison. The report shows the impact of changing the current method. Staff cautions that although this is a good example of a change and what the impact would be, it should not be considered to be the specific recommendation of the consultant. Mr Loudon's review includes a variety of rate structure alternatives. The review covers the basic components and several volumetric rate formats. Other issues discussed include Volume Only Rates, Revenue Security, and Metering of Condominium/Townhouse Developments. Further study can be performed by City staff, however, public input is necessary in order to appreciate what the range of impacts may be for various sectors in the community Staff is requesting that Committee recommend to Council the formation of a Public Consultation Committee, made up of staff and public representatives Members of the public should be selected to provide representation from residential, institutional, commercial and industrial interests. The Public Consultation Committee would be directed to prepare recommendations on the appropriate rate structure and its compliance with the adopted principles approved by Council CONCLUSION: In summary, Staff suggests that the Water and Sewer Rate Structure Report from R.M Loudon Ltd. be received for information, that the report's Principles be adopted by Council and a Public Consultation Committee, made up of representatives from a variety of sectors in the community, be formed to make recommendations on a rate structure to Council. Recommended by Respectfully submitted Ken Burden, Executive Director of Corporate Services ss ,~ r r , r ~,T . . ~- n MacDonald, Chief Administrative Officer V'\2008000NCIt\0804141CPS-2008-01 Water and Sewer Rate Structure Review.wpd City ofNiugura Falls Tina/ Repo~~t GYater &.Sewuge Rate Struciw~e Review page j of 78 City of Niagara Falls Water ~ Sewa .. r ~'. M. ~ R. M. )-.OL1ClOri Ltd. April 2, 2008 NF User Rale Repay Apri12 ZOUB Frnnl. doc ~ R.M. Loudon Ltd. City ofAriaga'u Fa!(s Water & Sewus~e Rate Struchrre Review TaUle of Contents Fina! Repur! 'aee 2 0(78 1 Executive Summary ............................................................................. ....................... 6 2 Background .......................................................................................... .......................9 3 Public Forum ........................................................................................ ..................... 15 4 Existing Water & Sewage Information ................................................ ..................... 18 4.1 Water 8c Sewage Rate Structures ................................................. ..................... 18 4.1.1 City Retail Rates .....................................................:~:.............. ..................... 18 4.1.2 Regional Wholesale Rates ............................... .:~~........ ..................... 22 Y:. 4.2 Customers ...........................................................................~, :r:-.. ..................... 23 4.3 Consumption ................................................................................ .::..................23 4.3 1 Regional Water Supply & Sewage Treated Volumes...... ''- ....... 23 4.3.2 Annual Consumption ....................... .....:.:...............~::......... ..................... 24 4.3.3 Consumption Profile ........................ .::.... `u ; ~, - °~ " ..................... 25 ~ 4.3 4 Largest Users " '~ ..................... 27 4.4 Budget .................................. 4....:, ........ ...:.......... .....................29 4.5 Conservation ! Water Efficient Use Programs:.... ............... ..................... 30 5 Alternative 2007 User Rates.....:.. ......... ..:......................... .................... 33 51 Principles ..................::,......... ....;::.........::............................. .....................33 5 l.] Revenue Adequacy.Bz Revenue Seciar~ty ................................. 3 ..................... 33 ~ 3 , ._ 51.2 Legality ......... ................................................... ....................33 5.1.3?'Practicality........ `...~C ................................................. ....................34 5.1:4 :.Fairness & User Pay......... .................................................. .................... 34 ,.. 5.1.5 zAffordability ............................................................................. ....................35 .;~ 5.1.6 Srmplicity .................................................................................. ....................35 5.1.7 Conservation,& Water Use Efficiency ................................... ; .................... 35 , 5 ].8 Encourage Development .......................................................... ....................35 5 19 Principles Summary .................................................................. .................... 36 5.2 Rate Format ................................................................................... .................... 37 5.3 Residential Sewage Bills and Seasonal Usage .............................. .................... 39 5.4 Alternative Rate Calcu]ation ......................................................... .................... 42 5.4.1 Fire Protection Cost .................................................................. .................... 42 5.4.2 Cost Allocations to Service Charge & Volumetric Charge ...... .................... 44 5 4.3 Service Charge Calculation ....................................................... ....................46 5.4.4 Volumetric Rate ........................................................................ .................... 48 NF User Rate Repmv Apri! 2 2008 Finol.doc 2 R.M. Lneidon lyd. City oJNiaguru ral/s Fina! Reyors JYater & Selvage Rate S[ruchrre Review Puge 3 a, f 7b 5.4.5 Current vs Alternative Rates ........................................................................ . 49 6 Impact (25% in Service Charge) .............................................................................. . 50 6.1 Cross Section of Customers .............................................................................. 50 6.2 Impact on Large Customers ............................................................................. 52 6.3 Rates Comparison With Uther Municipalities .................................................. 54 7 Uther Issues ............................................................................................................... 57 7.1 Volume-Only Rates-Nu Service Charge ...................................................... 57 7.2 Revenue Security .......................................................::.r:................................. 60 7.3 Metering of Condominium Townhouse Development .:::. ..................... ,~ 61 8 APPENDIX A -Rate Structure Alternatives ...................................:`..................... ' ' 63 : . 8.1 Basic Components ......................................................................i.~ `,,.:............. 63 8.2 Volumetric Rate Format Alternatives.. ..:. .r:.:... :.=~: ` ........ 64 8.2.1 Single Block Rate (SBR) ...........................:...........1....::...:.....:..................... . 64 ; 8.2.2 Declining Block Rate (DBR)........... >... ......... ` ..................... 65 8.2.3 Increasing Bluck Rates (IBR) :..,° ,,,,... 67 8.2.4 Humpback Rate (HBR).... ....... ::....... ....................................... . 68 8.2.5 Lifeline Rate (LR) ...........: ........ ;:~................................................ ,. 69 8.2.6 Seasonal Excess Use Rate" (EUR).... :.r :.............................................. 70 8.2.7 Seasonal Rate (SR) ........ 'F ..................................................... ' ' 71 ; , . 8.2.8 Multiple or Combrried;Rate Formats ..................................................... 73 9 Attachment 1 -City of Niagara Falls -Study of Water & Sewer Rates Following Metering -Final,'-Report Novembei`2000 -Loudon &Fortin ................................ 74 10 Attaehriient 2 City ~of Niagara Falls Report F-2000-74 -Utility Rate Structure.... 75 I1 AttachmenY3`-Material Presented by Mr. Ed Bielawski to the Corporate Services Comrmttee'of the City of Niagara Falls on July 23, 2007 .................................... 76 12 Attachment 4 Niagara~Falls Terms of Reference for Review of Water & Sewer Rate Structure November 9, 2007 ............................................................................ 77 13 Attachment 5 -City of Niagara Palls Review of Water & Sewer Rate Structure Proposal - RM Loudon Ltd ..................................................................................... 78 NF User Rate Report Apn1 ? IOUd Fieal.doc 3 H. M. Loa~don Ltd. City oJAliugara Falls Water & Sewage Ratz Structure Review Exhibits Final Report 'aee 4 of %8 Exhibit 1 Regional vs Local Cost Share (2001 to 2007) ............................................. . 10 Exhibit 2 Data Requests ............................................................................................... . ] 3 Exhibit 3 November 2000 Report Proposed 2001 Water/Sewer Rates (monthly) - Recommended in I3nld Italics ................................................................................... . 18 Exhibit 4 Proposed vs Final 2001 Water/Sewage Rates ...................................... .. ] 9 . ..... . Exhibit 5 Retail Water & Sewage Rate Summary (monthly): 2001 to 2007 ............. . 20 Exhibit 6 Retail Water 8c Sewage User Rates (monthly) 2007 ::... ..................... . 21 Exhibit 7 Calculation of 2007 Retail Volumetric Water & Sewage Rates ................. ; . 21 Exhibit 8 : Niagara Region Wholesale Water & Sewage Rates - 2000 to."2Q07 ............ . 22 Exhibit 9 Water & Sewage Customer by Metcr Size - 2007'&:2008 .: ' ........ . 23 Exhibit 10 Water & Sewage Volumes Purchased from Region ;;2005.-to 2007........ . 24 Exhibit 11 ~~. = Consumption vs Supply (000 m3 & %) 2005 to 2007 :.................... . 25 Exhibit 12 Water Consumption Profile (m3 &,,%) - 2007'` ...`. .................... ~ ., : . 26 Exhibit 13 ; ~ 10 Largest Customer Consumption (m3),- 2007 .................................. . 28 Exhibit ] 4 Water & Sewage Utility`Budgets X007 ~2008 .................................. ., . 29 Exhibit 15 Summary of Principles for• Financial & User Rate Policy ...................... . 36 Exhibit 16 Niagara Falls Water+ Sewage=Bills,Converted to Volumetric Only for Standa rd Meter¢Customer :r-::. ~ ...................................................... ....... ,~;,. . 39 Exhibit 17 -` Water System Fire ProtectiorrCosts - 2007 Budget ................................ . 44 Exhibit 18 . <<. „ $ Allocations to Service Charge & Volumetric Rate (25% SC) - 2007... .45 Eahlbit 19 ~^ "„$eivice Charge Calculation (25%r SC) - 2002 ....................................... . 47 ~ _: Exhibit 20 , Volumetric Rate Calculation (25% SC) - 2007 ....................................... , . 48 ~x : _ Exhibit 21 Current vs Alternative Rates (25% SC) - 2007 ........................................ . 49 Exhibit 22 Impact on Cross Section of Customers (25% SC) - 2007 ........................ . 51 Exhibit 23 Impact on Large Customers (25% SC) - 2007 ........................................ . 53 Exhibit 24 Water Rate Formats in 16 Municipalities - 2007 ...................................... 54 Exhibit 25 Exhibit 26 Exhibit 27 Exhibit 28 Exhibit 29 Water/Sewage Charges in 15 Municipalities (240 m3/year) - 2007 ......... 55 Water/Sewage Charges in 15 Municipalities (227,000 m3/year) - 2007 .. 56 Volume-Only Rate Calculation - 2007 ..................................................... 57 Impact of 2007 Volume-Only Rates ......................................................... 58 Single Block Rate Structure .... .................. ................. 65 NF User Rnte Report Apri12 200fi Frnal.duc 4 R.M14. Lmrdan Ltd. City of Niagara Falls Water & Sewage Kate Slruclure Review Exhibit 30 Declining block rate ................... Exhibit 31 Increasing Block Rate ................... Exhibit 32 Hump-backed rate ......................... Exhibit 33 Excess use rate .............................. Exhibit 34 Seasonal Rates .............................. ~f ~: R:. 'T:- ".:. A_ v 3 9r NF User Rote Repor t April 2 20uR Final.doc 5 R M Loadan Ltd. City of Niagara Fal/s l~I~ater & Sewage Rate Structure Reiriew City of Niagara Falls Water & Sewage Rate Structure Review 1 Executive Summary Final Report 'aee 6 of ~8 This report is inteaided as a resource and reference for Council related to discussions nn future water and sewage rates for the City of Niagara Falls. The following is a summary of the findings of this report. ~_.,.. ~ Comment -Report Location ``_ -. _ - --..- ___ _c • The current City volumetric rates recover Regional, volumetric :. _ --- Section 2 charges and the fixed service charges recover City costs Thrs `t , approach was Option 1 in the November 200(1 report "City of _.; Niagara Faits Study of Water 8 Sewer Rates Following'Metering j -Loudon & Fortin". "~ h.' i • Attachments to this report provide background-matErial related to At back ofreport ~ the steps from the November 2000.recommended rates prior to implementation to the^preparation oftfiis-rate rcview:~ • Since 2001 City costs have increased relative to Regional charges Exhibit 1 ':, with the resulP~ihat the fixed=service charges-have also increased ~ relative to the volumetric charge ^ , • A publio forum was,,hetd January'24 .2008 at City hall to obtain Section 3 customer_input. The"two most mentioned issues were that the charge are"too high and from gardeners that the inclusion service # of seasona]•:usage in summer sewage charges is unfair. ~`iy '._ • A water consumption analysis indicates that residential users are Section 4.3.3 ]ikeiy not excessive users on average with 50% of customers Exhibit 12 using about 18 m'/month or less. The City has a few very large ~ users with 1 % of customers using 45°ro of consumption. • The user rates should be based on an agreed set of principles. A Section 5.1 list of optional principles is provided for Council consideration and adoption. Some, such as legality, are required. Foremost in terms of public perception is Fairness & User Pay . _. _.- _ _ _.._ _ ._..-...... - g _.. _ p • An in-de th discussion is carried out m i'e and to the issue raised Section 5.3 by some customers regarding the use of water consumption to bill for sewage. The issue relates to seasonal usage. It is noted that water meter readings are actually used as the basis for billing sewa e because they allocate costs between customers based on AtF User Rate Report April 2 2008 Final d°c ~ R. h3. London Ltd. City of Niagara Falls 4i~ater & Sewage Rate Structure Review Final Repa•t 'ate 7 of 78 relative system usa;?e. Other methods are generally more for ' optics since sewer rates would have to be increased to raise the required revenues. It is concluded that combining water and ~ sewage into a common rate will promote conservation and eliminate or greatly reduce the perception of unfairness related to seasonal usage. ~ • In accordance with the proposal for this study an Alternative rate Section 5 4 I structure is developed with a lower service charge and nigher volumetric charge. Rates are calculated based on 2007 data for discussion and comparison with existing. '=s. • The Alternative rate structure service charges are fixed charges ~; Section 5.4.3 j based on a customer's meter size and are calculated to recover "~'~~. y Exhibit ] 9 25% of budget costs compared with 43% recovered from the , F',.. j cw•rcnt service charges. The costs are distributed by meter size ` ''* , - using cost allocation faotors developed by the American Water : .~ i -FUS~,_ Works Association (AWWA). Three different types of costs are allocated including uniform, cost-based and capacity-based- osfs;. I each with specific allocation factors. '=~' ' The Alternative rate structure single-block volumetric rate fs ~._ Exhibit 20 , calculated to recover 75% of budget costs. • The Alternative Rates are compared with the existing rates below Exhibit 21 I Existing Rates *- Alterna ~ tive Rates Water" Sewage ,'Combined Water Sewage Combined Service Char e s /month § ~ ' i Meter Size ~+ °. '''" ~ , ' mm) (inches , +<~. ~'~ I 18 'l<" $ 20.07 $ 1%8,58 $ ' 38.65 $ 10.26 $ 12.89 $ 23.15 25 1 0.07 $ 18P58 $ 38.65 2 $ $ 15.24 $ 18.04 $ 33.28 , 1Yz 37 , , $ 360.21 $ 55.74- ~$ 11595 $ 28.88 $ 23.20 $ 52.D8 _ 50 ~ 2, , 120 42 $ 111 48 $ 231.90 $ $ 51 19 $ 37.37 $ 88.56 75 3 ~ „$~ 240.83 $ 222.96 $ 463 79 $ 155.88 $ 141 74 $ 297.62 100 4 ', ,, ~$„. 441.52 $ 408 76 $ 850.28 $ 270.30 $ 180.39 $ 450.69 I 150 6 ` ,$,-'x,842.91 $ 780.37 $ 1,623.28 $ 656.08 $ 270.58 $ 926.66 ~ 200 8 $ 1 505..1,9' $ 1,393.50 $ 2,898.69 $ 1,297 06 $ 373.66 $ 1,670.72 j 250 10 $ 2;10727 $ 1,950.91 $ 4,058.18 $ 2,243.48 $ 489.62 $ 2,733.10 Volumetric Rat ~?z,^ es f$!m'1 All Consumptio $ 0.6024 $ 0.8544 $ 1.457 $ 0 858 $ 1.037 $ 1 895 NOTE. Test Year = 2007 Costs in SC = 25% Niagara Falls User Rates 2008.zls Rafe Summary 30-Maw OS ` • The impact of the Alternative Rates would be to decrease Exhibit 22 charges to small to average customers (mostly residential) Exhibit 23 ranging from I S% reduction to about 6°fo for the average ', customer. Larger customer would pay progressively more with the largest customers paying increases from 20% to 29% • Niagara Falls charges are the currently highest at $813 per year Exhibit 25_` A'F Usei Rate Repor(April Z 2008 Fina/.doc -I li.M. Lundon Ud. City ofNiugaru Fulls Final Report Water & Seirage Rate Slruchn~e Review Page $ Of'8 __ _- or a fairly typical customer using 20 m /month compared with Exhibit 26 15 other medium to large sized Ontario municipalities. The Alternative rates would reduce charges to $732 per year behind '. Kingston and Windsor. For a large customer using 227,000 i m3/year a customer would be 6`h lowest and with the Alternative rates 5`h highest out of 15 municipalities. ~ • Volume-only rates are calculated for comparison purposes. Section 7.1 This is a radical change from existing and results in small i customers saving 37°io, average customers saving about 15% ' and increases soaring for larger users up to a 71% increase=for the largest user ~ • It is suggested that a Rate Stabilization Reserve Fund be ~~_; - Section 7.2 considered to provide revenue security against revenue fluctuations resulting from a higher volumetric rate. i • The issue of individual metering of condominiwn units is ~ ~;__ Section 7.3 ~ discussed It is concluded that bulk meters are preferred ~~' ~_ _ . --._.. _.-..- - - >-= _. I Report prepared by M. Loudon & M. Fortin rt:~,. ;~: Submitted April 2, 2008 ~:a_ -~ °:;x-,, ~1 ks` r':. < NF User Rate Report April 2 20J8 Finat.dac Q R. M Loudan Ltd. City afNicrg2ra Falls Final Report Dater & Sewage Ruie Structure Review _ Page 9 Of 7$ 2 Background The City completed a universal metering program in 2000. In late 2000, a report by Fortin ~ Loudon ~ provided two Alternative rate structures. • Option 1 calculated a volumetric rate which covered Regional charges and service charges by meter size which covered local costs. This resulted in a rate which stressed revenue security, an important consideration with a large number ofnewly-metered customers. 4u ~-'. • Option 2 was based on a volumetric rate which covered 80% of costs and'service charges by meter size which recovered remaining costs Th{s option had a"stronger conservation element. ~ - Option 1 was preferred due to its revenue sectarity,.feature. Staff recommended Option 1 in Report`F 2000-742 which;was considered at the December I I, 2000 Corporate Services Committee meeting. The minutes of the meeting state: ~ ~„ ~: F ~-; . "That the proposed use based'>;illingstructure be adopted for determining ~_- °. -,..; . ;water/sewer utility„rates and tliat fhe proposed use-based billing structure be " appLed to the~2000~Budget expenditures fo set rates for the new Water By-]aw.° *~:. ~:' Council later m the`~`evening gave unanimous approval to this resolution. ~:, . ~ Copy attached -see Attachment 1 Citv ofNiaeara Palls -Study of Water & Sewer Rates Following Metering -Final Renort November 2000 -Loudon & Fortin a Copy attached -see Attachment 2 -City ofNiaeara Falls Renort P-2000-74 -Utility Rate Structure NF User Rme Repwx Aprrf 2 2008 Fina{.dac 9 R.M Laxdon Ltd. Ciry of Niagara Falls Finul Report Grater & Sewage Rate Slructm~e Rerieiv Page 1 Q Of '~ The approved rates recover Regional costs from the volumetric charge with the local costs in the service charge. The current rates are calculated on the same basis. The resulting structure has a high tlxed charge component. Exhibit 1 below provides share of Regional versus City costs in the user rates as well as the impact on a customer using 20 m3/month of including these costs in the volumetric and service charges respectively. >;xhibit 1 Regional vs Local Cost Share (2001 to 2007) Water Regional 5,300 City/Other 5,649 Total 10,949 Sewage Regional 9,900 City/Other 3,310 Total 13,210 Combined Water+Sewage Regional 15,200 City/Other 8,959 Total 24,159 Combined Share (%) a Regional ~ 63% City/Other 37% NF Regional vs City Sewec antl.,Water Cosfs Of 10 07 2002 2003 2004 5,955 6,399 6,892 5,875 6,431 7,262 11,830 12, 830 14,153 10,382 11,188 1{1,415 3,724 3,536 =,4;427 14.106 14.724 15~R4~ 16,337 .,„17;587, 1 37% `ri36% ' 39% ?005 2006 2007 7,040 8,007 '8;;177 7;578 8,424 ,.8.004 10;481.. 11,620 11,166 4,9T2 '; 5,697 7,061 15.393' 17.317 18.227 521 19,797 19,590 919 13, 275 15, 066 1,440 33,071 34,655 58% 60% 57% 42% 40% 43% a;.:. vri,. Over the period 200Pto 2007 the Clty portion of the budget has increased from 37%to 43% of°the combined water and sewage~budget and the Regional share has decreased an 1.r ,,, F„r~Y equivalent percentage. Since the user rate service charge is tied to the City budget and the ,~.--~ user rate volumetcicrcharge is tied to the Regional volumetric the service charge has trended upwards since the `metered rates were introduced in 2001. The awareness of the relatively high filed service charges came to the fore in 2007. Council actively considered alternatives for updating fhe water and sewage rate structures, particularly in relation to the relative magnitude of the volumetric and service charge levels. There was a strong sentiment expressed by one customer that the current rate structure was inappropriate. On July 23, 2007, the Corporate Services Cummittee of the City of NF t/ser Rate Repnrt April2 2008 Fitin/.dnc 1 0 H M Landon Ltd. City of Niagara Falls Water & Sewage hate Struc[m~e Review Finis! Report sce 11 of 78 Niagara Falls received a deputation from Mc Gd Bielawski. The material presented by Mr. Bielawski is appended -see Section ] 1. Mr. Bielawski provided examples to back up his contention that the service charge is much too high and in fact would best be eliminated entirely with avolume-only charge applied. At a meeting on 29 October, 2007, Council authorized staff to engage consulting services to review the City's water and sewer rates and that Loudon and Fortin be invited to provide a proposal on the water and sewer rate review. As a result _a request for proposal was issued; see Section 12, with the following objectives 1. To study the financial impacts from changing the existing water and sewer rate structure. _, x ~ . 2. To examine the optional rate structures for vuater and sewera~rvices, in <: accordance with all legislation and regulation governing=.wafer and sewer distribution systems. - `" ,. 3. To compare the;advantagesfana-disadvantages`of appropriate rate structures, <, rrr.: in relation to the public concerns'for the costs of water and sewer services. ,fib` ~. •`•'E Y.. `x.. i 4. To recommend a water andsewer rate structure(s) for water and sewer _ services tliat.complies with='all"ielevant legislation and regulation, and best ~. x =, {` .satisfies the public concerns: s On December 10; 2007, Council considered proposals for the Review, including a proposal from dated December 4, 2007 see appended Section 13. The following order was passed at that meeting: "That Council approve the engagement of Loudon & Fortin to conduct a Water and Sewer Rate Structure Review." The target completion of the study was end of January 2008. With the mid-December award date and Christmas holidays impending time was of the essence. NF User Fate Report Apri! 2 2008 Finu[.doc I I R.M Loadon Ltd. City of Niagara Falls 4~aler & Sewaze Raie Stnrciure Review Final Report 12 of 78 The study was initiated immediately. Because the generation of needed customer and financial data is usually the task that takes more time than expected, a list of data needs from the City was included in the Loudon & Fortin Proposal so that the City could have an early start on gathering. As soon as the consultant selection was known, discussion papers on Princip]es and on Kate Options were forwarded to the City. A meeting was arranged with staff for December 14, 2007 to refine the initial data request, obtain available data, discuss data gaps and obtain initial feedback on the issues raised in the Discussion Papers. A list of the agreed data requests with date information received by provided below in Exhibit 2. Some of the data proved more time-cc than expected with the result that some key original target completing date. v `Y; # F. A!. Sr ~e consultant is mnmg'to,produce ved wrtil`a8er the NF User Rate Report April ? 2008 Finol.da~ 12 R.M. Lovdon Ltd City nfNiugara Falls li~aler & SewaQ~: Rate Structure Review Exhibit 2 Data Requests Final Report 13 of 78 Category _ _ `;=~ Data Description ~- `' ` Final R ce~pt ; ,_.._ ~ „~ .. _ _ ._. t , Usage -Monthly volumes billed by class X - Largest 10 users Jan I S/Fcb 22 -Information on residential customer billing profile Feb 22 -individual customer examples for impact analysis. List will include a cross sectiun of customers in terms Feb 7 > of volume used and category t. - Regional water & sewage volumes "~~ n 22 J ~ >° a Customers ~:; -Number annually since 2000 °~ X„. - Number by class ~A. X~-.~<, ~. - Number by meter size ~; Jan 15 ~~`=~"~ Operating Initially provide broken down by major categories zTfie,, Dec 31' Budget degree of detail will depend an the rate format selected.- Capital ~: -Budget documents providing list of proJecis, ~` ~X Budget -Debt principal & interest ' ~ ' - '° Jan 15 to meeting - - Identification of capital programs i-elated X z legislative upgrade requirements such as the;Federal P2 requirements: Revenue Broken down by category ' ~ Dec 31 Budget Prouide,actuals.for 2006 *'~ '~ Dec 31 Rates :Regional rates and billings monthly 2001 to 2007 Jan ] 5 ~'~ 2001 to 2007 City water and sewage rates Jan 16 ~ . ~.,> Note that those ttems,marked "X" were not supplied, but were not crucial to the completion of the study sFor example, the customer data by class was not available because the billing re}~oits did not produce this information in this manner. Thus specific residential versus non-residential analysis could not be carried out. Similarly, consumption information could not be provided broken down by month so consumption could not be discussed in terms of seasonality. Detailed budget data related to projects or legislative upgrade requirements was not needed and that request was eliminated. NF User fate Repnri April 2 2008 Fi»ol.duc 13 R.M Loadon /.td City of Niagara Fa(Is Wate-r & Sewage Rate Structure Rei~iew Fina( Repori 14af78 Supplementary information provided by the City not covered in the initial list included a summary of the public meeting (February 19), a report on Regional rates (Feb 19), and information on conservation programs (Peb 29). The interested customer, Mr. Bielawski, has gathered considerable Niagara Falls water and sewage related background and made it available to the Study. He had carried out research on usage by meter size as well as associated number of units (such as in hotels) as well as user rate practices elsewhere and freely made his data available. In addition, f relevant information has been shared with Mr. Bielawski who has been kept abreast of the Report progress. Numerous emails and telephone calls were excfiariged in order to share data and information ,;-`„ `A+4is The target schedule for the study was provided in Schedule 1 of ttie;proposal -see Section 13 According to the schedule, data would be provided by the Gify in December, the public forum would be held on January 18„andlhe report completed by February 1, 2008. As can be seen from the data request w Fxhibifi~l, some crucial information was not available until February 22. A first drafr report was then completed and submitted to Staff and copied to Mr. - ~..-._ Bielawski March ~3 followed by add-itional drafhupdates March 5 and March 17. Every ~~.. effort has been made toprovide oppoi=tun?ties for comments so they can be considered ~a . ""` and incorporated where ag--reed. The final report was finally scheduled to be issued April 2, 2008. NF User Rare Report Apri112008 Final.doc 14 R.M. Landon L(d. City of Niagara Falls Water & Sewaxe Raze SU~ucture Re-i~iew 3 Public Forum Final Report rQe IS o('8 A public information session was planned for January I6 or 17, 2008. Due to notice restrictions, the City delayed the public forum by one week to January 24. Afrernoon and evening sessions were organized. Notice of the public forums was posted in the Niagara Palls Review. Direct contact was also made via emails regarding the public.forums with the following stakeholders: • Chamber of Commerce • Lundy's Lane BIA • Main & Ferry BIA ' • Victoria/Centre BIA • Pallsview Tourist Area BIA • Clifton hill BIA • Downtown BIA • Niagara Falls Tourism Interest in this water and sewn Round tables were set up with t encouraged to ask r consultarf resource personnel present and >: isttogs and express opinions. Written comments including Mc Bielawski, with a high degree of interest and contribution. The following is a suriimary of the results of the two sessions: Concerns; Issues; Feedback: I Paying sewer consumption charges that are calcu]ated by the amount of water they consume which is measured by their water meter. 2. Large lawn c~ gardens that are very expensive to water in the summer months. h'F Uxer Rine Repm'+Apnt 2 200A Fi+raLdoc 15 R.M. Loardnn L[d. Cily of Niagara Falls Final Report Wader & Sewage Rate Structure Review Page 76 of 7S 3 Matching of sewer costs based on water use; why should there be sewer charges on water that never enters the sewage treatment centre? 4. When meters were installed, there wasn't anything to measure what goes down the sewer; a concern especially in the spring & summer months. 5. High monthly charges; low consumption makes the total cost seem very high. 6. Service charges should be based on consumption rather than fixed rates. 7. Oversized meters should not be penalized when consumption should be considered. ~ -~'~~ ~: ~ .,, 8. Being charged sewage treatment rates for water that never goes to, the sewage plants. E.g. watering lawns/gardens, car washing, swimming pool.,filling, etc. Customers offered a number of suggestions to deal with SuEgested solutions bV Customers: ~" 1 Normalize the off-peak months and apply that value to calculate the sewer consumption charge for the peak mouths: ~,, ~_, 2. Measure exactly-what goes down the sewer _ 3. Decrease sewer charges for spring and summer. y5'~. _.. 4. Reduced fixed charge tf consumpUon Is below a conservation threshold. ~x 5. Fixed charges~based on fronfa`ge ~€' Wit. 6. The=SewerMrate should be a uniform fixed cost for each household. 7. Review of rate structure for large meters in proportion to smaller meters. :':,,. 8. Water run off to sanitary sewer instead of storm sewer. ~ ~: 9. Establish a base consumption amount (i.e. the average usage January through April/May); any increase in the summer months above this base is lawn watering and is therefore not going to the sewage treatment plant. 0. Use grey water for external use. l 1. Seasonal rates for specific residential areas. Basically, the major concerns fell in to two categories: NF User hate Reporr April 2 2008 Finat.doc 1 6 RM. Loudon Ltd. Cify afNiagara Falls Flna! Reyav N~'ater & Selvage Rute Struchrre Revie>n+ Page 17 of 78 1. Service charges too high. 2. Using water consumption in the summer to bill for residential sewage charges is not fair since seasonal usage does not enter the sanitary sewer. The presentation in this report of an alternative rate structure with a reduced service charge and increased volumetric rate addresses the first major concerns expressed at the public forum. It is also consistent with the study proposal which stated that an option would be provided "with a higher consumption charge and lower fixed charges" Methods for addressing concerns about charging for sewage m the'sui~mer based on water usage are provided in Section 5.3. These methods include those'`'sg~ested during the public input sessions as well as how this issue is dealt wiih~.in other m including: Method 1 - A maximwn sewage bill for residential:' Methnd 7 -Residential discount. Method 3 -Lasing a customer's billing. _, Method A -Applying a <: Method 5 -Eliminating `f:: ;average corisr~mption for summer sewage ~`'_. summer. by combining water and sewage rates NF User Rate Report Apri! 2 2(1(!8 Fina(.dnc 17 R.M. Lrn~don Ltrl. City of Ariagara Falls Fina! Report Water & Selvage Ralc Structure Review' Pate 18 Of 78 4 Existing Water & Sewage Information 4.1 Water & Sewage Rate Structures 4 1 1 City Retail Rates The Option 1 and Option 2 rate structw~es provided in the November 2000 Study of Water Rates Following Metering report were as shown in Exhibit 3 below: ~'=;x.. Exhibit 3 November 2000 Report Proposed 2001 Water/Sewei•~Rates (monthly) - ..~ . Recon:mcnderl in Bolrl Italics ~ ~- r_, -.-, °c c- t ~ Z`~"y`.t ,,d"e"ar- 3 E ~ i°h-4 Y "'s~2m` ~ ° ~' ~ :- ~~` '` ~ ~'~ i ~ ~ s~~, 2r 4a'£" 3 .v r r.~ a~ t~on ~l ~ ~;.rt~ '~ ' " Op r,.. I scE'x i ` ~. ~~ ~ Option 2 ; ~:_ ~` ~; ~ . t ~ ~ ~ F 'fi ~ ,y, S t 3$_}'S"~ a ~ r . ~, e `s .s a Y` ?K l ~ , ~ ° ~ ~3'~'~.cn~`F ~^ ~ ~,~ ~ ~o u t etric~ra~er ec ers~. s~~~olume~ricratedc ~ ~ ~ x~ $~u ~_w; c' ~, tit ~ g g > Re ionakchar es ~ ~~ ~ i•ecouers 80/o ofcosts) Volumetric Rates ($/cubic metre) $1 309 $1.549 Service Charges ($/month) ~ ~, ; ~, ~ - A Single Uniform Charge $26.233.. $] 6.182 - B Charge Variable by Meter Size 15 mm ;-:~. $22.54 $13.90 18imin , ~Y$22 54 $13 90 , ~ . . ,F '25 mm rr: k - $22.54 $13 90 ;;`~ 37 mm,*,; $56.35 $34.75 - ,~_~. $135.23 $83.41 k ,75inm $270.46 $]66.82 100~mn~ $495.84 $305.83 150 mm„, . " $946.61 $583.85 200 mm; $I,691L37 $],042.59 NF User Rafe Report ~pri12200N Firtal.dnc 18 R. M. Laxdan Lrd City ofNiaKara Falls Fitra! Report Water c~ Sewage Rate Stricture Review Page 19 Of '8 As noted previous]y in Section 2, Staff recommended ®ption I in Report F-2000-743. The minutes of the meeting state: "That the proposed use-based billing structure be adopted for determining water/sewer utility rates and that the proposed arse-based billing structure be applied to the 2000 Budget expenditures to set. rates for the new Water By-law." The actual 2001 rates compared to those recommended in the November 2000 Study of Water Rates Following Metering as shown below in Exhibit 4" Exhibit 4 Proposed vs Final 2001 Watcr/Sewage Ratcs ~~ ;: ,~ :. Rate Compotient~.-~ .~ ''` .k r ~.,,.. r . m. . <......... .-x . ~ , - ` '~ ~~'~ P "~' ~- Pro osed ~ .,~ ±~ , ,~ Final~Kn~ ,;r_ ~,.., r:,_.~_- Volumetric Rate ($/m3) y~$1.309 ~-:~;- x$1.22 Standard Service Charge ($/month) ;1$22 54 ~ ~ $21.37 The final rates are a little different water and sewage budget• For exa $24,861,000 used in the November 2000 re}~e .,. ~.`'.~. +?' ~,-: The adopted water and sewage retad`rates fro Exhibit 5:'~ -~`'~~<°"" :.... 3 Copy attached -see budget level of $24,158,700. 1 to 2007 are summarized below in Attachment 2 -City of Niagara Falls Report F-2000-74 - Utiliri Rate Structure s proposed`due to changes in the combined ?tal budget decreased from a projected -~ r, NF User Hare Report dpri! 2 2008 Finul doc 19 R.M. Loudon Ltd. City of Niagara Falls Final Report Wader & Sewuge- Rate Structure Review Puge 2~ of 7$ Exhibit 5 Retail Water & Sewage Rate Summary (monthly) - 2001 to 2U07 :,~ ~~ ~',. Year `- ~~~"~~~ ~ ~ i Uolumetrdc Rates'($/ms) 4 ' ~ R~ater,~ _° Sewage; . Totar ._. Service Char e standard meter ? $ ( ) -` ~~ Water Sewage ,' Total _...E,,. , , ..~ ,. ,-.:~ 2001 $0.41 $0.81 $1.22 $13.92 $7.45 $21.37 2002 $0.44 $0.81 $1.25 $15.30 $909 $24.39 2003 $0.48 $0.89 $1.38 $16.61 $9.62 $26.23 2004 $0.51 $0.89 $1.41 $18.67 $11.16 $29 83 2005 $0.56 $0.88 $1.44 $20 44 =i~. <~ $11.96 $32.40 2006 $0.58 $0.88 $1.46 $ l9 56 ^ =.'$13.82 $33.38 2007 $0.60 $0.85 $1.46 $2007 $18:58. $38.65 =f:'i C .M4j Over the period 2001 to 2007 the volumetric rates increased aboutr20% whereas the service charges increased about 81%, reflecting higherCity budget ihcreases compared to Regional cost increases. This meant that the impact of an annual average percentage rate increase would vary depending on how much a cuatoter used aril the meter sizc. Small users would have higher,percentage increases than largewol`ume users. This could lead to confusion since a customer may be expedting he average increase and may in fact be faced with one thatiamore or`lessdependmg on,volume used and meter size. Fixing the percentage of total budget costs recovered from7the service charge (e.g. the "Alternate" rate calculated later) would eliminate thiseonfusing situation. All customers would rate increase. The full 2007 wateix'and sewage rate schedule is provided below in ExhibiC 6: ~. NF User Ram Report April?2008 FinaLdac 20 R. M. Lavdan Ltd City of Niagara Falls Y7tate-r & Selvage Rate Slrtteture Revdeir Exhibit 6 Retail Water & Sewage User Rates (monthly) - 2007 Final Report ee 21 n(7R Rate Component!- '~' ~^~' ~ ;~, ti ,~ Water ~ ~ ~ Sewage, _ t Total Volumetric Rates ($/cubic metre) $0.6024 $0.8544 $1.4568 Service Charges ($/month) 15 to 25 mm $20.07 $18.58 $38.65 37 mm $60.21 $55.74 $ I ] 5.95 SO mm $120.42 $11]'48 $231.90 75 mm $240.83 $222.96 ' • $463 79 100 mm $441.52 $408.76 A;-:$850.28 150 mm $842.91 v $780.37 ,1623.28 200 mm $1,505.19 ., $1,393:50,. -" $2,898.69 250-mm $2,107,.27 .._, . $1,950;91 $4,058.18 The City water and sewage` linked to the Region's wholesale rates as shown below in Exhibit 7. S -' ~ .]. . , . )/xhibit 7 ,'Calculation of 2007 Retail Volumetric Water & Sewage Rates ,. ,<{ s„- neut ~,k~' <' ~,~~:~'~ ";~ ~ XCom o s p ~-~ ~~~Wate"r < '~~ ~ ,~_,~ fr ~` '1 Sewa e ~ _ . . ., ,.~.,,,~~,, __,~,:n.T ~~~_ 2~ti~ _~~ ~ g _ ~~_ ~~ Regional Volume;,(in3) 16,452,757 18,214,832 Wholesale Regiori2l_mRate ($/m3) $0.5120 $0.6130 Regional Charge`s ':, $8,423,812 $] 1,165,692 City Billed Consumption ~(m3) 13,984,843 ]3,068,836 City Volumetric Rate`($/m3) $0.6024 $0.8544 City vs Regional Volume 85% 65% Note that the City (retail) rates must be higher than the Regional rates because retail billed volumes are less than the Regional volumes. This is due, in the case of water, to unaccounted for losses (such as main leakage and fire fighting) between supply and City NF User Rale Report Aprr(2 200& Final.doc 21 R.M. Loudon I,td. City of rViagura Falls Firrul Report Water & Sewage Rate .Structure Review Page 22 Of 7$ customer of about 15% of the volume purchased and, in the case of sewage, there is about 35% flow added into sewers between customer and treatment due to inflow (surface water) and infiltration (groundwater). 4 1.2 Regional Wholesale Rates The Region's wholesale rates and rate increases from 2000 to 2008 are as shown in Exhibit 8: „~: ;:__ Exhibit 8 Niagara Region Wholesale Water & Sewage Rate"s;=`'2000 to 2007 ~;,_:. ~ F ~ Rate ($/ms) ~ ~ '~ ~' Rate`Jnc ease~`~~' ~ },, ..: ~~~~~~. ~ r ~~ ~~ ~ k}~' s °' ~ `tr z te"' ~ k ~ ~~~ «* x ~ .,,. ~,~ Year' ~ as z 3 t ~ .Water ~~ Sevva e t y ~ rn ~ Water ~ Sewa e , s > . , r L + +Effechve~Date~ ` ~'i ''` ~ , !i ~ 3 » 2000 0.300 0 489 3°ro 2% v; Jan ] to*D~ec31, 2000 2001 0.318 0489 3% .x 2% Jan I to-Dec 31, 2001 ` 2002 0.340 0.503 7%= 3% Jan 1 to Dec 31, 2002 2003 0.364 -0:52] °-7%,_ ,r,, 4% ~-'y -Jan 1 to Dec 31, 2003 .~ ,. 2004 0.400 0.547 10% ~".'; 5%' ~ Jan 1 to Dec 31, 2004 2005 ;~Y•. 0.400' '' 0.547 ' 0°r° £~ `.0% Jan 1, 2005 to Feb 28 2005 , 2005 ~"0.446 0.579 12% 6% Mar 1, 2005 to Feb 28, 2006 ~ 2006 ~ ` ~~tD.49] ~ '''0.608 1`0% 5% Mar 1, 2006 to Feb 28, 2007 2007 0 512~~ £~ 0.613 4.3% 0.8% Mar I, 2007 to Feb 29, 2008 2008 0 554'' 0.655 7.6% 6.4% Mar 1, 2008 to Feb 29, 2009 Until 2007, the Regioncharged for both water and sewage based on the calculated rate times the volume treated. Water charges continue using this method. However, far sewage, the total annual charge is determined in advance by multiplying the rate times the average flovd over the prior three years. Thus the 2008 sewage charge has already been determined to be $11,730,523 based on Niagara Falls actual 2005 to 2007 sewage flows and the sewage rate of $0.655hn3. In addition to the wholesale rates, the Region levies a capital charge amounting to $] 64,802 for water and $124,953 for sewage in 2007. NF User Rate Reporl Aprr122008 Fir+ol.d°c 22 R. M. Lo~idon Ltd Ci[y oJNiagara Falls Wales & Seivaee Rate Structm~e Reviex~ 4.2 Customers Final Report see 23 of 78 The number of water and sewage customers by meter size is provided in Exhibit 9: >;zhibit 9 Water & Sewage Customer by Meter Size - 2007 & 2008 ~ 'o "a M :5~ f`Y ~" '"' ~ ~ yJu i; Yi£~ pY ~ j'~ ~ 4~ Water r 9S' Y F rI dFf "' -<-Sew , "~' f +r a'.. ~.~` a e ~. Meter Size ~ ~ ~ =Raho~~. , ~ ~~x ~ ~>x " . , , g ~ ~~ s `~' '3 4 »t* ~ ~ 's.3fij e r'E -:,fe x2007 ~ '~ ~ a ~ ~ 200$ ;~ k .a+a ~; 2007y ~ .sa-~' k..w..- X2008:'; t , ~ ~; ~_ . ; t ,~ ~ z.4 unmetered 1 250 125 !~ t. 120 121 15mm 1 25,114 25,401 25,13T' .. -.;-.25,255 18mm 1 482 482 475 ~"~F~'477 *~ ,.;5 . 25mm 1 357 362 "'' 354 35f 37mm 3 222 23P~ y ` 227= r ~`:4,.. 228 SOmm 6 - 293 301 ~ 294i; ~ 29 75mm 12 71 ~ ~ ~ 74_ ` 72 72 IOOmm 22 39„ 38- ~ 36 36' 150mm 42 17 17' 15 _]5 200mm ~~' ~'"375 2 ` ~ 2 1 .- 7 250mrn` ,105 `~,2„ ,~ ~ 2 2 2 Total 26,849 27,035 26,733 26,858 x" _.~ =; °,:. There are fewer se'wagerthan'water customers, 0 7% in 2008, because there are some water only customers with no sewers in the more rural areas. 4.3 Consumption 4 3.1 Regional Water Supply & Sewage Treated Volumes The Region wholesales water supply and sewage treatment and bills Niagara Falls based on the volume at the treatment plants. The volumes billed monthly and annually for water and sewage to the City by the Region from 2005 to 2007 are shown below in Exhibit 10. NF User Rnte Repa't Apr d 2 2008 Finol due 23 R.M. Lmidon Ltd. City Of Niagara Falls Final Report !1'uter- & Sewage Rafe Structure Review Page '9 Of 78 Exhibit 10 Water & Sewage Volumes Purchased from Region - 2005 to 2007 Month 2005 2006 2007 2005 2006 2001 January 1,308.48 1,18417 1,136.60 1,863.$6 1,928.67 1,862.03 February 1,40591 1,086.69 1,12099 1,62608 1,428.86 1,099.99 March 1,28666 1,206.82 1,217.53 1,801.69 1,41675 1,800.64 April 1,268.52 1,223.58 1,174.84 2,142.62 1,357 OS 1,456.80 May 1,432.58 1,415.64 1,442.70 1,310.43 1,293.83 1,07047 June 1,698.68 1,675.65 1,802.10 1,25768 1,143.02 1,136.39 July 2,005.93 1,823.90 1,56772 1,332.07 ti:,,1,408.11 1,303.84 August 1,835 63 1,704.76 1,720.57 1,466.$5 ;:1292.83 1,240.58 September 1,475.99 1,312.07 1,482.43 1,455.19 1,486.55 1,187.96 October 1,341.94 1,203.57 1,298.38 1,71546 2;185x,16 1,166.91 November 1,170.57 1,114.49 1,108.71 1,633.82 144419 -, 1,267.92 December 1,203.26 1,100.67 1,163.21 1,510.61 1,7691`3!:: ;;;>1,61698 Total 17,43415 16,052.00 16,235.78 19,116.35>. 18,154.17 "16,290.51 NF Data 2008.x1s Region Flows 1&M5r 08 ~"-' r. The monthly water flows are used to bill the current Regional water charges for the same period. Up to 200( this method was used for sewage. Starting in,2007, historical 3-year ,..-;;.1,.: , average flows are used (i.e. 2005 to 2007 average for-2008 bill) so that sewage charges for a given year are fixed.:"amount known-in advance ~ z'` ., 4 3.2 Annual Consumption '-, y =: k`rr Annual purchased water volume compared with the volume of water the City billed to ~, k- customers;for 2005 to 2007 is compared m Exhibit 11 below. _: _._-_,_+ NF User Rafe Report Apri1220(1R Finaf.doc 24 R.M Laudon Ltd. City ofNiagura Falls Gilatw~ & Sewage Rate Suztciure f2erierv Exhibit 11 Consumption vs Supply (OOU m' & %) - 2005 to 2007 Final Report 25 of 7S _` p Descri tton ~ ~~ `Actual K ~ -~~ ~;~ '. , ~ 2006 ~; , ~~2007w 2005.= ~~ ~w ~z Bud ~a x; 2007r ~ get ~ _~n~~ ~ ~ ~~ Y~,~2008 Water Consumption 13,915.68 13,488.56 14,211.98 13,872.1 13,984.8 Supply 17,434.15 16,052.00 16,235.78 16,2571 16,452.8 UFW 5,407.6 4,558.7 3,]40.6, UPW (°io) 20.2% 16.0% 12 5% ", Summer weather Very dry Very Wet Very Diy ~ ' ~~, Sewage = °r -„~ Billable (City) 13,446.64 13,113.23 13,614.96 13 391 6yti 73,068.8 Treated (Region) 19,1 ll 87 18,154.]7 16;210 51,,~ 17 909 2~'~ '°1'8,214.8 i~. Unbilled Water Consumption (UWC)° is a hides losses such as watermain leakage, as well as usage such'as maln_flushing and`fire fighting/training, _ w ~,. Unaccounted for water (UFW) has been"decreasing froth^20.2°fo in 2005 to 12.5% in ,: st 2007. The AWWA suggests that it is not uncommon to find UWC to be over 20% in older systems and,less than 10°lo,in new well managed systems. e Consumption in 2005 and 2007 both.dry years, was about 3% higher than 2006, a wet ~, ~:: ~U: year ~_ ~' _. F.. 4 3.3 Consumption Profile An analysis has been carried out of annual usage by all customers in 2007. From this a cross section of annual and monthly usage has been derived, as shown in Exhibit 12, ° Formerly refereed as Unaccounted for Water (UFW), the American Waterworks Association (AWWA) now prefers the term Unbilled Water Consumption. s AWWA Water Conservation Programs - A Planning Manual - 2006 NF Ua'er Rote ReporrApri727008 Final.doc 25 R. A1. Loudon L[d. Cify of Niagara Falls Wafer & Sewus;e Rate Strucfw~e Revieir Exhibit ]2 Water Consumption Profile (m3 & %) - 2007 Final Report t'e 26 oT 7$ ~,r~ ~ ~~ Consumption (m } ~ • ~ ~ ,~ Annually ;„'',~ ~ -Monthly `~',,. Percent using=Volu ~ . , Customers '~' ~, me Shou+n or Less : , ~ Volume _,~. 25 2.1 5% 0% 55 4.6 ] 0% I 80 6.7 15% 1 102 8.5 20% 2% 123 10.3 25% .<, 3% 142 11.8 30% 5% 160 13.3 35% 6% 177 14.8 40% ..: `'+8%.; 193 16.1 45% 1'0% 211 17.6 50% 12°/n 230 ]9.2 55"/0 15% 249 20.8 '.~. ; 60% ] 7% 269 22.4 f ":65% 20% 293 24.4 - 70%' 23% 319 26.6 `-,_ 75% 26% 351 „ ~'- . ~ 29;3 ~' ~`` ._ 80% 29% 395 ~ 32.9,'°v: 85% 33% 46I 38.4 ` _" 90% 38% °~655~;a- ~ ~ 54.6 95% 43% 4,235,~_ft,' 352.9 99% 55% 884,720 ~~~'?~a• . 73,726 100% 100% An example of how to read this table is about 50% of customers use 211 cubic metres per year (17.6 m3/month) or less and they represent unly 12% of consumption. This means that the median customer uses 211 m3/year or 17.6 m3hnonth or Iess.6 According ° The median customer is in the middle in terms of consumption; about 50% use more than the median and 50% use less. NF Usw~ Rate Report Apnt 2 2008 FinaLdoc 26 R.M. L°vdon Ltd. City of Niagara Fa11s Wafer & Sewage Rate Structure Review Final Repnrf 27 of 78 to Environment Canada, average 2001 residential water use in Ontario was 285 litres per capita per day (Ipcd)'. Statistics Canada reports a 2001 Niagara Falls population of 78,815 and 32,447 private dwelling units equivalent to 2.43 persons per dwelling8 Based on this median Niagara Falls residential conswnption was abuut (21 ] _ 365 - 2.43 x 1000 =) 240 Ipcd. This would indicate that residential usage in Niagara Palls is probably average or less and thus not wasteful water users. At the other end of the scale there are a few very large users which represent a large share n:. of usage. 1 % of customers (294 customers) use 45% of consumption: The remaining 99% of customers (26,555 customers) only use 55% of total usage. 4 3 4 Largest Users A list of the 10 largest users is provided below in because they will be the most impacted by an increase in the in the service charge. >*~:, _~,. A. r ~q ` . R "5- `w ::.. ` .q..: . Y 'Municipal Water Use 2001 Statistics -Environment Canada $ Statistics Canada website are listed rate and decrease NF' Usw' Rafe Report Apr+! 2 2008 Final.dac 27 R.A1 London Lta. Ciry ofNiagara Falls Fina! Report Water & Selvage Rate Structure Review Page Z8 of 78 Exhibit 13 10 Largest Customer Consumption (m') - 2007 Customer~'Y ,~ Meter~S~ze (min) g ~~ ,Volume (m3) x tTM Niagara Falls View Casino I50 mm (6-inch) 884,720 Strahag Incorporated 200 mm (8-inch) 269,420 Niagara Parks Commission 250 mm (] 0-inch) 210,350 Ontario Power Generation ]50 mm I6-inch) 203,190 Niagara Water Park Properties 150 imn L6-inch) ]"77,,720 Marineland 250 mm (10-inch) 169,85.Q 2095527 Ontario Limited 100 mm (4-inch) 151,370 "~ Canadian Niagara Taotels l50 mm (6-inch) 193,050 Hilton Niagara Falls 150 mm (6-inch) 1'28,8$0 Casino Niagara 150 mm (6-inch) - 121,060 ~: Total ~~~ ~ - ~"~ 2,459,610 Total Conswnptiori All Customers 13,938,983 T.op 10 as a % of~Total 18% ate:: 2006 Total 2,108,798 "~r'.~`Z005 Total 2,145,883 The 10 largest edstgmers used 18% of total consumption in 2007. NF User Rate Repa't Apri! 210eR Final.doc 2g R.Af London /.td. City of Niagara Falls Final Repa•t Nrater & Sewage Pate Structure Reviera Page 29 0{ 78 4.4 Budget The 2007 and 2008 water and sewage utility budgets are provided below in Exhibit 14. Bxhibit 14 Water & Sewage Utility Budgets - 2007 & 2008 Water B ($) ($) ~($) ($) Expenditures ~ ' '_`~~- '" 4 Operations Local Operations 3,064,351 3,240,015 2,209;528 3,068,611 Billing Costs 601,136 601,164 TAO.=- ~ 0 Total 3,665,487 3,841,179.... 2,209528!°. .;ra 3,068,611 Capital „~ ~ s"r - LongTermDebtPrincipal 94,137 98,718 ~`"~t.81,654 85,861 Transfer to Own Funds 4,080,000 4,500,000: 't4y645,000 4,500,000 Total 4,174,137 4;598,718:~~ 4,726;654 4,585,861 Regional Charges Fixed Charges 164,802:. _ 164,802 '124,953 124,953 Volumetric Charges 8,423,812 -„-9,006,450 x]96,135,692 11,730,523 Total 8,588,614 ` `~fi:9171,252 - 11,260,645 11,855,476 Total Expenditures ;16;428,238 17,61"1,149 18,196,827 19,509,948 Regional Cost Share ~ , *":~. 52% :n52% 62% 61% Operations+Regional ~ 12;254;101 13,012,431 13,470,173 14,924,087 Revenues Non-User Rate (Otfier)..Revenues ~"v_. - Y~ Tank Truck '~ >- ` ~°f ~~ 50,000' 50 000 0 0 . Sundry .._ -:. 115,000 , 115,000 0 0 Fire Hydrarifs - `°,274,694 274,694 0 0 Sewer LaterCleaning 0 0 30,000 30,000 Sudry'Revenue;.,,. 0 0 100,000 100 000 Other * `~,~_a' 0 0 0 , 0 Sub-total Other Revenues 439,694 439,694 130,000 130,000 Net from User Rates:"6~. 15,988,544 17,171,455 18,066,827 19,379,948 Niagara Falls User Rates2008.afs Budget 26Mar-08 NF User Role Xeporr Apri12100R Find doc 29 R. h7. LoaJon Ltd City of Niagara Fulls Final Report Wager & Selvage Rute SLZrchrre Xevieiv Page 3~ Of 78 4.5 Conservation /Water Efficient Use Programs The entire Niagara region is covered by a watershed-based protection strategy known as the Niagara Water Strategy WaterSmart Niagara9 was released in October, 2003. It is a strategy that works towards the common goals of protection, restoration and management of water resources across the Niagara watershed. Operation of the strategy is organized as follows: 1. Steering Committee -Comprised of municipal and Regtonahcouncilors and "=z_ senior staff from MOE, NPCA, Niagara Region and area mtintcipalities. The City of Niagara Falls is a member. ~ ~- '~'.. .. .;= ~< _ ;:~ 2. Action Coordination Team -Includes Technical support staff from Niagara - ; Region, NPCA, MOE, watershed munimpahhes,--Environmenf Canada, etc. 3. Water Advisory Group ~ Citizens,_Advisory Committees -Staff, community stakeholders and genera citizens '` ~~. ;. - __ _. WaterSmart Niagara has developed six 1. Human`Heahti Clean and~abr 2..:Natural Environment -Water and goals: water for our safe consumption sufficient quantity and quality in natural areas hkew etland's`and streams ensuring healthy plants, species and the integrity of the 3. Flooding and`Ero"lion -Protection for our residential, commercial, industrial and public land uses from detrimental flooding and erosion. 4. Recreation -Sufficient clean water to support and sustain recreational uses such as beaches and natural areas. 9 information on WaterSmart Niagara can be accessed by logging on to vrovw watersmartniagara.ca NF User Rote Repot Apri! 2 200R Frnal doc 30 R.M. Lovdon Ud. Cily ofNiaguru Fulls Fina! Report Water & Sewuge Rute Structure Review Page 31 of 78 5. Commerce Clean and abundant water for commercial users. 6. Agriculture -Clean and abundant water fur agriculture operations. A mm~ber of actions have been developed to be addressed over 30 years, organized under 11 action programs: 1. Education and awareness building 2. Watershed and natural heritage system study 3. Data collection and monitoring 4. Land use planning 5. Regulations and policies ,:.._,- =-°;~. (». Land and property management 4 , 7. Growrdwater study and protection-:. t "-~'~ >~,, .: 8. Agricultural best practices, _,~. ~, ,~a. 9. Funditig incentives, financing and taxation ,,, ] 0 'Maintenance,°maiiagemeot and LLrepair of infrastructure and remediation of k CS { y.: confantinated sites 11 Energy, and best practices. WaterSmart Niagara produces an annual WaterSmart Tip Calendar which provides many hints for reducing water usage. There is no apparent direct impact of the water strategy on the formulation of water and sewage rates. However, it is expected that water usage per residential customer will reduce over time due in part to changes in customer usage habits as encouraged by initiatives such as the WaterSmart Tip Calendar, as well as the plumbing code which NF User Rate Report ~pri12 2003 Fuval.doc 3 1 R M Lavdon Ltd. =r' City of Niagara Falls Final Report 4Yater & Sewage Rate Structure Review Page 32 of ?8 requires water efficient fixtures in new construction and more water efficient appliances such as washing machines. The City of Niagara Falls implemented a voluntary water conservation program in 2000 which continued until 2003. This program included an education campaign, low flow showerheads and rain barrels. The program costs were shared with other utilities. The program was discontinued in 2004 due to finding constraints and declining interest. The City is revisiting this initiative as a component of its Pollutton:Control Plan and Combined Sewer Overflow (CSO) Abatement Strategy and is planning~to implement a new program over the next 16 months that includes; 'm' • Water conservation kits • Educational Workshops • A L,ow Flow Toilet Incentive program; and `fir. • A Rain Barrel program •' These programs target residential users and provide opportunities to reduce consumption by encouraging effic ent use of potable water ": <_ - a =~T _~; ,_'~: NF User Rnte Report Apri! 2 2008 Final.doc 32 R.M. Lovdan / td. City ofNiagara Falls Final Report Water & Sewage Ra[e Shucku~e Review Page 3.3 of 7$ 5 Alternative 2007 User Rates 5.1 Principles There are a number of principles and objectives to be considered when formulating metered water rates. Some seem rather obvious; others may be harder to choose. Some may not go well together so a choice is needed as to which is preferred. Some are basic ohjectives that are compatible with others. Others-may conflict with the result that choices may have to be made. But in any case it rs useful~to consider and decide what principles will be used before deciding cost recovery methods`and developing the format of the charges. In any case it is important for the City to agree them as they are used`to.set strategy, adopt a rate format and to explain and defend the user rates to customer`s. The following is a list of possible principles for Niagara Palls ah~ has been drawn from various sources and used by the consultant in the development of user rates for a number of municipalities. ';,_ _~ ,i•,,~::. ~. a- ~;, r 5 1 1 Revenue Adequacy & Reuenue Security :,.. -~ ~t~,. Revenues must be adequate to meet financing needs. This is a basic principle that must be n.......,:'rr achieved Metering brings a degree of revenue instability due to rate revenues being influenced by year-to,-year variations in consumption due to seasonal precipitation fluctuations. The user late format can be finessed to improve revenue security, but to some extent it comes 6~~sacrificing the extent to which charges are tied to usage. 512 Legality The financing and cost recovery methods must be consistent with existing legislative authority. This means that the methods used must be allowable under provincial legislation. The Provincial legislation does not prescribe or proscribe the format of the rates. The legislation focuses more on ensuring that the cost recovery levels are NF Uscr Rnte Reyon Apri122008 Fienl.duc 33 H.M. Lo+~dwt Ltd City of Niagara Falls Water & Sewage Rate Stn~ciure Rerieiv Final Repor[ r=e 34 of ?~Y appropriate. For example, as previously mentioned, Regulation 244/02 of the Municipal Act requires that water and sewage fees should not exceed the cost of service. Bill 175, the Sustainable Water and Sewage Systems Act, speaks to ensuring that utilities budget and recover the full cost of water and sewage systems. Legality would also be a basic requirement. 51.3 Practicality The rates must be practical to apply. The main constraint for metered-rates that target peak usage is the practical and economic frequency of meter reading= The ability to meter ~~..r;_ . and bill based on instantaneous peak usage rates has long been available'irithe electricity .., ... industry. Thus rates that reward customers for staying avo~ding.pigh usage during peak demand periods have long been common in the electricindustry Such meters have only recently become available in the water industry and peak'time-of use`ballings are not yet applied for water. A second limitation, related fo the practicality of calculating complex bills, became a minor consideration once manual billings were replaced by computerized systems. The capabilities of the current billing system to kahdle rate formats must be considered. - .. ,. ~..,, r , 5 1 4 Fairness & User Pay Fairnes§~is:kvhen charges<are as close as feasible to the actual cost of providing the service to eacH customer. The location or class of customer in Niagara Falls would not be a factor. All cListo`tu~rs are treated equally The advantages of common municipal systems are shared. For example,;a;customerrocated near the water source does not pay a lower rate than one more di<. This principle is probably the one most important if customers are to believe they are being treated fairly. Thus user pay is a basic principle that should be followed for both legal and fairness reasons. Charges based on user pay are the easiest to defend. NF User Rate Repm~~ Apri12 2008 Firxal.dac 34 R.M. Landon ltd City of Niagara Tally Water & Seiraee Ratc Structure Review 515 Affordability Final Report tze 35 of ~8 The ability oY customers to pay for essential services stash as water supply and wastewater treatment can be an important issue. Meter6ng of water does give the opportunity to manage costs if affordability is an issue. In some jurisdictions where affordability is of concern, water rates can be formulated with affordability in mind. "Lifeline" rates are of this type. Usually water rates are not used to implement social policy and affordability is addressed with programs specificallydesigned for this purpose. 5.16 Simplicity c.9 . ? . ~, - Customers should be able to understand how the charges ielate to=their water usage. Charges should be simple enough to explain and bill without undue co~nptication. The >~` simplest format would be a single-block volumetric rate for all usage with no other ~„ r- charges. However, this may not be a fair way to allocate costs,and also revenue security may suffer due to year-to-year 5.1 7 Conservation & Watery °~ t<: r.- .. Fair and equitaiile pricing will ens several rate formulations that can lated to the efficient use of water. l-Iowever, there are ecific types of use whether year-round or a certain type of water usage pattern. Where total water availaki,lity is limited, all usage may be targeted. Where supply is constructed '~ M. to meet peak smrimer°nsage, residential use is then targeted. BuC fairness might be sacrificed if specific customer classes or usage pasterns are targeted with punitive charges. 5 1 8 Encourage Development This would occur when charges are tilted or biased to a particular customer or class of customer to encourage them to locate in the municipality. Charges are depressed for that customer or class of customer and the differential is shared by all customers or paid from some other source. This type of rate structure violates scveral other objectives including Nr User Rale Repm~t Aprd 2 2QlIS Findl.doc 35 R.M. London Ltd. City of Ariagara Falls Water & Sewage Rate Structure Review Final Report ee 36 of 78 user pay and fairness. Moreover, cities usually have other more effective methods to attract development for example by the provision of serviced land. 5 1 9 Principles Summary It is essential that the user rates be set on a sound roster of principles. Exhibit 15 lists the principles and provides an initial assessment of how they might be weighted, for discussion pw•poses. .~ .a., Exhibit 15 Summary of Principles for Financial & User Rate Policy, Princ~nles ~ ' ~ e ~~' ~ ~ a Imtial}~'Assessment ~°4~ " " _ ~ ' ~ ,~, ~ ,, _ . • ~ x ~, _ Revenue adequacy & security It is essentual$iatthese be satisfied. Customers Legality should be~ushfied¢m their~assumption that these are being satisfied. Practicality Fairness & User Pay ~~`± This is the most'important priority when it Y3~: r comes to supporting the rates to the public ,_ The.u'ser rates should be based on the principles of fairness and user pay. Affordability Whether affordability should be an issue in ~ ~. v'- ~.focmatting the rates needs to be decided . ,_ . Simplicity -' -The charges should not he so complex that '`r : customers cannot reasonably understand them. ~ ~. Conservation & Water`iase efficiency Simply by metering and basing bills on volume used plus combining sewage and water charges t~ encourages conservation. Encourage mdustriahdevelopment Biasing rates to encourage development would °~ ~-~~; ,, = coupe at a cost to other objectives such as ' ~~`•`" conservation and equity. This list has been generated over time based on discussions in a nwnber of municipalities. There may be other items of importance in Niagara Palls that could be added. Although there are a number of principles listed, the most important from a public view point is that they should be fair and equitable. The following policies are related to achieving the principles: NF User Rale Reparl Aprit2?008 Final.doc 36 H.M Lovdwi Ltd City afNiagara Falls Finul Report Water & Sewage Rute Sa~ucture Review Page 37 Of 78 • Metering -Although metering has already been adopted, it is worth noting its value in increasing user pay, addressing affordability (customers can control their water and sewage bills) and conservation/water use efficiency. • Decreased Service Charges -Increased Volumetric Rate -Making the user rates more volume-oriented will enhance several of the objectives. Tt increases user pay. It also assists with the affordability principle since by reducing usage; customers can decrease their water and sewage bill. Also conservation will` e assisted if a higher proportion of the bill is volume-related. __ • Combined Water & Sewage Rates Several municipalities already coiiibine water and sewage rates including the City of Toronto and several municipalities'in York Region including Markham. This will increase the simphcity`ofthe rates. It has also been found that a combined water and sewage bill is~more acceptable~~to residential customers in the summer than a separate se¢vage,bill based.on.water consumption. • Single Block Volumetric Rates ".'The City currently has asingle-block volumetric rate. Asingle-block rate format has the.awantage of'simplicity. It is also the fairest ~, ,. approach for the City since tHe~reasons for multi-block rates are primarily due to supply costs-and the City purchases water from the Region at a single-block rate. Not only is a?single blUck fair, d has the perception of fairness to the public compared to multi block rates since all customers are charged the same rate. . ~' A set of principles'most suited to Niagara Falls should be agreed and should be the basis on which the user rates-are established. 5.2 Ratc Format Alternative rate formats are reviewed in detail in Section 8. For metered rates, a volumetric charge is essential. Usually, but not always, it is combined with a fixed charge, to form what are called "two-part" rates. NF User Rafe Report Aprit 2 2008 Final.dnc 37 H.M. London L[d. City ofNiagaru Fa(Is Final Report 7Nater & Sewage Rate Strrrekrre Revie-w Page 38 OJ 78 This combination is considered a fair way10 to recover costs and improves revenue stability over volumetric charges alone. The AWWA states "From a utility's standpoint, both revenue stability and equity are generally enhanced as appropriate types of costs are recovered through fixed costs."~~ The use oftwo part rates with both fixed and volumetric components is common by other utilities as well -gas, hydro and telephone all have two-part rates. Cable is an exception with fixed charges only that vary by service package. _:'_ In the review of water and sewage charges in 16 Ontario municipalifies'in Section 6.3 it was found that 81% have adopted two-part rates. The water service charge component usually varies by meter sizeh.order to~afilow costs ,: , to be allocated to customers in proportion to their cosbafservicc. lti's arJ~ore complex >:~' approach than volume-alone, but this factor is outweighed by.tincreased fairness. ~u ~ - a With regard to the volumetric rate component, as pohted out in Section 5.1 above, a single-block rate is consistent with the simplicity and fairness principles. ~`. Customer bills based ou rates that include botli`service charges and volumetric charges will vary depending on how much'~a"customer uses. If the total bills are divided by the <:;~:,. volume used, the resulting volumetric'uriit rate will vary somewhat since it includes the ~z~.. ~ . x, impacfof the_fixed charge:~~This is illustrated by drawing from an example provided by w, ~. Mr. Bielawsktm~h?s presentation to Council July 23, 2007 see Section 1 ] (fourth last V ~, Lam=. page of his malertal)~x_ 10 The Canadian Water and Wastewater Association suggests this approach in their Municipal Water and Wastewater Rate Manual " Principles of \>/ater Rate, Fees, and Charges - AW WA Ml - Pifrh Edition Pg ] 18 NF User Rate Report Apri! 2 2008 Finat.doc 3 g R.M. Loudon L[d. City of Niagara Falls Wafer & Sewage kale SLZtcture Review Final Repa't axe 39 of 78 Exhibit 16 Niagara Falls Water+ Sewage Bills Converted to Volumetric Only for Standard Meter Customer Monthly Bill Equivalent Unit Costs ($/m~ Usage Service Service (crrt/month) Charge Volume Total Charge Volume Total 5 $38.65 $7.28 $45.93 $7.73 $146 $9.19 10 $38.65 $14.57 $53.22 $3.87 $1.46 $5.32 15 $38.65 $21.85 $60.50 $2.58 ,:..,:,$1.46 $4.03 20 $38.65 $2914 $67 79 $1.93 $1:46 $3.39 26 $38.65 $3788 $76.53 $149 $1x46;_. { $2.94 30 $38.65 $43.70 $82.35 $1.29 $146 ; $2.75 Rate = $ 14568 /m3 ° , ~. rv¢.yora ~ aw vx/ nq<GJ <WO.AIJ UIIII LUS'( UNI{1HIIS(X7 „ - JV-Nlar r`~. i .i Columns have been added above compared to Mr Biel'awsk~'s material tti provide the total unit costs including both service charge and volumetric charge: The unit costs shown are not part of the normal rate calculatrori but-.have been calculated only to illustrate the impact of converting both fixed and volumetric.charges back to a per volume rate. J;. ~. r3. d ~`: z,*.u 5.3 Residential Sewage Bills and Seasonal Usage '`~,.. The installarion of€water meters is an essential element for achieving user-pay for municipal water Most municipalities also bill for sewage charges based on water billing information, again to target,:user-pay since sewage meters are not available for measuring ~~ residential flow. Water meter readings are commonly used to allocate sewage costs as well as water costs. A customer's water meter reading is used to bill sewage since it is the only mechanism available to assess the customer's actual utilization of the sewage system. A customer's metered water consumption is a surroeate used to determine share of sewa e costs Basically urine water meter readings to bill both water and sewage is a method of h'F User Rnte Repart Apri! 2 2008 Final.doc 39 R.b1. Loudon Ltd City aJNiagura Falls Water & SewaKe kale Structure keview Finul Report 40 of 78 allocating the costs incurred by both systems based nn a customer's relative usage of the system It is a method of sharing costs. The public readily accepts the use of water meter readings to achieve user-pay to recover water system related costs. The use of water meter readings to calculate sewage bills to recover sewage system costs is for the most part also accepted, except during the summer when water meter readings include usage that does not directly go to the sewer. This was an issue raised by some residential customers at the City's publicpforum on January 24, t ~~; 2008 -see Section 3 Public Forum. - One customer at the City public meeting suggested the installation of sewag`e,meters. However, there are no practical or effective sewage meters available for ~esiden#ial customers. Using water meter readings is an economicand practtcal"-method of achieving user pay. Note that customer meters do not measure ai%umber of affecting water supply such as water system losses,and sewage treatment such as sewage k system inflow and infiltration. However, t}ie use of customer water meter readings allows 4~- these costs to be shared in proportion to customers usage. " The vast majority of Ontario muhicipahttes bill forsewage based on water meter readings, without adjustment However there are a few who have adopted special ~Yi N methods iman attempt to increase the perception of fairness related to seasonal usage. ;~ ~- • Method 1 s _ Maximum Bill -Barrie Ontario has a maximum sewage charge of 45 m3/month toi`residential customers. Barrie previously has a maximum sewage charge ~y(i' ~6. of 30 m3/month but found that too many customers were qualifying. The increased threshold has result'e'd in a flood of complaints. Halton also has a maximum threshold of 60 m3hnonth,~but has found that only large users qualify and many of these some users have high usage year-round. Consideration is being given to abandoning this concession. • Method 2 -Discount -Peel Ontario -For residential customers the sewage rate is applied to 85%oftotal water consumption year-round. Peel also once had a NF User' Rnle Report Aprd 11008' Final doe 40 R.d4 Londrnr Ltd. Cii)~ of Niagara Falls Fntal Report Water & Sewage Rate Sb~ucture Review Page 41 Of 7c4 maximum sewage bill feature of 30,000 gallons quarterly (136 m3) but that practice has been discontinued. • Method 3 -Winter Usage - Irssentially a customer's winter usage level is used to bill for sewage in the summer. This was one method suggested at the public meeting. This method is not known to be used in Canada. One municipality using it is Portland Oregon. Portland uses water meter data for billing sewage, but has developed methodology to exclude outside water usage when billing residential sewage in the ~ Y.xi summer. A number of rules have been developed in Portland to?abcomplish this. As a ?: starting point, winter residential water consumption by a customer` is-used to calculate the summer sewage billing. Winter usage is assumed to start in about January and end ~:;- in April (depending on billing frequency). However,a mmiuium bill feature had to be added due to a large number of "snowhirds" who were away durEng,the winter but were home in the summer. These customers no longer could he considered user pay Also pool filling during winter months could be reduced to ret7ect sa prorated to a 30-day period is ;d~to;an appeals process so that their usage usage In 'some cases summer water usage winter average. Using the actual winter average would result in customers paying more than their actual summer average -.,{... water usage..To cover the situation when surtiiner water consumption is less than the winter average, actual summer average water usage is used for the sewage bill. Apparently a significant proportion.of customers fall into this category. • Method 4 Decreased Sewage Rate in Summer- This was another customer- suggested method°Since overall rates would have to be increased to produce the same revenues it is concluded that such an approach would result in customers paying the same amount, and the approach would only be to make the charge appear fairer, in effect "window dressing". • Method 5 -Combined Water & Sewage Rates By combining water and sewage charges into one rate the perception that seasonal sewage charges include a component which does not discharge to sanitary sewers is decreased. It has the advantage of showing the total impact of rates on water usage, thereby increasing the NF User Rare Report April 2 2008 Final.dx 41 R.M. Lm~don Ltd City of Niagara Falls Final Report Water r4r Selvage Rate Sb~ucture Review Yage 42 Of 7$ incentive to moderate water usage in the summer - a water conservation objective. It also has the advantage of not requiring special policies that complicate billing thereby simplifying the utility billing process and customer understanding of rates. Methods of adjusting for non-sanitary summer residential usage are rarely used, but they have been available for many years. To a great extent they are more for appearance since revenue targets must still be met and that is done by increasing sewage rates to offset the lower consumption figures used to calculate sewer bills. Method 5, which combines water and sewage charges into one rate; should make the use of water meter readings to calculate the bill year-round simpler to understand and increase the acceptability of using water meter readings for the Yatal water and=sawal bill. ~~ r 5.4 Alternative Rate Calculation 5 4 1 Fire Protection Cost i <, ~~ - Water systems.rnclud'e capacity on standby for fire protection. Water system fire ,? •-. , protection costs, often referred as Hyd~apt Rental", have commonly been recovered ,.- from property taxes m Ontario. NiagaratFalls follows this practice. It is considered directly to the fire department, which recovers its costs from the property tax. However, fre protection costs go beyond just the costs of hydrant installation and mamt nanoe sand many municipalities do not recover all such costs from the property tax, the City being an example. In fact many have removed all water system fire protection costs from property taxes altogether, due to pressures on the property tax. Where fire protection costs are included in the water rates, they are often included in the service charge since it is a cost that is largely unrelated to volume used by a customer The City currently recovers a portion of water system fire protection costs from the property tax and the balance from the user rate. In 2007 the amount budgeted for the property tax was $274,694 and the revenue category is referred to as "Fire Hydrants". A'F User Rate Report Aprr! 2 2008 F'mal.doc 42 2.1.1 Landon Ltd. City ofh'iagara Fa!!s Final Report Water & Se-wage Rate Snztctao'e Revie-w Page 43 Of 7c4 The actual total City water system fire protection costs are calculated below based on the fallowing: • Local System -The proportion of fire protection costs for local systems varies, for example, by size of main as well as size of municipality. In terms of main sizing, local mains are sized primarily for fire protection and so receive a relatively high percentage. Larger mains have a smaller share. In terms of municipality size, large municipalities have a relatively smaller fire protection percentage and smaller municipalities a larger percentage. A detailed fire protectton cost calculation can be time consuming. Considering that the results will be used in this case"only to distribute costs in the service charge, information is used from detailed analysis of other municipalities of similar size. The allocation used Is"20%„based on detailed analysis of other systems where detailed analysis was carrted out:12. • Billing Costs -Billing costs have no fire protection component: i .'~.. • Regional Charges -_ This relates tosupply costs Wa'tcr-for fire fighting is kept in storage which is refilled from the supply plant at a lat8r time. Fire protection has no impact on the sizing ofwater'supply facilttJes:;T}ius the allocation is only for the actual vo]unie used, estih~ated~at-about 0.5%~~ of total usage on an annual basis. ,.. .,: r <,~ The budgeT data used m~the water system fire protection cost calculation is based on the in Exhibit 14. The calculation oftfiewater system fire protection cost is carried out below in Exhibit 17. `. 5.' 'e '~ Percentage taken from a detailed study of the Peterborough water system "Water System Fire Protection Costs Coopers & Lybrand/RM Loudon Limited 1983" which calculated the fire protection cost share for mains at 19%. Peterborough is a mid-sized city similar to Niagara Falls. N6 User Rate Report Apri12 200R Final.doc 43 R.M. Loudon Ltd. City of Niagara Falls 6Vater & Sew Exhibit 17 Com Rate Sh~ucture Review Water System Fire Protection Costs - 2007 Budget Fire Share Fire Protection Total Local Operations (1) 20.0% 2,710,051 542,000 Billing COSts (2) 0.0% 601,136 0 Capital (1) 20.0% 4,528,437 906,000 Regional Charges (3) 0.5% 8,588,614 43,000 Total 16,428,238 1, 491,000 Less Hydrant Charge 100.0% 274,694 275;000 Total 16.153.544 1.216.000== Final Report 49 of 7N Percentage of Total Budget 8% • ~ . NOTES (1) Based on likely capacity in local mains for fire. (2) Billing casts not related to fire protection W's' , (3) Supply share based on annual volume used for firetneeds. , Niagara Fa!!s User Rates 2008.xls FP Cost x ~ 17 Ma~`08. Tr Total 2007 fie protection costs are estimated at $1,491;000 which represents 8%ofthe total water budget. This is in line with findings~el'sewhere. After,dEducting $275,000 revenue from property taxes, the residual cost ts~$1,216,000 This cost is allocated to the service charge calculationbelow. ~"`~ s ~.. 5 4.2 Cost Allocations to Seivice Charge &.Volumetric Charge ire Approximately 52°ro of water costs and.62°io,of sewage costs are related to the Regional charges. These costs are„currently recovered from the service charge which results in very high service charges: This has the advantage of revenue stability. It also allocates local costs, which are largely fixed and not variable by volume, to the fixed charge portion of the utility bill In ttrs`respect the charge can be considered fair. However, there are many 3 reasons for decreasingahe fixed charge share. A high service charge: • Decreases the incentive for conservation. • Decreases the opportunity for savings on the water/sewage bill. • Affects low income customers since they have less control over the level of their water/sewage bill. • Results in relatively higher bills for small users and lower bills for large users. NF User Rnte Report ~Ipn! Z 2008 Final.Aoc 44 R. hl Lovdnn Ltd City afNiagara Fulls ldrater & ServaQe- hate Struchrre Reviei» Final Report 95 of 78 A service charge is an appropriate method for recovering certain costs such as billing costs, fire protection costs and local capital costs. For revenue stability and fairness reasons a service charge is appropriate, but at a lower level. A target level of cost recovery from the service charge has been set at 25% oftotal costs with the volumetric charge recovering the remaining 75%. In essence this decreases the service charge by more than 50%. These are referred below as the "Alternative Rates" with Exhibits involving this calculation refereed as " 25% SC". Costs have been allocated to the service charge and the volumetric rate in Exhibit l8 below. For water and sewage combined, 25%oftotal 2007 rates revenue which is allocated to the service charge. Exhibit 18 $ Allocations to Service Charge & Rates Revenues Required Operations Capital Regional Charges Total Expenditures Deduct Other Revenues >s Rates Revenues Required" `' 3,665,487 2,209 528 :~, 5,875,015 4,174,13Z' 4,726 654 _ - ` 8,900,791 .. R .riRR R1d '11 7Rn [:A~. ~o ^no ~co $8,503,848, SC) - 2007 Method Rates Revenues by Component Percent Service Charge 25% 25% 25% Service Charge Revenue - 3,997,136 4 516 707 8 513843 - Fire Protection ~ , =" 1,216,000 0 1,216,000 Based on Capacity -Billing Charges ~ °~ '` ~ ` 601,136 0 601,136 Uniform ` ;,~ -; -Capital Financing (1) Y ` 2,18D,000 4,516,707 6,696,707 Based on Cost Volumetric Revenue ';ra '11,991,408 13,550,120 25,541,528 NOTES. (1) Capital Financing is the residual after deducting the other listed cost sectors from total SC Revenue Niagara Falls User Rates 2G08.xls Rev I~q 25Mar-08 N'F r7ser Role Reporl Apri12200S Finnl.doc 45 R.M. Loa~don Ltd. City of Niagara /'ails Wnter & Seiruge Rate Stn{cim~e Reviciv 5 4.3 Service Charge Calculation Fina! Repnrt ee 46 of 78 The service charge is calculated based on meter size. The allocation of costs is done by percentages, of which there are three categories. 1. Uniform Allocation Some costs, such as billing costs, are allocated equally to all sizes. 2. Cost Basis -Some costs, such as capital costs are allocated in proportion to the relative costs of building works of different sizes.. 3. Capacity Basis -Costs related to fire protection are based on capacity costs. This :;. _. only applies to the water system. :~h The Cost Basis and Capacity Basis percentage factors used are based on'the American Ivld a. Waterworks Association (AWWA) rate manual'. ~ ._ The casts by category are identified in~Eahibit ] 8 above: The costs are allooated by meter size in Exhibit 19 below: `` F A ~'" .: F'ti ttF , Y~ ;~ ' j".. NF User Rote 2epnrl dpril2 ZOOS Fixal.doc 46 R.M. Loxdon Lt2 City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 47 of 78 Exhibit 19 Service Charge Calculation (25% SC) - 2007 'Meter Size (1) I Number (mm) (inches) Of Meters Water Unmetered 125 19 '/. 25,883 25 1 362 38 1 % 231 50 2 301 75 3 74 100 4 38 150 6 17 200 8 2 250 10 2 Total 27,035 Equivalent Meters (1) Expenditures Unit Cost ($/Equivalent Meter) Sewage Unmetered 121 19 a/. 25,732 25 1 356 38 1 Y 228 50 2 295 75 3 72 100 4 36 150 6 15 200 8 1 250 10 2 Total 26,858 Equivalent Meters (1) Expenditures $ Unit Cost ($/Equivalent Meter) $ Total Avg W+S Unmetered 123 19 =/. 25,808 25 1 359 38 1 % 230 50 2 298 75 3 73 100 4 37 150 6 16 200 8 2 250 10 2 Total 26,947 Expenditures Billing Costs (2) Fire Protection (3) Capital Financing Costs (4) Total Factor Rate Factor Rate Factor ,,,,f‘} Rate Factor (5) Rate (6) I ,,f4Revenues ($/mo) ($/mo) ^!,! t ($/mo) ($/mo) 1 $ 1.817 1 $ 2.285 1 0, : $,t,'� 6.145 1.0 $ 10.25 $ 15,375 1 $ 1.817 1 $ 2.285 1.0 $;,, 6.145 1.0 $ 10.25 $ 3,183,609 1 $ 1.817 2 $ 4.798 1.4 $„;?y 8.603 1.5 $ 15.22 $ 66.116 2 $ 3.633 6 $ 14.165 1.8 $ li11`.061 2.8 $ 28.86 $ 80,000 2 $ 3.633 13 $ 29.701 3.8 $ 23,350 5.5 $ 56.69 $ 204,764 2 $ 3,633 37 $ 84.533 8 $ 49,'158,, 13.4 $ 137.33 $ 121,949 2 $ 3.633 79 $ 180.490 14 $ 86.027 26.4 $ 270.15 $ 123,188 2 $ 3.633 229 $ 523.192 21 '� i. , $ 129.040 r„•-64.0 $ 655.87 $ 133,797 2 $ 3.633 488 51,114.924 29 th $ 178.199. 126.5 $ 1,296.76 $ 31,122 2 $ 3.633 878 $2,005.949 ' 38 jy%)$ 233.502 218.8 $ 2,243.09 $ 53,834 $ 4,013,755 27,575 44,35329 564 s r'% 32,507 $ 601,136 $ 1,216,000 $$ 2.180,000 Required $ 3,997,136 $ 1.817 $ 2.285 $ 6.145 ($/mo) ($/mo) ) "/ ($/mo) ($/mo) 1 $ .z 1 O ': "$ 12.884 1 .0 $ 12.89 1 $ ) 1 O=til"$ 12.884 1.0 $ 12,89 2 $ 1.4 $ 18.038 1.4 $ 18.04 6 ,� $ f 1 8 $ 23.192 1.8 $ 23.20 13 $ 48.960 3.8 $ 48.97 37 $A 1' 18.0 $ 103.074 8.0 $ 103.08 79 $(," -"=114.0 $ 180.380 14.0 $ 180.38 229 21.0 $ 270.570 21.0 $ 270.57 '4488 $ a ,Ys �' t 29.0 $ 373.644 29.0 5 373.65 N078 $ n._.."!`s...,•,� 38.0 $ 489.603 38.0 $ 489.61 27,386 2.0 2.0 2.0 2.0 2.0 2.0 2.0 $ 601,136 WE User Rate Report April 2 2008 Einal.doc ($/rno) $ 1'i81.7 $ ..t'.8174n $l,y{1.817 $`'" 3.633 $ 3.633 $'n, 3.633 *;'43.633 5W019,3 $.ti"13 83✓` $ 29,282 28,583 $ "w/J t ,'Y $ 4,524,207 $ .;,V' $ 12,884 "($/mo) ($/mo) ($/mo) $ 2.285 1.0 $ 19.029 1.0 $ 23.140 $ 34,155 $ 2.285 1.0 $ 19.029 1.0 $ 23.140 $ 7,166.227 $ 4.798 1.4 $ 26.641 1.4 $ 33.260 $ 143,284 $ 14.165 1.8 $ 34.252 2.2 $ 52.060 $ 143,373 $ 29.701 3.8 $ 72.310 4.6 $ 105.660 $ 377,840 $ 84.533 8.0 $ 152.232 10.4 $ 240.410 $ 210,599 $ 180.490 14.0 $ 266.407 19.5 $ 450.530 $ 200,035 $ 523.192 21.0 $ 399.610 40.0 $ 926.440 $ 177.876 $1,114.924 29.0 $ 551.843 72.2 $ 1,670.410 $ 30,067 $2,005.949 38.0 $ 723.104 118.1 $ 2,732.700 $ 65,585 $ 8,549,042 $ 1,216,000 $ 6,704,207 Required $ 8.521,343 $ 18,716 $ 3,980,226 $ 77,067 $ 63,475 $ 173,354 $ 89,061 $ 77.924 $ 48,703 $ 4,484 $ 11,751 $ 4,544,760 Required $ 4,524,207 47 R. AL Loudon Ltd. City of Niagara Falls Water ct Sewage Rate Structure Review Final Report Page 48 of 78 Notes in Exhibit 19 are as follows: (1) Equivalent meters calculated by multiplying factors time number of meters and totaling. (2 Costs are allocated uniformly but adjusted for bimonthly bills to I9pmm, monthly for larger users. (3) Fire Protection costs are allocated based on capacity - AWWA factors used. (4) Capital Financing costs are allocated based the relationship between size and costs - AWWA factors used. (5) Factors are calculated from the total rate. (6) Rates rounded up to the nearest cent. 5.4.4 Volumetric Rate The volumetric rate is calculated below in Exhibit/20. Exhibit 20 Volumetric. Rate Calculation(25%SC) =2007 System ' € Revenue e wired. Volume �� 4 ?Ra le 3 Water 11,991,408'c 13,984,843 $0.858 Sewage 113,572,620 `,'" 13,068,836 $1.039 Total f-= `25;564,028 $1.897 NE User Rate Report April 2 2008 Final.doc 48 R.M. Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review 5.4.5 Current vs Alternative Rates The current versus Alternative rates are summarized below in Exhibit 21. Exhibit 21 Current vs Alternative Rates (25% SC) - 2007 Final Report Page 49 of 78 Existing Rates Alternative Rates Water Sewage Combined Service Charges ($/month) Meter Size (mm) 18 25 37 50 75 100 150 200 250 (inches) Water Sewage Combined $ 20.07 $ 18.58 $ 38.65 $ 10.25 $'+12:89 $ 23.14 1 $ 20.07 $ 18.58 $ 38.65 $ 15.22 $ 18 04:,. $ 33.26 1% $ 6021 $ 55.74 $ 115.95 $ 28.86 $ 23 20,."$; 52.06 2 $ 120.42 $ 111.48 $ 231.90 $ 56.69 $ 48 97''$ :105.66 3 $ 240.83 $ 222.96 $ 463.79 $ i 37 33 $103 08 $x'-240.41 4 $ 441.52 $ 408.76 $ 850.28 $4.1,1:270.15$A80.88 $ 450.53 6 $ 842.91 $ 780.37 $ 1,623.28 $65587$1270.57 $ 926.44 8 $ 1,505.19 $ 1,393.50 $ 2,898.69 $ 1;29676 $ 373.'65 $ 1,670.41 10 $ 2,107.27 $ 1,950.91 $ 4,058„18 $ 2,243.09 $=489.61 $ 2,732.70 Volumetric Rates ($/m3) All Consumptior $ 0.6024 $ 0.8544 $ 1.457 $'z: 0.858 $ 1.039 $ NOTE: Test Year.= 2007 Costsan.SC = 25% Niagara Falls User Rates 2008 xis8' w Rate _Summary 18 -Mar -08 HP User Rate Report Aped 2 2008 Final.doc 49 1.897 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 50 of 78 6 Impact (25% in Service Charge) 6.1 Cross Section of Customers A cross section of customers including both residential and non-residential, with different annual consumption and meter sizes has been chosen to illustrate the impact of the Alternative Rates compared to the current rate structure. The sample includes, for residential, single family dwelling, condominium, townhouse anchapartment development. For non-residential a variety of customers are t epreserited and also provide examples. The results of the comparison for rates with 25% of costs in the service chargee„are provided below in Exhibit 22. Some observations on the impact areas follows: 7` r • The bulk of residential customers would pay less if the Alternative Rates were implemented. In the examples shown, the customers using 29,7m3/year and less see reductions. A cross section of usage isprovided in Exhibit 22, which indicates that customers using 2934n /year or less represent 70% of all customers. • The three townhouse customers use large volumes of water per customer and as a result (since the vo' sIkt;increasing) pay much higher bills. .: r-- • The condominiurnhas'the lowest increase of the multi -unit customers due to its relatively low per unit consumption. • The motel and Mall /are ;low users per unit and both see savings. • The other non-residential customers see mixed results, depending on their combination of meter size and consumption. AT User Rate Report April 2 2008 Finatdoc 50 R.M. Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 51 of 78 Exhibit 22 Impact on Cross Section of Customers (25% SC) - 2007 Meter Description Location Units Size (mm) Residential SFD Woodfield Av. 1 18 SFD Epsom St. 1 18 Duplex Armoury St. 2 18 SFD Hawkins St. 1 18 SFD Mount Carmel Blvd. 1 18 SFD January Dr. 1 18 Townhouse Thorold Stone Rd. 33 37 Townhouse Thorold Stone Rd. 33 37 Condo Dorchester Rd, 75 75 Townhouse Thorold Stone Rd. 33 37 Apartment Drummond Rd 95 75 Non -Residential Motel Lundy's Lane 60 50 Mall Montrose Rd. 11 50 Medical Centre Morrison St. 1 50 Car Wash Ferry St. 1 50 School Drummond Rd 1 ,100 Laundromat Drummond Rd 1 .g, 50 Arena Centre St. ,,��1 '° X100.. Niagara Falls User Rates 2008.xls NF User Rate Report April 2 2008 Final.doc Impec 2006 Volume Current Rates e;, Alternative Rates Alt vs Current Total Per Unit Water Sewage Total Cost/Unit fit Water Sewage Total Cost/Unit Total Total (malyear) (ma/year) 180 180 183 183 293 147 297 297 469 469 1,275 1,275 12,308 373 12,326 374 13,659 182 17,340 525 29A02 ' 309 av" 905 15 1820 165 ,se3,8357- 3 835 4,104 4,104 6,601 , 6,601 - 7925 "'=,7,925 _, 8,348'"'' 8,348 ($/year) ($/year) ($/year) $ 349 $ 377 $ 726 $ 726 5 351 $ 379 5 730 $ ,:730" $ 417 $ 473 $ 891"- $ ' 445:;'-$ $ 419 $ 476 $ 896 $ 896:^$".a. $ 523 $ 624 $ 1147':$ 1(147 $ 1,009 $ 1,312 $ 2,321 $ 2,321 $ 8,137 $ 11,184 $,,19,321 $ h 585 $ 8,148 $ 11,200 $119,348 $.°,..:-.,,$$,$,, $ 11,118 5 14;346 $4(25,464 $ '340 $ 11,16815 15,484 $ 26(6522,$ ,x808 $ 20,602. 5'27,797 $ 48 398r. r`$�> 509 S s $, 1,990 $ 2(1:11,V.$ 4101 $ 68 $ .2541 $ 2,893, $(Y>'5,434 $ 494 $'3,75511 $ 4,614 ,-$ 8,370 $ 8,370 $ 3,917(.../S,;( 4,844' $ 8,762 $ 8,762 $ 9,27$ $,'1©;'545 $ 19,820 $ 19,820 $ 6,219 $7 8,109 $ 14,328 $ 14,328 $ 10,327 "'$ 12,038 $ 22,365 $ 22,365 ($(year) ($/year) $ 277 i"';5 ,-342 5 280$r`,345" 374 $ ^x'459 377 $' 463 $ 525 $ 642 $„'1;217 $ 1,479 ,y10,906 $ 13,066 $ 10,922 $ 13,085 $ 13,367 5 15,429 $ 15,224 $ 18,295 5 26,875 5 31,786 $ 1,457 $ 1,528 $ 2,242 $ 2,479 $ 3,971 $ 4,572 $ 4,202 $ 4,852 $ 8,905 $ 9,023 $ 7,480 $ 8,822 $ 10,404 $ 10,838 ($/year) $ 619 5 625 $ 834 $ 840 $ 1,167 $ 2,696 $ 23,972 $ 24,007 $ 28,796 $ 33,519 $ 58,661 $ 2,985 $ 4,720 $ 8,543 $ 9,053 $ 17,928 $ 16,302 $ 21,243 $ 619 5 625 $ 417 $ 840 $ 1,167 $ 2,696 $ 726 $ 727 $ 384 $ 1,016 $ 617 $ 50 $ 429 $ 8,543 $ 9,053 $ 17,928 $ 16,302 $ 21,243 ($/year) 5 (107) $ (106) $ (57) $ (56) $ 20 $ 375 $ 4,651 $ 4,659 $ 3,332 $ 6,866 $10,262 $ (1,116) $ (714) $ 173 $ 292 $ (1,891) $ 1,974 $ (1,122) (%) -15% -14% -6% -6% 2% 16% 24% 24% 13% 26% 21% -27% -13% 2% 3% -10% 14% -5% 18 -Mar -08 51 R.M. Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 52 of 78 6.2 Impact on Large Customers The impact on Large customers is provided below in Exhibit 23. The shift of charges from the Service Charge to the volumetric charge affects large volume water users the most. NF User Rate Report April 2 2008 Final.doc 52 R.M. London Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 53 of 78 Exhibit 23 Impact on Large Customers (25% SC) - 2007 Meter 2006 Rank R=rriptim b Sze Vdure Water Senaga Tod Cost/Room VVater "7'=S nag Total 01 HO (m) (Shear) (Shea) (Sheer) ($'1'ear) ($/Y )c ($.) 1 Casino 1 150 884,720 $ 543,070 $ 765,269 $1,305,339 $1,308,339 $766,963 $ 9297021t,$ 1,637,664 $ 1,687,664 $ 379,15 29% 2 Industry 1 200 289,420 $ 180,351 $ 246,914 $ 427,275 $ 427,275 $246727\ $ 233,872:g$;!!,X530,600 $ 530,000 $ 103,324 24% 3 Municipal 1 253 210,350 $ 152,002 $ 203,134 $ 355,136 $ 355,136 ,$20740248 224,008 `$:,431,410 $ 431,410 $ 76,274 21% 4 Utility 1 153 203,190 $ 132,517 $ 182,970 $ 315,487 $ 315487 w$1ffi210=�$ ,213,955 $ 396,165 $ 396,165 $ 83,678 26% 5 Hotel/Tourism 000 150 177,720 $ 117,173 $ 161,203 $ 278,382 $ 464;,};;$160357 $."'(987543 $ 347,899 $ 580 $ 69,517 25% 6 Tourism 1 250 169,850 $ 127,605 $ 168,531 $ 295,135 $ 295,136 ''$172,6153 $ ,182;010 $ 354,663 $ 354,663 $ 58,527 20% 7 1-bteVToulsm 512 103 151,3/0 $ 98,484 $ 134,236 $ 230719 -$ 451 $14.319„,$'4,159,135 $ 292,254 $ 571 $ 61,5145 27% 8 Fbtellfauism 670 150 143,050 $ 96,288 $ 131,586 $ 227875F, ' X340 $130610�a$ 151,590 $ 232,203 $ 421 $ 54,325 24% 9 F-bte3rftuism 513 150 128,880 $ 87,752 $ 119,480 $ 207,232 $ 404 $118,452 $ 136,896 $ 255,348 $ 498 $ 48,116 23% 10 Casino 374 150 121,060 $ 83,041 $,;112,798 $ 195,846 $ 524;$111,742 $ 128,786 $ 240,529 $ 643 $ 44,689 23% t Nagra Fails Ll l as xls In �x.f Lax, 31-mk, Qrrert Rates Pltemalive Rates Alt vs Curent Cost/Room Total (Shea) Tda1 (°/a) WE User Rate Report April 2 2008 FinaL doc 53 RM Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 54 of 78 6.3 Rates Comparison With Other Municipalities Water and sewage rates information has been gathered for 16 mid to large-sized Ontario municipalities in order to provide context for the current and alternative Niagara Falls user rates. A synopsis of the rates formats used is provided. Comparisons of 2007 combined water and sewage charges for two customer categories are provided for each municipality and for Niagara Falls both current rates and Alternative Rates. is A summary of the water rates formats for each municipality is provided in Exhibit 24. Exhibit 24 Water Rate Formats in 16 Municipalities - 2007 Municipality 2001 (1) Population Service Charge ($/rno)t Vo lu etric Rates (2) 19 -min 100 -mm 00 vs9s SR IBR DBR Other Belleville 45,986 $15.89 $90.36 v.r -6 =:1` X Cobourg 17,172 $10.45 $161:35 ,IS X Durham Region 506,901 $10.25 ; ; $30745.;E 30 X Halton 375,229 $8.99 "- $588.83 ^x'65 Hump Hamilton 490,268 $6.55N 101.52 , Y 15 X Kingston 114,195;-$8.55 $57:56 7 Res ICI London 336,539 $d,52 $39.36 76 Res ICI Newmarket" -;65,788 $600 :- . $6.00 1 X Niagara);Current 78 815 $20.07 $441.52 22 X Niagara 1ternate; -` 78,815 $10.26 $270.30 26 X Ottawa ik, 774,072 - - X Peel Region 2988,948 - - X Port Hope 15,605 $4.44 $28.43 6 X St. Catharines ©129,170 $10.00 $36.67 4 X Toronto 2,481,494 - - Hump Waterloo City 86,543 $2.42 $51.86 21 X Windsor 208,402 $16.84 $373.85 22 X Seasonal Summary 81% have S.C. 8 4 4 3 Notes: (1) Statistics Canada website (2) Abbreviations - Single Block Rate, Increasing Block Rate, Decreasing Block Rate, Humpback, Seasonal NF User Rare Report April 2008 Finatdoc 54 RAA Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 55 of 78 The approaches to water rate formats vary. Most common is the use of two-part rates with 81% adopting this practice. Service charges for 19 -mm and 100 -mm meters are shown. Virtually all increase with meter size, from very little to a maximum of 76 times larger in London. Niagara shares the middle ground with Durham, Waterloo City and Windsor at about 25 times larger. In terms of volumetric rate formats about half use single block rates and one-quarter using increasing block rates and one-quarter using decreasing block rates. The first water and sewage bill comparison is for a customer using240 m3/year (52,800 gallons) which would be fairly typical for an average residential custor`e:and is shown in Exhibit 25 below. Exhibit 25 Water/Sewage Charges in 15 Municipalities (240m3/year) 2007 Annual Cost ($) $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $- 0 00 Y N COea 100% 90% p co VD% co to' 70% U " 60% -D 0 >- 50% _$ - 40% 30% - 20% - 10% a N d 0 a O 0 1- 0 0 JZI0 0 0) 0- 0 S 0 0- 5 R 0 0 O a 0 J c 0 0 m03m x � LL Z a 0) 0 LL N O ) 4, > 0% The chart shows total annual water/sewage charge (vertical bars with annual bill) and percentage of bill that is fixed (black dot and percentage at right side of chart). 2007 charges were highest in Niagara Falls, but drop behind Windsor and Kingston with the Alternative Rates. NE User Rate Report April 22008 Finatdoc 55 R.M. London Ltd. City of -Niagara Falls Water & Sewage Rate Structure Review Final Report Page 56 of 78 Peel, Toronto, Ottawa, Waterloo and London fixed charges represented less than 10% of a residential bill. The average fixed charge level was 30%with about half between 20% and 40% including the Niagara Falls Alternate rate. Four are above 40% with the highest about 70%. The second comparison is for a Large customer using 227,000 m3/year and a 100 -mm meter which would be 314 largest user in Niagara Falls. The results are graphed below in Exhibit 17. Exhibit 26 Water/Sewage Charges in 15 Municipalities (227,0011V/year) - 2007 $600,000 v $500,000 w m $400,000 m $300,000 $200,000 c < $100,000 $0 c o o ur 0a c 0 0 J Niagara c o 2 c Ta o x 0 Hcu Newm 0 E x St. With current rates a large customer would be 6a' lowest out of 15 and would increase to 11th lowest with the Alternative Rates. NF User Rate Report April 2 2008 Flnal. doc 56 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 57 of 78 7 Other Issues 7.1 Volume -Only Rates — No Service Charge Some municipalities have adopted a volumetric -only water and sewage rate structure. Examples are Peel Region and the City of Toronto along with a few others. Although not part of this rate study proposal (see Section 13). the option of a only rates structure has been advanced by Mr. Bielawski and;as-aresult will interest to Council during deliberations. In order to provide a comparison to ;,. Alternative Rate format calculated in Section 5, information on a volume -on structure has been calculated and its impact provided below. volume - likely be of the ly block rate 2007 Niagara Falls volume -only user rates are calculated below in Exhibit 27. Exhibit 27 Volume -Only Rate Calculation --"2007 (System, Revenue :Ko -6 Volume nit) Rate ($/m3) $1.144 Water 1:8;988,544 13,984,843 Sewage 18,096,827 ,13,068,836 $1.385 Total x,.34,085 37r1 $2.529 The impactofelimmating-the service charge completely is illustrated below in Exhibit 28. NF User Rate Report April 2 2008 Final. doc 57 R.M London Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 58 of 78 Exhibit 28 Impact of 2007 Volume -Only Rates Description Location Units Meter Size 2006 Volume Current Rates ).:ICIC., , AJtemative Rates Alt vs Cur Total Per Unit Water Sewage Total Cost/Unit(icriNMater Sewage Total Cot/Unit Total (mm) (m3/year) (m3/Year) ($/year) ($/year) ($/year) tt `($✓year) ($,ear) ($/year) ($/year) Residential SFD Woodfield Av. 1 18 180 180 3 349 $ 377 $ 726 3 726 $ 2064 3 249 $ 455 3 455 $ (271) SFD Epsom St. 1 18 183 183 $ 351 $ 379 $ 730 3 r X730 5 "209 3 ,;' 253 $ 463 3 463 $ (268) Duplex Armoury St. 2 18 293 147 $ 417 3 473 $ 891 ,t$ .1•"3'445 $ 335.„$;;- 406 IspSFD $ 741 5 370 $ (150) HawkinsSt. 1 18 297 297 $ 419 3 476 $ 896'`3 ,"'896? ,$339r.7$ 411 $ 750 $ 750 $ (146) SFD Mount Carmel Blvd. 1 18 469 469 $ 523 $ 624 $ 1 147 $ 1,147 $ 537 $ 650 $ 1,186 $ 1,186 $ 39 SFD January Dr. 1 18 1,275 1,275 $ 1,009 $ 1,312 $ 2321$ 2,321 $*`� 1,459 $ 1,766 $ 3,224 $ 3,224 $ 903 Townhouse Thorold Stone Rd. 33 37 12,308 373 $ 8,137 $ 11,184 $ 19,321 $ _'` 585 ,$ 'e14080 $ 17,046 $ 31,126 $ 943 $ 11,805 Townhouse Thorold Stone Rd. 33 37 12,326 374 $ 8,148 $ 11,200 $1 19,348 $ 586 "$ 14,101 $ 17,072 $ 31,172 $ 945 $ 11,825 Condo Dorchester Rd. 75 75 13,659 182 $ 11,118 $ 143454t$sk 25464 $ „340 $ 15,626 $ 18,918 $ 34,544 $ 461 $ 9080 Townhouse Thorold Stone Rd. 33 37 17,340 525 $ 11,168 $ 15,484 $ 26,652 $ '808 $ 19,837 $ 24,016 $ 43,853 $ 1,329 $ 17,201 Apartment Drummond Rd 95 75 29,402 309 $ 20,602 $ r 27;797 $ 48398. $ 509 $ 33,636 $ 40,722 $ 74,358 $ 783 $ 25,959 Non -Residential' • T2 ,, ',, r; Motel LuncysLane 60 50 905 "I5"3 1,990 t, $ ° 2,111 $ 4,101$ 68 $ 1,035 $ 1,253 $ 2,289 $ 38 $ (1,812) Mall Montrose Rd. 11 50 1,820 165 $ 2,541 $ 2893.,$ 5,434 $ 494 $ 2,082 $ 2,521 $ 4,603 $ 418 $ (831) Medical Centre Morrison St. 1 50 3,835 3,R15 $ ,+$37$$ $ 4,614 $ ..M 8,370 $ 8,370 $ 4,387 $ 5,311 $ 9,699 $ 9,699 $ 1,329 Car Wash FerrySt. 1 50 4,104 k 4,104 $4.9'39117,,, $ 4844 $ " 8,762 $ 8,762 $ 4695 $ 5,684 $ 10,379 $ 10,379 $ 1,618 School Drummond Rd 1 100 6,601 6,601 $ 9275 7$,,, 10,545 ;,$- 19,820 $ 19,820 $ 7,552 $ 9,142 $ 16,694 $ 16,694 $ (3,126) Laundromat Drummond Rd 1 50 ',7,925 7,925 $ 6219 $,u3 8,109 $ 14328 $ 14328 $ 9,066 $ 10,976 $ 20042 $ 20,042 $ 5714 Arena Centre St. 1 100. i'-• 8,348 $ 10,327 $ ,,12;038 $ 22,365 $ 22,365 $ 9,550 $ 11,562 $ 21,112 $ 21,112 $ (1,253) Casino 1 150y,,884,720 884720;; $ 543,070 $ ;765,269 31,308,339 $ 1,308,339 $ 1,012,120 $ 1 225337 $ 2237,457 $ 2,237,457 $ 929,117 Industry 1 - 200 269,420 .3269,420 '$ 180,361 $"246,914 $ 427,275 $ 427,275 $ 308,216 $ 373,147 $ 681,363 $ 681,363 $ 254,088 Municipal 1 250 210350e 210,350 $ 152,002 $ 203,134 $ R'$,136 $ 355,136 $ 240,640 $ 291,335 $ 531,975 $ 531,975 $ 176,839 Utility 1 150 203;190 203190 $ 132,517 $ 182,970 $ 315,487 $ 315,487 $ 232,449 $ 281,418 $ 513,868 $ 513,868 $ 198.381 Hotel/Tourism 600 150 177,720 k.6. 296 $ 117,173 $ 161,208 $ 278,382 $ 464 $ 203,312 $ 246,142 $ 449,454 $ 749 $ 171,072 Tourism 1 250 169,850 4"169,850 $=127,605 $ 168,531 $ 296,136 $ 296,136 $ 194,308 $ 235,242 $ 429,551 $ 429,551 $ 133,415 HotellTourism 512 100 151,370 "^^2966: `$ 96,484 $ 134,236 $ 230,719 $ 451 $ 173,167 $ 209,647 $ 382,815 $ 748 $ 152,096 Hotel/Tourism 670 150 143,050 -214 $ 96288 $ 131,586 $ 227,875 $ 340 $ 163,649 $ 198,124 $ 361,773 $ 540 $ 133,899 Hotel/Tourism 513 150 128,880 .-251 $ 87,752 $ 119,480 $ 207,232 $ 404 $ 147,439 $ 178,499 $ 325,938 $ 635 $ 118.706 asino 374 150 121,060 324 $ 83,041 $ 112,798 $ 195,840 $ 524 $ 138,493 $ 167,658 $ 306,161 $ 819 $ 110,321 iagara raps User Rates 2C08.x Impact NF User Rate Report April 2 2008 Final.doc 31 -Mar -08 58 R.M Loudon Ltd. City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 59 of 78 A volumetric -only rate would result in small customers pay much less and large users pay a lot more compared to current rates. One advantage of this approach is that all customers pay the same volumetric charge. It has been argued that this would be the fairest approach. However, small users and customers who are away, such as snowbirds, would be contributing nothing even though the water and sewage systems are in place, ready to serve, and costing money on an ongoing basis even if the customer is not actively using them For;, example, meters are Y 4 t: read and bills sent out as well as fire protection being available evengifsomebody is away. Thus it can be argued that at least some service charge should bean, place to " 3=m- recover ongoing costs which continue whether the customeiis home or not;'_ A minimum bill feature is sometimes used to ensure that low users or "snow -bird" type absent customers pay at least something to cover ongoing costs One municipality73 eliminated a minimum bill feature for residential since it meant -that true small users such as the elderly were not rewarded for conservation another efforts to save money on consumption. hi that eaSe_there was alreadyya service chargewhich fulfilled the function of recovering fixed costs. In regard to fairness, the two-part rategis designed for fairness by allocating certain fixed costs to a -fixed charge,and remaining costs'to the volumetric rate. It also enhances yk -. revenue sedulity byensuring some revenues are not vulnerable to consumption Jai fluctuationsHowever, the volume -only approach has its supporters and does remain an option that is usedin severaliOntario municipalities. A minimum monthly bill of 5 m3/month has been suggested. On an annual basis this would be equivalent to 60 m3/year. Based on the consumption profile in Exhibit 12 this minimum bill level would impact about 10% of customers. 13 The Region of Durham eliminated a minimum bill for standard meter customers (targeted at residential) in the 1980's but retained it for meters 25 -mm and larger NT User Rate Report April 2 2008 Final doe 59 R.M. Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 60 of 78 7.2 Revenue Security The decrease in fixed charges and increase in volumetric charges will make annual revenues more vulnerable to changes in consumption patterns due to conservation over the long term and seasonal usage on a year-to-year basis. Revenue shortfalls can occur due to a wet summer (low seasonal use), economic conditions (business closure) or reduced usage due to conservation or plumbing fixture replacement. Protection against negative revenue variances can be accommodatedsby a combination of: • By basing revenue projections used to calculate the next year rates on' conservative consumption projections. This would be done by assuming slow growth increased penetration of low -flow plumbing fixtures and appliances andhlow seasonal usage. • The maintenance of a rate stabilization reserve fund witlhsufficientbalance to offset possible revenue shortfalls. A surplus at year-end would be contributeddto the Rate Stabilization Reserve Fund. To offset excessive accumulation of reserve fund"balance s`, funds would be applied to moderate rate in,creases but oft1;:foAtheneeded to keep the Reserve Fund at target re levels14. The Ra e'�StabilizattoMReserve Fund leve] can be established by an analysis of historical consumption trends and fluctuations and the resultant impact on revenues. Both basic trends and season ail variations would be considered. As a guide it is noted that the Region considered a range oT5%"to 10% of revenues as a target balance and adopted a level of 10% for water and 5%for sewage. The lower value for sewage is presumably a result of adopting a fixed annual charge approach where sewage revenue variations are more predictable. 14 Altematively, surplus funds could be directed to capital needs such as major projects to avoid debenturing or asset management to provide capital funds for needed replacement projects. NF User Rate Report April 2 2008 FinaLdac 60 R.M. Loudon Ltd. City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 61 of 78 7.3 Metering of Condominium Townhouse Development In the past Niagara Falls has agreed to the installation of City meters in individual condominium units in a few condominium developments. The City issues bills to those individual units. However, in the majority of condominiums bulk meters are installed and the condominium corporation is billed. Most Municipalities have tended to avoid installing individual meters for each unit within AN; multi -unit developments (such as condominiums), for several reasons: • The ability to shut off individual customers for non-payment of waterand sewage bills is compromised since the shut-off valve to individual:customers isremprivate property and the master shut-off to the condominium` development which is at the property line, would shut off the whole complex. This would be a difficult situation since the other customers, who likely have paid their bills, would received a service interruption due to a single customer. • The individual meters'; not measure,losses in the private mains and services. Leaky it private mains would be uncged To addfess this a harmaster meter would be needed. This would become problematic since it is unlikely that even under the best of r circumstances the individual meterxtotal consumption is unlikely to match the master meter reading due to a combination`of not being able to read all the meters at exactly the same time -plus meter accuracy limitations. • Clearances, construction,and maintenance standards for roads and other facilities within private development may be lower within private property compared to public streets which could impede access by utility vehicles. • The allowance of metering of this type on private properties could lead to the argument that separate meters should be installed in malls where policing of illegal connections would be virtually impossible because plumbing is often hidden, but easily accessible if somebody wants to make an illegal connection. NF User Rate Report April 2 2008 Final.doc 61 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 62 of 78 It is recommended that multi -unit customers such as condominiums be bulk metered and billed by the City using bulk meter readings. Individual metering, meter -reading and billing of each unit should be the responsibility of the property owner or condominium corporation. This does not apply to freehold townhouse development or other customers where there are individual services from City mains — these customers would continue to have individual City meters since they could be shut off if required for water and sewage bill collection action. NF User Rate Report April 2 2008 Final.doc 62 R.M. Loudon Ltd. City ofNiagara Falls Water & Sewage Rate Structure Review Final Report Page 63 of 78 8 APPENDIX A — Rate Structure Alternatives 8.1 Basic Components Water user rates are charges levied to serviced customers on an ongoing basis to recover recurrent water system costs expended to provide the service. There are basically two types of charges that can be used to make up the user rates: • Fixed Charges — In the case of unmetered systems, only fixed charges, referred to as flat rates, are levied. For metered systems, fixed charges are optional, but common. They are usually known as service charges, but other names are sometimes used, such as basic charges. Sometimes a single fixed charge is apphed,to all custorriers.,NIore often the charge varies in relation to the size of customers' meters Fixed charges cover some costs that are unrelated to usage volume -(such as bdling,costs). In addition to being a fair way of recovering certain costs,they provide a level of revenue stability to the utility. • Volumetric Charges ;:These are charges that are tied'to the actual volume of water used by a customer. Meters.are needed forvolumetric charges to be levied. There are a number of optional volumetric rate formats= for water utilities to choose from. Various options are discussed in more detail below. For metered, rates, a volumetric charge;is essential. Usually, but not always, it is combined withhafixed charge, to form what is called "two-part" rates. This combination is considered the fairest way to recover costs and improves revenue stability over volumetric charges alone" There are a couple of other rate features to consider: • Minimum Bills - The fixed charge may or may not include a minimum consumption allowance. Where it does it is referred to as a minimum bill. The minimum bill provides the customer with a specified consumption allowance at no additional cost. The customer pays the minimum charge plus the volumetric consumption charge on any water used in excess of the consumption allowance. The minimum bill can be NF User Rate Report April 2 2008 Finot.doc 63 R.M. Loudon Ltd. City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 64 of 78 justified as a means of covering some fixed costs that are ongoing whether a customer uses water or not. It provides a municipality with a revenue cushion that is unaffected by annual variations in use (usually related to seasonal use fluctuation for cooling and irrigation). The consumption allowance with a minimum bill should be sufficiently low that only a small percentage of customers pay only the minimum bill. Otherwise, the minimum bill starts to function like a flat rate charge. • Demand Charge — This is a fixed charge per billing period ha is based on a customer's peak demand. Different approaches may be used to measure peak demand, but for a retail rate, maximum month demand in the previous year is appropriate. The measure of peak demand for a customer remains constant for the billing year. The demand charge can replace the meter chargeas a fixed charge. This charge is common for electricity sales but not usualfor water: • Unmetered Fire Line Charge — This is a fixed monthly charge to customers with fire lines. A fire line would serve private,fire protection'facdil•_ies such as private fire hydrants, sprinklers or standpipe connections. Public.water systems include capacity on standby for fire protection. Water used for fire fighting is not sold based on `mow. volume used. Costs are normally recovered"Trom-all customers by means of water user rates. An unmetered fire line_charge could form part of this. 8.2 Volumetric Rate Format Alternatives There area numbetof optional volumetric rate formats: 8.2.1 Single Block Rate°(SBR) A single volumetric rate is applied to all usage. The rate is simple to understand and the customer bill is simple to calculate. A SBR does not attempt to refine the allocation of costs to customers in relation to their usage characteristics, other than the total volume. NF User Rate Report April 2 2008 Finat.doc 64 R_ M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Exhibit 29 Single Block Rate Structure Price/cu.metre $0.0 Final Report Page 65 of 78 0.0 Water use/month. Structure of the Volumetric Rate Water $0.0 Water Water use/month. Monthly` Water Bill Sample calculation of a customer hill withthe�SBR strmcturer� Volumetric rate = $1.50/m3 Customer water use in one month,= 24 m as Monthly water bill = 1.50/m3 x 24m $36.00 8.2.2 DecliningfBloek Rate (DBR) 4kjy A declining block rate decreases in steps as usage increases. Traditionally the consumption limits for the first block were set to encompass the largest amount that a customer in a single-family dwelling might use. The upper consumption limits for the 2nd block would encompass the consumption of most industrial, commercial and institutional customers, and the 3rd block covered larger industrial users. Sometimes more blocks are used. There has been an ongoing shift away from this type of charge due to their poor reputation for water conservation. It is argued that they do not promote water h'F User Rate Report April 2 2008 Final.doc 65 R. M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 66 of 78 conservation since the price of water declines as more water is used. But this reputation is more a matter of optics than reality. Like any other volumetric tariff structure, the declining block volumetric charge always provides the customer with an economic incentive to conserve water since the water bill always increases as the amount of water used increases. Declining block charges were originally designed to achieve an equitable allocation of costs among customers. Costs for building and operating the excess system capacity that is used to satisfy peak demands are recovered primarily from residential customers who, as a customer class, are the main cause of peaks demands. The rate design is cost -based and is not meant to favour industry in order to promote economic development. Exhibit 30 Declining block rate Price/cu.metre Water, bill/mo° Water use/month. Structarc>of the Volumetric Rate NE User Rate Report April 2008 Final.doc 66 $0.0 0.0 Water use/month. Monthly Water Bill R.M Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 67 of 78 Sample calculation of a customer bill with the DBR structure: Volumetric rates: 0 to 24 m3/month = $1.207/m3, 24.1 to 200 m3/month = $1.000/m3, 200.1 to m3/month = $0.700/m3 Customer water use in one month = 28 m3 Monthly water bill = ($1.207/m3 x 24 m3) + ($1.000/m3 x 4,m3) = $32.9 8.2.3 Increasing Block Rates (IBR) The block rate increases with increasing use. This structure is designed to encourage water conservation.Thelfiitast ' ' ' for ustomer class would be designed to cover the normal use of an average customer in that class-For:Subsequent blocks, the differential in the charge level=shiould be designedlto give a clear and strong economic incentive to the customer to conserve water. Howevermrate,differentials between the blocks of 5%, 10% or evenz25%;may notiybe.84ough to change water use by some domestic customers because totalVwater charges are still relatively low compared to other utilities. This type of charge is normallya,3appropriate for residential customers since they are the ones most likely to be causing peak seasonal demands (usually the hardest and most expensive to supply). It would be/suitable for industrial customers where water availability limitations outweigh the disadvantages of shifting the cost burden to the largest users. NE User Rate Report April 2 2008 Finat.dor 67 R.M. Loudon Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Exhibit 31 Increasing Block Rate Final Report Page 68 of 78 Price/cu.metre Water bill/mo. $0.0 0.0 Water use/month. Structure of the Volumetric Rate $0.0 ater use/month. Monthly` Water Bill Sample calculation of a customer bill with the IBR structure: Volumetric rate: 0 to 10 m3/month at $0.350/m3, 10 to 25 m3/month at $0400/m3, 25.1+ m3/month at,.$1.400/m Customer water use in one mont 4 3 4 Monthly eater bill ($0.350hn x 40 m;)"+ ($0.700/m3 x (25 m3 - 10 m3)) + tit ($1.4001m3 x;(35 m3 25- n3)) = $28.00'=` 8.2.4 Humpback Rate'(HBR) This looks like and inverted "U" when the rates are graphed. It is a hybrid of the increasing and decreasing blocks. Calculation of hump back blocks requires an analysis of costs similar to the analysis used to set declining blocks. Costs are allocated to the same functional cost categories. The subsequent assignment of allocated costs to component blocks then creates a peak charge for the consumption block that captures most of the seasonal demand of residential customers. This format encourages conservation by residential customers by using the increasing block limits to encompass NF User- Rate Report April 2 2008 Final.doc 68 R.M. London Ltd. City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 69 of 78 residential usage, while at the same time offering large industrial users declining charges which reflect the economies of scale of providing such customers with water. Exhibit 32 Hump -backed rate Price/cu.metre $0.0 0.0 Water use/month. Structure of the Volumetric Rate Water bill/mo. $0.0 Water use/month. Monthly Water Bill Sample calculation of a customer bill with the>HBR structure: Volumetric charge: 0 to 25 m3/month at $0.600/m3, 25.1 to 75 m3/month at $1.400/m3 35.1+ m3/month,a40.600/m Customer water use in one month"'` -41 3 Monthly water bill .-($0.600/m3 x 25 in') + ($1.400/m3 x 10 m3 ) = $36.40 8.2.5 Lifeline Ra This format features alsubsidized volumetric charge covering an estimate of the minimum volume of water needed for to meet basic residential needs. They are designed to assist low-income households. Lifeline rates can be incorporated into increasing or decreasing block rate structures. NF User Rate Report April 2 2008 Final.dor 69 R.M. Laudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 70 of 78 Calculation of a customer bill with the LR structure: Volumetric charge: 0 to 5 m3/month - $0.750/m3 5+ m3/month - $1.350/m3 Monthly meter charge: Customer water use in one month = 28 m3, -i Monthly water bill = $0.750/m3 x 5 m3 + $1.350/m3 =x (23 34.80 8.2.6 Seasonal Excess Use Rate (EUR) This is a high volumetric charge thatapplies to all demand during the peak water demand season in excess of -a threshold :The threshold is7set equal to a customer's average off- peak season consumption or a modestmultiple of this amount, for example L3 times winter deii and. A basemate is used for all a age during the off-peak season and to es consu ptton during the peak season that lies below the threshold. NF User Rate Report April 2 2008 Ftnal.doc 70 R.M. London Ltd. City of Niagara Falls Water & Sewage Rate Structure Review Exhibit 33 Excess use rate Price/cu.metre $0.0 summer excess use threshold 4 0.0 Water use/month. Structure of the Volumetric Rate Water hill/mo. Final Report Page 71 of 78 $0.0 er use/month. Monthly Water Bill Sample calculation of a customer bill with the EUW'itructure: Volumetric charge: Base charge: $1.000/m3,„ Excess use charge:_$3.145/m3;y Excess use applied to demand above L`20% o inter consumption Customer itiater use in•one;month = 16tia' in the winter & 28 n? in the summer -i Winter bill In winter = $I.000/m � r l6 m = $22.00 In Summer = $1.000%m3 x (1.2x16 m3) + $3.1451m3 x (28 m3— 1.2x16 m3) = $46.88 8.2.7 Seasonal Rate (SR) A seasonal rate is one that is higher than the off-peak rate and is charged to all water used during the peak season. The off-peak or base rate applies to water consumed during the NE User Rate Report April 2008 Finai.doc 71 R. M London Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 72 of 78 remainder of the year. Seasonal charges promote water conservation where seasonal demands are the target of conservation efforts. The rationale for a seasonal charge is that peak demands require over sizing of supply facilities relative to the capacity required to meet demand for most of the year. With a seasonal charge, the extra costs of this excess capacity are recovered directly from that component of demand that causes those costs. Exhibit 34 Seasonal Rates Price/cu.metre $0.0 summer rate winter rate 0.0 Water use/mon Wate bill/mo summer charge Structure of the Volumetric Rate Water use/month. Monthly Water Bill Sample calculation=of a customer bill with tlieSR structure: V olumetri c, eharge: Off-peak season rate: $1.000/m3, Peak season rate: e.462/m3 Customer water use in one month = 28 m3 in the summer and 16 m3 in the winter Monthly water bill In winter = $1.000/m3 x 16 m3 = $16.00 In summer = $1.462/m3 x 28 m3 = $40.94 NF User Rate Repon April 2 2008 Fina! doc 72 RM London Ltd City of Niagara Falls Final Report Water & Sewage Rate Structure Review Page 73 of 78 8.2.8 Multiple or Combined Rate Formats Some municipalities will apply different rate formats to different customer categories. On combination frequently encountered is increasing block rates for residential and decreasing block rates for ICI customers. Another applied by Toronto is a humpback rate up to large customers and a declining block after the upper hunchback rate threshold is exceeded. NE User Rate Report April 2 2008 Finat.doc 73 R.M. Loudon Ltd City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 74 of 78 9 Attachment 1 — City of Niagara Falls - Study of Water & Sewer Rates Following Metering — Final Report November 2000 — Loudon & Fortin (See following pages numbered 1 to 16) NF User Rate Report Apri12 2008 Final.doc 74 R.M. Loudon Ltd. City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING SYNOPSIS 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: • Metering Program - The City has completed the metering of approximately 22,500 customers billed flat rates. Most of these are residential, but there are a few commercial customers. • Current Situation - There are approximately 3,100 customers currently billed metered rates. The current rates are two-part with a fixed charge variable by meter size and a volumetric charge with 6 declining rate blocks. • Proposed Two Part Rates - The proposed rates are also two-part with a fixed charge variable by meter size and a volumetric charge. The proposed volumetric charge is single block — there are no reduced volumetric rates for Targe 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. • Water/Sewer Combined - The sewer charges are currently billed as a 150% 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 been calculated. This approach is increasingly used as it simplifies the customer billing and improves the flexibility of financially managing the water and sewer utilities. Toronto has followed this approach for years. • Recommended Volumetric Rate Option - Two options are provided for 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 2 is provided as an alternative. It allocates 80% of the costs to the volumetric charge, which would increase the conservation element, would allow more control by customer's of their water bills, but would decrease revenue security during years with low seasonal use. • Recommended Service Charge Option - Two service charge alternatives are provided. Alternative A is a single service charge for all customers. It has the advantage of simplicity. Alternative B has service charges variable by meter size. This is recommended as it more closely 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. • Implementation - An implementation plan is suggested in Section 8 of the detailed report. NFRateReport doe 1 Loudon & Fortin City of Niagara Falls Study of Vater & Sewer Rates Following Metering Final Report Proposed 2001 Water/Sewer Rates (monthly) —Recommended in Bold Italics NFRateReport doe 2 Loudon & Fortin Option 1 (Volumetric rate recovers Regional charges) Option 2 (Volumetric rate recovers 80% of costs) Volumetric Rates ($/cubic metre) $1.309 $1.549 Service Charges - A - Single Uniform Charge $26.235 $16.182 - B - Charge Variable by Meter Size 15 mm $22.54 $13.90 18 mm $22.54 $13.90 25 mm $22.54 $13.90 37 mm $56.35 $34.75 50 mm $135.23 $83.41 75 mm $270.46 $166.82 100 mm $495.84 $305.83 150 mm $946.61 $583.85 200 mm $1,690.37 $1,042.59 NFRateReport doe 2 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING DETAILED REPORT 1 INTRODUCTION During 1999 and 2000, the City of Niagara Falls has carried out a program of installing meters on the water services to all customers. Formerly only non-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 charge 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) Block limits (gallons/quarter) Industrial $/000 gallons Commercial & Residential $/000 gallons 0 to 99,000 $3.13 $3.52 100,000 to 199,000 $2.74 $3.13 200,000 to 299,000 $2.35 $2.74 300,000 to 499,000 $2.20 $2.35 500,000 to 699,000 $2.04 $2.20 700,000 & over $1.87 $2.04 Note that some larger metered customers are billed monthly rather than the quarterly basis used for most metered customers. City of Niagara Falls Residential Water Metering Study Financial Analysis—prepared by Fortin & Loudon in conjunction with Acres & Associated Limited— August 1998 NFRateReport.doc 3 _ Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Exhibit 2 2000 Service & Minimum Charges (quarterly) Final Report Meter Size (millimetres) Service Charge ($/quarter) Minimum Bill Charge ($/quarter) Nominal Volume Allowance (m3 /quarter) — see note 15 mm $1.25 $43.00 11,000 18 mm $2.00 $57.00 15,000 25 mm $2.50 $95.00 26,000 37 mm $3.00 $155.00 44,000 50 min $4.00 $231.00 66,000 75 mm $7.50 $385.00 125,000 100 mm $12.00 $768.00 285,000 150 mm $30.00 $1,158.00 529,000 200 mm $50.00 $1,932.00 967,000 NOTE: The m'nimum consumption allowance volume is approximate only. The dollar volume is appfed 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: NFRateReport.doc 4 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Exhibit 3 Number of Metered Customers by 2001 Final Report Meter Size (millimetres) Number 15 mm 24,250 18 mm 387 25 mm 343 37 mm 221 50 mm 291 75 mm 52 I00 mm 42 150 mm 18 200 mm 3 Total 25,607 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. 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 Exhibit 4. Exhibit 4 Niagara Region Water & Sewer Charges (51m3) The 1999 water and sewage volumes which the Region billed the City are summarized in Exhibit 5 below: NERateReport.doc 5 Loudon & Fortin Water Sewer 1998 $0.275 $0.465 1999 $0.291 $0.479 2000 $0.300 $0.489 The 1999 water and sewage volumes which the Region billed the City are summarized in Exhibit 5 below: NERateReport.doc 5 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 5 1999 Water & Sewage Volumes Billed to Niagara Falls by Region (m3) Month Water Sewer January 1,269,279 1,821,812 February 1,122,577 1,754,075 March 1,233,599 1,836,082 April 1,274,006 1,738,828 May 1,746,304 1,616,411 June 2,242,640 1,582,608 July 2,820,323 1,723,472 August 1,849,745 1,814,831 September 1,661,525 1,666,689 October 1,441,157 1,697,414 November 1,297,101 1,73 9,527 December 1,315,656 1,747,952 Total 19,273,912 20,739,701 The monthly water and sewage flows billed by the Region starting in 1998 and up to September 2000 are graphed in Exhibit 6. This graphically illustrates the normal seasonality of the water purchases. Monthly water flows in the summer 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. NFRateReportdoc 6 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Exhibit 6 Niagara Falls Monthly Water & Sewage Flows Final Report 3.50 0 0 0 3.00 0 0 0 2.50 0 0 re 2.00 V E 0 1.50 u 0 > = 1.00 E 0.50 0 NIAGARA FALLS MONTHLY WATER & SEWER FLOWS (000,000 m3) 0.00 Ja Ma Ma J Se No Ja Ma Ma J Se No Ja Ma Ma J Se n- r- y- ul- p- v- n- r- y- ul- p- v- n- r- y- ul- p- 98 98 98 98 98 98 99 99 99 99 99 99 00 00 00 00 00 Month 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 Exhibit 7. Exhibit 7 1998 & 1999 Metered Customer Consumption (m3) 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 are summarized in Exhibit 8. NFRateReport doe 7 Loudon & Fortin 1998 1999 Quarterly metered 7,172,986 6,736,805 Monthly metered 671,582 699,483 Total metered 7,844,568 7,436,288 Pumpage 19,541,564 19,646,127 Unmetered use 11,696,996 12,209,839 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 are summarized in Exhibit 8. NFRateReport doe 7 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 8 Newly Metered Customer Consumption Results Summary to June 2000 Description Number of Customers Average Total Monthly Consumption (m3 /month) Unit Consumption (m3/month/customer) Date errors (note 1) 49 N/a N/a 0 reading 56 0 N/a Normal residential 17,540 431,865 24.6 Larger customers 178 38,158 214.4 Normal + Larger 17,648 470,023 26.5 Note: The reading dates were not feasible such as1980 installation or installation date after the date of the latest meter reading 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 largest 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. Exhibit 9 illustrates the average consumption by customers and includes the variance in level depending on how 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 July 1999 was about 29.5 m3/month. These 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. NFRateReportdoc 8 - Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Exhibit 9 Consumption vs Month When Customer Metered Final Report CONSUMPTION versus MONTH WHEN CUSTOMER METERED Jun -00 May -00 Apr -00 Mar -00 Feb-oo Jan -00 Dec -99 Nov -99 Oct -99 Sep -99 Aug -99 Jul -99 Month 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. Unmetered use is a combination of unaccounted for water (UFW) losses such as watennain leakage, hydrant flushing, sewer flushing etc plus water used by unmetered customers (i.e. flat rate customers). Exhibit 10 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 26 m3 /month /customer for residential customers. In the original metering financial study2 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. 2 City of Niagara Falls Residential Water Metering Study Financial Analysis — Draft Discussion Paper— Fortin & Loudon in association with Acres & Associated Ltd.—August 1998 page 14 NFRateReport doe, 9 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 10 Possible Combinations of Unmetered Unit Consumption vs UFW 45% 40% 35% 4.9 30% 8 25% 20% C 3 u 15% coc 10/ 5% 0% POSSIBLE COMBINATIONS OF UNMETERED UNIT CONSUMPTION vs UFW 0eisi y=�'.#"G eY�is .N^ ,a+,w v.Xir. ..a. -E' e tt. + : ,. . -. _ f - '- 1 _r 1998 1999 ,y Asn=,.mss ,Ei. '= w�� •,+� .�'-- ,tea- .0-F ".i . yew os NO combination 28 '!month& 23°/UFW ro 15 17 19 21 23 25 27 29 31 33 35 Unit Consumption (m3 icust /month) 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 I% largest users in the newly metered group, the likely consumption now is about 26 m3/month. According to research by Environment Canada3 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. 3 Guidelines for Municipal Water Pricing —Environment Canada — McNeill and Tate —page 7 NERateReport.doc 10 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report 5 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 Exhibit 11. Exhibit 11 2000 Budget & 2001 Draft Budget 2001 2000 Water Sewer Total BUDGET Revenues Sewer Surcharge 14338000 13514300 13514300 Water Sales 9677000 11347400 11347400 Service Charges 89000 40000 34000 74000 Sewer Lateral Cleaning Fees 25000 25000 25000 Discount -612000 0 Total 23517000 11412400 13548300 24960700 Expenditures Administration 832500 245600 245600 491200 Regional Charges 16244600 5500000 11300000 16800000 Sewer Maintenance & Operation 2105100 2214300 2214300 Water Maintenance & Operation 1230300 1296500 1296500 New & Replacement Mains 450000 1000000 1000000 New Equipment 17500 17500 17500 Contribution to Capital Budget 720000 1000000 1000000 Water Metering Program 50000 61000 61000 Cathodic Protection 250000 600000 600000 Debt Charges 1617000 1196500 283700 1480200 Total 23517000 10917100 14043600 24960700 USER RATE REVENUE REQUIREMENTS Total Expenditures 23517000 10917100 14043600 24960700 Less Other Revenues Water Sales 89000 40000 34000 74000 Service Charges 25000 25000 0 25000 Sewer Lateral Cleaning Fees -612000 0 0 0 Total -498000 65000 34000 99000 User Rate Revenue Requirements 24015000 10852100 14009600 24861700 Less Regional Charges (in volumetric rates) 16244600 5500000 11300000 16800000 Local Costs (in fixed charge) 7770400 5352100 2709600 8061700 NFRateReport. doc 11 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report 6 Tariff Calculations 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 Newmarket 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 6% 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 Exhibit 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 Exhibit 12. NFRateReport.doc 12 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Exhibit 12 Proposed 2001 Water Rate Calculation Step 1 - Consumption (cubic metres} Final Report Consumption Current Consumption Levels Reduction Level for Consumption Cons. Cons. Due to Metered Rate Customers /mo./cust. Monthly Annually Metering Calculation Metered now - billed quarterly 6700000 1% 6633000 Metered now- billed monthly 700000 1% 693000 Newly metered - top 1% 178 x 241 42898 514776 15% 437559.6 Newly metered - residual 22322 x 24.6 549121.2 6589454.4 23% 5073879.888 Total Annual (with resulting percentage difference) 14504230.4 11% 12837439.49 Volume Used for Rate Calculation (m3 ) 12837439.49 Step 2 - Volumetric Rate Calculation Option 1 - Volumetric Rate Recovers Regional Charges Annual Regional Charges = $ 16,800,000 Volumetric Charge = $ 16,800,000 > 12837439.5 = $ 1.309 / cubic metre Option 2 - Volumetric Rate Recovers 80% of Costs Cost Share = $ 24,861,700 x 80% = $ 19,889,360 Volumetric Charge = $ 19,889.360 - 12837439.5 = $ 1.549 / cubic metre Step 3 - Service Charqe Calculation Cost included in service charge A - Single Uniform Service Charge Number of Meters Monthly Charge ($/month) B - Variable Service Charge - Varies by Meter Size (see also chart below) Option 1 Option 2 Local Costs 20% $ 8,061,700 $ 4,972,340 25607 25607 $ 26.235 $ 16.182 Meter Size Equivalent Allocation Number of Service Charge ($/month) Meters Ratio Meters Option 1 Option 2 15 mm 24250 1.0 24250 $ 22.54 $ 13.90 18 mm 387 1.0 387 $ 22.54 $ 13.90 25 mm 343 1.0 343 $ 22.54 $ 13.90 37 mm 221 2.5 552.5 $ 56.35 $ 34.75 50 mm 291 6.0 1746 $ 135.23 $ 83.41 75 mm 52 12.0 624 $ 270.46 $ 166.82 100 mm 42 22.0 924 $ 495.84 $ 305.83 150 mm 18 42.0 756 $ 946.61 $ 583.85 200 mm 3 75.0 225 $ 1,690.37 $ 1,042.59 Total 25607 29807.5 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. Unfortunately, the conservation aspect of metering is weakened since only about two-thirds of costs in the volumetric rate. • Option 2 - Recover 8O% 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. NFRateReport. doe 13 Loudon & Fortin 11 I City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report 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 Exhibit 12. 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 more due to the elimination of the volume discounts. NFRateReport. doc 14 Loudon & Fortin City of Niagara Falls Study of Water & Sewer Rates Following Metering Final Report Exhibit 13 Impact of Proposed 2001 Rates vs Current 2000 Rates M eter Customer Usage Size (m 3/m o.) (mm) Option 1 - Volumetric Rate Recovers R Residential (currently flat rate) Small 10 15 Average 20 15 Large 40 15 Laundromat 780 25 Hospital, Hotel 9000 100 Large Hotel 16250 100 Niagara Parks Comm. 18250 150 Large Industry 21000 200 Option 1 • Volumetric Rate Recovers 8 Residential (currently flat rate) Small 10 15 Average 20 15 Large 40 15 Laundromat 780 25 Hospital, Hotel 9000 100 Large Hotel 16250 100 Niagara Parks Comm. 18250 150 Large Industry 21000 200 RATES USED IN CALCULATIONS NFRateReport. doc Current Rates Current Charge Service Charges Size Charge Proposed Rates Option 2 Volumetric Rates Block Limits Rate W ater (ms/month) ($/m3) (3) (mm( ($/month) Volumetric Service Commercial Sewer Volumetric Service 15 1.25 Charge Charge Total 150% Total Charge Charge Total Difference (5) (5) (5) ($) (5) (3) (3) (5) (5) eg lo nal Charges 18 $ 22.54 $ 13.90 2714 $ 0.604 1986.046 37 3.00 5 20.62 $ 30.93 $ 51.55 $ 13.09 $ 22,54 $ 35.63 $ (15.92) 50 4.00 5 20.62 $ 30.93 $ 51.55 $ 26.18 $ 22.54 $ 48.72 $ (2.83) 75 75.00 $ 20.62 $ 30.93 $ 51.55 $ 52.36 $ 22.54 $ 74.90 $ 23.35 $ 604.50 $ 2.50 $ 607.00 $ 910,50 $ 1,517.50 $ 1,021.02 $ 22.54 $ 1,043.56 $ (473.94) $ 5,286.98 $ 12.00 $ 5,298.98 $ 7,948.47 $13,247.44 511,781.00 $ 495.84 512,276,84 $ (970.60) $ 6,561,38 $ 12.00 $ 8,573.38 $ 12,860,07 $21,433.45 521,271.25 $ 495.84 $21,767.09 $ 333.64 $ 9,459.38 $ 30.00 $ 9,489.38 $ 14,234.07 523,723.45 523,889.25 $ 946.61 524,835.86 $1,112.41 $10,694.13 $ 50.00 $10,744.13 $ 16,116,19 $26,860.32 527,489.00 51,690.37 $29,179.37 52.319.04 )% of Costs 6805 $ 0.449 3783.12 $ 20.62 $ 30.93 $ 51.55 $ 15.49 $ 13.90 $ 29.39 $ (22.16) $ 20.62 $ 30.93 $ 51.55 $ 30.98 $ 13.90 $ 44.88 $ (6.67) $ 20.62 $ 30.93 $ 51.55 $ 61.96 $ 13.90 $ 75.86 $ 24.31 $ 537.42 $ 2.50 $ 539.92 $ 809.88 $ 1,349.80 $ 1,208.22 5 13.90 $ 1,222.12 $ (127.68) $ 4,768.68 $ 12.00 $ 4,780.68 $ 7,171.01 511,951.69 $13,941.00 $ 305.83 514,246.83 $2,295.14 $ 7,775.36 $ 12.00 $ 7,787.36 $ 11,681.04 $19,468.40 $25,171.25 $ 305.83 525,477.08 $6,008.68 $ 8,599.36 $ 30.00 $ 8,629.36 5 12,944.04 521,573.40 528,269,25 $ 583.85 528,853.10 $7,279.71 $ 9,732.36 $ 50.00 $ 9,782.36 $ 14,673.54 524,455,90 $32,529.00 51,042.59 533,571.59 59,115.70 Current Rates Accumulated Charge Service Charges Size Charge Proposed Rates Option 2 Volumetric Rates Block Limits Rate Option 1 (ms/month) ($/m3) (3) (mm( ($/month) Volumetric 5 1.309 $ 1,549 Commercial 15 1.25 Service Charge 0 $ 0.775 0 18 2,00 15 $ 22.54 5 13,90 1350 $ 0.689 1046,25 25 2.50 18 $ 22.54 $ 13.90 2714 $ 0.604 1986.046 37 3.00 25 $ 22.54 $ 13.90 4077 $ 0.518 2809.298 50 4.00 37 $ 56.35 $ 34.75 6805 $ 0.485 4222.402 75 75.00 50 $ 135.23 $ 83.41 9532 $ 0.449 5544.997 100 12.00 75 $ 270.46 $ 166.82 Industrial 150 30.00 100 $ 495.84 $ 305.83 0 $ 0.689 0 200 50.00 150 $ 946.61 $ 583.85 1350 $ 0,604 930.15 200 31,690.37 $ 1,042.59 2714 $ 0.518 1754.006 4077 $ 0.485 2460.04 6805 $ 0.449 3783.12 9532 $ 0.412 5007,543 I5oudon & Fortin November 2000 City of Niagara Falls Study of Water & Sewer Rales Following Metering Final Report 8 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 are 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. NFRateReport. doe 16 Loudon & Fortin City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 75 of 78 10 Attachment 2 — City of Niagara Falls Report F-2000-74 - Utility Rate Structure (See following 16 pages — not numbered) NF User Rote Report April 2 2008 Final.dac 75 R.M Loudon Ltd The City of Niagara Fall Cantatas/11.11111.11.1 Corporate Services Department F-2000-74 Finance Ken Burden 4310 Queen Street Director P.O. Box 1023 Niagara Falls, ON L2E 6X5 web site: www.city.niagarafalls.on.ca Tel: (905) 356-7521 Fax: (905) 357-2016 E-mail: kburden@city.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: 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 for 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 basicrecommendation from the consultant's report provides for a two-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) or the number and size of meters (varies with meter size). This service charge funds the maintenance ofboth 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 • Legal • Planning & Development December 11, 2000 - 2 - F-2000-74 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 a use -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: Manager of Revenue Recommended by: K.E. Burden Director of Finance Approved by: T. Ravenda Executive Director of Corporate Services Attach. N.SWPFILFSCwmu,K\F-2000-74. Uiny Raw Stnactve.wpd E.P. Lustig Chief Administrative Officer Exhibit 1 Annual Water/Sewer Utility Rate Structure Comparison $900 $800 1 .. ,. $700 $600 $500 ♦ ♦ �••-.... ... ♦ ..!.- • ,_.+._.-.._ $400 - k.._. $300 10 15 20 25 30 35 40 Monthly Consumption Rate ( Cubic Meters) -♦- 2000 Fiat Rate •-•*. ' 2000 Revised Metered Water/Sewer Utility Rate Structure Comparison Cu M 2000 Flat Rate 2000 Revised per month Metered 10 15 20 25 30 35 40 $599.88 $599.88 $599.88 $599.88 $599.88 $599.88 $599.88 $374.91 $442.33 $509.75 $577.17 $644.60 $712.02 $779.44 (Decrease) Increase ($224.97) ($157.55) ($90.13) ($22.71) $44.72 $112.14 $179.56 Cu Meters per month 150 900 1300 2200 3100 4000 5000 Cu Meters per month 150 900 1300 2200 3100 4000 5000 Cu Meters per month 150 900 1300 2200 3100 4000 5000 37 mm Revised 2000 52,826.96 $13,248.96 518,807.36 $31,313.76 $43,820.16 $56,326.56 $70,222.56 75 mm Revised 2000 $5,054.16 $15,476.16 $21,034.56 $33,540.96 $46,047.36 $58,553.76 $72,449.76 Meter Existing 2000 3,496.80 18,604.20 23,521.20 34,134.00 45,024.00 53,868.00 67,332.00 150 mm Revised 2000 512,478.68 522,900.68 $28,459.08 $40,965.48 $53,471.88 $65,978.28 579,874.28 Meter Existing 2000 3,514.80 18,622.20 23,539.20 34,152.00 45,042.00 53,886.00 67,350.00 Meter Existing 2000 3,604.80 18,712.20 23,629.20 34,242.00 45,132.00 53,976.00 67,440.00 City of Niagara Falls Exhibit 2 Comparison of 2000 Metered Rates Increase Cu Meters (Decrease) per month (669.84) 150 (5,355.24) 900 (4,713.84) 1300 (2,820.24) 2200 (1,203.84) 3100 2,458.56 4000 2,690.56 5000 Increase Cu Meters (Decrease) per month 1,539.36 150 (3,146.04) 900 (2,504.64) 1300 (611.04) 2200 1,005.36 . 3100 4,667.76 4000 5,099.76 5000 Increase Cu Meters (Decrease) per month 8,873.88 150 4,188.48 900 4,829.88 1300 6,723.48 2200 8,339.88 3100 12,002.28 4000 12,434.28 5000 50 mm Meter Revised 2000 Existing 2000 3,500.80 18,608.20 23,525.20 34,138.00 45,028.00 53,872.00 67,336.00 $3,569.28 513,991.28 $19,549.68 $32,056.08 544,562.48 $57,068.88 $70,964.88 100 mm Meter Revised 2000 Existing 2000 $7,529.04 3,532.80 18,640.20 23,557.20 34,170.00 45,060.00 53,904.00 67,368.00 517,951.04 523,509.44 536,015.84 $48,522.24 $61,028.64 $74,924.64 200 mm Meter Revised 2000 Existing 2000 3,684.80 18,792.20 23, 709.20 34,322.00 45,212.00 54,056.00 67,520.00 $20,645.75 531,067.76 $36,626.16 549,132.56 $61,638.96 $74,145.36 $88,041.36 Increase (Decrease) 68.48 (4, 616.92) (3,975.52) (2,081.92) (465.52) 3,196.88 3,628.88 Increase (Decrease) 3,996.24 (689.16) (47.76) 1,845.84 3,462.24 7,124.64 7,556.64 Increase (Decrease) 16, 960.96 12,275.56 12,916.96 14,810.56 16,426.96 20,089.36 20,521.36 CITY OF NIAGARA FALLS STUDY OF WATER & SEWER RATES FOLLOWING METERING DETAILED REPORT 1 INTRODUCTION During 1999 and 2000, the City of Niagara Falls has carried out a program of installing meters on the water services to all customers. Formerly only non-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 charge 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) ;-Block limits�gaTlons/quarter] Industn'a7 5/000 gallons Commercial &- Aesidentiaf $/000 gallons 0 to 99,000 53.13 100,000 to 199,000 $2.74 200,000 to 299,000 52.35 300,000 to 499,000 $2.20 500,000 to 699,000 52.04 52.20 53.52 53.13 52.74 $2.35 1 700,000 & over 51.87 $2.04 Note that some Larger metered customers are billed monthly rather than the quarterly basis used for most metered customers. Exhibit 2 2000 Service & Minimum Charges (quarterly) Meter Size (millimetres) Sernce Charge ($/quarter) Mimmum Bill Charge ($/quarters Nominal Volume Allowance (m3 /quarter) - see note T5 nim $1.25 ' $43.00 _. _.. 11,000 -1 j 18 mm ; $2:00 $51.00__ __ '_I 5,000__ 25 mm i $2.50 $95100 26000 37 mm T13.00 $155.00 1 44,000- 50 mm 4,0005Onim !$400 :$231:00 x6-6006__._ ; 75fiith ; $150 -- $385:00 -I25;000 1130 mm $12.00 $768.00 2$5,000 -- - - ---1 1-50 mm 330100____ $1,158.00 129;000— ____ _-- — -- 200 -mm +150.00- j $1;932:00 t 967,000 — NU'1E:'1'he minimum consumption allowance volume is approximate only. the dollar 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 $82.46. Sewer charges are levied on the water bill as a surcharge. The sewer surcharge is currently 150% of the water charge. 3 CUSTOMERS By the time the metering program is complete, about 22,500 unmetered customers are expected to be converted to meters. When added to the 3,100 customers previously metered, this will bring the total number of meters to the following: Exhibit 3 Number of Metered Customers by 2001 Meter -Size (mill>metr�)1Tu r IS -mm -24,250 -ISmm -387 L25 mm 343- 1 3Tmm 221 150 nun - 291 75 nun __ 52 100 mm 42— -. 150 mm T8-+ 200_mrn .. 3 _.. Total 25;607- 4 5;607 4 CONSUMPTION Wholesale - The City pays wholesale charges for the volume of water supplied and the sewage treated by the Region of Niagara, which is responsible for this service. The City only has jurisdiction over the retail operation of distributing water and collecting sewage. The Region charges the same wholesale rates year-round and to all of the area municipalities. The wholesale rates over the past 3 years are as shown below in Exhibit 4 Exhibit 4 Niagara Region Water & Sewer Charges ($/m3) Water Sewer ..1998$0275 $0.465 1999 ;--$0291 $0.479 2000 7 $0:300 — $0.489 The 1999 water and sewage volumes which the Region billed the City are summarized in Exhibit 5 below: Exhibit 5 1999 Water & Sewage Volumes Billed to Niagara Falls by Region (m3) Month Water Sewer January 1,269,2/9 1,82T,812 February 1,122,5/1 1,'154,075 March 1,233,599 1,836,082 Apnl 1,274,006 1,738,828 May 1,746,304 1,61411 June 2,242,640 1,582,608 July 2,820,323 1,723,4/2 August 1,849,745 1,814,831 September 1,661,525 1,666,689 October 1,441,157 1,697,414 November 1,297,101 1,739,527 December 1,315,656 1,747,952 Total I. 19,273,912 20,739,/01 The monthly water and sewage flows billed by the Region starting in 1998 and up to September 2000 are graphed in Exhibit 6. This graphically illustrates the normal seasonality of the water purchases. Monthly water flows in the summer 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 f xhibit 7. Exhibit 7 1998 & 1999 Metered Customer Consumption (m3) 1998 Quarterly metered 7;172;986 Monthly metered 671;582 Total metered f 7;844;568 Pumpage :19,541;564 Unmetered use 11;696,996 1999 6;736;805 699,7483 7;436;288 19;646,127 12;2-09;839- Unmetered 2;269;839 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 are summarized in Exhibit 8. Exhibit 8 Newly Metered Customer Consumption Results Summary to June 2000 Isescnption ' Number of Custon}ers j Average 1 otal Monthly Consumption (m3 /month) Unit Consumption (m3/month/customer) Rate errorsjnote Ty 1 4rf -J NTa Nil - 1 0 reading ' 56 ; -0- T17a —1 I Nerma[residential 17;540 -1-43I a65 24: Larger customers 17$ ---.-- - -38,1-58-.-- - -214. ; ; Normal+Larger i-17,648 470,1123 26.5 Note: 'l he reading dates were not feasible such as1980 installation or installation date after the date of the latest meter reading 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 largest 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. Exhibit 9 illustrates the average consumption by customers and includes the variance in level depending on how 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 July 1999 was about 29.5 m3/month. These 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. Unmetered 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). Exhibit 10 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 26 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 I% largest 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. 5 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 Exhibit 11. 6 Tariff Calculations 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 Newmarket 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 6% 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.xhihit 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 Exhibit 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 largelyfixed charges to the fixed service charge. It is a fair approach. Unfortunately, the conservation aspect of metering is weakened since only about two-thirds of costs in the volumetric rate. • Option 2 - Recover 80% 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 Exhibit 12. 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 more due to the elimination of the volume discounts. 8 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 are 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 J s O n 0 3 EXHIBIT 6 olume invoiced by Region 000,000 m , 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 NfAGARA FALLS MONTHLY WATER & SEWER FLOWS (000,000 m3) '$c tray 0\ 'J 4:4 4°, 'ac 4as_ a� ,J� . ��Q. +° 'ac qtA Month NFdalaula 00.71-20 Niagara Falls Metarcd Water Rate Study Loudon Fortin 0 n V EXHIBIT 9 CONSUMPTION versus MONTH WHEN CUSTOMERS METERED 30.0 29.0 O w CE. 28.0 C p O C-3 a) 1-06 27.0 O •r 00�''' 26.0 d a E 25.0 L d Q 24.0 100% 90% so% w O 70% O 60% O. c 50% fi 40% 30% O) 20% 0- 10% 10% 23.0 ., +rE^;- *tl�'s6,gJie,et3s..P as�mi: iii Gt-ti,.�3g;? vF :e „•�'-g=:;z czr�;�a.<.gc st•=: awe-�..s.-'ss ,e --;res 0% ' Jun -GO May -00 Apr -00 Mar -00 Feb -00 Jan -00 Dec -99 Nov -99 Oct -99 Sep -99 Aug -99 Jul -99 Month Customer Metered NFd. co11-20 Niagara Fdls TawM, Fonowbq Metering Loden Fafro r r v 0 r n EXHIBIT 10 45% 40^% " 35°% L 30°% p 25°% 20% 815x% U c a 10°% 5°% 0°% POSSIBLE COMBINATIONS OF UNMETERED UNIT CONSUMPTION vs UFW 15 17 19 21 23 25 27 29 31 NFdota is 0-11-z Unit Consumption (m3 /cost /month) 33 ' 35 Niagara Faye Metered Rote Study Laudon Fortin CITY OF NIAGARA FALLS WATER & SEWER SYSTEM 2000 BUDGET & 2001 DRAFT BUDGET ($) RUnr,PT Revenues Sewer Surcharge Water Sales Service Charges Sewer Lateral Cleaning Fees Discount Total EXHIBIT 11 2001 2000 Water Sewer Total Expenditures Administration Regional Costs Sewer Maintenance & Operation Water Maintenance & Operation New & Replacement Mains New Equipment Contribution to Capital Budget Water Metering Program Cathodic Protection Debt Charges J1SFR RATF RFNENfIF RFDIIIRFMfNTB Total Expenditures Less Other Revenues Water Sales Service Charges Sewer Lateral Cleaning Fees Total User Rate Revenue Requiremenjts Less Regional Charges On volumetric rates) Local Costs (n fixed charge) Nfdata.xla 14,338.000 13,514,300 13,514,300 9,677,000 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 24,960 700 832,500 245,600 245,600 491,200 16244,600 5,500,000 11,300,000 16,800,000 2,105,100 2,214,300 2,214,300 1,230,300 1,296,500 1,296,500 450,000 1,000,000 1,000, 000 17,500 17,500 17,500 720,000 1,000,000 1.000,000 50.000 61,000 81,000 250,000 600,000 800,000 1,617,000 1,196,500 283,700 1,480,200 23,517,000 '10,917,100 14,043,600 24,960,700 23,517,000 10,917,100 14,043,600 24,960,700 89,000 40,000 34,000 74,000 25,000 25,000 0 25,000 -812,000 - 0 0 0 -498,000 65,000 34,000 99,000 24,015.000 10,852,100 14,009,600 24,861,700 16,244,600 5,500,000 11,300,000 16,800,000 7,770,400 5,352 100 2,709.600 8,061,700 'Financial' 2O -Nov -00 r.biO c.77 Orh Ir,rr n? -I1-00, CITY OF NIAGARA FALLS COMBINED WATER & SEWER RATE CALCULATION PROPOSED 2001 Step 1 - cone usn 1Io0_LCU I9 metres) Current Consumption Levels Coml./month Cons. Customers /customer Monthjy Cons. Annually EXHIBIT 12 Consumption Reductjon -. Level for Due to Metered Rate Metering Calculation Metered now - billed quarterly Metered now - billed monthly Newly metered - top 1% 178 x 241 Newly metered - residual 22,322 x 25 Total Annual (with resulting percentage difference) 42,898 = 549,121 0,700,000 1% 700,000 1% 514,770 15% 6,589,454 23% 14,504,230 11% maasasa Rate Calculation (m') Volume lissr for ;tor) 2 - VolumetricRete Calculation Optlonl - Recover Regional Charges Annual Regional Charges = $ 16,800,000 Volumetric Charge = S 16,800,000 • $ 12,837,439 = Option 2 - Percentage Cost Recovery Cost Share = • S 24,881,700 x 80% = Volumetric Charge = $ 19,889,380 + $ 12,837.430 Step 3 -Service Chorea Calculation Cost Included In service charge A - Single Service Uniform Charge Number of meters Monthly Charge (S/month) 8 - Service Charge Variable by Meter Size (see also below) EquNalent Number of Meters Equivalent Monthly Service Charge Charges distributed by meter size (sea Options 1 & 2 below) Distribution of Service Charge Costs by Meter Size S 1.309 / cubic metre 119,889,360 $ 1.549 / cubic metre Option 1 Local Costa Option 2 20% E 8,001,700 54,972,340 25,607 25,607 S 28.235 $ 18.182 29,808 29,808 S 22.538 $ 13.901 Meter Size 16 mm 18 mm 25 mm 37 mm 50 mm 75 mm 100 mm 150 mm 200 mm Total Meters 24,250 387 343 221 291 52 42 18 3 Allocation Ratio 1 1 1 3 8 12 22 42 75 Equlvatent Number of Meters 24,250 387 343 553 1,748 824 924 756 225 Service Charge (S/month) 25,807 29,808 Option 1 S 22.54 S 22.54 E 22.54 S 58.35 S 135.23 E 270.48 S 495.84 S 946.81 S 1,690.37 Option 2 S 13.00 S 13,90 S 13.00 S 34.75 S 83.41 $ 168.82 $ 305.83 S 583.85 3 1,042.59 txaLhxde 'Rids Cal• 20•Nov-G0 r'• , •^^ •nl-1 tonnnnl •1., •L 6,633,000 693,000 437,580 5,073,880 12837439 12,837,439 661[1 C77 016 Ir•rt n7-11—nn City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 76 of 78 11 Attachment 3 — Material Presented by Mr. Ed Bielawski to the Corporate Services Committee of the City of Niagara Falls on July 23, 2007 Two Parts - Deputation by Mr. Ed Bielawski 5 pages - not numbered - Presentation material 12 pages - not numbered NE User Rate Report April 2 2008 FinaLdac 76 R.M. Loudon Ltd. JA9-01-1995 10:02 a P. 03'D6 background. You are on City Council and I sought out Kim Craitor and I went through what I found out. I asked Wayne to arrange a meeting with senior staff so we can -go through this and I present to you what I found - it certainly isn't fair. So we had a couple meetings and the last one we had was Friday morning. That's when I was shown that my name was being used. I said that this was rather strange that someone would make a recommendation. I am totally unaware that my name's there. So I took some of the reports that I prepared that are quite extensive they would fill a suitcase almost. All the data I collected, was very difficult to collect because what you have is a system that doesn't lend itself any business type of atmosphere. So now we can proceed to page 1, What you see before you are the objectives taken from a report dated March 27, 1995, These were the objectives. It was a well written report. The first objective and on the recommendation on that report was that we establish a water/sewer utility. Now that says that you are going to establish a utility and its going to be run as a business, This utility is no different that Niagara Falls Hydro, And if you take a look at these objectives, you% find that none of them would say why, why aren't these achieved, these are the objectives of the new system. The answer is simple, if you don't a utility, you don't have anyone responsible and therefore you have a fragmented system, which this is as it exists today. It Is still a totally fragmented system. On the second page, the conclusions which become obvious as we go through the charts I prepared. Go to page 3 you will see how the system works. Number 1, you have the homeowner, The homeowner pays $39.65 In service charges, monthly. They have one meter, The second one shows that condominium complex with 28 units, which is probably the only one in the city that has 28 one inch meters as a consequence pays $1,082.20 as a service charge. Now that $1,082.20, the highest user in this city pays $1,623.22. As a resident of one of these condominiums, I couldn't even find the office for a refund because there is nothing here, you can't talk to anybody. The third one, you'll see 21 condo units, which Is typical condo units broken up in units, and it has one meter, a 2 inch meter and they pay $231.90 in other words $11.04 versus what residents pay compare to $38.65. 0 we go to a 22 condo unit that is split up, you have 2 one Inch meters. Those 2 one Inch meters, the total service charge is $77.30 for 22 units which works out to $3.51. The next scenario you have in the city is 5 one inch meters servicing 55 condo units. They pay $3.28. Now if we go to apartment complex - 120 unit apartment, which uses a 3 inch meter, pays a service charge of $4.03. Then we have the 78 unit condo apartment which has a 2 inch meter pays $231,90 which equates to $2.97. This is a family unit obviously - $2,97 versus the homeowner who pays $38.65 for the same service. We've had these meetings and to this day I can't find anybody who will say JAN -01-199E DD:03 P.04%D6 you don't know what the hell you're talking about. That' s what I came to see. Now, go to page 4, you have the rate increase which was published in the paper as 6.8% for a family using 30 cubic meters a month. Well that's a fine thing to say, but you'll notice 2 things about this. You'll notice that this is the first time when you receive the water rate schedule that you do not have a rate increase in there. It says you will pay a charge of $5.20. Because it isn't a 6.8% increase, it's a 7.4% increase. This little lady that was brought up in 1995 that was an a fixed income. She was struggling and concerned and was using somewhere around 10 cubic meters. Weil isn't that wonderful - she will pay 11% increase...for her a 11% increase. If you go to the next page, these are the actual consumption rates of the 6 inch meter customer so it shows you that per the 6 inch meter you have all types of volumes associated. The highest user is the 52,200 cubic meters and it stops as high as 72,000 cubic meters, That person is charged -3 cents a cubic meter. The high user that will incur incremental costs of bringing a huge volume in and what is the equivalency rate of that? That 6 inch unit meter means nothing...nothing. What we have here, if we look at in simple terms we now have moved up a flat rate from one scenario in 2001 to a flat rate which shifted down to the service charge. What is a service charge? It's not a variable that they say In al! of these reports, The service charge happens to be a flat rate in essence - $38.65 for a 5/8 inch meter; $38.65 for a 3/4 inch meter; $38.65 for a one inch meter. One inch meter uses up to 1000, 1100, 1200 cubic meters in the lawn. So if you want to look at in lament terms, we now have a flat rate and service charge which impacts the poor little lady that uses 10 cubic meters and there's no conservation. I'd like to summarize this, I only had Friday afternoon to get the volume of reports that I have...I had to make it as simply as I could. Now, we go to page 6. You will see a comparison of the increase in your rate. By this rate structure, you will note that if we use the homeowner, 26 cubic meters, we have a rate increase of 7.4%. If you go to the lady with a fixed income, her increase is 11%. But now you go to the high user and this is based on 50,000 cubic meters, his rate increase is .289%. Now factor that -take .0289% and elevate it to 11%, and yeah, that's not a 100% increase, that's not a 200% increase, you are now moving into the regimen of 1000% increase. Thousands. That's fairness? That's equity? Not by engineering know how. Councillor Ianonnl: Mr. Bielawski, so what you're telling us and I noticed you used the Casino, I see that that's the number -the user you have there. So the little old lady who's trying to save Is using 10 cubic meters, her rate Is going up and the casino who's using 50,000 meters, their rate is going down. So the richer are paying less, and the poorer are paying more. E.B.: The more you use, the less you pay, That's the whole purpose of this. JAN -D1-1996 00'03 F.05/35 Councillor Ianonni: You're scenario is, the more you use, the less you pay. E.B.: Yes. As a matter of fact, when I brought this report to a senior staff member, he said that is your opinion and I said I beg your pardon, that is my opinion? These my good man, are your numbers. It has nothing to do with me and opinions - these are your numbers. So now we jump to the high user - you can see we don't have here. We have a shopping plaza which has umpteen restaurants; we have a hotel and this is what we're talking about. Now, think of the people that are competing against - this guy is paying 3.2 cents per each cubic meter and yet he has 17 places, he has 10 restaurants when I first did this scenario and so what we have is all these all these businesses get hidden under an umbrella of a huge complex, Because we put them all under one roof and use only one meter, we say that's great...well not by my standards, not by the numbers that this reveals. I indicate to you that this a totally flawed system. Now, if you recall one of the things in there mention that here we are and now in 2001 we sent out this particular flyer. This was sent in the mail. And what it said was, if you take a look it says calculating charges. But if you take a look at that paragraph, it has nothing to do with calculating charges, all it says Is that they were going to save you administrative costs. Looking at putting this bill into this envelope. Listen, that's wonderful, that's true genius. But in the 3`d paragraph, they say oh by the way, don't worry about it, we are going to save you here...we are going to turn around and read your meter every 2 months. 5o we're going to have that guy take 6 trips. We are going to have this done. I can't think that way, So, we went through this quickly...you're going to have to digest it and when you have gone and read this,,..and whoever wants to conduct a meeting, I can to into all the details, I can bring out all my files and everything else, So we get to the point where we have a recommendation. And the recommendation says, let's call in a new consultant, That makes no sense to me as a business man. Lowden is a very reputable firm, so therefore it makes no sense, its not ethical to turn around to jump in and say hey get somebody else in here, What I recommend that this Council recommends is simply this, you're calling Mike Lowden, and you say, Mike, you know in 2001 we had this scenario and we all agree that this system was fair to people, would be fair and equitable, So you say, Mike sit down, let's go through and see and prove that this guy is crazy, doesn't know what he's talking about. He's only an old engineer, a senior, turns around and plays with some numbers and see how he can test the system. So to me, that is a proper recommendation, you use the same man who prepared those lengthy reports both in 1997 and in Z000 prepared the final report. Now that type of scenario is the type that I would sit down with_ That this is the only thing you can do — sit down with the man and say let's go through this. Just find out — why did the system fail? Why did it fail...it was a good system? I'II tell you why it failed...simple...what you don't have and it JAN -01-1996 DO:03 P.D6'a6 is the most important thing you should have is a utility. A sewer/water utility. In 1995, you say ok, let's establish a utility, let them run their business, let him select the building system, let him do these things, because that's what business is all about. The problem that I have is that this existing scenario makes no sense. You have to go to turn around and there's no utility and there's no place to call. You call over to Niagara Falls Hydro and want to speak to a Customer Service Supervisor. Oh we're only the building, we don't anything about that. So I call another number and I said who do I speak to, who's the supervisor? So I look at the organization chart and it doesn't even mention the word utility. But if have no responsibility, you have no accountability, you have nothing but a flawed system. You call up Hydro, for instance, for me to get information, it took 6 weeks in one case to get information back. It makes no sense, but that's what happens when you have a fragmented system. Everything is all over the place, no one is accountable, TOTAL P.06 CONCLUSIONS - the City has NO water/sewer utility - the use -based principle for water billing is applicable ONLY for the CONSUMPTION charge j - the use of meter size for allocation of service charge is TOTALLY flawed -all multi unit structures that have a single meter are SIGNIFICANTLY SUBSIDIZED BY RESIDENTIAL customers - the pricing policy for water and sewer service is UNFAIR AND NOT EQUITABLE - yearly percentage rate increases as reported are not factual - the FACTOR USED to calculate weighted meter is unrealistic and thus totally flawed ruAnin 2 CUSTOMER SERVICE CHARGE COST / UNIT No. of Meter Service Service Charge Meters Size Charge Cost / Unit 1 Homeowner 5/8" $38.65 $38.65 28 28 unit condo 5/8" 1,082.20 38.65 1 21 unit condo 2" 231.90 11.04 2 22 unit condo 1" 77.30 3.51 5 55 unit condo 1" 192.25 3.29 1 120 unit apartment 3" 483.79 4.03 1 78 unit condo apt 2" 231.90 2.97 TO 3 2007 RATE INCREASE AS A FUNCTION OF USAGE (HOMEOWNER) Usage 36 m' 30 m' 26 m' 10m' 5m' 2006 $85.80 77.06 71.24 47.94 40.66 2007 91.07 82.33 76.51 53.21 45.93 6.1% 6.8% 7.4%* 11.0% 11.3% * - Actual 2007 increase based on 26 cubic metre usage. 4 6 inch meter 2006 SERVICE CHARGE COST / CUBIC METRE Monthly Usage(cu. m) Cost ($/cu. m) 1,330 1.22 2,320 0.70 3,520 0.46 4,090 0.40 4,630 0.35 5,520 0.29 6,630 0.24 9,340 0.17 12,830 0.13 12,940 0.13 13,020 0.12 13,670 0.12 20,290 0.08 21,960 0.07 52,200 0.03 (Service charge: $1,623.28) 5 COMPARATIVE RATE INCREASE Homeowner Homeowner Large User (26 Cubic Metres) (10 Cubic Metres) (50,000 Cubic Metres) 2007 7.4% 11.0% 0.289% 2006 2.0 6.6 1.2 2005 5.2 2.5 2.5 2004 7.1 10.0 1.7 6 FALLSVIEW CASINO Rooms 368 Restaurants/Dining Areas 17 Retail Shops 23 Service Charge $1,623.28 Water Usage 50,000 cubic metres / month Service charge cost/cu. metre $0.032 TL 7 CALCULATING CHARGES -The City of Niagara Falls has already taken steps to keep your bill as low as possible. Administration costs were reduced by having water and sewer charges included in your Hydro bill. The discount offered to residents who pay their bill promptly was increased over last year. The city plans to spend over 3.4 million dollars in 2001 on improvements to the water and sewer infrastructure. Among other things, the improvements will reduce leakage from the system which keeps rates under control. CAN THIS SYSTEM REDUCE MY BILL? -To determine how much water you have used, your meter is read at the same time as your Hydro meter. Every two months, your water & sewer charges are included in your Hydro bill. 8 i.. 0 0 ra 'mow .y co O CO CDe rz -t 0 The water from your tap continues to be an important, but very affordable commodity. A cnblc meter of 220 gal- lons of treated water casts approximately $ 1.22. The City of Niagara Falls purchases Its water from the Regional Municipality of Niagara through the Niagara Falls Water Treatment plant. The source Is a surface water supply from the Niagara River via the Welland River. The water Is disnibuted to residents through approximately 422 km of city walermalns and 39 km of Region waterrnains. The City of Niagara Falls continuously samples the municipal water supply to make sure It complies with provincial Drinking Water Protection Regulations. In addition to being much more fair for the consumer. Metered water usage leads to other benefits for the City of Niagara Falls and its ratepayers. The efficient use of water causes less waste and results In: R Reduced water and sewage treatment plant operating costs ■ An extended fife span for water and sever fadilties B lower demand during peak periods of water consumption III Identifies teaks In the system 1 identifies where water is being used so future system Improvements can be planned The water meter Installed at your residence reads in cubic meters 1m3 = 220 gallons. Every 100 litres of water con- sumed causes the sweep hand on the meter to make one revolution, and causes the black wheel en Ire meters odometet to Increase by 0.1 cubic meters or 22 gallons of water, Th a average family of lour in Canada consumes 36 Cubic Meters (7,900 gallons) of water per month. The City of Niagara Falls has already taken steps to keep your hill as low as possible. Administration costs Were reduced by having water and sewer charges included in your Hydro hill. The discount offered to residents who pay theft bill promptly was increased over last year. The City plans to spend over 3.4 million dollars In 2001 on improvements to the water and sewer infrastructure. Among other things, the improvements will reduce leak age from the system which keeps rates under control. CAN TFiI°. SYSTEM REDUCE • MY "11.12 Absolutely) Many Niagara Fails residents have lowered their water and sewer costs because they now pay for only the water they use and not the same flat -rate as everyone else. For example, if you use only 10 cubic meters of water per month, you will save over b 23.00 a month under the meter system compared to the old flat rale You now have control over how much water you use. By practicing conservation and repairing leaking faucets in your home, you can reduce your bill. To determine how much water you have used, your meter is read at the same time as your Hydro meter. Every two months, your water & sewer charges are Included in your Hydro bill. On your bill, the total amount you pay for seater & sewer services is broken down into four Items: $ Service Charge - Water (used to maintain the system and capital improvements) IA Consumption Charge - Wafer (how much water you have used multiplied by a rate set by the city) X Service Charge - Sewer (used to maintain the system and capital improvements) X Consumption Charge Sewer (your water consumption multiplied by e rate set by the city). WHY SEPARATE_ SERVICE CHARGES? Service charges for water and sewer are not new. Under the old flat -rate billing system, they v.ere Included In the total price you paid and nal shown as separate Items. Under the new billing system, we Rst what you are paying for each Item so you know exactly how your total charge was calculated. the Bill will appeal with 4 separate line Items: Service Charge' - Water (See table below) • Service Charge' - Sewer (See table below) 'SeMce charges are based an the meter servtce slit ■ Consumption Charge - Water 30.410/cubic metre) 1 Consumption Charge - Sewer ($0.806/cubic metre) P/II l;',&r'= r<tat Meter Slee 15mm I8 mm 25mm 37mm 50m el 75 mm 100 mm 150 rum 200 mm (0.58) (0.75) (460) (1-50) (1.00) (3.00) i4.00) (6 00) (apo) Water Rale $13,92 113.92 $13.92 541.75 Q3,51 $167.01 $306, f 0 $sadsd 11,043.83 Srnrmr Rate 57.45 $7.45 $7.45 121.34 144.6e $89.35 b 183@f $3{2.73 5558.45 Hormel Flat Rates(Gal'ianized Servire) Water: 514.87 per month Sewer: 528.99 per month Total: $53.86 pet month Reluctant fiat Ratts(tustorners not wanting meters) Water. $74.61 pet month Sewer; $86.4) per month total; $161.58 pet month If you have questions about meter problems, water locates, leaks and maintenance or new installations, call the City of Niagara Falls Water Department Service Centre at356-7521 ex1.4322. For water rate questions please dtal ext.4286. 5/8 inch meter MONTHLY CONTRIBUTION TO SERVICE CHARGE Monthly Usage (cu. m) Cost ($/cu m) 5 7.73 10 3.87 15 2.58 20 1.93 26 1.49 30 1.29 (Service charge: $38.65) ROIT 1 inch Month # of Meters Consumption Average January 219 32,560.6 148/ February 230 37,611.9 163.5 March 236 34,643.5 146.8 April 204 30,657.2 150.3 May 208 29,059.8 139/ June 243 44,063.6 181.3 July 204 37,097.0 181.8 August 252 54,896.1 217.8 September 219 46,527.0 212.5 October 250 51,700.7 206.8 November 205 34,695.4 169.2 December 233 38,460.4 165.1 471,973.2 4 inch meter SERVICE CHARGE COST / CUBIC METRE Monthly Usage(cu. m) Cost ($/cu. m) 2,000 0.43 3,000 0.28 4,000 0.21 5,000 0.17 6,000 0.14 7,000 0.12 8,000 0.11 (Service charge: $850.28) D) E z1 LJ 2006 HIGHEST CUSTOMER MONTHLY USAGE BY METER SIZE Meter Billing Period Size 1 2 3 4 5 6 7 8 9 10 11 1 894 775 1166 1109 1149 961 1052 1396 1003 731 731 1.5 1470 1001 1191 1111 1461 1075 1530 2078 1800 2091 1217 2 1935 2590 1925 2617 2455 2883 4220 6245 4500 2625 1905 3 3410 2990 3550 3204 3241 5309 4347 5144 3868 4051 3265 City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 77 of 78 12 Attachment 4 - Niagara Falls Terms of Reference for Review of Water & Sewer Rate Structure November 9, 2007 (See following 2 pages — not numbered) NF User Rafe Report April 2008 Finaf.doc 77 R.M Loudon Ltd. Terms of Reference City of Niagara Falls Review of Water and Sewer Rate Structure A. Introduction November 09, 2007 In an effort to create a greater understanding of the cost for water and sewer services, the City of Niagara Palls' Council has directed City Staff to proceed with a review of the existing water and sewer rate structure. Questions have focused on the fairness and equity of rates, especially the use of fixed monthly charges. Other concerns have focused on the increasing costs for services, and the ratepayers' ability to control costs by reducing usage. City Council is responding to these concerns by directing a review of the existing water and sewer rate structure that was implemented seven years ago, when a universal water metering program was completed in 2000. The metering program enabled the City to cease the pre-existing flat rate billing system, which for many ratepayers was a significant concern. At that time, an extensive multi-year analysis prefaced the Council's approval of a two-part rate structure. Today's rate structure includes a fixed monthly charge and a volumetric rate. The fixed monthly charge is for the annual maintenance and capital costs for the water and sewer systems. The volumetric charge is for the Region of Niagara's costs for water supply and sewer treatment. City Council, in its direction to Staff, is considering a change in the water and sewer rate structure. This review is intended to provide the Council with appropriate, timely, and accurate information about changing water and sewer rates. B. Objectives The objectives of the review are: 1. To study the financial impacts from changing the existing water and sewer rate structure. 2. To examine the optional rate structures for water and sewer services, in accordance with all legislation and regulation governing water and sewer distribution systems. 3. To compare the advantages and disadvantages of appropriate rate structures, in relation to the public concerns for the costs of water and sewer services. 4. To recommend a water and sewer rate structure(s) for water and sewer services that complies with all relevant legislation and regulation, and best satisfies the public concerns. C. Tasks The Water and Sewer Rate Structure Review should include a variety of analytical tasks. The tasks would include (but not limited to) gathering relevant information, seeking public input, analysis of rate structures, and comparative study of the financial impacts on ratepayers. These tasks would conclude in a final report and presentation to City Council, or a Standing Committee composed of all Council Members, that identifies a recommendation for changing the water and sewer rate structure. D. Work Schedule City Council has directed Staff to complete the review as part of the 2008 budget process. The review work would be ideally completed by the end of January 2008. A delayed completion may interfere with the Council's ability to approve a change that could be implemented in a timely manner. F. Staff Assistance City Staff will be available to provide assistance. Regular contact between the consultant and Staff will be managed by the Acting Executive Director of Corporate Services. As required, the consultant is expected to meet with Staff for interim written/verbal progress reports. The final written report (including twelve paper -copies and one electronic copy) will be submitted to the City Clerk. F. Deliverables The consultant will provide a work -plan that identifies and timetables the tasks for the review within the suggested work schedule. Upon Staff's approval of the work -plan, the consultant will implement the work -plan, provide interim written/verbal reports to Staff submit the final report to the City Clerk, and conclude with a presentation to City Council. G. Conclusion Council has directed City Staff to proceed with a review of the existing water and sewer rate structure. To engage a consultant's assistance for this review, this Terms of Reference document is intended to guide the consultant in preparing a Water and Sewer Rate Structure Review Proposal. Page 2 City of Niagara Falls Water & Sewage Rate Structure Review Final Report Page 78 of 78 13 Attachment 5 — City of Niagara Falls Review of Water & Sewer Rate Structure Proposal — RM Loudon Ltd. (See following pages numbered I to 7) NE User Rate Report April 2 2008 Final. doc 78 R.M. Loudon Ltd. City of Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M Loudon City of Niagara Falls Review of Water and Sewer Rate Structure Proposal 1 Introduction This proposal is in response to Terms of Reference related to review the City of Niagara Falls water and sewage rates, dated November 9, 2007. As stated in the Terms of Reference, the current rates are two-part with a volumetric charge which recovers Region of Niagara charges and a fixed charge which varies by meter size and recovers local system costs. The rates format was originally adopted based on a 2000 report' for application when universal metering was completed. Since that time the format has been retained, but rates adjusted to reflect annual costs. Two options were offered. The recommended option was adopted. The second option had a lower service charge and a higher volumetric charge. The selected format was the preferred alternative at the time of adoption primarily based on an objective of providing revenue security — customer consumption can be highly variable when meters are first introduced. By tying the volumetric charge to Regional costs, decreases in usage due to metering should relate closely to reduced bills by the Region. The approach was arguably fair since variable costs were linked to the variable portion of the rate. Since that time the fixed charge component has gradually increased compared to the volumetric charge. There is now a feeling that the fixed charge component is too large compared to the volumetric component. This will be a very important issue in the review of the water and sewage rate structure. 2 Objectives & Tasks The objectives stated in the Terms of Reference are as follows: 1. To study the financial impacts of changing the existing water and sewer rate structure. 2. To examine the optional rate structures for water and sewer services, in accordance with all legislation and regulations governing water and sewer distribution systems. City of Niagara Falls — Study of Water & Sewer Rates Following Metering — Loudon & Fortin — November 2000 NF Water Hate Study Proposal Dec 4 2007.doc 13/03/2008 1 City of -Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M Loudon 3. To compare the advantages and disadvantages of appropriate rate structures, in relation to the public concerns for the costs of water and sewer services. 4. To recommend a water and sewer rate structure(s) for water and sewer services that complies with all relevant legislation and regulation, and best satisfies the public concerns. A variety of tasks are needed to fully reach the report objectives. The Terms of Reference stated a few: 1. Gather relevant information 2. Seek public input 3. Analyze alternative rate structures 4. Compare financial impacts on ratepayers. These tasks form the core of what is needed. 3 Proposed Work Program 3.1 Establish Principles It is very important that the rates be formulated based on a sound set of agreed principles. At the outset, prior to any meetings, a discussion paper on a range of principles for water and sewage user rates will be provided to City staff for their review. The preferred approach would be for staff to have read the material before the first meeting so that they are familiar with the concept and options. In any case the issues can be reviewed and discussed at the first meeting. Most principles will probably be easily agreed at that time; however, some may need further discussion or may be appropriate for further consultation. Others might be added. 3.2 Discuss Rate Format Options A discussion paper on alternative rate approaches will also be provided prior to the first meeting. The paper would set out different rate approaches and discuss the advantages and disadvantages of each. The rate options, as well as the recommended rates would be consistent with Provincial legislation related to water and sewage systems. Again the first meeting would be a good forum to perhaps narrow the options down, establish a preferred option, or initiate a strategy for further discussion. Principles and alternative rate option formats are possible issues to include in public forums. 3.3 Data Requirements To some extent the data request can be massaged to accommodate availability and ability of the City to extract information from financial and billing databases. NF Water Rate Study Proposal Dec 4 2007 doc 13/03/2008 2 City of Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M Loudon The following is a preliminary list of data requests covering both water and sewage. Note data in Excel spreadsheet format is much preferred: Category Data Description Billed Consumption • Annual billed since 2000. 2005, 2006, 2007 YTD • Monthly volumes billed by class • Largest 10 users by billing period • Information on residential customer billing profile (discuss) • Individual customer examples for impact analysis — 2006. List will include a cross section of customers in terms of volume used and category. Customers 2005, 2006, • Number annually since 2000 2007 • Number by class • Number by meter size Operating Budget 2007 • Initially provide broken down by major categories. The & 2008 degree of detail will depend on the rate format selected. Capital Budget 2007 & • Budget documents providing list of projects. 2008 & projected to 2012 • Debt principal & interest • Identification of capital programs related to meeting legislative upgrade requirements such as the Federal P2 requirements. Revenue Budget 2007 & • Broken down by category 2008 • Provide actuals for 2006 Rates 2000 to 2007 • Regional rates and billings monthly • City water and sewage rates Water & Sewage • Monthly 2005, 2006, 2007 YTD Regional volumes Again, the list may be augmented, and will be finalized based on discussion of availability and need as the project progresses. NE Water Rate Study Proposal Dec 4 2007.doc 3 13/03/2008 City of Niagara Falls Proposal Review of Water & Sewage Rate Structures Prepared by M. Loudon 3.4 Public Input Given the interest already expressed in the current rate format, it is important that an opportunity be provided for those concerned to provide feedback. A change in the current rate configuration will have varying degrees of impact, depending on the format chosen and customer usage and meter size characteristics. The type of information provided and required as well as timing, format, participants and target groups need to be decided. In addition to views already expressed, target groups would include large users and residential customers. In terms of timing, it would likely be after enough material has been assembled and organized to be useful in presenting to the target groups, but prior to finalization of the approach to rates. It is suggested that this be discussed to achieve City objectives and utilize most effectively the resources available. 3.5 Financial Plan A projection will be made of expenditures and revenues for the period 2008 to 2012 based on financial and customer data as available in consultation with the Region and City staff as well as utilizing available projections. This will be used to project annual rate increase requirements. A Financial Plan offers an opportunity to tie rate increase needs with relevant issues such as government regulations as well as asset management needs for replacement. 3.6 User Rates Water and sewage user rates will be calculated for 2008. It is expected that two options will be required, one status quo and another with higher consumption charge and lower fixed charges. The options calculated and the complexity of the calculations will be influenced by discussion and public input. 3.7 Impact The following impact calculations will be carried out: • Impact of rates on a variety of typical and specific customers, including a range of residential customers, a variety of non-residential customers covering a range of types and volumes as well as the largest customer (perhaps top 10). The specific examples will be decided in discussion with City staff. • Calculations will be made using 2007 City rates as well as for each optional 2008 rates. NF Water Rote Study Proposal Dec 4 2007.doc 13/03/2008 4 City of Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M. Loudon • Comparisons will also be made for a typical customer and a large customer with a cross section of selected municipalities, nearby and comparable across the Province. 3.8 Implementation It is possible that the preferred option will have significant impact on some customers. If this is the case then a well thought-out implementation plan will be important. Customers are more likely to accept changes if they think they are fair and they have some warning. If required, an implementation plan will be discussed. 4 Timing & Project Organization 4.1 Timing The target completion date is the end ofJanuary 2008. This timing coincides with the City's 2008 budget process. A delay may interfere with Council's ability to approve a change that could be implemented in a timely manner. Schedule 1 following is a timetable formulated to achieve this goal. The timing is extremely tight, but if followed the end -of -January target can be achieved. City of Niagara Falls Review of Water & Sewage Rate Structure Work Plan Prepared by M. Loudon Schedule 1 Week Ending Task Description 14 -Dec -07 1 Establish Principles - Preliminary - Finalize 2 Discuss Rate Format Options - Preliminary X - Finalize 3 Data Requirements X X 4 Public Input 5 Financial Plan X X 21 -Dec -07 6 User Rates 7 Impact 8 Implementation Write Report 28 -Dec -07 4 -Jan -08 11 -Jan -08 18 -Jan -08 25 -Jan -08 Holiday Period x x 1 -Feb -08 X X X x x x X x X X X X Meetings Staff Staff Public Staff Council Input NF WS User Rate Study Work Plan Dec 4 2007.x/s NF Water Rate Study Proposal Dec 4 2007.doc 13/03/2008 5 City of Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M Loudon The critical path includes data generation by the City in December, public input at the beginning of January and report preparation during January. 4.2 Staffing City Staff have been offered to provide assistance. This is critical to the success of the project not only to provide the data that only is available from City resources, but also to provide valuable input in the formulation of different aspects of the report. The report should be a cooperative effort. The consultant will provide Mike Loudon and Mike Fortin as needed to complete the report. Both were involved in the original rate report and have worked to together on many projects. CVs of both are provided. 4.3 Level of Effort The level of consultant effort in days per task as well as an estimated cost is provided below in Schedule 2. City of Niagara Falls Schedule 2 Review of Water & Sewage Rate Structure Cost Estimate Prepared by M. Loudon Task Description Estimate Estimated Time (days) 1 Establish Principles 0 2 Discuss Rate Format Options 0 3 Data Requirements/Analysis 3 4 Public Input 4 5 Financial Plan 3 6 User Rates 3 7 Impact 1 8 Implementation 1 Write Report 3 Meetings 3 Total 21 Projected Cost Daily Rate (7.5 hours / $130/hr) $ 975 Fee $ 20,475 Disbursements $1,500 Total Cost (excl taxes) $ 21,975 NF Water Rate Study Proposal Dec 4 2007.doc 13/03/2008 6 City of Niagara Falls Review of Water & Sewage Rate Structures Proposal Prepared by M. Loudon The estimated cost of the consultant contribution is based on the above proposed work plan, but could be modified in discussion if a different work plan is preferred. One task that could affect the cost would be the degree to which the consultant is involved in the Public Input phase. Prepared by M. Loudon R.M. Loudon Limited Phone 416 225 2081 Fax 416 225 8144 Email mloudon@ica.net December 4, 2007 NF Water Rate Study Proposal Dec 4 2007.doc 13/03/2008 7 The City of Niagara Falls, Ontario Resolution No. Moved by Seconded by WHEREAS all meetings of Council are to be open to the public; and WHEREAS the only time a meeting or part of a meeting may be closed to the public if the subject matter falls under one of the exceptions under s. 239(2) of the Municipal Act, 2001. THEREFORE BE IT RESOLVED THAT on April 14, 2008 Niagara Falls Council will go into a closed meeting to consider a matter that falls under the subject matter of 239(2)(c) of the Municipal Act, 2001, a proposed or pending acquisition or disposition of land by the municipality. AND The Seal of the Corporation be hereto affixed. DEAN IORFIDA R. T. (TED) SALCI CITY CLERK MAYOR