August 24, 1998

To:Works and Utilities Committee

From:Commissioner of Works and Emergency Services

Subject:Emery Creek Stormwater Quality Ponds Project

User Pay Funding Model

Purpose:

To provide information on funding mechanisms for the Emery Creek Stormwater Quality Ponds and other stormwater management initiatives/projects.

Funding Sources, Financial Implications and Impact Statement:

Not applicable.

Recommendations:

That this report be received for information.

Council Reference/Background/History:

At its meeting of July 15, 1998, the Works and Utilities Committee had before it a report from the Commissioner of Works and Emergency Services dated June 30, 1998, respecting the Emery Creek Stormwater Quality Ponds Project.

The Committee, in recommending the adoption of the report, requested that the Commissioner of Works and Emergency Services submit a report to the Works and Utilities Committee for consideration at its September 9, 1998 meeting, on the following suggested criteria for a user pay model for funding the Emery Creek Stormwater Quality Ponds Project:

(i)the cost of the Emery Creek Ponds project should be borne by the generators of stormwater runoff;

(ii)the costs should be borne based on a flat rate per square metre of roof and paved area (roads not included);

(iii)if an industry or commercial operation can show that it can reduce its stormwater discharges (and will do so before construction is initiated), then they can apply for an exemption equivalent to the amount of water they redirect; and

(iv)industry must fund projects that will address costs incurred by their business operations, not the taxpayers;"

Comments and/or Discussion and/or Justification:

Stormwater quality problems are not unique to the Emery Creek drainage area but apply to all of the watersheds across the City of Toronto. Stormwater runoff conveys pollutants to area watercourses from residential, industrial/commercial and public areas such as roads each time it rains.

In August of 1997, staff with the assistance of consultants, the public, and other stakeholders initiated the process of developing a Master Plan for the management of wet weather flows to address the adverse quantity and quality impacts of stormwater runoff in the City of Toronto. Phase 1 of the Master Plan is expected to be completed later in the year.

The end result of the Master Plan will be a comprehensive, flexible strategy for the management of wet weather flows for the City of Toronto for the next 20 years. Major changes and expansion to our current stormwater management practice will be required in preventing and mitigating these adverse impacts and providing beneficial uses.

The objective of the Master Plan cannot be realized without the development of an appropriate funding mechanism for required stormwater remediation initiatives or capital projects. Consequently, the development of an equitable and harmonized funding mechanism is a key element of the Master Plan Study.

Through the Master Plan Study, several funding mechanisms are being evaluated which could be utilized to fund stormwater management initiatives/projects, such as the Emery Creek Stormwater Quality Ponds. These mechanisms include user charges, development charges, property taxes, water rates, and sewer surcharges. Variations and combinations of these mechanisms are used throughout Canada and the United States.

The following criteria which have been identified and are currently being considered in developing and evaluating an appropriate funding strategy are:

Sufficiency - To determine if the funding mechanism, alone or in combination, will be able to generate a revenue stream sufficient to cover the cost of stormwater management.

Predictability - To determine if the funding mechanism will be able to generate a predictable revenue stream from year-to-year to fund stormwater activities and enable long-term planning.

Flexibility - To determine if the funding mechanism can be modified over time in response to needs for greater or lesser revenues, for example to fund an unexpected capital project.

Fairness - To determine if the funding mechanism is equitable in collecting funds from individuals, land uses and areas/watersheds.

Incentives - To determine if the funding mechanism provides necessary incentives for property owners and businesses/Industries to engage in on-site stormwater management.

Financial Impacts - To determine if the funding mechanism imposes significant financial impacts on one or more groups of individuals.

Administrative Burden - To determine if the funding mechanism would be difficult and/or costly to develop and administer, thereby increasing costs to the community.

Authority - To determine if the legal authority exists to support the introduction or continued use of a funding mechanism and to deter potential legal challenges.

Public Acceptance - To determine the level of public acceptance to the funding mechanism.

Although the Master Planning process and development of the funding strategy is underway we will not be in a position to recommend any specific criteria for the funding model until the comprehensive evaluation of all applicable funding considerations as outlined above have been completed, as part of the second phase of the Master Plan. All stakeholders including the public, industry and community-based groups, such as the City of Toronto Stormwater Group and the Emery Creek Environmental Association will participate in the development of the funding strategy through the Master Plan Study. We anticipate the second phase of the Master Plan will take twelve to eighteen months to complete.

To move forward while a City wide stormwater funding mechanism is being developed, The Emery Creek Stormwater Quality Ponds Project is being funded from the sewer service surcharge on the water rate. Although the proposed ponds are physically located in the Emery Creek Watershed, the project will provide City wide benefits through much needed water quality improvement in the Humber River and Lakefront, and valuable information obtained through monitoring their implementation and performance.

Conclusions:

Concepts such as "generator of stormwater runoff" and the "beneficiaries of stormwater improvements" paying for stormwater projects are being evaluated. In addition, detailed criteria such as impervious area and credit for stormwater reduction, as suggested by the Works and Utilities Committee, are being considered through the development of a funding strategy.

An appropriate and equitable funding strategy including all necessary detailed criteria is expected to be developed through the ongoing Master Planning study in approximately twelve to eighteen months.

Contact Name:

Mr. R. M. Pickett

Director

Water Pollution Control Division

392-8230

Fax (416) 397-0908

E-Mail bob_pickett@metrodesk.metrotor.on.ca.

M. A. Price, P.Eng.Barry H. Gutteridge

General ManagerCommissioner

Water and Wastewater ServicesWorks and Emergency Services

pdc/ko:File No. 1078.60-3

userpay.doc