The Budget Committee recommends to the Executive Committee that:

Water Rates and Fees

1.         City Council approve:

a.         Effective January 1, 2014, the combined water and wastewater rates charged to metered consumers shall be as shown below and in Appendix B to the report (October 30, 2013) from the Deputy City Manager and Chief Financial Officer, and the General Manager, Toronto Water;

b.         Effective January 1, 2014, the water and wastewater rates charged to flat rate consumers be increased by 9% to the rates shown in Appendix B to the report (October 30, 2013) from the Deputy City Manager and Chief Financial Officer, and the General Manager, Toronto Water;

c.         Effective January 1, 2014, the water and wastewater service fees, including all fees to be transferred to Toronto Water from Engineering and Construction Services, formerly Technical Services, shall be as shown in Appendix C to the report (October 30, 2013) from the Deputy City Manager and Chief Financial Officer, and the General Manager, Toronto Water;

d.         Effective January 1, 2014, Chapter 441 – Fees and Charges, Appendix D, Schedule 3, Wastewater Services be amended to include the new service fees for CCTV inspections of sewage works impacted by private construction, based on actual costs, and for sanitary discharge permits, as well as clarification of the existing minimum fees and fee basis for industrial waste surcharge agreements and permits and sanitary discharge agreements, as set out in Appendix D to the report (October 30, 2013) from the Deputy City Manager and Chief Financial Officer, and the General Manager, Toronto Water;

e.         Effective January 1, 2014, Chapter 441 – Fees and Charges, Appendix D, Schedule 2, Water Services be amended to include a new fee of $75 for lost or damaged automated meter reading transmitters;

f.          Effective July 1, 2014, Chapter 441 – Fees and Charges, Appendix D, Schedule 2, Water Services be amended to include a new manual water meter reading fee of $80 per visit for consumers with water meters refusing to allow the installation of a new automatic water meter;

g.         Effective July 1, 2014, Chapter 441– Fees and Charges, Appendix D, Schedule 2, Water Services be amended to include a new flat rate legacy fee of $1,020 per year, which will be in addition to the existing flat rate fee, for residential flat rate consumers who refuse to allow the installation of an automatic water meter on their property;

h.         Effective September 1, 2014, Chapter 441– Fees and Charges, Appendix D, Schedule 2, Water Services be amended to include a new administrative fee of $50 for processing annual water supply backflow prevention device testing reports under the City's backflow prevention program.

2.         City Council approve, with respect to assistance for low-income seniors and low-income disabled persons, that:

a.         The rebate for eligible low-income seniors and low-income disabled persons be set at a rate of $0.8874 /m3, effective January 1, 2014, representing a 30% reduction from the Block 1 rate (paid on or before the due date).

3.         City Council make the necessary amendments to Municipal Code Chapter 441 - Fees and Charges, Municipal Code Chapter 849 - Water and Sewage Services and Utility Bill, and Municipal Code Chapter 681- Sewers, and any other necessary Municipal Code Chapters as may be required, to give effect to Recommendations 1 and 2 above.

4.         City Council authorize, effective July 1, 2014, the following amendments to Chapter 441, Fees and Charges, of the Toronto Municipal Code:

a.         Appendix D, Schedule 1, Water and Wastewater Consumption Rates, be amended to include a manual water meter reading fee of $80 per visit; and

b.         Appendix D, Schedule 1, Water and Wastewater Consumption Rates, be amended to include a flat rate legacy fee of $1,020 per year for residential flat rate consumers.

5.         City Council authorize, effective July 1, 2014, any other amendments to the Municipal Code to implement the above fees to water consumers who refuse or fail to allow access for the purposes of installing new water meters and associated meter reading equipment under the City's Water Meter Program.

6.         City Council amend Municipal Code Chapter 681 - Sewers substantially in accordance with the draft By-law attached as Appendix A to the report (October 4, 2013) from the General Manager, Toronto Water.

7.         City Council amend Municipal Code Chapter 441 - Fees and Charges Schedule C, Toronto Municipal Code Chapter 441 - Fees and Charges, Appendix D - Schedule 3, Wastewater Services, substantially in accordance with the draft By-law attached as Appendix B to the report (October 4, 2013) from the General Manager, Toronto Water.

8.         City Council amend Municipal Code Chapter 851 - Water Supply substantially in accordance with the draft By-law attached as Appendix C to the report (October 4, 2013) from the General Manager, Toronto Water.

Capital Budget

9.         City Council approve the 2014 Recommended Capital Budget for Toronto Water with a total project cost of $968.676 million, and 2014 cash flow of $613.270 million and future year commitments of $2.580 billion comprised of the following:

a.         New Cash Flow Funding for:

i.          260 new / change in scope sub-projects with a 2014 total project cost of $968.676 million that requires cash flow of ($181.985 million) in 2014 and a future year cash flow commitment of $216.870 million in 2015; $324.884 million in 2016,  $314.215 million in 2017, $190.590 million in 2018, $85.214 million in 2019, ($8.734 million) in 2020; ($10.609 million) in 2021, ($13.921) million in 2022, and $52.152 million in 2023;

ii.         216 previously approved sub-projects with a 2014 cash flow of $657.198 million; and a future year cash flow commitment of $466.680 million in 2015; $301.777 million in 2016,  $208.576 million in 2017, $103.774 million in 2018, $100.886 million in 2019, $100.595 million in 2020; $76.240 million in 2021, and $70.880 million in 2022; and

b.         2013 approved cash flow for 151 previously approved sub-projects with carry forward funding from 2013 into 2014 totaling $138.057 million.

10.       City Council approve the 2015-2023 Recommended Capital Plan for Toronto Water totaling $5.915 billion in project estimates, comprised of $110.798 million in 2015; $241.121 million in 2016; $406.364 million in 2017; $694.490 million in 2018;  $817.183 million in 2019; $869.353 million in 2020; $941.077 million in 2021; $908.333 million in 2022; and $926.611 million in 2023, as amended by Recommendation 11.

11.       City Council amend, for future planning purposes, the draft Capital Plan to reflect a water rate increase of 8% in the years 2015, 2016 and 2017 and that staff report back during the 2015 Budget process on additional financing options.

12.       Council consider operating costs of $4.432 million net in 2014, ($0.370) million net in 2015; $0.175 million net in 2016; $5.709 million net in 2017; $5.875 million net in 2018; $0.365 million net in 2019; and $2.504 million net in 2020; and $0.050 million emanating from the approval of the 2014 Recommended Capital Budget for inclusion in the 2014 and future year operating budgets.

13.       City Council approve 6 temporary capital positions for the delivery of new 2014 capital projects and that the duration for each temporary position not exceed the life and funding of its respective project / sub-project.

14.       City Council request the Deputy City Manager and Chief Financial Officer in consultation with the General Manager, Toronto Water to advance the 2015 cashflow for the Basement Flooding project into 2014, should it become evident that greater than planned volume of work can be completed, and that the 2015 – 2023 budgeted cash flows be adjusted accordingly as part of the 2015 Budget process.

15.       City Council request the General Manager, Toronto Water, to prioritize future Basement Flooding Protection Program studies based on the density of reported basement flooding complaints per sanitary sewer subsewershed for major storm events since 2000.  The density of reported basement flooding complaints will be calculated on the basis of the number of complaints of basement flooding received by the City divided by the land area serviced by the sanitary sewer subsewershed.

16.       City Council request the General Manager, Toronto Water, to initiate and expedite the completion of new Environmental Assessment studies for Area 35 (Silver Creek subsewershed), Area 36 (Chapman subsewershed), Area 37 (Hillary subsewershed), Area 38 (Etobicoke Creek subsewershed), Area 39 (Berry Creek subsewershed), Area 40 (Forman-Yonge subsewershed), and Area 41 (North Mimico Creek subsewershed).

17.       City Council request the General Manager, Toronto Water, to report back on the schedule of future Basement Flooding Protection Program study areas (for Study Area 42 and beyond), across the remainder of the city, as part of Toronto Water's  2015 Budget Submission.

18.       City Council request the General Manager, Toronto Water to report back in early 2014 on a coordinated, prioritized Toronto Water and Toronto Region Conservation Authority erosion control strategy and projects.

Operating Budget

19.       City Council approve the 2014 Recommended Operating Budget for Toronto Water of $403.163 million gross and $618.722 million in capital-from-current contribution, comprised of the following services:

20.       City Council approve Toronto Water's 2014 proposed service levels, as outlined on page 7 of the 2014 Recommended Operating Budget (Analyst Notes) for Toronto Water, and the associated staff complement of 1,732.8, as amended by Recommendation 21.

21.       City Council, subject to adopting recommendation 11 which amends, for future planning purposes, the draft Capital Plan to reflect a water rate increase of 8% in the years 2015, 2016 and 2017, also amend the 2014 recommended operating budget for Toronto Water to include 2 additional staff and $0.200 million in gross expenditure increase and offsetting capital contribution reductions.

22.       City Council direct the General Manager, Toronto Water to report back on the results of the Water Loss and Leak Detection Program with an implementation plan, including estimated costs and benefits, in time for consideration with the 2015 Budget Process for Toronto Water.

23.       City Council authorize the City Solicitor to introduce any necessary Bills required to implement these recommendations, subject to any necessary refinements, including stylistic, format and organization, as may be identified by the City Solicitor and the General Manager, Toronto Water.

The City of Toronto Water and Wastewater Program (the “Program”) is currently fully funded on a ‘pay-as-you-go’ basis through a combined water and wastewater rate without any reliance on borrowing/debenture financing.  The property tax supported budget is not impacted by adoption of the recommendations contained in this report. 

Based on the recommended 2014 Toronto Water Operating and Capital Budgets, the updated  water consumption forecast, and Council's adopted water rate structure, a rate increase of 9% for 2014 in the paid-on-or-before due date is required for Block 1 domestic-use consumers, and Block 2 industrial process-use consumers, both effective January 1st, 2014. 

As shown in Chart 1 below, the recommended rate increase impact on an average home consuming 300 m3/year, billed at the Block 1 Rate, will be 9% or $73 over the calendar year (from $814 in 2013 to $887 in 2014).  The impact of the 9% increase on a commercial consumer at Block 1 rate  and an industrial consumer at Block 2 rate with annual consumption of 100,000 m³ will be $24,420 and $17,526 respectively, the latter reflecting a 30% discount over Block 1 rates for eligible industrial consumers. The rate increase impact on a large industrial consumer of 1,000,000 m³ on Block 2 rate will be $171,299.

Even with recent 9% increase in Toronto Water rates, the City still has the third lowest water rates in the GTA area. The proposed 9% increase in rates is expected to raise $72 million in additional revenue.

(See Table 1 in Financial Impact Section of the report dated October 30, 2013, from the Deputy City Manager and Chief Financial Officer and General Manager, Toronto Water)

The recommended inflationary increases of the water and wastewater service fees set out in Appendix C are expected to generate additional revenue of approximately $296,000 the new administration fee related to the backflow prevention program is projected to generate $150,000 and the new fee for lost or damaged meter reading transmitters is expected to generate about $37,000 in 2014.

In addition, the proposed two new fees for water consumers not allowing access to their property for the automatic meter installation, as outlined in the staff report   entitled 'Update on the Water Meter Program' could potentially result in an estimated increase in revenue of up to $10 million.   The increase in revenue is intended to recover the City's costs in providing manual meter reading services and to recover the potential loss of additional revenue from flat rate consumers who have refused to convert to automatic metered accounts. It is expected these fees will serve as an effective incentive to allow access for the purposes of having a new meter installed as required under Municipal Code, Chapter 851, Water Supply.  As a result, Toronto Water has not included these additional fees as part of the 2014 Operating Budget and will report on the actual revenues and corresponding costs as part of the Corporate Variance Reports in 2014.

The Public Works and Infrastructure Committee on October 21, 2013, considered a report (October 4, 2013) from the General Manager, Toronto Water, on “Update on the Water Meter Program”.

This report recommends measures that will allow for improved cost recovery of damage to City sewage works from private construction-related activities by introducing a deposit requirement to cover the cost of Closed Circuit Television Camera (CCTV) systems that document the pre- and post-construction state of City sewage works in the vicinity of the construction.

Presently, there is no sufficient information to quantify that impact. Toronto Water will continue to monitor related activities and include any resulting financial impacts for consideration with Toronto Water's future year operating and capital budgets.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

The purpose of this report is to advise City Council on the expansion of the Basement Flooding Protection Program city wide, to include new study areas, including the budget impacts and the prioritization methodology for new study areas.  New study areas are recommended for initiation in 2014 and 2015, and for completion in 2016 and 2017.

On the afternoon and evening of July 8, 2013, severe thunderstorms and heavy rains flooded many parts of the City, causing damage to public and private property and infrastructure, stranding thousands of commuters, and leaving tens of thousands of residents and businesses without electricity.  More than 4,700 basement flooding complaints were received during and immediately following the storm.  Many of the impacted properties were located outside of the existing Basement Flooding Protection Program's 34 priority study areas resulting in the need to reconsider how basement flooding risks are assessed and addressed city wide.

The Recommended 10-Year Capital Budget and Plan for Toronto Water includes a total of $962 million in funding (including funds carried forward from 2013 into 2014) for the construction of Basement Flooding Protection Program (BFPP) over ten years.  This reflects an overall increase of $47 million in 10-year funding as compared to the 2013 – 2022 approved Basement Flooding program.

Expanding the BFPP across the entire City will require the undertaking of Environmental Assessment (EA) studies to examine capacity of sewer and storm drainage systems and, therefore, an increase to the 10-Year Capital Budget and Plan.  The Capital Plan impact for undertaking the studies on a city-wide basis is estimated to be $4 million per year, beginning in 2015, and continuing for an estimated 12-15 years using existing staff resources to project manage the consulting assignments.

Accelerating the expanded BFPP, so that it is completed sooner, will require additional annual increases to Toronto Water's Capital and Operating Budgets to hire more engineering consultants and staff within Toronto Water to manage the projects.

The estimated cost to construct projects identified by the EA studies in an expanded city-wide BFPP (includes construction projects not presently within the existing 34 priority study areas) will require additional capital funding beyond the 10-Year Capital Plan.  The capital cost implications are not known at this time, but can be estimated to be well over $1 billion.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.

This report is submitted in response to a request by City Council for the General Manager, Toronto Water, to report through the 2014 budget process with a plan for enforcement of the Mandatory Downspout Disconnection Program Phase 1 (combined sewer areas) and implementation of Phase 2 (basement flooding areas) as set out in Municipal Code Chapter 681, as part of the Basement Flooding Protection Program.

A field assessment undertaken in the summer of 2013 of the 200,000 properties serviced by combined sewers (Phase I of the program) that came under the mandatory provisions of the downspout disconnection by-law on November 20, 2011, recorded a 79.77 percent compliance rate.  The assessment also recorded compliance rates of approximately 60 – 64 percent in other sections of the City (Phase 2, mandatory as of December 3, 2013 and Phase 3, mandatory as of December 3, 2016). Engineering reviews for chronic basement flooding study areas have shown that the risk of basement flooding can be significantly reduced if approximately 70 percent of the houses in a sewershed are disconnected from the storm sewer. 

The data shows that a high compliance rate can be achieved through education, communications and outreach, grounded by the by-law.  Rather than embark on an aggressive enforcement program that may achieve only very limited results and may incur costly litigation, a multi-year enhanced education, communication and outreach strategy will be continued to boost compliance with the by-law across the City.

There are no financial implications to the City as a result of this report.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.