HomeMy WebLinkAboutFIN-19-088 - 2020 Water Utilities RatesREPORT TO:Council
DATE OF MEETING:December 2, 2019
SUBMITTED BY:Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353
PREPARED BY:Ryan Hagey, Director of Financial Planning, 519-741-2200 x 7353
WARD (S) INVOLVED:All
DATE OF REPORT:November 26, 2019
REPORT NO.:FIN-19-088
SUBJECT:2020 Water Utilities Rates
___________________________________________________________________________
RECOMMENDATION:
THAT the proposed ratescontained in the 2020 Water Utilities Ratesschedule attached
to Financial Services Department Report FIN-19-088be approved.
BACKGROUND:
The rates for the City’s Water Utilities (water, sanitary, and stormwater) are set annually by
Council. In 2017, a comprehensive reviewof the water, sanitary and stormwater infrastructure
(the Water Infrastructure Program or WIP) was conducted to evaluate infrastructure investment
needs and other factors such as affordability, growth, and sustainability.The WIP report
provided information about the infrastructure in each of the utilities and provided Council with
investment options for both capital replacement and increased maintenance spending along
with 5-year rate options for the utilities. Council’s consensus from that discussion provided
staff with direction for future investments and rate increases which were reflected in the 2018
and 2019 utility rate increases approved through the budget.
Rate changes for theWater Utilities havetypically beenpassed as part of approving the
overall budgeton Final Budget Dayin January, with the new rates coming into effect on March
stst
1.Starting in 2020, the City is moving to an effective date of January 1to coincide with rate
changes from the Region of Waterloowho supplies the City withwater and treats its
wastewater. This report is seeking approval of the new rates in order to implement them on
st
January 1.
REPORT:
The proposed rate increases for the Water Utilities are summarized in the table below, with the
more detailed schedule attached to the report.
Summary of Water Utilities Rate Changes
UtilityRate Change
Water2.9%
Sanitary3.3%
Stormwater5.0%
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
The combined impact on the average homeowner for 2020 is 4.4%, which is slightly lower than
the forecast rate increase for 2020 as shown in the table below.
Projected Combined Utility Rate Increases
20182019202020212022
Rate Increase Projection from WIP6.5%6.5%4.5%4.5%4.5%
Revised Rate Increase Projection6.5%6.5%4.4%4.5%4.5%
The change for 2020 is because of two Regional impacts that offset each other, but were not
anticipated as part of the original WIP modeling.First, the Region has moved the date of their
st
rate increase for watersupplyandsanitarysewage processingto January 1instead of March
st
1.This has upward pressure onrates since higher prices are being charged earlier than was
modeled during the WIP analysis. Second, the Regionhas reduced the rate increase for water
supply and sanitary sewage processing by 1%. This has downward pressure on rates since the
price increase is less than what was modeled during the WIP analysis. The overall impact is
summarized in the chart below and shows how each change impacts the overall WIP rate
increase.
WIP 2020 Rate Increase Reconciliation
Originally ForecastedWIP 2020 Rate Increase4.5%
Timing of Regional Rate Increase Moved to January 1+0.3%
Regional Rate Reduction-0.4%
RevisedProposed WIP 2020 Rate Increase4.4%
As part of the Operating Budget discussion on November 25, there was some interest shown in
reducing stormwater rates as they are going up by more than an inflationary amount and the
City was recently approved for nearly $50M of federal grant funding over the next 10 years
through the Disaster Mitigation Adaptation Fund (DMAF). Historical information about
stormwater utility rates since the utility’s inception in 2011was requested and is shown in the
table below.
Historical Stormwater Rate (Residential Single Detached Medium property)
YearCost% ChangeYearCost% Change
2011
$10.502016$11.449.2%
Jan-Jun
2011
$9.45-10.0%2017$12.499.2%
Jul-Dec
2012$9.733.0%2018$13.739.9%
2013$9.871.4%2019$14.727.2%
2014$10.173.0%2020$15.465.0%
2015$10.483.0%
The table above shows theoriginal stormwater rate implemented in 2011 based on the
recommendations from a multi-year comprehensive review to create a separateand sustainable
stormwater utility was $10.50. This initial rate was reduced by 10% (effective July 1,2011) as
part of the 2011 budget process. As shown in thetableabove, the stormwater rate did notreturn
to itsoriginal level until 2015. Since 2015, rate increases have been more than inflationary, but
were required to:
Make up for effectively having no rate increase between 2011-2015
Eliminate an accumulated deficit of $1M in the stormwater utility at the end of 2015
Provide proportionatefunding for increased WIP full road reconstruction projects
As noted duringthe operating budget presentation, when Council considered multi-year WIP
rate options in 2017, they endorsed the lowest option (Option #3) and stated that any grant
funding would go towards an incremental increase to planned work which is what is proposed
through the 2020 budget. Further, any reduction in the projected stormwater rate increase would
mean a reduction in planned work,which could lead to areduction in DMAF grant funding.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The recommendation of this report supports the achievement of the city's strategic vision
through the delivery of core service.
FINANCIAL IMPLICATIONS:
The total annual impact of the proposed rate changes is $50 as noted in the table below.
Impact on Homeowner
20192020$ Change
Water$435$450$15
Sanitary$543$568$25
Stormwater$175$185$10
TOTAL$1,153$1,203$50
Assumptions:
3
Water& Sanitary: water consumption of 175m
Stormwater: Residential Single Detached Medium
COMMUNITY ENGAGEMENT:
INFORM –This report has been postedto the City’s website with the agenda in advance of the
council / committee meeting.
ACKNOWLEDGED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services
Appendix A - 2020 Water Utilities Rates
2019 Rate2020 Rate$ Change% Change
Sanitary (per cubic metre)$ 3.0538$ 3.1546$ 0.1008 3.30%
Water (per cubic metre)$ 2.4339$ 2.5045$ 0.0706 2.90%
Stormwater (monthly charge)
Residential Single Detached Small$ 8.82 $ 9.26 $ 0.445.00%
Residential Single Detached Medium$ 14.72$ 15.46$ 0.745.00%
Residential Single Detached Large$ 19.35$ 20.32$ 0.975.00%
Residential Townhouse/Semi-Detached$ 10.51$ 11.04$ 0.535.00%
Residential Condominium$ 5.86 $ 6.15 $ 0.295.00%
Multi-Residential duplex$ 11.78$ 12.37$ 0.595.00%
Multi-Residential triplex$ 17.70$ 18.59$ 0.895.00%
Multi-Residential four-plex$ 23.54$ 24.72$ 1.185.00%
Multi-Residential five-plex$ 29.46$ 30.93$ 1.475.00%
Multi-Residential (>5 units)$ 2.95 $ 3.10 $ 0.155.00%
Non-Residential Smallest$ 28.16$ 29.57$ 1.415.00%
Non-Residential Small$ 75.30$ 79.07$ 3.775.00%
Non-Residential Medium-Low$ 197.30$ 207.17$ 9.875.00%
Non-Residential Medium-High$ 575.95$ 604.75$ 28.805.00%
Non-Residential Large$ 1,395.90$ 1,465.70$ 69.805.00%
Non-Residential Largest$ 2,996.70$ 3,146.54$ 149.84 5.00%