HomeMy WebLinkAboutDTS-09-042 - Stormwater Management Program Funding Review1
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Qevelo pment &
Technical Services
Report To: Development and Technical Services Committee
Date of Meeting: October 5, 2009
Submitted By: Grant Murphy, Director of Engineering Services
Prepared By: Grant Murphy, Director of Engineering Services
Ward(s) Involved: All Wards
Date of Report: September 25, 2009
Report No.: DTS-09-042
Subject: STORMWATER MANAGEMENT PROGRAM AND FUNDING
REVIEW
RECOMMENDATION:
That the findings of the Kitchener-Waterloo Stormwater Management Program and
Funding Review: Stormwater Funding Analysis, dated October 2008, be received for
information; and,
That staff be directed to report on this matter to Council on or before May 1, 2010 seeking
further direction on the adoption of a specific Stormwater rate approach at that time; and
further,
That staff be directed to include the Stormwater Utility Implementation Project in the 2010
capital budget for the amount of $80,000.
EXECUTIVE SUMMARY:
Stormwater management (SWM) systems represent valuable public assets that provide a
number of community benefits. By controlling floodwaters and preventing pollutants from
reaching our rivers, lakes, and coastlines, stormwater management systems protect the health
and safety of the public and the environment. These clean and healthy water resources support
public drinking water supplies and stimulate local investment through increased land values.
Furthermore, clean and healthy water resources support recreation, tourism, and basic
manufacturing activities that rely on clean water. The City of Kitchener has SWM assets valued
at approximately $300M. Nonetheless, the operation of stormwater management systems is a
service that keeps a low profile in the City and if not properly funded, can cause serious future
problems.
In November 2004, Council directed staff to proceed with undertaking a Stormwater
Management Program and Funding Review Study (Study) collaboratively with the City of
Waterloo as part of the Shared Services Initiative. The Study purpose is to identify the City's
current level of service, compare this to the legislated requirements and guidelines, develop a
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suggested level of service, and to evaluate appropriate funding mechanisms to support these
needs.
In April, 2007 the interim findings of the Study were presented to Council (DTS Report 07-073);
which identified the City's current level of service, as well as a sustainable level of service based
on Federal and Provincial legislative requirements and guidelines. The report acknowledged the
concern that a sustainable level of service was not being delivered with respect to SWM and
that the following objectives need to be addressed:
• Provide a more proactive and preventative maintenance program;
• Provide additional activities to meet provincial and federal water quality
requirements;
• Manage assets in a more sustainable manner; and
• Meet service level expectations of the public.
The 2007 stormwater Management Program Budget was pegged at $5,820,910 (while the 5
year average between 2003-2007 is $4,495,037). The study also identified the sustainable level
of service as being $9,910,590 (2007). This means that currently the City only allocates enough
funds to meet 59% of the sustainable level of service to ensure that stormwater management
facilities are functioning to provide adequate flood control and acceptable levels of water quality
enhancement.
Successive studies, such as the 2008 SWM Audit (DTS Report 09-131), Upper Blair Creek
Functional Drainage Study (DTS Report 09-010), Victoria Lake Remediation Class
Environmental Assessment Study (DTS Report 09-096), and the Alder Creek Watershed Study
and Upper Strasburg Creek Subwatershed Plan Update (DTS Report 08-032), either make
recommendations about required infrastructure improvements or establish the need for the City
to put into place long-term preventive system maintenance and monitoring programs. As such
these future program needs will present additional challenges to the City in its attempts to
deliver a sustainable level of SWM service.
A primary purpose of the Study was to review options and identify a sustainable manner to fund
the SWM program needs. Further to this point, the Study considered if the current SWM
program can be modified to reflect the public service values of fairness and equity. The
consultant (AECOM Canada Ltd) and Study team reviewed approaches to fully fund SWM
programming within the City of Kitchener and the City of Waterloo, and the following funding
mechanisms were investigated:
• Taxes;
• Fees and special charges;
• Special levies that have specific designations and limitations for usage;
• Other means i.e. fines, debentures, grants, bonds, and loans
• Combinations of the above
In October 2008, the final draft report of the Study was completed -recommending that a utility
structure and user rate approach be implemented in order to fully fund SWM programming
within the City of Kitchener. The Study has demonstrated that there are a number of public
service values that can be brought into the system by introducing a stormwater rate structure,
such as:
1. A dedicated funding source to stormwater management, hence sustainability;
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2. A rate based on the user's amount of runoff contribution as opposed to property value;
3. A mechanism to charge tax-exempt properties for municipal stormwater management
services, resulting in an increased customer base which would then lower the rate of the
average household contribution;
4. A potential incentive for property owners to reduce stormwater runoff and pollutant
discharge.
The Study recommends that a "tiered single family unit (SFU)" rate structure be implemented.
This rate structure takes into consideration the amount of impervious area (i.e. surfaces
resistant to water penetration) that a citizen or business owns as opposed to the current method
of apportioning stormwater funding based on property assessment values for eligible taxpayers
(many properties are tax-exempt). The more impervious area an individual property owner has,
the greater the demand on the City's SWM system, either for flood control or water quality
treatment purposes.
Staff are supportive of the Study recommendations to implement the "tiered single family unit"
rate based funding model. This form of user rate approach has been successfully applied in
hundreds of municipalities in the United States and in some jurisdictions in Canada, such as
Alberta. For an average residential property owner the annual SWM rate would be
approximately $79 or $6.50 a month. For non-residential property owners the amount would be
based on a base rate of $6.56 per 290 m2 of impervious area on their properties. The Study
sampled various non-residential and tax-exempt properties and these results are identified in
Table 6 of this report.
As part of the study a stormwater Advisory Committee was formed consisting of various
stakeholders from across the Cities of Kitchener and UVaterloo. Representation has included the
school boards and universities, the Chamber of Commerce, other business representation and
members of the public. Eight meetings over the last 4 years have been held with the SWAC, as
well as individual meetings with the various stakeholders to identify issues and concerns. A
Public Open House and research focus groups were also held for the general public to provide
comment and insight as well.
During the public consultation process, it was apparent that there were significant concerns from
the institutional, industrial and tax-exempt property owners related to implementation of the rate
structure, and the affects that it would have on their bottom-line. But it was also clearly noted
that there was significant support from the residential property owners for this rate approach.
Staff recognize that moving to this model represents a significant philosophical shift in how
stormwater is viewed by the community, as well as an economic impact to citizens, business
and industry and the current tax-exempt sector of the community. It is recommended that the
Study and report be received for information by Council and that staff be directed to report on
this matter to Council by May 2010 seeking further direction at that time.
As such, staff are recommending that a stormwater utility implementation program be funded
during 2010 and 2011 in order to further advance the concept of having all property owners
contribute financially into the SWM program. The stormwater utility implementation program
would build on the detailed financial analysis completed in the Study to provide a rationalized
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fee structure approach, an updated financial analysis, a draft of the enacting by-law, drafts of
the supporting rate and credit policies. These would be brought forward for Council's
consideration and adoption in early 2011.
Further that staff be directed by Council to develop a budget issue paper as it relates to the
stormwater utility implementation program and that this be considered as part of the Council`s
2010 budget deliberations with a decision being made on January 18, 2010.
BACKGROUND:
The City of Kitchener currently maintains approximately 690 km of storm sewer, 10,400
catchbasins, 73 ponds, 17 oil grit separators, and 95 km of watercourses (2007). The total asset
value of the Storm Drainage System is approximately $300,000,000. The City of Kitchener
current stormwater management (SWM) program consists of four general components-
operation and maintenance, environmental compliance, capital improvement projects, and
planning and management.
Many of the best management practices (BMPs) that have been constructed within the City (e.g.
storm ponds, oil/grit separators, etc.), are not only designed to prevent against flooding and
erosion, but improve water quality for aquatic and terrestrial habitat and downstream drinking
water recipients. All of the stormwater flow within the City of Kitchener is directed towards the
Grand River with the ultimate receiver being Lake Erie.
stormwater-related works are subject to such legislation as the Ontario Water Resources Act,
Canadian Environmental Protection Act, the Federal Fisheries Act, and several guidelines
published through the Ministry of Environment and Ministry of Natural Resources. The Grand
River Conservation Authority (GRCA) also provides a significant role in the permitting and
approvals process as well as being a lead on the new Clean Water Act which will have
municipal effects as work related to this Act evolves.
Totten Sims Hubicki Associates (now known as AECOM Canada Ltd) was retained in June
2005 to conduct the study following a formal consultant selection process. This study was
prompted by a variety of SWM program needs, including:
• Identification of deficiencies in the current levels of service and with respect to legislative
requirements, where new and more stringent regulatory requirements are continually being
introduced
• Urbanization and intensification is exceeding the capacity of the existing system, not only
making profound changes on the area being developed but also causing significant impact
of the downstream natural surface water bodies (i.e. streams and creeks)
• Aging infrastructure priorities taking precedence, resulting in an inability to fund current
SWM infrastructure needs (both construction and maintenance);
• Rapidly evolving types of "state of the art" infrastructure requiring more frequent monitoring,
maintenance, and specialized staff knowledge;
• Need to improve the existing level of service, and better plan, schedule, and proactively
manage respective SWM programs;
• Desire to consolidate and coordinate SWM activities and services that are currently spread
across multiple departments and budgets; and
• Increasing environmental awareness and public expectation regarding the quality of
receiving wetlands and streams.
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Sustainable Service Level for Stormwater Management
In May, 2007 City staff presented the interim findings of the study which identified the City's
current level of service and identified a sustainable level of service based on Federal and
Provincial legislative requirements and guidelines (DTS Report 07-073). This component of the
study reviewed operations and maintenance frequencies compared to available guidelines - it
is evident that Kitchener is falling short on many of its practices. A review of the current City
practices and programs identified the following elements that require improvement:
• Facility inventory, monitoring and maintenance
Sediment removal from SWM ponds and oil/grit separators
SWM asset management
• Development of operation and maintenance programs, procedures and
schedules
• Annual auditlcash-in-lieu implementation and follow-up
Table 1 shows a comparison between the current level of service and the sustainable level of
service required. The 2007 Stormwater Management Program Budget is pegged at $5,820,910
(while the 5 year average between 2003 and 2007 has only been $4,495,037). The study
identifies a sustainable level of service as being $9,910,590 (2007). This means that currently
the City only allocates enough funds to meet 59% of the sustainable level of service to ensure
that stormwater management facilities are functioning to provide adequate flood control and
acceptable levels of water quality enhancement.
Table 1 - SWM Program Expenditures Comparison of Current and Sustainable Level of
Service (LOS)
Activity 2007 Level of Sustainable Level Funding % Current to
Service of Service Deficit Sustainable Target
Operation and 1 591 015
$ 2 523 615
$ 932 600
$ 63%
Maintenance '
Environmental g0 000
$ 97 000
$ 7 000
$ 93%
Com liance
P '
Capital Improvement
~ 4 085 380
$ 6 862 869
$ 2 777 489
$ 60%
Pro
ects
J ' '
Planning and 54 515
$ 427106
$ 372 591
$ 13%
Mana ement
g '
SWM Program Total $ 5,820,910 $ 9,910,590 $4,089,680 59%
Additionally, in 2008 and 2009, three significant studies were completed by City staff and
approved by Council:
• The Upper Blair Creek Functional Drainage Study (UBCFDS) relating to the development
potential within the Doon South Community Plan -Phase 2 (DTS Report 09-010),
• The Victoria Lake Remediation Class Environmental Assessment Study, relating to the
dredging and reconfiguration of the lake and upstream water quality facilities (DTS Report
09-096),
• The Alder Creek Watershed Study and Upper Strasburg Creek Subwatershed Plan Update,
relating to management strategies that will support the long-term preservation and
protection of the existing natural features within the study area, while permitting
development to proceed on lands where deemed appropriate (DTS Report 08-032).
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The City has had a stormwater management policy since 2001, and part of its role is to provide
guidance and direction on protection of watercourses. The policy includes an annual SWM audit
which monitors water quality parameters in watercourses, evaluates the effectiveness of
stormwater ponds, and prioritizes maintenance activities to be conducted.
On October 5th, 2009, Council received the 2008 SWM audit (DTS Report 09-131) for their
consideration and adoption. The Audit identifies that more than $120M of stormwater pond
retrofits and watercourse capital works are necessary over the next 20 years in order to meet
water quality targets.
These studies have wide-ranging effects on water quality improvements of source water and the
local environment. Importantly, these studies either make recommendations about required
infrastructure improvements or establish the need for the City to put into place long-term
preventive system maintenance and monitoring programs. As such these programs will present
additional challenges to the City in its attempts to deliver a sustainable level of SWM service.
Funding Mechanisms
A primary purpose of the Study was to review options and identify a sustainable manner to fund
the SWM program needs. Further to this point, the Study considered if the funding of the current
SWM program can be modified to reflect the public service values of fairness and equity. In
other words, is there an advantage in adopting a different funding model for a SWM program
that involves charging property owners a rate based on how much they use the SWM system?
The consultant (AECOM Canada Ltd) and Study team reviewed approaches to fully fund SWM
programming within the City of Kitchener and the City of Waterloo, and the following funding
mechanisms were investigated:
• Taxes;
• Fees and special charges;
• Special levies that have specific designations and limitations for usage;
• Other means i.e. fines, debentures, grants, bonds, and loans
• Combinations of the above
In October 2008, the final draft report of the Study was completed -recommending that a utility
structure and user rate approach be implemented in order to fully fund SWM programming
within the City of Kitchener. The executive summary of this Study is attached for Council's
reference in Appendix A. The study findings have demonstrated that there are a number of
public service values that can be brought into the system by introducing a stormwater rate
structure, such as:
1. A dedicated funding source to stormwater management, hence sustainability;
2. A rate based on the user's amount of runoff contribution as opposed to property value;
3. A mechanism to charge tax-exempt properties for municipal stormwater management
services, resulting in an increased customer base which would then lower the rate of the
average household contribution;
4. A potential incentive for property owners to reduce stormwater runoff and pollutant
discharge.
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The Study investigates various funding mechanisms that will support a sustainable level of
service and includes taxes, fees, and special charges or other means such as partnerships,
grants, etc. Property taxes are the primary source of funding for SWM programs in Ontario. At
least three municipalities (i.e., London, St. Thomas, and Aurora) have implemented a special
stormwater user fee that charges a flat rate to residential properties and an area-based charge
to commercial/industrial properties.
Other municipalities in Ontario are known to be evaluating various stormwater rate structures.
There are approximately a dozen municipalities in western Canada that have either adopted a
flat rate user fee or have implemented a stormwater rate based on zoning and intensity of
development. Over 600 stormwater rates based on measured impervious area, have been
implemented in communities throughout the United States.
The following four (4) options are presented for Council's consideration and explained in more
detail -including the identification of strengths and weaknesses and potential costs to
ratepayers:
I. Stormwater Management User Rate
II. Dedicated Tax Levy for Stormwater Management
III. Stormwater Management Tiered Flat Fee
IV. Do Nothing -Maintaining the Status Quo Approach
Option 1 -Stormwater Management User Rate
A stormwater management user rate is calculated based on the contribution of stormwater
runoff from each property to the municipal drainage system (ditches, sewers) and end of pipe
infrastructure (i.e. ponds or creeks), as measured by the amount of impervious area contained
on each property.
The primary advantage of a user rate is that it is a more equitable funding mechanism than any
other funding source. Rates are assessed to each parcel of land based on usage of the
drainage system rather than on property value.
The secondary advantage associated with a stormwater rate is that all parcels (including tax-
exempt properties) can be assessed a user rate that reflects their relative stormwater run-off
contribution to the municipal SWM system. Table 1 provides a summary of the advantages and
disadvantages of the SWM user rate option.
The rate is typically applied on a monthly basis and would appear as a separate charge on the
monthly water bill for Kitchener Utilities customers, itemized as stormwater management
service. Revenues generated through the rate can be used for any SWM program related costs.
Tax-exempt properties would be required to contribute to the municipality's Stormwater
Management Program. Tax exempt properties include governmental parcels (e.g. municipal,
regional, provincial, and federal buildings) as well as institutional parcels (e.g. schools,
hospitals, and churches) and other charitable organizations that are registered with the Canada
Revenue Agency and therefore exempt from property taxation under the Income Tax Act.
Table 1: Summary of Advantages and Disadvantages of a Stormwater Management User Rate
Advanta es Disadvanta es
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Dedicated funding source and therefore a
stable funding source for all SWM program
activities to allow long-range planning, large-
scale capital improvements, and leverage for
debentures.
Fair and equitable rate that is based on runoff
contribution rather than property value.
Costs for municipal SWM services are
equitably distributed to all privately and publicly
owned developed properties.
A credit program could induce incentive to
property owners to reduce stormwater runoff
and pollutant discharge.
• Additional implementation costs (e.g.
database management, billing, and customer
service). However, this could be minimized
through the use of other existing billing
systems such as waterlsewer.
• New rate may not be well received by the
public.
• There is noway to remove or discontinue
services for non-payment.
• The service is provided to all properties
without choice.
• The actual service rendered to each individual
property is often difficult to quantify.
• Provides a mechanism to help ensure privately
owned SWM infrastructure is properly
maintained.
Option 2 -Dedicated Tax Levy for stormwater Mana~ eq ment
A dedicated tax levy can be administered specifically to raise revenue for stormwater services,
as a fixed property tax rate is applied and itemized on the property owner's annual tax bill.
Unlike a stormwater rate based on impervious area, the dedicated tax levy has inherent
weaknesses in achieving the principles of fairness and equity. In addition, there are no financial
incentives for property owners to provide onsite controls to reduce stormwater and pollutant
loads to the municipal SWM system. However, this option is easier to implement as it offers
significantly lower administrative costs. Table 2 summarizes the advantages and disadvantages
of this option.
Table 2 -Summary of Advantages and Disadvantages of a Dedicated Tax Levy for stormwater
Management
Advantages Disadvantages
• Property-tax-based revenues are already Property taxes are based on a property's
accepted as the primary existing source of assessed value, which may not equate to its
revenue for municipalities. runoff contribution, so the fairness and equity
Can be used to fund all SWM ro ram
• p9 of this revenue source is low.
activities. Property owners have limited ability to reduce
The billin s stem is alread established for
• 9Y Y their charge (i.e. no incentive to adopt source
controls).
ro ert taxes.
P P Y
• Maintains status quo for property owners • Tax-exempt properties contribute very little or
nothing to support the SWM program.
• Maintains tax exemption and payment-in-lieu- Inequitable among parcels, since charge is
of-taxes (PILOT) contributions for currently based on property value not runoff.
eligible properties.
• Additional administration costs are negligible. • When revenue requirements change, it is
difficult to equitably increase the charge
• Maintains constant revenue stream for the commensurate with runoff.
City's SWM program.
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• No additional database management system
required to implement the char e.
Option 3 - stormwater Management Flat Fee
Staff also considered the option of a "flat fee" stormwater funding mechanism. This option was
not originally explored in the Study Terms of Reference and is presented for Council's
consideration. The principle is that if a property owner was served by the local water utility
through a water meter, that the amount of stormwater service being charged would be based on
land parcel usage.
The "flat fee" stormwater funding mechanism would enable a shift from residential users to the
non-residential sector, where taxable non-residential properties would be paying their fair share
of stormwater services, due to the amount of stomrwater run-off generated from their properties.
Tax-exempt properties would be required to contribute to the municipality's SWM Program. Tax
exempt properties include governmental parcels (e.g. municipal, regional, provincial, and federal
buildings) as well as institutional parcels (e.g. schools, hospitals, and churches) and other
charitable organizations that are registered with the Canada Revenue Agency and therefore
exempt from taxation under the Income Tax Act. Table 3 summarizes the advantages and
disadvantages of this option.
This option is easier to implement as it offers lower administrative costs and may remove many
of the obstacles in obtaining buy-in from the public. The rate charged would appear as a
separate charge on the monthly water bill for Kitchener Utilities customers and itemized as
stormwater management service. This approach has been adopted by several communities in
Canada, but this option has inherent weaknesses in achieving the principles of fairness and
equity.
Table 3 -Summary of Advantages and Disadvantages of a SWM Flat Fee
Advanta es Disadvanta es
• Low administration cost (i.e. compared to an
• Charge does not correlate with the runoff
impervious area based stormwater rate). contribution from each property.
• Maintains constant revenue stream for the
City's SWM program. Inequitable among parcels since all customers
are charged the flat fee equally (i.e. parcels
• Minimal database management system with the largest runoff contribution pay an
required to implement the charge. identical charge to the smallest contributors).
• Tax exempt properties would contribute,
reducing the overall burden on residential Property owners have limited ability to reduce
property owners. their charge (i.e., no incentive to adopt source
controls).
• Subject to legal challenges, since no rational
nexus exists between the service provided and
the allocation of charges.
Option 4 - Do Nothing -Maintaining the Status Quo Approach
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The "do nothing" option maintains the status quo and makes no change to the funding
mechanism in order to increase the service levels associated with the SWM Program. More
revenue would ultimately need to be generated from the tax base in address long term Sv11M
program needs as it maintains the current property tax funding model. However, tax increases
in order to accommodate for a sustainable level of SvvM programming would only amplify the
current inequity between different property classes.
Tax-exempt properties would continue not to contribute to the municipality's stormwater
Management Program. The Municipal Act authorizes a "heads and beds" charge to institutions
(e.g. hospitals, postsecondary schools, and correctional facilities), where payments of $75 per
personlyear or per bedlyear in lieu of taxes are made under this program.
Unlike a stormwater rate based on impervious area (option #1), there are no financial incentives
for property owners to provide onsite controls to reduce stormwater and pollutant loads to the
municipal SWM system. This option would not likely face opposition from various stakeholders
in the public, as nothing changes. Table 4 summarizes the advantages and disadvantages of
this option.
Table 4: Summary of Advantages and Disadvantages of Maintaining the Status Quo
Advantages Disadvantages
• Property-tax-based revenues are already Property taxes are based on a property's
accepted as the primary existing source of assessed value, which may not equate to its
revenue for municipalities. runoff contribution. Fairness and equity of this
Can be used to fund all SWM ro ram
• p9 revenue source is low.
activities. There is no incentive for property owners to
• The billing system is already established for
reduce stormwater runoff and pollutant
discharge.
ro ert taxes.
P P Y
•Tax-exempt properties contribute very little or
nothing to support the stormwater management
program.
• It is not a dedicated funding source.
• There is annual competition for general tax
funds to support other community services and
can therefore prove difficult to sustain the SWM
program.
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FINANCIAL IMPLICATIONS:
As mentioned previously the current SWM program budget (2007) is pegged at $5,820,910 with
a sustainable level of service of $9,910,590 (2007). Rate or tax levy calculations associated with
the various funding mechanism options utilize the current SWM program budget (2007), but the
Study does go into additional detail around what the calculations would look like relative to the
sustainable level of service of $9,910,590 (2007). A brief summary of this analysis is provided
below.
Financial Analysis of Option 1 -Stormwater Management User Rate Structure
The Study has demonstrated and concluded that the "tiered single family unit (SFU)" rate
structure is an equitable and defendable rate structure. The "tiered SFU" rate structure takes
into consideration the amount of impervious area (i.e. surfaces resistant to water penetration)
that a citizen or business owns as opposed to the current method of apportioning stormwater
funding based on property assessment values for eligible taxpayers (many properties are tax-
exempt). The more impervious area an individual property owner has, the greater the demand
on the SWM system, either for flood control or water quality treatment purposes.
Impervious areas include all surfaces that water cannot penetrate such as roofs, driveways,
parking lots and sidewalks. Water travelling over these surfaces is transported to the City's
stormwater infrastructure system, moving more quickly and accumulating more pollutants than
from an equivalent, more natural area such as a lawn, garden, or green roof. If the water could
be slowed down it could absorb into the ground, and the pollutants could settle out before they
reach the City's storm sewer system or watercourse.
The estimated rate structure was based on the total impervious areas of selected land parcels.
The analysis provided estimated rates however further precise measurements of individual
properties would be required at the time of implementation. The estimated values are adequate
for the purpose of evaluation and is based on the "tiered SFU" method. The estimated
stormwater rate is provided in Table 5.
In order to determine the estimated stormwater rate for different types of properties for the
purposes of the feasibility study, the following steps would betaken:
I. Parcel Analysis -determines the impervious characteristics of a sampling of properties
to determine the estimated number of billing units
II. Stormwater Billing Unit Analysis - uploads of the customer information database and
coding for rate structure
III. Sample Property Impacts - a sample of specific properties were analyzed to compare
financial impacts of a stormwater rate versus tax.
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Table 5 -Estimated Stormwater Rate by Property Type (tiered single family unit method)
Property Type' Kitchener Stormwater Rate- Waterloo Stormwater Rate-
$/month $/month
Single Family small $3.94 $4.09
(<170 m2 impervious area)
Single Family medium2 $6.56 $6.82
(170 - 340 m2 impervious area)
Single Family large2 $8.53 $8.87
(>340 m2 impervious area)
Duplex (per dwelling unit) $2.62 $3.41
Townhouse (per dwelling unit) $4.59 $2.05
Multi-Family 3-5 Units (per $2.62 $3.41
dwellin unit
Multi-Family >5 Units (per $1.31 $1.36
dwelling unit)
Non-residential (per every 259 m2 $6.56 $6.82
(2,788 ft2) of impervious area)
Notes:
1. Residential property owners would be charged these rates on aper-dwelling unit basis. Non-residential
property owners would be charged by impervious area (rate times measured impervious area divided by
259 m2).
2. The SFU method includes three tiers for single family detached homes:
o Single Family (small): the smallest 10 percentile of impervious area (i.e., <170 m2);
o Single Family (medium): the middle 80 percentile of single family homes; and
o Single Family (large): the largest 10 percentile of impervious area (i.e., >340 m2).
For the typical residential property owner (using $6.56 per month) this would equate to about
$79 annually. Additional analysis was performed on random sample properties to provide
examples of individual property monthly rate contribution. A summary of this analysis is
provided in Table 6.
There would be an implementation cost for the initial programming of GIS software applications
and other technological changes for grouping of account numbers and incorporating GIS
property information. There would also be ongoing administrative support (customer service)
and billing costs for the program that can be minimized by deploying existing staff and retooling
the existing water and gas utility billing format. There would be a one time implementation cost
to upload the tiered flat rate structure in the existing water meter billing data of $250,000.
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Table 6 -Comparison Showing Monthly Rate Charges versus Tax Charges for Selected
Properties
Item 100% Tax 100% Rate
Total Stormwater Program
Expense $5,820,000 $6,070,000
Program Expense paid by Tax Levy $5,820,000 $0
Program Expense paid by
Stormwater Rate $0 $6,070,000
Stormwater Portion of Tax Lev 6.6% 0.0
Stormwater Rate Charge
~$ISFUImo) nla $6.56
Sample Property 1 Monthly Charge Taxi Rate2 Difference
Res'I Taxpayer (Single Family -
Small)
$2.4
$3.9
$1.5
63%
Res'I Taxpayer (SF Medium,
$150,000)
$3.6
$6.6
$3.0
83%
Res'I Taxpayer (SF - Medium,
$250,000)
$6.0
$6.6
$0.6
10%
Res'I Taxpayer (SF - Medium,
$350,000)
$8.4
$6.6
$(1.8)
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Res'I Taxpayer Single Family -
Large)
$9.6
$8.5
$(1.1)
-11%
Res'I Taxpayer (Mulit-Family) $582.3 $225.6 $(356.7) -61
Tax Exempt (Church #1) $ - $86.6 $86.6 nla
Tax Exem t Church #2
p( ) $ - $350.2 $350.2 nla
Tax Exem t Fire Station
p( ) $ - $48.5 $48.5 nla
Tax Exem t elementar school
p( Y ) $ - $287.2 $287,2 n/a
Tax Exem t seconder school #1
p( Y ) $ - $985.6 $985.6 nla
Tax Exem t seconder school #2
p( Y ) $ - $775.1 $775.1 nla
Non res'I Taxpaper (Commercial #1) $19.8 $37.4 $17.6 89%
Non res'I Taxpaper (Industrial #1) $730.6 $851.4 $120.8 17%
Non res'I Taxpaper (Industrial #2) $1,729.5 $6,240.6 $4,511.1 261%
Non res'I Taxpaper (Commercial #2) $723.3 $46.6 $(676.7) -94%
Non res'I Taxpaper (Commercial #3) $209.3 $63.6 $(145.7) -70%
Notes:
1. Current 100% tax funding scenario.
2. Scenario in which the entire SWM program is funded through a stormwater rate using the tiered SFU
method. These are base charges and do not include potential credits for on-site source controls.
4-13
3. Monthly charges have been rounded to the nearest decimal place, stormwater program expenses
rounded to the nearest ten thousand dollars (a $250,000 rate admin charge has been added).
4. The tax charge is based on 2007 Assessed Values, 2007 Final Tax Rates, and the 2007 total Tax
Levy.
Financial Analysis of Option 2 -Dedicated Tax Levy for Stormwater Management
A dedicated tax levy would be a fixed property tax rate of 6.6% and itemized on the property
owner's annual tax bill. The amount paid by the taxpayer would be based on the value of the
land. Tax-exempt properties would continue not to contribute to the municipality's Stormwater
Management Program. The Municipal Act authorizes a "heads and beds" charge to institutions
(e.g. hospitals, postsecondary schools, and correctional facilities), where payments of $75 per
person/year or per bed/year are made in lieu of taxes under this program.
Financial Analysis of Option 3 -Stormwater Management Flat Fee
This option presents a "tiered flat fee" structure made up of four (4) tiers (single family, multi-
family, non-residential, and tax-exempt non-residential). The fee for each tier is determined
based on overall impervious area contribution determined in the 2008 Study. That is, the water
rate revenue distribution among the four (4) tiers matches the tiered SFU revenue distribution
identified in the 2008 Study.
Table 7 -Estimated Stormwater Rate by Property Type (tiered flat fee method)
Property Type Kitchener Stormwater Rate2
$Imonth Waterloo Stormwater Rate2
$Imonth
Single Family 4.64 6.86
Multi-Family 66.57 54.64
Non-residential 74.34 66.41
Tax Exempt + P I LOT 47.84 67.50
Notes
1. Rate revenue proportioned by parcel type to match Tiered SFU revenue distribution from 2008 Study.
2. Average impact (per water account per month) for a water rate stormwater charge
Table 8 compares the dedicated tax levy and tiered flat fee option for the City of Kitchener for
the revenue requirement scenario described above.
Table 8 -Tiered Flat Fee versus Dedicated Tax Levy Comparison
Table 4-10a City of Kitchener Annual Tax versus Water Rate Comparison (distributed by SFU proportion)
Parcel
Tax Levy
Revenue2
Water
Rate
Water
Rate Water
Rate
Revenue
Rate vs.
Tax
Average6
Type Amount % Accounts3 Charge4 Amounts % Annual $ % (accountlmo)
Single Family $3,526,000 60.6% 53,795 $4.64 $2,993,000 51.0% $533,000 -15.1 % -$0.8
Multi-Family $785,000 13.5% 1,049 $66.57 $838,000 14.3% $53,000 6.8% $4.2
Non-Residential $1,324,000 22.7% 1,678 $74.34 $1,497,000 25.5% $173,000 13.1% $8.6
Tax Exempt + PILOT $185,000 3.2% 944 $47.84 $542,000 9.2% $357,000 193.0% $31.5
Total $5,820,000 100.0% 57,466 $8.51 $5,870,000 100.0% $50,000 0.9% $0.07
4-14
Notes
1. All dollars have been rounded to the nearest thousand.
2. Tax levy revenue based on 2007 tax information.
3. Water rate accounts by parcel type are based on actual current water customers for each parcel type.
4. Base charge per water meter per month and assuming 100% collection rate.
5. Rate revenue proportioned by parcel type to match Tiered SFU revenue distribution from 2008 Study.
6. Average impact (per water account per month) for a water rate stormwater charge compared to tax levy
funding.
Financial Analysis of Option 4 - Do Nothing -Maintaining the Status Quo Approach
The current situation would be retained, variable tax rates would be applied to tax classes and
the SWM program would be funded from the general tax levy fund. A move towards a
sustainable level of service for the stormwater program would equate to a $4.1 M annual
increase to the general tax levy fund and would account for an increase of about 4% from
current levels.
Legal Analysis
If a rate or a dedicated tax levy approach is implemented there needs to be a by-law enacted in order
to charge special rates or taxes and then allocate these to the stormwater management program.
Under the authority of the Municipal Act (2001) the City has authority to pass a "Fees and Charges"
By-law for the purpose of funding stormwater management. As such, tax exempt property owners
would be required to pay the stormwater management fee. Additionally staff have retained external
legal counsel to seek advice on this matter and their opinion supports the user rate option
recommended in the Study.
COMMUNICATIONS:
In November 2004, Council approved Engineering staff to proceed with undertaking a Storm
Drainage Utility Feasibility Study collaboratively with the City of Waterloo as part of the Shared
Services Initiative. Totten Sims Hubicki Associates was retained in June 2005 to conduct the
study following a formal consultant selection process. This is a Citywide study, is being
conducted jointly with the City of Waterloo, and the costs for the project to date have been
shared equally by both Kitchener and Waterloo.
As part of the study a stormwater Advisory Committee (SWAG) was formed consisting of
various stakeholders from across the Cities of Kitchener and Waterloo. Representation has
included the school boards and universities, the Chamber of Commerce, other business
representation and members of the public. Eight meetings over the last 4 years have been held
with the SWAG, as well as individual meetings with the various stakeholders to identify issues
and concerns. A Public Open House and research focus groups were held for the general public
to provide comment and insight as well. As a result of the input received, the study name was
changed from the stormwater Utility Feasibility Study to the stormwater Management Program
and Funding Review study.
The project team circulated the Draft Final Report to the SWAG members on October 22, 2008
for their review and comments. At the December 4t", 2008 SWAG meeting, these comments
4-15
were addressed, the Final Study Report was presented, and the consultation process formally
concluded.
In written submissions by members of the Stormwater Advisory Committee (SWAG), specifically
the Region of Waterloo, Waterloo Catholic District School Board and University of Waterloo are
not in favour stormwater rate funding model option. Their preferred option is to maintain the tax-
based status quo, of which they are currently exempted or make payments in lieu of taxes to the
City. Representation from the GRCA and the community at large members preferred the user
rate model (refer to Appendix B and C).
The City's Communications Division is committed to developing a full communications plan to
ensure public education and awareness about any future decisions of Council that would affect
the funding of the City's SWM program.
CONCLUSION:
The purpose of the Stormwater Management Program and Funding Review Study is to identify
the deficiencies within the Stormwater Management Program, develop a suggested level of
service with respect to stormwater, and explore and recommend a preferred funding mechanism
to fund the suggested program.
The Study has demonstrated and concluded that an equitable and defendable rate structure for
stormwater is feasible and identifies the "tiered single family unit" method as preferred approach
to establish a SWM rate structure. Staff are in agreement with the Study recommendations also
recognize that moving to this model represents a philosophical shift in how stormwater is viewed
by the community, as well as an economic impact to the tax-exempt sector of the community. It
is recommended that the Study and report be received for information by Council and that staff
be directed to report on this matter to Council by May 2010 seeking further direction at that time.
Staff are also recommending that a stormwater utility implementation program be funded during
2010 and 2011 in order to further advance the concept of having all property owners contribute
financially into the SWM program. The stormwater utility implementation program would provide
to Council for their consideration and approval; a rationalized fee structure approach, an
updated financial analysis, a draft of the enacting by-law, drafts of the supporting rate and credit
policies.
Further that staff be directed by Council to develop a budget issue paper as it relates to the
stormwater utility implementation program and that this be considered as part of the Council`s
2010 budget deliberations with a decision being made on January 18, 2010.
ACKNOWLEDGED BY: Jeff Willmer
General Manager, Development and Technical Services
4-16
DTS 09-042
APPENDIX A
EXECUTIVE SUMMARY OF
DRAFT FINAL REPORT
STORMWATER MANAGEMENT
PROGRAM AND FUNDING
REVIEW
4-17
Appendix A:
DRAFT FINAL REPORT
EXECUTIVE SUMMARY
ES.1 Background
The Kitchener-Waterloo Stormwater Management Program and Funding Review study is a
collaborative effort between the Cities of Kitchener and Waterloo as part of their joint services
initiative. The overall study features two key components:
• An identification of the stormwater management (SWM) program needs and
expenditures; and
• An evaluation of the appropriate funding mechanisms to support these needs.
The Stormwater Management Needs and Expenditures Interim Report was prepared in Apri12007
and documents the findings of the first project component. This report documents findings of the
second project component and is intended to summarize the evaluation of available SWM
financing mechanisms, the parcel and stormwater rate analysis, and the implementation plan
recommendations for both Cities.
This study was prompted by a variety of SWM program needs for both Cities, including:
• Identification of deficiencies in the current levels of service and with respect to legislative
requirements;
• Inability to fund current SWM infrastructure needs (both construction and maintenance);
• Desire to consolidate and coordinate SWM activities and services that are currently
spread across multiple departments and budgets;
• Need to improve the existing level of service, better plan, schedule and proactively
manage their respective SWM programs; and
• Develop an appropriate and sustainable source of funding (i.e., consistent from year to
year) to support the improved SWM program and protect the existing stormwater
infrastructure with funds that are dedicated solely to SWM and generated on a fair and
equitable basis.
Study Objectives
The overall objective of this study is to quantify an appropriate level of service, and evaluate
potential funding sources as a means to support and enhance the respective SWM programs in the
Cities of Kitchener and Waterloo in a sustainable manner. Specific study objectives include:
1. Detailed quantification of the current operations and capital SWM program elements;
2. Detailed quantification of the projected SWM program needs, as identified by an
appropriate and affordable level of service;
3. Recommendation of the financial mechanisms to meet these needs; and
4. An implementation plan identifying the key activities and corresponding schedules to
implement the recommended funding option.
Project Highlights
The project was initiated in July 2005. Activities that took place throughout the course of the
study included data collection efforts, meetings and interviews with City staff, presentations to
City Council and corporate management, and regular progress meetings with the project Steering
Committee. In addition, key project highlights included:
• Kickoff workshop in August 2005 that included presentations, interviews, and related
discussion sessions with key staff from various City departments;
• A series of seven facilitated Stormwater Advisory Committee (SWAG) meetings from
October 2005 through March 2008;
rr" ~ - ~s
Appendix A:
DRAFT FINAL REPORT:
ii
• Two public open house forums in February 2006 (i.e., one for each City), featuring
summary presentations, informational poster boards, and activities targeted to specific
groups (i.e., residential taxpayers, non-residential taxpayers, tax-exempt entities);
• Individual discussion meetings in March 2006 with SWAG members (i.e., residents,
business, and education groups);
• Interim report describing the SWM needs and expenditures issued in April 2007;
• Research focus group meetings held in November 2007; and
• Technical memorandum describing the draft rate structure analysis and recommended
implementation strategy issued in March 2008.
ES.2 Stormwater Needs and Expenditures
Stormwater management in Kitchener and Waterloo represent major public investments, with an
estimated total asset value of $300,000,000 and $125,000,000, respectively. These programs are
currently funded through property taxes, with development related capital projects currently
funded by development charges. Stormwater funding drawn from the general tax fund must
compete with other vital City services and is often inadequate to provide an acceptable level of
service demanded by citizens, businesses, and other organizations within the community.
Stormwater program funding has also been inadequate in achieving regulatory requirements, such
that current guidelines are not being met.
Existing Stormwater Management Programs
Each City's SWM program can generally be categorized into four main areas:
• Operations and Maintenance (0&M);
• Environmental Compliance;
• Capital Improvement Projects; and
• Planning and Management.
The average annual SWM program expenditures in Kitchener are currently $4.5 million
dollars/year, which represents approximately 5.1 percent of the City portion of property taxes
(i.e., 2007 total tax levy). The average annual SWM program expenditures in Waterloo are
currently $2.8 million dollars/year, representing approximately 5.7 percent of the City portion of
property taxes (i.e., 2007 total tax levy).
Future Stormwater Management Programs
A "sustainable" level of service was investigated as the future SWM program within the Cities of
Kitchener and Waterloo. This was the recommended alternative in the 2007 Interim Report (dated
April 2007). A sustainable level of service represents an intermediate alternative between the
current and ultimate desired service levels that ramps up services to meet the capital and 0&M
needs and regulatory requirements over a realistic timeframe. The sustainable service level
quantifies City staff's assessment of future SWM program activities and expenditures required to:
• Provide a more proactive and preventative maintenance program;
• Provide additional activities to meet provincial and federal water quality requirements;
• Manage assets in a more sustainable manner; and
• Meet service expectations of the public.
The average anticipated Stormwater expenditure in Kitchener is $9.9 million dollars/year,
representing approximately 12.0 percent of the City portion of property taxes. The average
anticipated Stormwater expenditure in Waterloo is $4.5 million dollars/year, representing
approximately 9.5 percent of the City portion of property taxes.
rr" c~ -19
Appendix A:
DRAFT FINAL REPORT iii
ES.3 Stormwater Funding Options
The funding options that were investigated as part of this study included:
• Property Tax which allocates charges to property owners based on assessed value.
Funding a municipal SWM program with revenue from property taxes is the most
common method of financing in Ontario. As an alternative, a dedicated levy could be
administered specifically for SWM. The primary advantages of using property taxes to
support the municipal SWM program, either through the general tax fund or dedicated
levy, is that this method is already accepted as the primary existing source of revenue for
municipalities and the billing system is already established. The primary disadvantages
are that the fairness and equity in allocating charges is low, it is not a sustainable revenue
stream, there are no incentive opportunities to reduce Stormwater runoff and pollutant
discharge, and many large properties do not contribute to the funding (i.e., tax-exempt).
• Development Related Charges and Fees which allocates charges to developers to fund
eligible growth-related costs. Development charges are used to pay for capital costs of
SWM facilities in specific areas. Cash-in-Lieu charges can be applied to both capital and
0&M costs of SWM facilities in redevelopment/infill situations, and not necessarily in
the location where the development is occurring. Subdivision agreements can also be
used to pay for area-specific capital works and anticipated future 0&M activities. The
primary advantage is that these methods are currently accepted by the development
community. The primary disadvantages are that these methods are limited by the amount
of developable land within municipality and are directly dependent on growth and
economic conditions.
• Stormwater Rate which allocates charges to property owners based on the measured
area of impervious ground cover (e.g., rooftops, driveways, and parking lots), which is a
common indicator of the relative contribution of Stormwater runoff and pollutant loading
to the municipal SWM system. Funding through a Stormwater rate has the primary
advantages of a fair and equitable allocation of charges to property owners, it is a
sustainable and dedicated funding source, provides incentive opportunities to reduce
Stormwater runoff and pollutant discharge, and it provides a mechanism to charge tax-
exempt properties for municipal SWM services. The primary disadvantages include
additional costs for rate implementation and the possibility that a new fee may not be well
received by the public.
Property taxes are the primary source of funding for SWM programs in Ontario. At least three
municipalities in Ontario (i.e., London, St. Thomas, and Aurora) have implemented a special
Stormwater user fee that charges a flat rate to residential properties and an area-based charge to
commercial/industrial properties. Other municipalities in Ontario are known to be evaluating
various Stormwater funding options. There are approximately a dozen municipalities in western
Canada that have either adopted a flat rate user fee or have implemented a Stormwater rate based
on zoning and intensity of development. Over 600 Stormwater rates have been implemented in
communities throughout the U.S.
ES.4 Conclusions and Recommendations
A Stormwater rate based on impervious area was identified as the most fair, equitable and
sustainable funding mechanism, because the costs are allocated based on the relative contribution
of Stormwater runoff and pollutant loading from all properties.
V" ~ - Zo
Appendix A:
DRAFT FINAL REPORT
iv
Key Benefits of a Stormwater Rate
The implementation of a stormwater rate represents more than a mere reallocation of municipal
SWM program costs compared to current property tax based funding, it also supports the Cities'
overall Environmental, Planning, and Engineering/Infrastructure goals and objectives on three
key fronts. That is, the implementation of a stormwater rate offers the following key benefits:
• Achieves the shared City principles of fairness, equity and sustainability;
• Provides a flexible mechanism to support the current and future needs of the SWM
program; and
• Offers financial incentives for property owners to provide on-site controls to reduce
stormwater and pollutant loads to the municipal SWM system, through the adoption of a
credit policy.
Key Challenges of a Stormwater Rate
The key challenges of a stormwater rate include:
• Additional implementation costs. There is a common misconception that a stormwater
rate entails significant implementation costs and that there is a need to reorganize the
City's administrative structure to implement a stormwater rate. A critical success factor is
addressing these misconceptions at an early stage in the rate study by presenting factual
accounts of the anticipated administration costs. Although a stormwater rate does not
generally result in organizational restructuring, it does force a change in financial
reporting methods towards better cost accounting. Itemizing specific SWM labor and
equipment expenditures is a good business practice and not necessarily a challenge.
• Explaining the new fee to all sectors of the public. A structured public consultation
program is a critical success factor in the implementation of a stormwater rate, since a
new funding mechanism may not be well received by the public. A key feature of the
public consultation program in this study was the development and facilitation of a
Stormwater Advisory Committee (SWAG), whose members represented different
segments of the community and brought to the discussion the interests and concerns of
each group. Given the typically low profile and level of understanding of the municipal
SWM program by the general public, the formation of an advisory committee is a critical
undertaking in a stormwater rate. Experience has shown that a successful SWAG process
will address the more contentious issues of key stakeholder groups at an early stage. On
the contrary, avoiding opponents during the course of the study could result in the rate
being defeated during Council deliberations, depending on the tactics of a delegation of
those opposed to the rate.
Recommended Implementation Strategy
The recommended implementation strategy described below was developed based on results of
the stormwater rate analysis, discussions with the project Steering Committee, and in
consideration of feedback received during the public consultation program:
1. Develop a stormwater rate to meet the annual SWM program funding requirements based
on the current level of service (LOS) for the most recent fiscal year.
2. Consider increasing the stormwater rate in future years in order to achieve the sustainable
LOS expenditures identified in Section 2.3. The ultimate goal of this study is to identify
the most fair and equitable funding mechanism to support a sustainable SWM program in
the respective Cities. Item 1 is the first step in achieving this goal, as it provides a flexible
foundation for increasing SWM program activities to the sustainable LOS. The
sustainable LOS represents City staff's assessment of future SWM program activities and
expenditures required to provide a more proactive and preventative maintenance
V" ~ - 21
Appendix A:
DRAFT FINAL REPORT: v
program, additional activities to meet provincial and federal water quality requirements,
manage assets in a more sustainable manner, and to meet service expectations of the
public.
3. Develop a stormwater rate based on the Tiered Single Family Unit (SFU) billing unit
method. The Tiered SFU rate structure is the recommended option for both the City of
Kitchener and Waterloo. From a practical standpoint, this option offers the optimal
balance between equitability and administration requirements. Based on an initial
assessment, it is estimated that the rate for an average residential property will be:
• Kitchener - $6.56 per month for a property with an impervious footprint of 259 m2
(2,788 ft2); and
• Waterloo - $6.82 per month for a property with an impervious footprint of 266 m2
(2,863 ft2); and
4. Develop a stormwater rate structure in Kitchener for all properties, regardless of tax
status.
5. Develop a stormwater rate structure in Waterloo for all properties, regardless of tax
status.
6. Phase-in the stormwater rate program over a specified time period to ease the transition
from the current property tax based funding. The suggested phase-in is over afour-year
period.
7. Reduce the property tax levy by the corresponding stormwater rate revenue amount in
each year of the recommended phase-in period in Item 6.
8. Adopt a stormwater rate credit policy for all property types.
9. Adopt a rebate policy for tax-exempt properties currently contributing Payment In-Lieu-
Of Taxes (PILOT, e.g., post-secondary schools and hospitals). The rebate will deduct the
stormwater component of their PILOT charge from their stormwater bill, which will vary
in proportion to the stormwater rate revenue during the phase-in period.
10. Adopt a tax subsidy for tax-exempt properties that do not currently contribute Payment
In-Lieu-Of Taxes (e.g., elementary/secondary schools, churches, and charitable
organizations that are defined as exempt from taxation under the Income Tax Act).
11. Continue to identify and evaluate efficiencies in stormwater services provided by
Kitchener, Waterloo, Grand River Conservation Authority, and the Region of Waterloo.
Joint initiatives that can offer services on a multi jurisdictional basis (e.g., operations and
maintenance activities, capital projects, and administrativelmanagement services) can
help to reduce the overall SWM program costs.
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DTS 09-042
APPENDIX C
FORMAL COMMENTS SUBMITTED BY
STORMWATER ADVISORY COMMITEE MEMBERS
4 - 27
~il% "
Region oP Waterloo
- tarmwater Management Advisory committee
Attent~an: D1ane N~arton
pity of waterlaa
ia0 leg~na street .
waterloo, ON
Dear s. artan~
~~~~~r3~9y~. ~~~_;~~-~~
fie; torrn~ater 1V~angement Advisory omm~ttee Recamrnendations
~~~~I 4~~
150 Frederick Streit
K~tc~ener ~N Canada N2~ 4~3
~ele~h~r~~~ ~519~ 575-4704
Fax. (519 575~4~47
www.re~io~.waterl oo.o~.ca
Apr~124, X008
legion of waterloo staff have reviewed the material presented to the tormwater advisory
committee ~wA~ on larch ~~tn and the recommendations put Earth by the o~nmittee and
have the following comments and concerns
• The proposal to move to a "rate structure" appears to be based on getting more program
funding far tormwater Management than is currently provided in city budgets. we
question haw tormwate~' anage~nent is any different i'ro~n other tax supported services.
Funding should be based on need, council p~~iarities and council approvals.
• The material Hates that a move to a "rate based" systerr~ would actuary result in property
tax decreases. This can Hat be guaranteed as municipalities tend to move into budget
decreases with new and expanded programs. rt ~s quite passible that a mave to a "rate
based" system could actually increase costs to homeowners and businesses.
• hosts to borne owners and businesses far true "rate based" programs such a water,
hydra, natural gas are under the control of the user who pays based on actual usage.
Where is na such control with the proposed "rate based" program for stormwater
management and without that control, the proposed rate structure i essentia~ly~.~ust
~nnth~r tax
• The ~inanciai information in the presentation does not appear to consider the costs
of the proposed rebates and credits which could be significant and couYd
substantially reduce the axnaunt net revenue eoZ~ected.
• The financial information in the presentation does not include any costs associated
with the administration of the program. Adr~inxstration casts are li~eZy to be
significant ine~uding the establishment of ~ data base, the ongoing maintenance and
assessment of the data base, the pplicatian of credits, the processing of rebates,
billing and collections.
• The data base v~ill have to be developed and maintained on a property by property basis
far all residential, multiyresidential, commercial, industrial, exempt and ply properties
and the unique billing parameters will require a highl}r specialized billing system.
4-28
_~..
• 'when all of the ad~aainistration cysts, credits and rebates are considered, will the
proposed rate based structure achieve the revenue targets? ~t is quite possible that
fundi~ag available far tornawater 1V~anagement could actually be less under tl~e
proposed model. _
• The report does allude to rate increases in the future however there is no specific
infar~natian. Zn order to see the full impacts of the proposal and to ensure openness
and transparency, ~t is recpmnaended, that a_te~-dear---projection be developed,
including all associated casts and proposed rate increases as well a the 4year
transition from a property tax cast ~a a rate based colt, to show the public the actual
impacts to homeowners and businesses and the expected net revenue available far
ta~r~nwate~r Management.
• The proposed "rate based" system would include properties that are fully exenr~pt from
taxation churches, schools, municipal administration buildings} and properties that arc
exempt from taxation but make payments-gin-lieu of taxes in the form of a "heads and
beds" tax ~col~eges, universities, hospitals}. This ca~ld have szgn~ficant impacts on these
properties and a an owner of various exempt properties, the Region of '~U'aterloo has
some concerns aver the financial impact of the prcposal.
• The lncluslon of exempt properties ,and propet-tles that pay taxes ~n the ~'arrn of "heads
and beds" tax in the rate structure is unfair to those properties a they will have no
corresponding decrease in property taxes to offset the stormwater management rate.
~ The financial review shows limited increases in funding for stormwater management
under the proposed system (particularly in the absence of specific information on future
rate increases). There appears to be very .little benefit achieved as a result of the
significant efforts and changes required to implement the proposal.
• This proposed process will ultimately have na financial advantages when compared
to an increase in property taxes. All things being equal, this new "tax" will simply
cast taxpayers nacre.
In summary, the prapQSed mQVe to a "rate based" system far torm~vater 11~anage~nent
appears to be a very inefficient way to do business and it is difficult to justify far the reasons
note above.
Thank you for the opportunity to comment. Should have any questions about our comments
or require any additional information, please feed free to ca11 Mr. Ryan at {519) 575-4545 or
Ms. Hinchbe~•ger at (519) 575-4728.
L. Ryan
Chief Financial Officer
~~~ ~--
A, ~inchberger
Director of Treasury services Tax Pa~icy
cc John I~amn~er, Director of Transportation, Region of waterloo 47924
4-29
~~~~ .y~ ~fW~4~~
DOC: Region of Waterloo
October 17, 2008
Region of Waterloo
150, Frederick Street
Kitchener, Ontario
N2G 4J3
Attention: Larry Ryan, Angela Hinchber~er
Dear Mr. Ryan, Ms Hinchberger:
c,,.oF
Waterloo
RE: Stormwater Management Advisory Committee Recommendation
Please find below our response to your letter dated April 24, 2008 regarding the Stormwater
Management Program and Funding Review. Our sincere apologies for taking a while to respond
back. The delay is due to various factors primarily due to additional legal reviews.
We believe the following answers your questions however, in the event we have missed anything
please let us know and we will do our best to provide the answers.
A. "The proposal to move to a rate structure..we question how Stormwater management is
any different from other tax supported services.."
We see Stormwater services as having a significant number of common elements with sanitary
sewer services than any other services delivered by municipalities. Currently sanitary service is
provided based on a user fee structure. Further under the Municipal Act, both have been
defined as sewage flow and no distinction made. As a result, the funding method could also be
viewed in the same way.
B. "The material notes that move to a rate based system would actually result in property tax
decreases.."
Our recommendation to Council will be to decrease the taxes and redistribute it in the form of a
user fee to those who use the system.
C. Costs to home owners and business for true "rate based" programs such as water, hydro,
natural gas are under the control of the user who pays based on actual usage. There is no
such control with the proposed "rate based" program for Stormwater management and
without that control, the proposed rate structure is essentially just another tax.
Yes, there is control; however control based on land use practice. Property owners can make
changes to minimize either the amount of run-off or install modifying control devices so the net
discharge to the public system is reduced.
4-30
D. The financial information in the presentation does not appear to consider the costs of the
proposed rebates and credits which could be significant and could substantially reduce the
amount net revenue collected.
Presently most of the control structures are placed as part of the development requirements,
however subsequent maintenance is either being neglected or has not been properly addressed.
The user fee structure will enable us to enforce required maintenance practices. The financial
information has been developed to reflect the proposed rebates and credits and factored to
reflect that information
E. The financial information in the presentation does not include any costs associated with
the administration of the program. Administration costs are likely to be significant
including the establishment of a data base, the ongoing maintenance and assessment of the
data base, the application of credits, the processing of rebates, billing and collections.
Yes, there is potential for an increased level of administration, however, it brings significant
value, control and fairness into the system. Further, there is no recreation of an established data
base. We can utilize the existing sanitary/water service database and utilize the same
administrative structure. It is not a new established administration, rather an incremental change
on the existing system.
F. The data base will have to be developed and maintained on a property by property basis
for all residential, multi-residential, commercial, industrial, exempt and PIL properties
and the unique billing parameters will require a highly specialized billing system.
This database already exists based on the water and wastewater utility customers. It will be up
to the individual city as how specialized the billing would be. It could be very simple one on
the water and wastewater bill or on the gas bill
G. When all of the administration costs, credits and rebates are considered, will the proposed
rate based structure achieve the revenue targets? It is quite possible that funding
available for Stormwater Management could actually be less under the proposed model.
In theory, it is correct that there will likely be less revenue targets. However, the administrative
cost will be minimized as there will be existing resources who will be utilized to run the
administrative structure by retooling the methods & procedures (except there is likely one time
implementation cost) of the existing billing system i.e. water and sanitary. Further,
redistribution of revenue contributions among property owners under a common criteria will
likely produce positive revenue. Lastly, there will be more number of customers to pay rate
structure than through tax contribution which will enable to gain positive revenue.
H. The report does allude to rate increases in the future however there is no specific
information. In order to see the full impacts of the proposal and to ensure openness and
transparency, it is recommended that aten-year projection be developed, including all
associated costs and proposed rate increases as well as the 4 year transition from a
property tax cost to a rate based cost, to show the public the actual impacts to homeowners
and businesses and the expected net revenue available for Stormwater Management.
Ten year forecast can be developed at implementation time.
4-31
I. The proposed "rate based" system would include properties that are fully exempt from
taxation (churches, schools, municipal administration buildings) and properties that are
exempt from taxation but make payments-in-lieu of taxes in the form of a "heads and
beds" tax (colleges, universities, hospitals). This could have significant impacts on these
properties and as an owner of various exempt properties, the Region of Waterloo has some
concerns over the financial impact of the proposal.
Our initial legal review indicates that there appears a way to not jeopardize the existing heads
and beds tax arrangement and at the same time not to lose the rate. We are currently looking at
the legal implication of these special properties.
J. The inclusion of exempt properties and properties that pay taxes in the form of "heads and
beds" tax in the rate structure is unfair to those properties as they will have no
corresponding decrease in property taxes to offset the Stormwater management rate.
Please refer to above, item I.
K. The financial review shows limited increases in funding for Stormwater management
under the proposed system (particularly in the absence of specific information on future
rate increases). There appears to be very little benefit achieved as a result of the
significant efforts and changes required to implement the proposal.
There is a significant benefit in planning for the scope and required resources for:
• Increased Operation and maintenance activities;
• Inventory and assessment of watercourse and stormwater management T facilities;
• Accelerated capital improvement programs, including planning studies and coordination
with Source Water Protection and Salt Management Plans; and
• Assessment of value and condition of stormwater management assets.
L. This proposed process will ultimately have no financial advantages when compared to an
increase in property taxes. All things being equal, this new "tax" will simply cost
taxpayers more.
Apart from the traditional benefits of financial & administrative aspects, there is an overall
community based advantage in adopting the rate structure that is:
Fairness & equity, further incentives can be built-in to the program easily to promote
environmenta awareness.
Here are advantages of having rate structure system:
• Dedicated funding source;
• Fair and equitable fee that is based on runoff contribution rather than property value;
• A mechanism to charge tax-exempt property for municipal stormwater management
services;
• With a credit program, provides an incentive for property owners to reduce stormwater
runoff and pollutant discharge; and
• Astable funding source for all stormwater management program activities to allow long-
rangeplanning, large-scale capital improvements, and leverage for debentures.
However, like any other system, it has it's own disadvantages too:
4- 2
• Requires, additional one time implementation cost.
• It may not receive its fair assessment and due consideration among the community due to
skepticism and unawareness of this concept.
We want to thank you for the time you have taken to put forward this memo. We will address any
unanswered concerns at the time of implementation if this report is approved by the councils of
Kitchener and Waterloo.
Yours truly,
Grant Murphy P.Eng.
Director of Engineering
City of Kitchener
MIS ~da.,.~...~~.,
Sunda Siva MBA P.Eng.
Director of Capital Projects and Services
City of Waterloo
4-33
May 2, 2008 (via email)
Sunda Siva, The City of Waterloo
Grant Murphy, The City of Kitchener
Re: Implementation Plan Joint Response (Education Sector)
Storm Water Advisory Committee
Please find below the response from the Waterloo Region District School Board, Waterloo
Catholic District School Board, University of Waterloo, Wilfrid Laurier University and
Conestoga College to the proposal by the Cities of Kitchener and Waterloo for an annual, separate
property owner rate for storm water facilities maintenance.
We wish to make it clear, that we strongly object to the proposed `rate' approach applied to all
properties regardless of taxable status -particularly with respect to the education sector, which, as
you well know, has limited access to financial resources for such a rate. In very simple terms, the
parties object because:
• The operation and maintenance of storm water facilities is a conventional municipal
responsibility.
• This scheme to develop an annual property specific rate for this particular responsibility is
a tax substitution, and the parties noted are tax-exempt.
If this is the approach that the two municipalities wish to follow, then the education sector should
be exempt. Exempting this sector from the proposed rate, as demonstrated by the project's
consultants, left the `residential' mil rate about where it is now.
The position of the education sector, including the contents of this submission, has been well
discussed and consistently stated throughout the process and at all Stormwater Advisory
Committee meetings.
With respect to specifics in the consultant's approach and analysis, we make the following
comments:
• The proposed recommendations fora `rate' seem to have relied on a focus group that did
not include the three post secondary operations and the two school boards -however the
proposed rate is based on the impervious surface area of these institutions' properties.
• As the owners of the largest proportion of urban property, the education sector was not
properly represented in the focus group.
• The proposal does not seem to reflect the complete discussion at the focus group, but
rather selective positions that were cited which support the `rate' approach.
4-34
Page 2
The partial response to our concern over the tax-exempt issue is the credit process, which at this
point is incomplete. The methodology/requirements to justify receiving credits is onerous and
puts another annual cost on this sector. To this extent, the parties are preparing a legal opinion on
the entire question oftax-exempt status vis-a-vis a municipal `rate' .
For school boards only
The operations of the two boards, their properties and provincial education levy are
region-wide. This proposal shifts boards' expenditures to two of the 7 municipalities -
inequitable for the balance of the municipalities. Since the Province does not recognize
this `rate' as a specific operating cost, the significant expenditure on it by school boards
will divert operating dollars from other under-funded "regional" operational requirements.
For post-secondary educational institutions:
While `tax exempt', this sector provides payments in-lieu-of taxes (PILOT), which are
intended to offset the services utilized by the institutions, provided on their behalf by the
municipalities. This is the appropriate revenue source for the storm water responsibility.
The report arbitrarily allocates the PILOT payments in the same manner as the general tax
base. That results in approximately 2.5% of the PILOT being presented as the
contribution to storm water management on the assumption that the institutions are also
proportionally paying for all other city services whether utilized by the institutions or not.
In general terms, property owners have no control over the initial storm water input -
precipitation -therefore, the suggestion that a rate based on an area calculation is similar to
existing municipal user fees is misleading. This approach is not a process parallel to "user" fees
for consumption-based usage, as is the situation with a conventional utility -gas, hydro, etc.
And user fees at recreational facilities for example, are a very small percentage of actual
operating and capitals costs and are often determined from the perspective of encouraging use;
not a full cost recovery model.
Unfortunately, such an approach will also challenge the historic relationship with the education
sector, which has formal and informal joint use arrangements with both municipalities. This new
model has the potential to challenge our traditional collaborative working relationship in j oint
facility usage, resources and common institutional issues.
The proposed `rate' approach also sets up the requirement for a specific bureaucratic component
collection, review/audit, credit, process in an (in-out) for municipalities, and for the tax-exempt
sector to claim the credits, etc. Conversely, the current tax system requires NO change.
In this regard, municipalities need to plan, manage and budget for storm water operations in the
way they do for other municipal services that benefit all property owners and residents.
In principle, all parties understand the goal of improving the quality of storm water and the need
for moving from the traditional "flush" approach to detention and infiltration.
4-35
Page 3
The proposed `rate' does nothing to encourage this.
When we first were asked to engage in discussions about storm water operations, there was a
discussion about creating a municipal utility for this purpose. When the question of why such a
utility was needed, the response was that the higher standards for storm water management over
the past 20 years has resulted in a municipal infrastructure that has increasing annual operating
and long-term capital needs. As a relatively recent municipal responsibility, it was not being
recognized adequately through the annual municipal budget process. As a result, storm water
maintenance was under-funded vis-a-vis higher profile and more established services such as
paving, parks, and winter maintenance. The utility model was being investigated because it had
been adopted successfully in some U.S. jurisdictions (where municipal funding and authority can
be vastly different than Ontario).
While the proposal is now fora `rate' approach, the essential concept of separating out an
individual municipal responsibility remains the same.
It seems to us, that a far better approach is to keep the storm water responsibility in the municipal
public services portfolio and general tax budget.......its annual allocation will allow each council
to address and prioritize all their responsibilities through the annual budget process. If, however;
a rate model is eventually adopted, we believe the education sector should be exempted as is
contemplated in the various Acts and Regulations governing Ontario educational institutions.
Respectfully submitted,
The University of Waterloo
Wilfrid Laurier University
Conestoga College Institute of Technology & Advanced Learning
Waterloo Catholic District School Board, and
Waterloo Region District School Board
4-36
~'~alf ['4 a lf~.~~'~~a
~OC: Response to SWAG Education Sector
October 21, 2008
The University of Waterloo
Wilfrid Laurier University
Conestoga College Institute of Technology & Advanced Learning
Waterloo Catholic District School Board, and
Waterloo Region District School Board
Attention: Education Sector SWAG Members
Dear members:
c,,.oF
Waterloo
RE: Implementation Plan Joint Response (Education Sector) Stormwater Advisory Committee
Please find below our response to your letter dated May 02, 2008 regarding the Stormwater
Management Program and Funding Review. Our sincere apologies for taking a while to respond
back. The delay is due to various factors primarily due to additional legal reviews.
The project steering committee was authorized by the respective City Councils to review the
stormwater program needs and expenditures and to identify an appropriate funding mechanism to
support these needs. While we recognize your position and acknowledge your beliefs in this matter,
we would like to respond to your concerns. The intent is not to alter your present position, rather to
explain our mandate on this matter with a broader perspective and the underlying element of fairness
associated with it.
A. "~Ve wish to make it clear, that ...In very simple terms, the parties object because:
• The operation and maintenance of storm water facilities is a conventional municipal
responsibility.
• This scheme to develop an annual property specific rate for this particular
responsibility is a tax substitution, and the parties noted are tax-exempt..."
It is true that operation and maintenance of stormwater is a conventional municipal responsibility
which is similar to the service delivery for collection of sanitary flow. Sanitary service is
currently being paid through a user fee system. We see Stormwater services as having a
significant number of common elements with sanitary sewer services than any other service
delivered by municipalities. Further under the Municipal Act, both have been defined as sewage
flow and no distinction is made. As a result, the funding method could also be viewed in the same
way
The primary differences between tax and user fee systems are:
1. A user fee is designed to defray the costs of a regulatory activity (or government service),
while a tax is designed to raise general revenue;
4-37
Education Sector SWAG Members
Pg 2 of 5
2. A true user fee is proportional to the necessary costs of the delivery of service, whereas a
tax is based upon value (e.g., property assessment, sales, or income); and
3. A user fee is adjustable based on the user's choice, whereas a tax is not.
B. "With respect to specifics in the consultant's approach and analysis, we make the following
comments":
• The proposed recommendations fora `rate' seem to have relied on a focus group that
did not include the three post secondary operations and the two school boards -
however the proposed rate is based on the impervious surface area of these
institutions' properties.
• As the owners of the largest proportion of urban property, the education sector was
not properly represented in the focus group.
• The proposal does not seem to reflect the complete discussion at the focus group, but
rather selective positions that were cited which support the `rate' approach..."
The intent of the creation of the Focus Group was to connect with as many remaining
community groups as possible that were not included in the SWAG community forum.
The effort of the Focus Group was to supplement the SWAC's contribution for the Study.
Engagement of many different forms of public outreach programs is to be considered as
complementary to each other, rather than to outweigh or to overshadow the same.
C. For school boards only:
• The operations of the two boards, their properties and provincial education levy are
region-wide. This proposal shifts boards' expenditures to two of the 7 municipalities
- inequitable for the balance of the municipalities. Since the Province does not
recognize this `rate' as a specific operating cost, the significant expenditure on it by
school boards will divert operating dollars from other under-funded "regional"
operational requirements.:
This concern will have to be addressed collaboratively among all the parties involved at the
time of implementation by quantifying the cost and services rendered and hence make the
appropriate adjustments to that effect.
D. For post-secondary educational institutions:
• While `tax exempt', this sector provides payments in-lieu-of taxes (PILOT), which are
intended to offset the services utilized by the institutions, provided on their behalf by
the municipalities. This is the appropriate revenue source for the storm water
responsibility. The report arbitrarily allocates the PILOT payments in the same
manner as the general tax base. That results in approximately 2.5% of the PILOT
being presented as the contribution to storm water management on the assumption
that the institutions are also proportionally paying for all other city services whether
utilized by the institutions or not.
4-38
Education Sector SWAG Members
Pg 3 of 5
Our recommendation to Council will be to decrease the taxes and redistribute it in the form
of a stormwater rate for those who use the system. There should be a similar arrangement
made to accommodate changes in the "heads and beds" levy.
However, the "heads and beds" levy which is received in lieu of property tax has been
frozen at $75 per student since 1987. A report to the Region of Waterloo Council (dated
Nov 14, 2007) was submitted to this effect and recommended a request to the Minister of
Finance to amend the prescribed amount for the purposes of section 323 of the Municipal
Act to allow for inflation over the past 20 years. It further states that indexed for inflation,
the levy should be $121. If based on the assessed value of the property, as is the case with
other provincial properties, the payment to the municipality for municipal services would
be higher.
With the above reference, a rate approach to recover the cost for stormwater program
components from post secondary institutions looks to be more equitable to counterbalance
the above disparity .
E. "In general terms, property owners have no control over the initial storm water input -
precipitation -therefore, the suggestion that a rate based on an area calculation is similar to
existing municipal user fees is misleading. This approach is not a process parallel to "user"
fees for consumption-based usage, as is the situation with a conventional utility -gas, hydro,
etc".
Yes, there is control; however control is based on land use practices. Property owners have the
choice to make changes to minimize either the amount of runoff or install modifying control
devices so that the net discharge to the public system is reduced.
Currently sanitary service is provided based on a user fee structure which has a very similar
approach. Further, under the Municipal Act, both storm and sanitary have been defined as sewage
flow and no distinction made.
F. "And user fees at recreational facilities for example, are a very small percentage of actual
operating and capitals costs and are often determined from the perspective of encouraging
use; not a full cost recovery model"
The above recreational services could be viewed as soft services and hence there is no mandate to
meet. However, there are regulatory requirements to fulfill stormwater program needs and choices
on a voluntary basis are very limited. The intended rate structure is not meant to fund any
growth/development-related Capital programs. It is intended to meet operation, maintenance and
rehabilitation of stormwater assets and its functions. Additional capital assets for modifying
existing systems and satisfying regulatory requirements would be included in the rate. The
growth/development-related assets for expansion must come from other funding sources as you
have suggested above.
G. "The proposed `rate' approach also sets up the requirement for a specific bureaucratic
component -collection, reviewlaudit, credit, process in an (in-out) for municipalities, and for
the tax-exempt sector to claim the credits, etc. Conversely, the current tax system requires
NO change."
4-39
Education Sector SWAG Members
Pg4of5
To a large extent, the specific bureaucratic component is already in place with the existing billing
system (i.e., water and sanitary sewage). In other words, there is no re-creation of a process; just
reliance upon an existing process. We can utilize the existing sanitary/water administrative
structure.
H. "When we first were asked to engage in discussions about storm water operations, there was
a discussion about creating a municipal utility for this purpose. When the question of why
such a utility was needed, the response was that the higher standards for storm water
management over the past 20 years has resulted in a municipal infrastructure that has
increasing annual operating and long-term capital needs. As a relatively recent municipal
responsibility, it was not being recognized adequately through the annual municipal budget
process. As a result, storm water maintenance was under-funded vis-a-vis higher profile and
more established services such as paving, parks, and winter maintenance. The utility model
was being investigated because it had been adopted successfully in some U.S. jurisdictions
(where municipal funding and authority can be vastly different than Ontario)".
While the proposal is now fora `rate' approach, the essential concept of separating out an
individual municipal responsibility remains the same.
The terminologies of `Utility', `User Fee' or `Rate' are essentially the same. The intent has been
always, from the beginning of the Study, to look at various funding mechanisms that would
essentially provide a dedicated, sustainable funding method while maintaining fairness and equity.
I. It seems to us, that a far better approach is to keep the storm water responsibility in the
municipal public services portfolio and general tax budget.......its annual allocation will
allow each council to address and prioritize all their responsibilities through the annual
budget process. If, however; a rate model is eventually adopted, we believe the education
sector should be exempted as is contemplated in the various Acts and Regulations governing
Ontario educational institutions.
We agree that the responsibility of stormwater program delivery should reside with municipalities
and there was no intent to establish a separate administrative entity to run the stormwater
management program. As suggested, the program should be under municipal public services
portfolio. However, we believe there will be significant benefits in a stormwater rate approach:
• Dedicated funding mechanism will enable long term planning, whereas annual allocation
in the general tax budget is uncertain;
• Fair and equitable fee that is based on runoff contribution rather than property value;
• With a credit program, an incentive is provided for property owners to reduce stormwater
runoff and pollutant discharge; and
• It is a stable funding source for all stormwater management program activities.
Staff recommendations to Council will likely be a rate structure with a few modifications to
address some of the stakeholders concerns. However, the staff report will include all the
stakeholders' concerns in the report for both Councils to reach an informed decision.
In the event that the staff recommendations are approved by the councils of Kitchener and
Waterloo, we can ensure that each City's administration will take the necessary time and effort to
make the transition as smooth as possible for all the tax exempt properties
4-4
Education Sector SWAG Members
Pg 5 of 5
We want to thank you for the time you have taken to put forward this memo. ~Ue look forward to
receiving any additional comments you may have on the Draft Final Report and to discuss these issues
during our next SWAG meeting, tentatively scheduled for the week of November 24, 2008.
Yours truly,
Grant Murphy P.Eng.
Director of Engineering
City of Kitchener
~-r-.4. ~-.d~~.~.~n
Sunda Siva MBA P.Eng.
Director of Capital Projects and Services
City of Waterloo
4-41
November 21, 2008 (via email)
Sunda Siva, The City of Waterloo
Grant Murphy, The City of Kitchener
Re: Implementation Plan Joint Response (Education Sector)
Draft Final Report
Storm Water Advisory Committee
On behalf of the Waterloo Region District School Board, Waterloo Catholic District School
Board, University of Waterloo, Wilfrid Laurier University, and Conestoga College, we thank you
for your follow up letter of October 21, 2008.
Unfortunately the letter and recently received Draft Final Report do not address our May 2, 2008
concerns regarding the changes to the current tax-funded storm water operations. We continue to
object to the proposed `rate' approach being applied to all properties regardless of taxable status.
We will be in attendance at the December 4, 2008 SWAG meeting, and look forward to your
comments at that time. In the interim, we will bring the recommended implementation plan to the
attention of our respective Executive to seek further direction.
Respectfully submitted,
SWAG Representatives of:
The University of Waterloo
Wilfrid Laurier University
Conestoga College Institute of Technology & Advanced Learning
Waterloo Catholic District School Board, and
Waterloo Region District School Board
4-42
con~sTO~A mA«
550 KING STREET NORTH, WATERLOO, ON N2L 5W6
November 24, 2008
TELu ~~~~~86-~~0~1 FAQ; ~~19~886-6956 www.CONESTOG~4M~LL.COM
Mr. Sunda Silva, P.Eng.
Director Environmental Services
City of vUaterloo
100 Regina St. S.
vllaterloo
N ~~ 4AS
Mr. Grant Murphy, P.Eng.
Director of Engineering Services
City of Kitchener
200 King St.111l.
Kitchener, ant.
NAG 4G7
Re: Stormwater Mana ement Pro ram and Fundin Review -Draft Final Re ort
Please note below comments regarding the Draft Final Report for Stormwater
Management and Funding Review by the Cities of Kitchener and Vl~aterloo.
~ The recommendation to separate stormwater management maintenance and
funding from municipal property taxes and establish a stormwater user rate
creates concern there would be no transparency of costs and rates such as seen
during council budget deliberations. There would also be no motivation to
balance expenditures while examining total taxpayer costs.
~ Although the report suggests a reallocation of program costs and funding with a
phased-in rate program [5.2 (6) and (7)], it is obvious from 5.2 (2) that rates
would increase in future years well beyond the current funding level. This would
effectively increase costs without control and increase the financial burden to
taxpayers.
~ If the two city councils determine that a user rate be established, it should be fair
and equitable, with no user group granted exemptions, rebates or subsidies,
thereby increasing the cost burden to other groups.
~ The suggestion to adapt a credit policy [5.2 (8)] and Appendix G appears to be
an onerous process for both the applicant and administrator.
~ There does not seem to be a clear understanding of the costs associated with
establishing a separate user fee, billing structure as well as start-up and ongoing
administrative expenses.
At this time of economic uncertainty, a r~ajor change in funding and municipal budget
process seems inopportune. Now is the time to increase transparency and build
consensus with all stakeholders working together.
I
Sandra D. Stone, CMD, CSM
General Manager
Conestoga Mall
OVER 1~0 SIG NAME STORES THE gAY • TELLERS ~ ~EHRS ~ WINNERS • SPORT GREK • G~LA~Y C1NEM~S
4-4
~:
~~°~ ~o
~~'ro~ ~~
December , X008
4~~ lyd~ Road, P.D. Box 729 Cambridge, 0~1 N~ R ~VVG
Phone: 5 ~ 9.~2 ~ .~ 7~~ To1i tree: 5~6.9~0.4722 Fax; ~ 9.~2 ~ .4844 online: ww~.gran~river.ca
~- tortewater Maagernent A.dvisary Camittee
Attention.: Diane Marton, Administrative Assistant
City of wter~ao
2~5 Lexington Court
waterloo ~~[ NUJ 4R4
Dear NIs. Marton;
Re: itchener~waterloo turmwater Management Program and Funding
~'undin~ Revze tarmater Fnndin~ Analysi~ - Draft ~~nal Report
~i~~m---- ~ ~ i i ~ i~~nnm i~ni~nrr. - nnin~rr~i~mnnnn ,.
we have had an opportunity to review the draft final torn~water funding Analysis report. Conservation
Authority staff have been supportive of this initiative and commend the de.il and the effort put into bath the
report and process, and are supportive of its findings.
tarmwater ~nanagerr~cr~t infrastructure plays an integral role in the overa~~ functioning of the city, both in
supporting the day to day activities of its residents, to ensuring safety in tunes of flooding. torrnwater
management also piays an important role in maintaining and restoring the environn~en~.l health of the brand
River and its tributaries. The proper song term operation of this infrastructure is critical in maintaining the
functions originally intended to sexve and as need far improvement is identified. Canse~ration Authority staff`
are supportive of the process initiated through this study in identifying the resources required to ensure the
required level of service and susta~nab111ty of the pragrarn.
More specific comments are provided on the fallowing items:
+ Rate structure based an imperviousness - From a watershed rnanage€nent perspective, impervious area is
one of the main driving factors in runoff to watercourses, Establishing a rate structure with a basis
provides a logical physical connection and educational perspective to the impacts and casts.
Property owner incentives ~ The report provides sorr~e good perspective an the application of incentives
and credits far sto~m~vater. we strongly support development of credit poXicy to encourage innovative on-
site measures which may ~e in addition to municipal measures. Current issues in starmwater management
and direction in Low Impact Development ~L1D~ recognize the need and benefit of distributed controls an
private lands for both new and existing development areas. The credit approach provides a required
mechanism ar incentive to encourage implementation and maintenance. Zt is noted that guidance is
available from past watershed studies including the Laurel Creek watershed Study, which have
encouraged retrofit of Starm~vater controls in existing developed areas and would benefit frarn an
incentive program,
* Conservation Authority flood controi dams and properties ~ The CRCA maintains and operates significant
flood control reservoirs associated with their properties in both wate~~ao and i~itchener. The Laurel
Reservoir in particular pra~rides watershed scale flood protection to the downtown core of waterloo. we
would like to further discuss the credit applied to these properties based an their benefit to the overall
system in addition to consideration, for improvement through the program, Also, several wM ponds in
~,~~,~~~terloa are located an COCA. lands adjacent to Laurel Reservoir. Cperatianal and maintenance
~~~
~S~ ~41~~~ Re ts~~red Canadian ~
He~ca~e
Rivers
~onservatian
D N TA R I O system
~~'dfrlr,i~ Ch,tirl~irins
• a~angements fog these facilities should be rev~e~ed. The attached figure shows G~CA properties in
.itchener and''aterlon.
• Additional Activities ~ Conservation Authority staff are commuted to continued invalvernent in
implementation of the plan
Please dv not hesitate to contact me for and further discussion on this pro~eet.
Yours trul~rr
Gus gis, P.En~.
eniar mater Resources Engineer
Grand River Conservation Authority
cc; Grant Murphy, City of l~itchener
Sunda diva, City of waterloo
4-45
~ ~
Waterfao Region
District School Board
51 Ardelt Avenue, Kit~#~ener, Ontario NBC ~R5
Phono. ~51~ 570.003 ext. 4~~~ Fix: ~519~ 570-9007
'~ a
~`y ~'~
4 P
February ~~, ~oo~,
MAR Q 3 2009
:-~.~
~ ~ .~ f~ i~1r~
'. in~on Farbrother,
thief Adrnistrative officer,
3rd Floor,
Waterloo City Centre
1~0 Regina Street youth,
waterloo, Ontario. NUJ SAS
R: storm water safe In~ple~nentatiar~ ~~an
Dear 1VIr. Farbrother;
The waterloo Region District Schaal Board serves the educational needs of students in Junior
~indergartcn through grade 1~ in the Region of waterloo. As ~ tax-exempt, provincially
funded, Local service provider, the Board's school programming, staffing, operating and
rr~aintenance costs as well as administrative support are all sustained through various pupil
based funding formulae. historically, the Board has paid its share of utilities consumed at its
various sites in the two cities, which include oaunicipal water supply, electrical and natural gas
consulnptian, as well as sanitary sewageF To date, the provincial finance formulae have
nnatched these needs; however, that is done so based on typical standards across the province
for utility consumption and rates.
The new initiative of the cities of waterloo and Kitchener to charge school boards and other
"tax-exempt" institutions a storm water rate, is the first step in assigning "new" cos#s to the
Board that are outside its current tax-exempt status, and beyond its current financial capacity
to accommodate, This is a shift of iitchener and V~aterloo's municipal responsibilities onto
these institutions, ~t is not consistent with the approaches util~~ed by Cambridge, wilrnot,
oo~wich, 'ellesiey and North Dumfries where storm water is under the generaX tax lev~+; in
effect, directing same of our regional education dollars to these two municipalities.
Thy original rationale for a Storm water date Plan a expressed to the study working Croup
was to overcome the difficulty of securing approval for the funding of ongoing storm water
maintenance and capital within the current municipal budget processF In fact, that is the best
and mast appropriate place for the discussion and setting of budget priorities to take place.
The implications of those on local rate payers can then be considered by Council in a
comprehensive manner.
Engaged Learners, Engaged Communities
4-46
__
Setting up a separate process and charge effectively remo~res one important municipal
responsibility from this scrutiny,
As the attached letter will illustrate, our staff has communicated the Board's concerns at
various points throughout the development of the tornr~ water rare proposal, and in concert
with the other educational institutions, has strongly objected to bath the principle and
application Of the rate.
The ^bse~ation we made is that the option of simply keeping the responsibility for storm
water operations ~+ithin each municipality's Engineering andlor Public Works budgets was
not one available far consideration through the study process,
~t is y understanding that the report ~r~d reca~nrnendations soon tv be pre~enxed to your
respective Councils will be for the approval of the concept of a storm water rate, and the
establishment of the process for its implementation. Dn behalf of the Board, I wish to
strongly urge you to reconsider the approach being recommended by dour respective staffs.
we request that the present form of storm water funding through general tax revenues be
~nair~tained.
The Board rvi11 be advised of staff's position In this matter, and w111 be apprised of apprapnate
cvt~rses of actlon that ~y ~e taken to ensure that the Board's current abl~lty t~ operate 1tS
schools equitably acrQSS the Region is not unfairly compromised,
Thank you for considering the Board's concern regarding this matter
Sincerely,
LF;rr~h
f r
~~ ~ ~
1
e'
Linda Fabi,
Director' of Education and Secretary.
cc-- Chair and Trustees, waterloo Region District School Board
C. Ladd, Chief Administrative C~f~icer, City of Kitchener
~. L. Johnston, President and "icerhancellor, [~ni versity of waterloo
llrf. Blouw, President and dice-Chancellor, Wilfrid Laurier University
~, Tibbits, President, Conestoga allege
Planning Department, waterloo Region District School Board
4-47
May 2, ~~~~ via e~nail~
Sunda Sava, The City of waterloo
grant 1Vlurphy, The City of itc~ener
Re. Implementation Plan ~Ioint Response {ducatian Sector
Storm wa#er Advisory Committee
Please fnd below the response firorn the waterloo Reian district Schaal Board, waterloo
Catholic district School Board, University of waterloo, Wilfrid Laurier University and
Conestoga College to the proposal. by the Ci#ies of Kitchener and waterloo for an annual, separa#e
property owner rate for storm v~rater facilities maintenance;
'' v~ish to rnaice it clear, that we strongly object to the proposed ;rate' approach applied to all
properties regardless of taxable status ~-particularly with respect to the edt~ca#ion sector, which, as
you well know, has limited access to finarrctal resources for such a rate, Zn very simple terms, the
parties object because:
• The operation and matntenar~ce of storm water facilities i a nventional municipal
responsibility,
• This scheme to develop an annual property specific rite for this particular responsibilit is
~ ~ ~
a tax substitut~an, and the parties noted are ta~c-exempt.
zf this is the approach that the two municipalities wish to follow, then the education sector should
be exempt, ~xernpting this nectar from the proposed rate, demonstrated by the project's
consultants, left the `residential' rail rate about where it is now,
The position of the education nectar, including the contents of this submission, has been well
discussed and consistently stated throughout the process and at all Storwater A.dvisa
Comm' ~
lttee meetings,
with respect to specifics in the consultant's approach aid an~~yis} we make the followin
g
comments:
The proposed recommendations fora `rate' neem to have relied an a focus group that did
not include the three past secondary operations and the two school boards -however the
proposed rate ~s based on the lmperv~aus nurface area ofthese ~nstitut~ons' properties,
As the owners of the largest proportion of urban property} the education nectar was not
properly reprener~ted ire the focus group.
The proposal does not seem to reflect the tom lets discussion at the focus au bu#
p pa
rather selective positions that were cited which support the `rate' approach.
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Page 2
The partial response to our cox~cern over the tax~exernpt issue is the credit rocess which at this
p
paint is ~namplete, Thy rnethodologylre~uiremer~ts to 'unit receivin credits is onerous and
~i v~ ( ~ J
puts another ~nnllal kI~l~3t an thl~ ~e~t~r~ r~'a thls Vf1tel]t, L~iI p[i~~V47 ~~4 ~V ~~111 ~ ~V 41~ ~ inlan an
the entire p ~ ~ P
question aftax-excrr~pt status iris#a~vis a m~tnic~pal `rate,
I~or school boards and ;
The operations of the two l~aards, their properties and ra~rincial education le are .
. ~ vy
regron-wide, This proposal ships boards' e~tper~ditures to two o~ the ?' mt~nici alities --
1
ine~u1tahle for the balance of the municipalities, since the province does not reca ire
this `rate' as a specilic operating cost, the significant ex enditure on it b ~ ahoal boards
p Y
will divert operating dollars fram othexuHder-funded "re 'anal" a eratiana~ r uirements.
P eq
for ostise nd educational institutions; '
hide `tax exerr~pt', this nectar provides payments in-lieu•of taxes PILOT which are
~ ~f
~ntended~ to offset the ser-~ices utilised by the institutions, ravided on their behalf b the
P y
municipalities, This is the appropriate revenue source far the storm water res onsibilit ,
There art arbitraril P ~
p y allocates the PILOT payments in the same manner as the general tax
hasef What results in approximately ~.5°/a afthe PYL~T bein resented a the
} ~ ~ f f
contribution ta. storm water management an the assumption that the institutions are also
proportionally paying fax alt other city services whether utilised b the institutions or nat.
Y
In general terms, property owners have no control aver the initiat storm water in ut
P
preaipitatian ~ therefore, the suggestion that a rate based an an area calculation is similar
to
existing municipal user fees is misleading. This a raacl~ is not a rocess arall }'
pp P P , el to user fees
far cansumptian~based usage, as is the situation with a conventional unlit - as h
y g , ydro~ etc
And user fees at recreational facilities far example, are a ve small ercenta a oi~atu 1
rY p g a
operating and capitals casts and are open determined from the ors eetive of encoura '
not a full cost ~ p ~g use,
recovery model,
~Unfartunatcly, such an approach will also challen a the historic relationshi wi '
g p th the educat~an
nectar, which has formal and infarrnal faint use arran ements with bath munici alities, This
g p new
model has the potential to challenge our traditianat collaborative worlcin relati ~ ' ,
g anshtp ~n~oxnt
facility usage, resources and common institutional issues,
The proposed `rate' approach also sets up tt~e re uirernent for a s eci~c bureaucra ' -
collecti ~ ~ ~ P tic component
on, ~reviewlaud~t, credo#, process in an din-outs far municipalities, and for the tax-exern t
p
sector to claim the credits, etc. conversely, the current tax s stem r wires N~ chan e.
Y 1 g
In this regaxd, r~unicipaliti need to ion, mans a and bud et for sto .
P g g rtn water operations in the
way they da for other rn~nicipal services that bene#it ail ra ert aw~ters and rest
p p y dents.
Ire principle, all attics u~aderstand the `
P Baal of ~n~proving the quality ofstarm water and the Head
far mavin,g from the traditional "hush" appraa~h to deter~tian and inhltratio
~i
4-49
r
~ ~~ ~
The proposed `rate' does nothing to enco~rrage this
when we first v~ere asked to engage in discussions about storm water a erations there was ~
. ~ a
discussion about creating ~ tunicipl utility for this u}1~'~~ose. when the uestio~t of wh such a
^ r ~ 1
ut~l~ty was needed, the response was that the higher standards for storm water mane ernent over
. g
the past ~D years has resulted in a rnunicxpal infrastructure that has incxeas~n annual o cretin
and lan - g p ~ g
g term capital needs. A a re~ati~rely recent municipal responsibility, it was not bein
recd iced ad uatel th ~
~ eq y rough the annual municipal budget process. A a result, storm water
n~a~ntenance ores under-funded vin-~-'vin higher profile and more established services such as
paving, parks, and winter n~aintenance~ The utitity model was bein investi ated because it had
g g
been adopted successfully in same U., jurisdictions where munici al fundln and authorit can
be vastl p g Y
y d1~`ferent than ~ntar~o},
while the proposal is new fir a `rate' approach, the essential canoe t of se gratin out an
individual ~ . p p
mun~c~pal responsibility remains the same.
It seems taus, that ~ far better approach is to keep the storm water res ansibilit in the munici al
p y p
public services portfolio and general tax budget., . , , , .its annual allocation will allow each c
to ad ' ~ ounce ~
dress and pr~or~ti~e atl their responsibilities through the annual bud et racers, If haweverF
~ P
a rate model is eventually adopted, we believe the education nectar should be exem ted as is
P
contemplated in the varYOUS Acts and Regulations governing ~ntana educational lnstltutlans.
Respectfully subt~itted,
The university of waterloo
'L~'ilfrid I~au~ier University
Conestoga allege Institute of Technology Advanced Learnin
aterloa bath r ~ ~
olio D~str~ct shoal Board, and
aterlao ~.egion District school Board
4-50
~ ~
Waterloo Region
District School Board
~~ Ar~ejt ~~~~~~, ~~~~~~~~~, o~tario ~v~c ~~~
Ph~ne~ ~5 ~ 9~ ~~D-003 Ext. ~2~2 ~~x: ~~ ~ 9} ~7~-~~07
February 7, 2aa9.
IIIIs. Carla Ladd, t~ief Administrative officer,
2nd Floor, Berlin Tower,
it~r fall, P.O. Box 1118,
200 ding street west,
Kitchener, Ontario, I~2 4~r7
R~: torn water Rafe In~pZen~entation ~~an
Dear s, Ladd.
The waterlaa Region District School Board serves the educational nerds of students in Junior
Kindergarten through grade 1 in the Region of Waterloo. As atax-exempt, provincially
funded, local service provider, the Board's school programming, staffing, operating and
maintenance costs as well as administrative support are alI sustained through various pupil
based funding formulae. Distorically, the Board has paid its share of utilities consumed at its
various sites in the two cities, which include municipal watex supply, electrical and natural gas
onsunapt~on, as well as sanitary sewage, To date, the provincial finance formulae have
matched these needs; howe~rer, that is lane so based on typical standards across the province
for utility consumption and rates,
The new initiative of the cities of waterloo and Kitchener to charge school boards and other
"tax~exempt" institutions a storm water rate, is the first step in assigning "new" costs to the
Board that ark outside 1#~ current tax-exempt status, and beyond its current financial capacity
to accommodate. This is a shift of Kitchener and wFaterloa's rr~unicipal responsibilities onto
these institutions. Zt is not consistent with the approaches utilised by Cambridge, V~ilmot,
Woolwich, Wellesley and North Dumfries where storm water is under the general tax levy; in
effect, directing same of our regional education dollars to these two municipalities.
The original rationale far a tarrn mater Rate Plan as expressed to the Study oridng group
was to overcome the difficulty of securing approval far the funding of ongoing storm water
maintenance and capital within the current municipal budget process. fn fact, that is the best
and rraost appropriate place for the discussion and setting of budget priorities to take place
The implications of those on local rate payers can then be considered by council inn a
comprehensive manner.
Setting up a separate process and charge effectively rerrloves one important municipal
responsibility from this scrutiny,
Engaged learners, Engaged Communities
4-51
-~,-
As the attached letter wzil illustrate, our staff has cornrnunicated the Bvardrs car~cerr~s at
various points throughout the development of the storm water rate proposal, and in concert
with the other educational institutions, has strongly ob~eeted to bath the principle and
appiicatior~ of she rate.
The observation we made is that the option of simply beeping the responsibility for storm
water operations within each municipality's engineering andlar Public 'art budgets was
net one available far cvnsideratian through the study process
~t is my understanding that the report and recammendativns sawn to be presented to your
respective Councils wilt be for the approval of the concept of a storm water rater and the
establishment of the process far its implementation. On behalf of the hoard, I wish to
strongly urge you to reconsider the approach being reeon~mended by your respective staffs,
we request that the present form of storm water funding through general tax revenues be
maintained.
The Board wzil be advised of staff's position in this rr~atter, and will be apprised a€ appropriate
courses of action that tray be taken to ensure that the Board's current ability to operate its
schools equitably across the Region is not unfairly camproised~
Thank you for considering the Board's concern regarding this matter.
sincerely,
L~: mh
c~°~.a~~
Linda Babi,
Director of ~ducatinn and Secretary,
cc-- hair and Trustees, waterloo Region i~istr~ct School Board
~arbrother, Chief ~dinistrative Officer, City of waterloo
D~ L, Johnstan~ President and dice-Chat~eelior, ~Jniversity of waterloo
lei, Blouw, President and ~ice~Chancellor, Wilfrid l~aurier University
J~ Tibbits, President, Conestoga College
Planning department, waterloo Region District School Board
4-52