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TO: |
Mayor and Members of Council |
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FROM: |
Andy Taylor, Commissioner, Corporate Services Barb Cribbett, Treasurer |
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PREPARED BY: |
Joel Lustig, Director, Financial and Client
Services Fuwing Wong, Manager, Financial Planning |
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DATE OF MEETING: |
December 16, 2003 |
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SUBJECT: |
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RECOMMENDATION:
THAT the report dated December 16, 2003
entitled “2004 Water/Wastewater Rate Increase” be received;
THAT the Town of Markham's water/wastewater
rate be increased by $0.0610 per cubic metre effective January 1, 2004 to a
total of $1.2810 per cubic metre;
AND THAT Bylaw 2002-276, the bylaw on fees
and charges for services or activities provided or performed by the Town of
Markham, be amended to reflect the increase in water/wastewater rates.
PURPOSE:
The purpose of this report is to increase the
Town's water/wastewater rate by $0.0610 (5%) per cubic metre (m3) to
match the Region of York's approved 5% rate increase effective January 1, 2004.
BACKGROUND:
As approved at the June 11, 2002 Council meeting, water/wastewater rate
increases by the Region of York will be automatically met by the Town of
Markham with a percentage increase equal to that of the Region.
At the October 16, 2003 Region of York Council meeting, the Region
approved a 5% increase per cubic metre in the water/wastewater rates charged to
area municipalities. Major factors that
led to the Region's increase include:
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an anticipated 5.1% increase
in the price of wholesale water the Region purchases from the City of Toronto;
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increased debenture charges;
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increased costs associated
with the Region's Duffin Creek Water Pollution Control Plant; and
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an increase in the provision
for non-growth related capital.
FINANCIAL CONSIDERATIONS:
As outlined in the July 9, 2001 report entitled, “Waterworks Reserve
Analysis”, several asset types, such as hydrants, valves, chambers, of the
Town’s Waterworks infrastructure will reach their 50 year useful lives and need
replacement beginning in 2020.
Replacement costs are projected to nearly double from the period
2011-2020 to 2021-2031. Bill 175, the
Sustainable Water and Sewage Systems Act, will require a full review of the
Town's waterworks infrastructure, and a cost recovery plan that must be
approved by municipal auditors.
On June 11th, 2002, Council approved that Water rate
increases by the Region of York be automatically met by the Town of Markham
with a percentage increase equal to that of the Region. The 5% increase in Region and Town's water
and wastewater rates are outlined below:
As shown in the above chart, the 5% increase in water and wastewater
rates approved by the Region of York results in a $0.0416/m3
increase in the Total Retail Water/Wastewater rate. The Town’s matching 5% increase on it’s
portion of the Retail rate results in a $0.0194/m3 increase overall. The Town's share of the total retail water/wastewater
rate is used to:
The proposed increase, of $0.0194, to the Town's share is intended to
cover increasing costs of infrastructure and an enhancement to the provision
for the Town's Waterworks reserve.
The components of the combined water/wastewater rate and the impact of
the 5% increase is shown on the table below:
($ per cubic metre)
Current Proposed
Rate Rate $ Change % Change
Water $0.6989 $0.7388 $0.0349 5%
Wastewater $0.5211 $0.5472 $0.0261 5%
Combined Water/Wastewater $1.2200 $1.2810 $0.0610 5%
Based on average consumption of 365m3 per year, the
$0.0610/m3 rate increase would result in a $22.27 water bill
increase per household in Markham. The
Region's portion of the $22.27 would be $15.19 and the Town's portion would be
$7.08.
In comparison with other municipalities, the Town's current and
proposed 2004 water/wastewater rates are between the high and low end of rates
for York Region.
($
per cubic metre)
As shown in the chart above, Newmarket's proposed water/wastewater rate
increase, at 5.1%, is similar to that of the Town of Markham (and the Region of
York). Unlike the Town of Markham,
Newmarket also charges a fixed amount per month regardless of consumption. The fixed component on Newmarket's water
bills will increase 10%, from $10/month to $11/month.
Aside from funding current operations, the Town's portion of the retail
water/wastewater rate is also used to build-up the waterworks reserve. As outlined earlier, several waterworks
assets will begin to reach the end of their 50 year useful lives beginning in
2020. As of the end of October, the
Town's waterworks reserve was $4.9 Million.
The following chart compares the Town's reserves to reserves of other
municipalities:
($ Millions)
DISCUSSION:
Recent Legislation:
On December 13th, 2002, Bill 175, the Sustainable Water and
Sewage Systems Act, and Bill 195, the Safe Drinking Water Act, received Royal
Assent. Currently, the bills are
unproclaimed and there are no regulations filed. In its current form, Bill 175 will require
all municipalities to undertake a detailed analysis of their water and sewer
systems, including a full cost accounting/recovery of all operating and capital
costs, all sources of revenue and the investment required to maintain and
expand their systems. Bill 175 also
contains comprehensive reporting requirements to the Minister of the
Environment, who will have the authority to approve, reject or change plans
submitted by the municipalities.
The implications of Bill 175 & Bill 195
will be revisited during the next budget period or as the regulations are
passed.
Waterworks Operational Review:
The Waterworks department will be presenting the results and financial
implications of their operational review to Council early in 2004. The water/wastewater rate increase included
in this report does not include the impact of the recommendations from the
operational review.
The Region of York's October 2nd, 2003 Reported entitled,
"2004 User Rates for Water and Wastewater", outlines the 5% increase
in water and wastewater rates driven by pressures outlined in the Background
section (see page 1). The October 2nd
Region of York report also indicates that additional changes to the Region's
water and wastewater rates, if any, resulting from Regional Council approval of
their 2004 Regional Business Plan and Budget will be communicated to area
municipalities and be effective mid-year 2004.
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Barb Cribbett, Treasurer |
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Andy Taylor, Commissioner of Corporate
Services |
Q:\Finance
and Administration\Finance\SHARED\2003FinAdminCtteeReports\0386water wastewater
2004 rate increases.doc
