ADMINISTRATIVE REPORT
Date: November 29, 2000
Author/Local: A. Klein/7771RTS No. 01747
CC File No. 1755
CS&B: December 14, 2000
TO:
Standing Committee on City Services and Budgets
FROM:
Director of Finance and General Manager of Engineering Services
SUBJECT:
Annual Review of Water Rates for 2001
RECOMMENDATION
A. THAT Council approve an increase in water rates for 2001 of approximately 2% as detailed in this Administrative Report dated November 29, 2000:
· for single dwelling units be increased from $256 to $261,
· other flat water service charges for residential properties (Schedule B),
· flat service charges for unmetered fire service pipes (Schedule C),
· charges for metered water service (Schedule D), and
· meter service charges (Schedule E),
· charges for temporary water service during construction (Schedule F)
· flat rate fees for installation of water meters (Schedule G).B. THAT flat rate water connection and removal fees for 2001 (Schedule A and Schedule A.1) be increased by 5% as detailed in this Administrative Report dated November 29, 2000.
C. THAT Council approve an increase to the building site threshold to $95,000 consistent with the Sewer and Water Course By-law (No. 8093),
D. THAT the Director of Legal Services be instructed to bring forward the necessary amendments to the Water Works By-law for approval, including the rate changes and related revisions in this Administrative Report dated November 29, 2000.
GENERAL MANAGER COMMENTS
The General Manager of Corporate Services and the General Manager EngineeringServices RECOMMEND approval of A, B, C and D.
COUNCIL POLICY
Water rates for both metered and non-metered customers are specified in the Schedules of Rates and Charges included in the Water Works By-law. These schedules are updated annually by Council to establish the following years water rates.
PURPOSE
The purpose of this report is to recommend a general increase in water charges for 2001 to fund GVWD and City water system costs.
BACKGROUND
The waterworks distribution system of the City of Vancouver operates on a utility basis, with the City purchasing water from the Greater Vancouver Water District (GVWD) supply system and distributing it to water consumers within the City on a cost-recovery basis, including debt charges.
DISCUSSION
1. 2000 Waterworks Operating Budget
A projection of the 2000 waterworks operating budget is included in Table 1. This projection was developed prior to consideration of the recent labour disruption. An estimate of the impact of the labour disruption is also included.
The Waterworks budget is dominated by Debt charges andWater Purchase costs which account for 87% of total expenditures. The balance of the expenditure budget is variable and is comprised of the cost of operation and maintenance of the water system and of water billing. Prior to consideration of the impacts of the labour disruption, it was anticipated that these expenditures will exceed revenues by approximately $135,900 (0.2%) resulting in a transfer from the stabilization reserve.
The labour dispute did not impact on the delivery of water to our customers. Any cost savings resulting from the labour disruption will be uncertain until year-end because some work delayed by the strike will be completed before the end of the year. Based on aproration of costs, the seven week strike could result in savings of up to $600,000, less any additional costs incurred to maintain services during the strike. As the Water Utility is funded entirely from user fees and is managed separately from the Operating Budget, any surplus that arises from the labour disruption will be transferrd to the WaterRates Stabilization Reserve and will be available to mitigate against fee increases in future years.
Table 1
2001 and 2000 Water Budget Projection
2001
Projected Budget2000
EstimatedInc/(Dec)
%
Expenditures
Debt Charges
$24,042,200
$24,685,600
($643,400)
(2.6)
Water Purchases (GVWD)
24,292,600
22,848,200
1,444,400
6.3
Water Rates Billing
853,700
818,100
35,600
4.4
Operating & Maintenance
6,271,000
6,070,700
200,300
3.3
Total Expenditures
$55,459,500
$54,422,600
$1,036,900
1.9
Revenue
Flat Rate Revenues
$22,251,100
$21,836,500
$414,600
1.9
Service Charges
$2,096,100
2,055,300
$40,800
2.0
Metered Rate Revenues
$31,248,000
30,394,900
$853,100
2.8
55,595,200
54,286,700
$1,308,500
2.4
Transfer from/(to) Reserve
(135,700)
135,900
($271,600)
Total Revenues
$55,459,500
$54,422,600
$1,036,900
1.9
2. 2001 Waterworks Operating Budget Projection
Table 1 also summarizes the projection of operating expenditures for the waterworks utility in 2001. The table indicates estimates of City operating and debt costs as well as the cost of purchasing water from the GVWD.
This increase in water rates is driven by the requirement to fund:
· the projected 6.3% increase in GVWD water costs. This increase is a combination of a projected 5.8% increase in GVWD water rates along with a 0.5% projected increase in consumption. The GVWD rates are expected to increase substantially over the nextten years, due to an extensive water transmission capital program to address regional growth, and implementation of the Drinking Water Treatment Program.
· the 3.3% projected salary and inflationary increase in waterworks operations costs.
· the projected 2.6% decrease in the Citys debt required to fund the 2000-2002 Waterworks Capital Plan. This plan included funding for a 1.0% annual waterworks infrastructure replacement program as well as the development of the Dedicated Fire Protection System which will start to increase the Citys total debt level in 2002 and beyond.
This projection indicates that an increase in user fees of 2% would be required to maintain the utility in a balanced postion in 2001. This compares with an increase of 4.9% in 2000 and increases in the 10% range in prior years.
In proposing a 2% increase in water rates for 2001, staff note that there will be increased pressure on water costs in future years as a result of the capital programs being undertaken by the Greater Vancouver Water District and by City debt charges as a result of the increase in the Water Capital Plan. The GVWD Long Range Plan anticipates that water costs will increase by as much as 20% by 2003 as a result of the following capital programs to improve the water delivery system: The Greater Vancouver Water District capital program includes:
Drinking Water Treatment Program $46.95 million
Secondary Disinfection $ 0.97 million
Source Treatment Program $ 4.10 million
Water Infrastructure Growth - Capacity $ 7.03 million
Water Infrastructure Repair and Rehab $ 3.50 million
Water Infrastructure Upgrade - Reliability $ 2.16 million
Water Infrastructure Upgrade - Safety $14.92 million
Total GVWD Capital Program $79.63 millionThe City utilizes the Water Rates Stabilization Reserve as a shock absorber to smooth significant year-over-year increases in water expenditures and to stabilize the changes in water rates. The following table summarizes the status of this reserve based on anticipated changes in expenditures to 2005 and on holding water rate increases to 4% after 2001.
Forecasted Water Stabilization Reserve ($ millions)
2000
2001
2002
2003
2004
2005
Reserve Balance Beginning of Year
$ 5.59
$ 5.45
$ 5.58
$ 6.23
$ 4.71
$ 5.30
Operating Surplus / (Deficit)
$ (0.14)
$ 0.13
$ 0.65
$ (1.52)
$ 0.59
$ (0.43)
Reserve Balance End of Year
$ 5.45
$ 5.58
$ 6.23
$ 4.71
$ 5.30
$ 4.87
The impact of the proposed water budget and a 2% increase in rates will be to bring the flat water rate for a single family dwelling to $261 per year, up from $256 in 2000. Charges for metered service will also rise by approximately 2% over the 2000 levels.
The proposed fees are included in Appendix A, attached.
3. Other Water Fees and Charges
In addition to consumption based charges, the water bylaw includes fees and charges for a variety of services provided by the City, including service connections fees, unmetered fire service fees and meter installation and service charges. These are detailed in Schedules
A, A.1, C, E and G of the bylaw. It is recommended that all fees, with the exception of connection and removal fees, increase by 2% to accommodate salary and inflationary cost increases anticipated in 2001.Connection and removal fees are recommended to be increased by 5% to cover the anticpated increase in the cost of labour and materials such as asphalt and fuel.
The proposed fees are included in Appendix A, attached.
4. Related By-law Revisions:
Changes are made to the Water Works By-Law (No. 4848) annually to reflect the water rates established for the coming year. In addition to those changes, two housekeeping items require attention:
a. The definition of a building site includes both new construction and major renovations. Major renovations are described as those where the estimated value of the construction is more than the greater of $65,000 or 100% of the buildings latest assessed value according to the records of the British Columbia Assessment Authority. The $65,000 threshold has not been revised for many years and does not reflect current market conditions. Therefore, it is recommended that building
threshold be increased to $95,000 to better reflect market conditions and provide consistency with the threshold in the Sewer and Water Course By-law (No. 8093).
b. Effective January 1, 1997, Council eliminated the subsidy for single-family and duplex water services. Full water service fees have been collected since that date, however, Section 18 of the Water Works By-Law still contains reference to the previous 50% subsidy. Therefore, the reference to the subsidy needs to be be deleted from the By-Law to reflect current Council policy.
CONCLUSION
Rates for water consumption and services are adjusted annually to offset cost increases in the water utility, including operating and debt charge costs and the costs of purchasing water from the GVWD. Based on a review of the waterworks costs for 2001, it is recommended that consumption based fees and service fees be increased by approximately 2% and connection fees be increased by 5%.
* * * * *
APPENDIX A
SCHEDULES OF RATES AND CHARGES
SCHEDULE A: Flat Rate Connection Fees
Service Pipe Size Fee
20 mm (¾") $2,170.00
25 mm (1") 2,258.00
40 mm (1½") 2,258.00
50 mm (2") 2,541.00
100 mm (4") 7,829.00
150 mm (6") 9,236.00
200 mm (8") 10,086.00
300 mm (12") 14,884.00
SCHEDULE A.1: Removal Fees
Service Pipe Size Fee
20mm (¾") to 50mm (2") inclusive $ 567.00
100mm (4") to 300mm (12") inclusive $1,701.00
SCHEDULE B: Flat Service Charges for Residential Properties
(Applicable to Single Family Dwellings and Dwellings comprising not more than two separate
dwelling units.)
(I) Single Dwelling Unit ............................................................ $261.00 per yr.
(ii) For an extra dwelling unit ..................................................... 94.00 per yr.
(iii) For each strata title duplex .................................................... 177.50 per yr.
SCHEDULE C: Flat Service Charges for Unmetered Fire Service Pipes
Pipe Size Rate in Dollars per Year
50 mm (2") or smaller .................................................................... $126.00
75 mm (3") ..................................................................................... 189.00
100 mm (4") ................................................................................... 261.00
150 mm (6") .................................................................................. 302.00
200 mm (8") ................................................................................... 353.00
250 mm (10").................................................................................. 375.00
300 mm (12").................................................................................. 403.00
SCHEDULE D: Consumption Charges for Metered Water Service
Two Monthly Period Four Monthly Period Rate In Cents
per Unit (2831 Litres)
All units used All units used 126.6
A minimum quantity of 8 units per month will be charged for,
should a lesser quantity or no water be consumed.
SCHEDULE E: Charges for the Use of Each Meter
(in addition to water consumption charges under Schedule D):
Per Two Per Four
Monthly Period Monthly Period
Size of Meter Services with Standard Type Meters
17 mm (½) and 20 mm (¾)..................................... $19.00 $ 24.00
25 mm (1") ................................................................ 21.00 28.00
40 mm (1½).............................................................. 24.00 38.00
50 mm (2") ................................................................ 31.00 50.00
75 mm (3") ................................................................ 63.00 ---
100 mm (4") .............................................................. 78.00 ---
150 mm (6") .............................................................. 100.00 ---
200 mm (8") .............................................................. 154.00 ---
250 mm (10")............................................................. 190.00 ---
300 mm (12")............................................................. 227.00 ---
Services with Low Head Loss Meters /
Detector Check Valves
100 mm (4") .............................................................. 89.00 ---
150 mm (6") .............................................................. 130.00 ---
200 mm (8") .............................................................. 176.00 ---
250 mm (10")............................................................. 217.00 ---
300 mm (12")............................................................. 260.00 ---
SCHEDULE F: Temporary Water Service During Construction Charges
(This charge is additional to any charge needed to provide a temporary service pipe)
Rate in Dollars of Gross
Building Size in Square Meters Floor Area Per Building
Up to and including 500 sq.m $114.00
Over 500 but not exceeding 2,000 223.00
Over 2,000 but not exceeding 9,000 336.00
Over 9,000 but not exceeding 24,000 564.00
Over 24,000 but not exceeding 45,000 844.00
Over 45,000 1,119.00
SCHEDULE G: Fees for Installation of Water Meters
on City on Private
Size of Meter Property Property
20 mm (¾") $ 1843.00 $232.00
25 mm (1") 1,895.00 245.00
40 mm (1½") 1,959.00 245.00
50 mm (2") 1,959.00 350.00
75 mm (3") 6,980.00 541.00
100 mm (4") 6,980.00 541.00
150 mm (6") 24,087.00 604.00
200 mm (8") 24,087.00 699.00
250 mm (10") 28,897.00 911.00
300 mm (12") 28,897.00 911.00
SCHEDULE H: Miscellaneous Fees for Water Users
Cross Connection Control Administration Fees
First Assembly $20.00
Additional Assembly $10.00
Charges when service pipes are shut off for more
than ninety days for 15mm, 20mm or equivalent
unmetered services, for each month or part thereof $ 2.00
SCHEDULE I: Miscellaneous Charges
Charges for Returned Cheques $20.00
Residual Water Pressure Estimate Fee
Original calculation $35.00
Additional copies for same location $10.00
Miscellaneous water information requests (per hour) $40.00
(c) 1998 City of Vancouver