Water and Sewer Budget 2011

1. Water and Sewer Budget2011 December 07, 2010

2. Legislation for Water & Sewer • Sustainable Water and Sewage System Act – 2002 • Regulations pending • Safe Drinking Water Act • Requires municipalities to obtain a “Municipal Drinking Water License” which includes an “Approved Financial Plan” for “Full Cost Recovery” • Full Cost Recovery includes: • Source protection costs • Operating costs • Financing Costs • Renewal Costs • Replacement Costs • Improvement Costs

3. Budget Overview • The 2011 budget has been prepared with an overall increase of 2.95% to the utility bill: • Water billings represent a ‘zero’ rate increase • Sewer billings represent a 5.64% increase • This year, both of these budgets have a prior year “growth” factor included in billings: • $117,649 is the estimated growth for water • $34,561 is the estimated growth for sewer

4. Budget Overview con’t • Operating expenditures have increased 6.74% which includes the following contributions to reserves: • $1,000,000 for the Secondary Waste Water Treatment Plant • $250,000 to the Waterworks Reserve • Net Capital has decreased by 1.20% (or $55,000)

5. Water & Sewer Budgets 2011 Note: Fees & Miscellaneous Revenue includes contributions from reserves in 2010 in the amount of $103,000 to the operating budget (2011 – nil).

6. Comparison of Water & Sewer Proposed 2.95% Increase for the Residential Sector

7. 2009 Municipal Study The City of Cornwall participated in a Municipal Study in 2009 which included 80 municipalities within Ontario. The commercial water rates for the City of Cornwall were ranked the lowest within all 80 municipalities. The residential water rates for the City of Cornwall ranked 60th(highest to lowest) out of 80. In other words, the residential rates were within the bottom quarter of municipalities surveyed.

8. 2011 Capital Projects - Water • Watermain Rehabilitation Improvements (page 11) • To improve the water delivery $ 700,000 • Supply of Water Meters (page 12) • Continuation of a 5 year project $ 540,000 • Investment from previous years equals $1.38 million • Total project investment is $8.7 million • Water Purification Plant Upgrades(page 13) • System improvements (filter upgrades) $ 650,000

9. 2011 Capital Projects – Water con’t • Pine St. from Cumberland to Seymour (page 14/32) • Replace watermain, sewer separation $ 295,000 (joint project) Total Capital Projects – Water$2,185,000 These proposed capital projects for Water would be equivalent to approximately 0.9% of the replacement cost for the water production and distribution infrastructure.

10. 2011 Capital Projects - Sewer • South Branch Channelization (page 25) • Hydraulic improvements to the river $ 200,000 • Sewer Network Analysis(page 26) • Investigate and model hydraulic conditions $ 50,000 • Jobin Ave (Pitt to west limit)/Champagne (page 27) • Sewer separation project$ 885,000

11. 2011 Capital Projects – Sewer con’t • Brookdale Ave / North Channel Bridge (page 28) • Sewer separation project, watermain upgrades $ 500,000 • WWTP Administration Building / Lab (page 29) • Various repairs needed $ 375,000 6. WWTP Digester Cleanout (page 30) • Drainage and cleaning of digester $ 100,000

12. 2011 Capital Projects – Sewer con’t • WWTP Pump House (page 31) • Upgrades to the screening bin trolley system $ 75,000 8. Pine St. from Cumberland to Seymour (page 14/32) • Replace watermain, sewer separation $ 175,000 (joint project) Total Capital Projects – Sewer $ 2,360,000 These proposed capital projects for Sewer would be equivalent to approximately 0.7% of the replacement cost for the Waste Water Treatment Plant and waste water collection infrastructure.

13. Water & Sewer TangibleCapital Assets Replacement Cost is approximately 2.9 times the current stated value.

14. Waterworks Reserve Opening Balance (January 1, 2010) $ 2,560,466 Contribution to 2010 operating budget ($ 51,500) Estimated 2010 Surplus $ 286,000 Estimated Ending Balance 2010$ 2,794,966 Proposed 2011 Contribution to Reserves $ 250,000 Total Current Asset Value – Water $57,628,578 Total Replacement Cost – Water $232,964,000 The Waterworks Reserve is 4.8% of the current asset value or 1.2% of the estimated replacement cost.

15. Sewer & Sewage TreatmentReserve • Opening Balance (January 1, 2010) $ 4,007,129 • 2010 Contribution to reserves $ 1,000,000 • Provincial Funding plus interest $ 18,583,956 • Contribution to 2010 operating budget ($ 51,500) • Estimated 2010 Surplus $ 345,700 Estimated Ending Balance 2010 $ 23,885,285 Proposed 2011 Contribution to Reserves $ 1,000,000 Total Current Asset Value – Sewer $135,288,963 Total Replacement Cost – Sewer $326,599,000 Funding for Secondary WWTP is: Province $ 18,583,956 2009 Budget $950,000 2010 Budget $ 1,000,000 Total $ 20,533,956 The remaining balance in the reserve is $3,351,329. The available Sewer Reserve is 2.5% of the current asset value or 1.0% of the estimated replacement cost.

16. Secondary Waste Water Treatment Plant The budget for this project is $55,500,000. Funding: Provincial $18,500,000 Federal $18,500,000 Reserves $ 4,950,000 Interest 550,000 Long Term Debt $13,000,000 Assumes a $1,000,000 contribution to reserves for 2011, 2012 & 2013. • Annual principal and interest payments for long term debt would be approximately: • $1,000,000 for 20 years @ 4.44% • $900,000 for 25 years @ 4.62% • Rates effective December 7, 2010

17. Recommendation Administration is recommending a combined Water and Sewer rate increase of 2.95% for 2011 for the City of Cornwall as outlined in the Water & Sewer Budget document and this presentation.

18. Questions ???