Presentation of the 2018 Water and Wastewater Budget

Monday December 11th , 2017

Tracey Bailey, General Manager, Financial Services/Treasurer

John St. Marseille, M.Sc., P.Geo., P.Eng., FEC General Manager, Infrastructure & Municipal Works

Presentation Overview

• Budget Framework

• Asset Management

• Sustainable Financial Planning

• Compliance

• Water Program

• Wastewater Program

• Operating & Capital Budgets

• Long-Term Debt and Reserves

• Municipal Comparators

• Summary

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Budget Framework

Council’s Strategic Plan

• Policy environment/ guidelines for annual/long-term budgeting • Services, service levels and priorities for budgeting

Budgets (Operating & Capital)

• Actual performance vs. Benchmark • Inform strategic and long-term financial plan

Results Evaluation

• Informs financial plan (priorities, services, and service levels) • Resource limitations • Future financial state

Compliance Asset Management

Financial Plan Customer Service

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280km of watermains 2016 estimated replacement value, $135M Current backlog $41.2M 393km of wastewater pipes 2016 estimated replacement value, $321M Current backlog $6.8M Buildings and process equipment

2016 estimated replacement value, $223M Current backlog $1.2M

Asset Management Sustainable Service Delivery

The objective of asset management is to maximize benefits, manage risk, and provide satisfactory levels of service to the public in a sustainable manner.

Current Water and Wastewater Infrastructure:

It is important to note that the 2018 proposed capital projects total $6,745,000, which is only 1% of the estimated replacement values of these assets.

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Sustainable Financial Planning

(Source: Ontario Ministry of Environment, 2007, Toward Financially Sustainable Drinking Water and Wastewater Systems)

If revenues are at this point, the utility is just meeting current period expenses. It is not adequately planning for the future.

If revenues are at this point, the utility is just recovering cash costs. It is significantly underfunded.

A sustainable level of revenue accounts for the future investment needs of the utility in addition to current period expenses. Revenues in excess of current period expenses will be reflected as an accounting surplus in financial statements.

This is an accounting view of cost under municipal full accrual accounting practices.

These items together fund replacement costs.

• Safe Drinking Water Act / Standard of Care

• Municipal Drinking Water Licence

– O.Reg. 453/07 Water and Wastewater Financial Plan

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Compliance

Water Accomplishments

• New funding – Clean Water and Wastewater Fund

• Watermains replaced or relined • 3.7km, 2017

• 4.0km, 2016

• 5.7km, 2015

• 2.3km, 2014

• 2.5km, 2013

• Water bottle filling stations

• 100% Inspection Rating (9 straight years)

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Watermain Relining - Riverdale

Water System Challenges • 34 Watermain breaks in 2017 YTD

(Sydney, Brookdale, Vincent Massey, Tollgate)

• “Soft and Hard” Costs (repair, nuisance, unplanned disruptions)

• Taste and odour

• Blue-green algae, emerging

contaminants (climate change)

• Financial sustainability

• Aging infrastructure

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Blue-green algae

Water Distribution Network

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280 km of watermains

69 km of watermain needs (repaired, restored,

rehabilitated or replaced)

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(2006-2017)

2018 Capital Projects - Water

1. Watermain Rehabilitation (page 10) $1,700,000 Improves water quality, system reliability by relining watermains and addresses tuberculation, chlorine residuals, and fire flows.

2. Critical Looping – New Watermain (page 11) $550,000 Redundant network extension to support network growth, improve water quality, and fire flow capacity.

3. Water Purification Plant Upgrades (page 12) $880,000 Performance improvements, upgrades and assessments of this critical infrastructure (Asset Management Plan).

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Cornwall Water Purification Plant

• Ongoing optimization of enhanced secondary treatment plant (WWTP)

• Funding to update Pollution Control Plan

• Combined Sewer Separation

• Low Impact Development – 7th St. Bioswale

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7th St. Bioswale

Enhanced WWTP

Pollution Control Plan

Wastewater Accomplishments

Wastewater System Challenges

• Stormwater Management

• Combined sewer overflows (CSOs)

• Fats, oils, grease and other unflushables

• Emerging contaminants

• Climate change, flood

risk reduction

• Financial sustainability

• Aging infrastructure

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Wastewater Collection Network

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1. Flood Reduction / Management (page 23) $200,000

Investigation and cleaning of sewers

2. Sewer Network Improvements (page 24) $800,000 Combined sewer on Water Street as well as various culvert replacements

2018 Capital Projects Wastewater

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Before Cleaning After Cleaning

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Work Area Work Area

2018 Capital Projects Wastewater

3. Combined Sewer Separation (page 25) $675,000

Coordinated with roadway improvements

4. Wastewater Treatment Plant Upgrades (page 26) $890,000 Performance improvements, upgrades and assessments of this critical infrastructure (Asset Management Plan)

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2018 Capital Projects Joint Infrastructure

1. Asset Management (page 13/27) $100,000

2. Arc Flash Risk Analysis (page 14/28) $100,000

To address worker safety at Water and Wastewater facilities as required by the Canadian Standards Association (Standard Z462)

3. York Street (Phase 1) $850,000

from Fifth to Seventh (page 15/29)

Sewer, watermain, roadway, and sidewalks are in poor condition.

Funded from water billings in 2018 and sewer billings in 2019

- Construction in 2019

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2018 Operating Budgets

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2017 2018 $ %

Budget Submission Change ChangeRevenue

Fees, & Misc. Revenue 258,128$ 265,300$ 7,172$ 2.78%

Total Revenue 258,128$ 265,300$ 7,172$ 2.78%

Expenditures

Salaries & Benefits 4,124,240$ 4,201,401$ 77,161$ 1.87%

Purchase of Goods 2,707,585 2,773,118 65,533 2.42%

Services & Rents 1,946,595 1,957,011 10,416 0.54%

Financial 1,454,187 1,439,700 (14,487) -1.00%

Transfer to Reserves 250,000 250,000 - 0.00%

Total Expenditures 10,482,607$ 10,621,230$ 138,623$ 1.32%

Debt Charges 1,501,913$ 1,842,801$ 340,888$ 22.70%

Total Net Expenditures 11,726,392$ 12,198,731$ 472,339$ 4.03%

Increase in operating costs is related to debt costs

2018 Capital Budgets

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2014 2015 2016 2017 2018

Water Distribution $1,400 $2,790 $2,530 $1,560 $2,250

Water Purification Plant 650 950 650 650 880

$2,050 $3,740 $3,180 $2,210 $3,130

Sewer Collection Program $675 $810 $850 $800 $800

Combined Sewer Separation 335 335 335 335 675

Wastewater Treatment Plant 500 550 550 550 890

Flood Reduction Initiatives 4,600 4,030 1,130 200 200

Brookdale N. Channel Bridge 350 0 2,000 1,350 0

$6,460 $5,725 $4,865 $3,235 $2,565

Joint Infrastructure Projects $1,330 $1,382 $1,515 $1,300 $1,050

Total Project Costs $9,840 $10,847 $9,560 $6,745 $6,745

Water Project Costs $2,715 $4,431 $3,938 $2,860 $4,070

Wastewater Project Costs $7,125 $6,416 $5,622 $3,885 $2,675

$9.8M

$10.8M

$9.6M

$6.7M $6.7M

The following charts illustrate capital funding allocations (in the thousands of dollars) from the 2014, 2015, 2016 and 2017 Budgets compared to the 2018 Submission.

Long-Term Debt and Reserves

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This chart shows the ten–year (2018-2027) forecasted balance for the Waterworks and the Wastewater Works Reserves based on the City’s Long-Term Financial Plan.

This chart shows the ten–year (2018-2027) forecasted balance of Long-Term Debt. The City has borrowed for the Flood Reduction Initiative and for the Secondary WWTP. There is no new debt in 2018. Water Services is debt free.

*Dollars rounded to millions

Municipal Comparators

20 * Source: 2017 BMA Study (see Appendix A)

Municipal Comparators

* Source: 2017 BMA Study (see Appendix B) 21

The 2018 budget has been prepared with an overall increase of 7.65% to the utility bill.

Water billings represent an 8.87% increase ($658,632)

Wastewater billings represent a 6.67% increase ($613,707)

Net Operating increased by $472,339 or 4.03%.

$138,623 or 1.32% operating increase

$340,888 or 22.7% increase in debt charges

Net Capital increased by $800,000 or 16.34%.

$0 increase gross capital ($6.7M, same as in 2017)

$800,000 reduction in capital funding

Budget Overview

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Appendix A

Appendix B

Comprehensive Cornwall urban water brand to

address key pillars of the Strategic Plan:

Quality of Life, Economic and Financial, as well as Environment

“Cornwall Blueprint”

• Urban Water Brand

• Basement Flooding Mitigation

• Sewer Extraneous (I/I) Flow Control

• Education, Outreach and Engagement

• Homeowner Rebate (Policy Development)

Appendix C

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Comprehensive Cornwall urban water brand to

address key pillars of the Strategic Plan:

Quality of Life, Economic and Financial, as well as Environment

“Cornwall Blueprint” Appendix C

• Environmental, Water and Infrastructure Awareness

• Demonstration Projects and Innovation

• Fund Leveraging and Partnerships

• Climate Change Planning / Adaptation

• Water Demand Management

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