2. Fire Supply
Charge – Allocation Methodology
|
Que le Conseil porte la redevance
d’eau-incendies sur la facture des services d’eau et qu’elle soit fonction des
dimensions du compteur.
Documentation
1. Chief Corporate Services
Officer’s report dated 10 January 2006
(ACS2006-CRS-FIN-0001).
Report to/Rapport au :
Corporate Services and
Economic Development Committee/
Comité des services organisationnels et du développement économique
10 January 2006/le 10 janvier 2006
Submitted by/Soumis par: Greg Geddes, Chief Corporate Services
Officer/
/chef des Services généraux
Contact/Personne ressource: Lloyd Russell, Director, Financial Services and City Treasurer/Directeur des Services financiers et trésorier municipal.
580-2424, ext./poste 21312, Lloyd.Russell@ottawa.ca
SUBJECT: |
|
|
|
OBJET: |
REDEVANCE D’EAU-INCENDIES – MÉTHODE DE RÉPARTITION
|
1.
Add
the Fire Supply Charge into the water rate
All Homes
Assessed Property Value $ |
Water Usage Per
Day |
Fire Supply in
Water Rate $ |
Fire Supply on
Tax Bill $ |
Yearly
Difference $ |
|
Low |
174,000 |
0.750/m3 |
20.53 |
18.10 |
2.43 |
174,000 |
1.0/m3 |
27.37 |
18.10 |
9.27 |
|
174,000 |
1.25/m3 |
34.21 |
18.10 |
16.11 |
|
Med |
218,000 |
0.750/m3 |
20.53 |
22.67 |
(2.14) |
218,000 |
1.0/m3 |
27.37 |
22.67 |
4.70 |
|
218,000 |
1.25/m3 |
34.21 |
22.67 |
11.54 |
|
High |
277,000 |
0.750/m3 |
20.53 |
28.80 |
(8.27) |
277,000 |
1.0/m3 |
27.37 |
28.80 |
(1.43) |
|
277,000 |
1.25/m3 |
34.21 |
28.80 |
5.41 |
Pros |
Cons |
May result in the conservation of water |
As part of the water rate, the cost of the fire hydrant service is not distinguishable. |
Tax-exempt properties would no longer have a rationale to challenge the charge. |
Providing Fire Hydrant service is an invariable cost, but would be charged on a variable basis. |
|
May not generate the amount required. |
Depending on water consumption it may represent a decrease over what was paid in 2005. |
Depending on water consumption it may represent an increase over what was paid in 2005 |
Relatively easy to administer. |
Would require some system modification for areas with water service but no hydrant service. |
Ottawa does not have a flat fee, or monthly service charge on the water/sewer bill. According to the BMA Municipal Study 2005, 46 of the 67 Ontario municipalities they surveyed have a monthly fixed charge on the water/sewer bill. The flat fee recognizes that a portion of the costs of the water system do not fluctuate with consumption and ensure that the municipality recovers these fixed costs. The costs of providing the infrastructure to ensure that there is sufficient water supply in the event of the fire is one of those fixed costs.
Each water connection in the system is provided with a service connection lateral to the distribution system therefore a water service connection size can be used as surrogates to apportion the costs of fire protection charges on an equivalency calculation basis. The connection size needs to be pro-rated to reflect the flow as doubling the connection more than doubles the flow. There are sixteen different connection sizes identified in the water billing system with the largest producing a flow 400 times greater than the flow going into the average single family home.
All Homes Assessed Property Value $ |
Fire Supply on Water Bill as a function of
connection $ |
Fire Supply on Tax Bill $ |
Yearly Difference $ |
174,000 |
20.68 |
18.10 |
2.58 |
218,000 |
20.68 |
22.67 |
(1.99) |
277,000 |
20.68 |
28.80 |
(8.12) |
For commercial properties, the connection sizes are larger than for residential, so in general the amount collected would increase, but there are significant increases and reductions within the class. While the entire sample had an overall decrease of 29% the subsample of the six smaller properties had a 143% increase and the largest property had a 62% decrease.
Multi-residential are similar to
residential in that the connection sizes tend to be smaller than they are for
commercial. As a result in the sample
of multi-residential properties examined the total charged under this
methodology is 7% less than if based on assessment.
Pros |
Cons |
The water connection size for residential properties is a better allocator of fire hydrant services as most homes have the same connection and would require the same hydrant service. |
The water connection size may reflect the water usage need in the commercial sector which is greater than that required for fire hydrant service, resulting in an increased charge. |
Makes the charge a flat fee which represents the fire hydrant charge better than a variable cost |
Any connection information not in the system would have to be determined. This will require significant resources and time. |
Most connection information for calculation is on the water billing system making it easier to administer |
Properties that have water service but no fire hydrant service would have to be coded for exemption. |
Alternatively, the fire protection charge could be calculated on the basis of the meter size, as a surrogate for the demand in the building. Each water service in the utility has an appropriately sized water meter to measure the flow to the facility. In other situations, unmetered sprinkler connections are providing fire protection services to industrial and large commercial sized buildings.
As with the connection size the meter size would be pro-rated to reflect the actual flow. There are 10 meter sizes identified into the water billing system with the largest meter having a flow 277 times larger than that of a single family home. This apportionment on the basis of the meter size will distribute the fire protection access and utilization service to the buildings requiring that service. It provides a measure of equitable allocation of cost to service, provides a balance of costs to benefit and is transparent such that each customer classification group will understand that these charges will apply to the system utilization provided to the building.
All Homes Assessed Property Value $ |
Fire Supply on Water Bill as a function of meter
size $ |
Fire Supply on Tax Bill $ |
Yearly Difference $ |
174,000 |
31.71 |
18.10 |
13.61 |
218,000 |
31.71 |
22.67 |
9.04 |
277,000 |
31.71 |
28.80 |
2.91 |
As meter size is more reflective of the water used in the premises the
meter size for commercial is often much lower than the connection size. As a result using the meter size reduces the
commercial sector charges. While there
were some small increases in charges based on this method of allocation in total the sample examined saw a decrease
of 70%.
For the multi-residential properties sampled
the use of meter size as the determiner of fire supply charges saw the total
charged decline by 36%.
Pros |
Cons |
Becomes a flat fee on the water bill that is constant among the residential sector. |
Meter size is a function of usage, so lower water usage commercial properties will pay less. |
Information required for the charge is already in the water bill system |
Those areas that have water service but no hydrant service would have to be coded for exemption. |
The cost of ensuring sufficient water supply in the event of a fire is a function of infrastructure sizing. The amount of sizing required is determined by the fire rating assigned by the building code and is consistent between types and sizes of buildings. This cost of this infrastructure is fixed and should not be charged on a basis that fluctuates such as assessment or water consumption.
Of the other two methodologies examined result in a fixed fee, either of these two methodologies is recommended. As meter size is the cleanest data set in the water billing system this method is recommended among the two. It is recognized that this allocation methodology does not reflect demand on the system for fire suppression as accurately as possible and it is recommended that the Utility Services Branch undertake a review of the fixed costs of the water system and a methodology then be developed that ensures that these costs are allocated more precisely.
CONSULTATION
The Utility Services Branch was consulted in preparing this report.
FINANCIAL
IMPLICATIONS
The financial implications are detailed within the report.
DISPOSITION
Upon approval of the recommendation, the Revenue Branch will begin the process of adding the Fire Supply or hydrant charge to the water bill.