Report to: General Committee                                    Date Report Authored: January 29, 2010

 

SUBJECT:                          Process and Status of the Waterworks Service Fees Implementation

PREPARED BY:               Noris Dela Cruz, Ext. 4800

                                           

 

RECOMMENDATION:

1)                  That the report titled  “Process and Status of the Waterworks Service Fees” be received;

 

2)                  And that Staff be authorized and directed to do all things necessary to give effect to this resolution.

 

EXECUTIVE SUMMARY:

Not applicable

1. Purpose  2. Background  3. Discussion  4. Financial 

 

5. Others (HR, Strategic, Affected Units)  6. Attachment(s)

 

PURPOSE:

To update Council on the process and status of, and customer reaction to the 2008 Waterworks service fees.

 

BACKGROUND:

On December 5, 2007, Waterworks presented to the Developers’ Round Table the need to recover the costs of providing services to new development. A break-out group composed of Finance, Engineering and Developer Representatives was formed to review the proposal. After several meetings, the group accepted the Waterworks calculation methodology and fees. Staff also reviewed outdated service fees and submitted the fees recommendation to General Committee in a report dated August 1, 2008.

 

The report estimated a revenue increase of approximately $291K in 2009 based on 5-year historical average service volumes and new development activities. Although noted in the report, slow down in the development activities was not considered in the 2009 forecast calculation.

 

On September 8, 2008, Council approved the service fees effective October 1, 2008 and amended By-Law 2002-276. Staff was directed to report back in one year to provide the process and status of the service fees implementation.

 

OPTIONS/ DISCUSSION:

Process and Implementation Status

Bulk water meter station rate and water meter application forms have been updated. Staff worked with Legal Services and Engineering to update the Development Agreement and allow collection of new fees. The revised Development Agreement is now in effect. Staff also worked with the Contact Centre and Finance Department to identify means to collect new fees. Process work flows have been developed for all fees and are available through the “Collection and Tracking Mechanism” link at http://waterworks.markham.ca/. Please refer to Attachment A for a sample.

 

 

 

 

 

The fees collection mechanisms are now in place and implemented. However, in order to ensure appropriate allocation of revenues to services rendered, staff will work with support groups to implement necessary process improvement.

 

Revenue and Forecast

In the 2008 Report, the estimated 2009 revenue was forecasted to be $291K. Due to a considerable reduction in new development in 2009, the total fees collected fell short of the forecasted amount, as outlined in the following table. The Waterworks fees revenues were not budgeted in either 2009 or 2010 WW Operating budget.

 

Waterworks Fees Revenue and Forecast:

 

A

B

C = A-B

Fee Revenue Type

2009 Rev. Forecast

2009 Rev. Actual

Actual Variance

General Service

$656K

$744K

($88K)

Development Service

$163K

$33K

$130K

Total

$819K

$777K

$42K

 

 

Customer Reaction to New Fees

There were 134 requests for Water Turn ON/OFF in the 4th quarter of 2008. Some customers questioned the new Water Turn ON/OFF fee. They felt municipal tax should cover this service. Staff provided information that Waterworks funding model is based on user pay principle and that municipal water rates and service fees are used to finance Waterworks infrastructure replacement, operation, maintenance and service.

 

In 2009, of the 585 requests for Water Turn ON/OFF, there were two (2) documented complaints where customer felt strongly against paying service fees even though both paid for the service. In general, 99% of customers had accepted the user fees. In 2010, staff will work with Corporate Communication to develop and publish in the Town’s web site a Frequently Asked Questions (FAQs) topic on Waterworks Service Fees and how they are used.

 

Next Step

Staff will continue to gauge and monitor customer satisfaction for paid Waterworks services. It will also review the service fees in 2010 and recommend updates necessary to ensure equitable and fair recovery of Waterworks service cost. Waterworks will start to include the fee revenues into the 2011 Operating Budget.

 

FINANCIAL CONSIDERATIONS AND TEMPLATE: (external link)

Not applicable

 

 

 

HUMAN RESOURCES CONSIDERATIONS

Not applicable

 

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not applicable

 

BUSINESS UNITS CONSULTED AND AFFECTED:

·              Financial and Client Services – providing access to Cayenta Utilities for invoicing, collection of receivables and financial reporting.

·              Contact Centre – providing customer contact support and revenue collection.

 

 

 

 

 

RECOMMENDED

                            BY:    ________________________          ________________________

                                      Jerry Klaus                                         Peter Loukes, P. Eng.

                                      General Manager, Waterworks           Director, Operations Dept.

 

 

                                       ________________________

                                       Brenda Librecz

                                       Commissioner, Community and Fire Services

 

 

 

ATTACHMENTS:

Attachment A – Sample “Process Work Flow for Turn-ON/OFF Water Service”

 

 

 

 

 

 

 

 

 

Q:\Commission Share\Operations and Asset Management\Reports\2010\Waterworks\Process and Status of the Waterworks Service Fees.doc