1. Communal W/WW Systems: Financial Analysis for Municipalities Ontario Onsite Wastewater Association Convention 2019
Alec Knowles, MASc
Senior Consultant, Advisory Services, WSP
18 Mar 2019

2. Outline Context Financial Model Purpose Methodology & Options Results
Model Application 1 2 3 4 5

3. Context County of Frontenac (FC): Centralized or Communal W/WW
Population: 27,000
Pop. Density: 8 / km2
Well/septic (except for Sydenham)
Desire to grow community
Attract net migration
Increase services
Increase density
Improve efficiency of land use
Centralized or Communal W/WW

4. Context County of Frontenac (FC): Centralized or Communal W/WW
Population: 27,000
Pop. Density: 8 / km2
Well/septic (except for Sydenham)
Desire to grow community
Attract net migration
Increase services
Increase density
Improve efficiency of land use
Centralized or Communal W/WW

5. Financial Model Purpose
Estimate funding needed for long- term operation of a hypothetical communal system
Calculate stabilized annual charges
High-level ‘what-if’ tool allowing user to test:
Development scenarios
Risk thresholds
Utility Fee, Property Tax, or combination
Address financial risk to FC $

6. Financial Model Purpose
D-5-2 Application of Municipal Responsibility for Communal Water and Sewage Services
“It has been the experience of the Ministry [of Environment]…that private communal services, in the absence of a responsible public authority to ensure proper operation and maintenance, have a greater likelihood to malfunction as a result of poor management practices…”
“…a Responsibility Agreement between the developer and the municipality will be requested by the planning authority. Such agreements will include provisions for municipal assumption of the communal services in the event of default…”

7. Methodology & Options Options: Utility fee  paid by users
Property tax  paid by all County residents
Mix of Utility Fee / Property Tax, split by cost obligation
Unexpected ‘catastrophe’ costs
Capital replacement
Utility fee
Property Tax

8. Methodology & Options User Inputs Inflation rate
Development construction dates
Interest rate
Development size (residential & commercial)
Capital costs (initial and replacement)
Water usage (flow) rates
Annualized O&M, Rehab, Insurance costs
Property values and property tax rates
Unit purchase (occupation) rate by year
Surface vs. subsurface operation
Risk tolerance
Annualized likelihood of failure
Developer obligations (capital, O&M)
Seed funding

9. Methodology & Options Key issues: Risk tolerance – ‘catastrophe’ costs
Risk in the context of other FC communal w/ww systems
Affordability of utility fees  comparison to well/septic costs
Comparison to Financial Assurance (F-15 MOE guidelines)

10. Example Hypothetical communal system: New development 4 phases
Total of 100 residential units
Avg unit = 1,300 sqft
Communal system capital cost = $950k
Surface disposal system
1,000L water per day per unit
Initial hookup fee = $2k per unit
Property tax  capital + ‘catastrophe’ costs

11. Sample Results

12. Findings County-wide property tax increase is minimal
$0.55/year for capital + ‘catastrophe’
Ownership of communal system has little impact on financial model
Per-system ‘catastrophe’ costs reduced significantly as number of systems increases

13. Model Application
Determine financial risk to municipalities considering communal systems
Determine rough lifecycle costs and fees for users & municipal residents
Help planned condo corporations understand realistic w/ww fees
Compare annualized cost of proposed communal system to well/septic
Estimate incremental tax revenue per development area
Help small municipalities increase development opportunities, development density, and water quality

14. Thanks Alec Knowles, MASc Senior Consultant alec.knowles@wsp.com
Advisory Services