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BUSINESS CASE – CITY WATER 2014 CAPITAL PROGRAM PAGE 1

Business Case*

City Water 2014 Capital Program

2014 AC Watermain Replacement Program (Asset Renewal Program) and

2015 Asset Renewal Design

Submitted by: Karl Filiatrault, Eng. L. Senior Engineer, Water Utilities and Solid Waste

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Section Executive Summary 1

City Water – AC watermain replacement

What type of initiative is this? (select all that apply) ☐ an increase in service level avoid damage claims to the City

maintain the existing service level

☐ a change in service delivery method to achieve savings ☐ an investment with a net financial payback (If so, complete the cash flow template.)

Program/project deliverables: (What will be done/built?)

Benefits/outcome of the program/project: (What is the ultimate desired impact on the community?)

What is the cost and what is the source of funding? (Identify gross cost and any offsetting funding.)

What risks are there in proceeding with this?

:

Asbestos Cement (AC) watermains that are at the end of their life expectancy will be replaced with new PVC (plastic) or Ductile Iron watermains. Design work will be performed for the proposed 2015 AC replacements.

Old end of life watermains will be replaced before they fail. This will maintain or improve the current level of water supply to residents and avoid repair or damage to infrastructure and property from burst watermains.

There is an existing backlog of AC watermains that have reached their expected life expectancy. This is discussed in attached Council Report No. ENG 71-2012. The proposed annual budgets required for replacement of the total inventory are identified in the report. Water reserves, which receive funds from user fees, is the funding source for the program.

The risk is that we may not get the absolute maximum life from some of the watermains; however, this is offset by avoiding damage to existing property and adjacent infrastructure. Also, the risk of watermain failure due to pressure fluctuations during the fighting of a fire is reduced.

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Section Problem/Opportunity 2

Description: As identified in the attached Council report, the City has a large inventory of AC watermain that is either approaching or has reached the end of its projected life expectancy. An asset assessment program, which analyzes the condition of actual sections of watermain to estimate the number of years to failure of the watermain, is ongoing. Information obtained through these assessments generally supports the industry accepted life expectancy of 50 years for AC pipe.

Replacements of the various watermains were assigned priority ratings and year of replacement in the infrastructure database; however, this program must be adaptable to meet changing priorities in other programs. Replacement needs to be coordinated with roads and sewer programs to minimize disruption and optimize cost effectiveness.

Section Program/Project Deliverables 3

Purpose of the Program/Project Outcomes Section: The reason for writing this section is to provide a clear definition of what the planned deliverables are (i.e. describe the initiative in terms of what it produces), as well as to explain how those deliverables address the problem or opportunity that was described in the previous section.

Planned Deliverables

The specific deliverables of the project are:

Deliverable Deliverable 1 – Replacement of $3.5 million of end of life AC watermain. Deliverable 2 – Design of watermain to be replaced in 2015.

Replacement of the watermain will avoid potential damage from failures of the old AC pipe and maintain adequate fire protection and water for domestic use to all City water customers.

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Alternatives Considered (for projects over $1 million)

Slip lining or other pipe rehabilitation technologies are not feasible for watermains. Alternate installation methods, such as pipe bursting or directional drilling may be considered in special cases; however, open trench replacement is usually the most cost effective method of replacing watermains and service connections.

Section Risk Assessment 4

Purpose of the Corporate Risk Assessment Section: The reason for this section is to provide the reader with an understanding of what the risks to the organization would be if the program/project does not proceed, and what alternative actions, if any, would be planned in that event. This section also identifies any risks specifically associated with the proposed program/project, along with associated mitigation strategies.

Risk of Not Proceeding with Program/Project

Risks Risk Mitigation Strategy 1. Damage to property and infrastructure

from watermain breaks Pay out insurance and damage claims

2. Reduced fire protection due to watermain breaks Have tankers on standby

3. Contamination of the water supply from main breaks Flushing and boil water advisories

Risk of Proceeding

Risk Assessment Risk Mitigation Strategy

Minimal n/a Assess mains selected for replacement to ensure they are not replaced prematurely

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Section Cost/Benefit Analysis 5

Purpose of the Cost/Benefit Analysis Section: The reason for this section is to provide the reader with an overview of the costs and benefits of the program/project.

Financial Analysis

Description:

Watermain failure results in disruption of service to business and residential customers, reduced firefighting capability and potential contamination of the water supply system. The dollar value will vary significantly depending on the location and severity of the main break. The existing infrastructure has a finite life and will need to be replaced. If this is done before it fails, financial losses associated with damage and disruption to service will be avoided. Incremental Costs: The capital cost of replacing the aging AC watermain inventory is identified in the attached Council report. Incremental Revenue: N/A

Qualitative Analysis – Non-Financial Benefits & Costs:

Some of the costs and benefits may not be quantifiable (difficult to attach a dollar value). For example, non-quantifiable benefits may be changes in customer satisfaction, staff morale or corporate image. Qualitative Summary Description Stakeholder(s) Impacted Benefits: Public health and safety Adequate fire protection will be maintained

and potential for contamination of the water supply will be minimized.

All City residents and businesses

Customer satisfaction Service disruptions will be minimized or eliminated.

All City residents

Costs: None N/A

New Staffing Position Details

N/A

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~s~s~~~ ABBOTSFORD

Report No. ENG 71-2012 October 22,2012 File No: 5600-80

To: Mayor and Council From: Karl Filiatrault, Water Planning Engineer

Tim Henry, Asset Manager Subject: Water Asset Replacement Program

RECOMMENDATION

COUNCIL REPORT

Executive Committee

THAT Report No. ENG 71-2012, dated October 22, 2012, from the Water Planning Engineer; and the Asset Manager, regarding the Water Asset Replacement Program, be received.

BACKGROUND

Currently the asbestos cement (AC) inventory within the City water system is approximately 114 km (13% by length) as illustrated in Appendix A. Appendix B illustrates the locations by installation date.

In 2008, engineering staff looked into the AC watermain issue and produced a report' of findings. From this report annual funding to assess and replace AC watermains was identified and approved. Approximately 21 km of AC have been replaced to date. The program year and quantity are as follows:

• 2007 - 2.5 km • 2008 -1.7 km • 2009 - 4.6 km • 2010 - 4.8 km • 2011 - 5.8 km plus 1.5 km with interchanges

Appendix C illustrates the watermain break data by material type and pipe diameter for the last 5 years. Current issues are with 100 to 150 mm diameter AC watermains. Appendix D illustrates operational costs to repair the breaks over the same 5 year period. There are additional direct and indirect costs. In addition, the break trend has increased.

Watermain failure can range from relatively minor to catastrophic in nature. Pin holes can develop where there is an interaction with soil. In these cases the failure would start off as a relatively small leak and eventually progress. Blowouts resulting from degradation of the watermain wall thickness are of a catastrophic nature and cause significant damage. This is the type of failure that recently occurred on George Ferguson Way on September 21, 2012.

Watermain breaks can cause significant damage to adjacent utilities, private property and roads. They also disrupt service to customers, compromise fire-fighting capability and can cause contamination of the water supply system. Failures adjacent to surface watercourses have the potential to harm aquatic life due to the chloramines used for disinfection.

I City of Abbotsford, Technical Report - Water Main Assessment, AC Pilot, RevO. 2008 -436-

Report No. ENG 71-2012 Page 2 of 5

DISCUSSION

Assessment Program Abbotsford's assessment program, regardless of watermain material, looks to balance the cost of doing the assessment and it's accuracy with the consequences of not doing it. Generally the steps are pre-assessment, indirect assessment and lastly direct assessment. The steps taken depend on the criticality of the watermain, structural condition and situation.

For AC watermains typically the pre-assessment includes looking at age and breaks. The indirect assessment is typically done based on surface hardness measurements through hydro-excavation. The hardness data is translated to remaining wall thickness so the remaining life and structural condition can be calculated based on loading and pressure. Using hardness to determine the remaining life is not uncommon. This approach was originally documented in the early 1980's in the UK. Over the last few years Abbotsford refined our specific process.

Direct assessments typically involve a watermain sample and therefore direct measurement of the remaining wall . This allows for more accurate prediction of the remaining life and structural condition from the loading and pressure data.

The criticality (i.e. consequences of failure), structural rating, available funding/resources and other works (roads and utilities) are all important inputs for decision making. The objective is to maximize the useful life of the watermain at the same time as minimizing risks and damage to other assets. Where feasible, repairs are coordinated with the road resurfacing pro~ram. More detailed information can be obtained from our 2008 internal technical report .

Factors used to determine the criticality of a watermain include:

• Whether the watermain is a primary or secondary watermain. These are watermains supplying reservoirs, pump stations or are larger than localized distribution watermains.

• Consequences of failure to the local area of the City. • Number of critical structures such as hospitals impacted by the failure. • Potential for failure to damage significant adjacent buildings or other

infrastructure. • Impact on fire-fighting capability that a failure of the watermain would have. • Whether there is adequate looping in the system to isolate the break and

minimize service disruption.

When determining criticality another issue considered is system hydraulics. If the section of watermain in question is causing flow or pressure deficiencies in other areas it would increase its ranking for replacement. This is an issue in areas of the City with watermains that are well below today's minimum watermain size standard. It was common to use 100 mm or 150 mm watermain in the 1950's and 1960's, but the minimum size to meet current fire flow standards is 200 mm.

2 City of Abbotsford, Technical Report· Water Main Assessment, AC Pilot, RevO. 2008 -437-


The baseline useful life for Abbotsford AC watermains is 50 years. This was selected based on experience in the Lower Mainland, the Province of BC guide amortization guidelines3

, and internal PSAB/TCA policy approved by the City auditor (KPMG). This value agrees well with the design life of 50 to 60 years as per the National Research Council of Canada & Water Research Foundation reports4.

Other Municipalities A review of several local municipalities was undertaken to see how they deal with AC watermain replacement. A table is included in Appendix E.

Best Practices The most recent and comprehensive research in North America was done by National Research Council of Canada and the Water Research Foundation4 in 2011/2012. Abbotsford's approach is consistent with the approaches they put forward.

Replacement Size When replacing the AC watermain, size is determined by minimum Subdivision and Development Bylaw size standards and hydraulic system requirements. The minimum watermain size for low density residential areas is 200 mm diameter and for all other uses is 250 mm diameter. System hydraulic requirements are reviewed using the water model, but in most cases the minimum Bylaw size is adequate.

The existing AC inventory was installed pre-amalgamation between the former districts of Abbotsford and Matsqui. Each system had its own watermain network which did not connect to the neighbouring system. Hydraulic modeling identified some areas where reconfiguring the network and linking the systems provides improved flow, pressures, storage and water quality. In some cases the old AC watermains needed to be upsized by one nominal diameter (from a 200 mm to 250 mm) to provide the optimum flows in the new expanded network. This was to supply existing areas and zonings.

Where an extension to supply new development is required, the new watermains are either funded through Development Cost Charges (DCC's) or the required watermains are installed by the developer.

ANALYSIS

Replacement Program Abbotsford replacement dates are only as accurate as the data provided (i.e. as-builts) and collected (i.e. testing). At one end of this spectrum are decisions solely on the average useful life (i.e. 50 years). The other end of the spectrum is taking direct samples. Staff tried to find a balance that is economical and risk based. We cannot afford to take direct samples from every 4 metre section. We also do not want to replace the watermains too early or too late.

3 Province of BC - Table, Guide to Amortization TCA, 13May200B.doc

4 National Research Council of Canada / Water Research Foundation, http: //www.nrc-cnrc.gc.ca/eng/cilv17n2/4.html- reports available upon request -438-

Report No. ENG 71-2012 Page 4 of. 5

With the above in mind, the data indicates Abbotsford could have an AC backlog of up to $14 million. To address the backlog and meet anticipated annual replacement quantities the following expenditures are proposed:

2012 - 2017: $3.5 million annually 2018 - 2022: $2.5 million annually 2023 - 2027: $1.3 million annually 2028 - 2032: $180,000 annually

The summary in Appendix G shows the annual amounts required. This will be revised as the City performs additional condition assessment and prioritizes replacement of individual sections of watermain.

In addition to the AC watermains that need to be replaced, the City has a large inventory of ductile iron (01) and PVC watermain. These watermains are newer, hopefully have a longer life expectancy and are generally sized to meet current Bylaw and hydraulic requirements. The graph shown in Appendix H estimates when these watermains will come due for replacement and the approximate cost required in the replacement years. Though this is still in the more distant future, the dollar amounts are significant and reserves should be built up to meet these requirements.

In addition, there are indications that the 01 watermains may not obtain the 75 year service life predicted in all locations. The oldest (Le. 1960's) and ones in corrosive soils could be approaching the end of their lives. The longevity of 01 versus cast iron (CI) has been debated for years. The two materials are not the same and similar services lives should not be expected. However, there is agreement that the corrosion rates are approximately the same and that the wall thickness of 01 can be 50% of the CI wall thickness. A similar reduction (Le. 50%) in service life seems logical. It is not uncommon to hear about CI that has last 80 to 120 years. This would translate to as low as 40 years for 01. To manage this, a proactive assessment project for 01 should also be put into place in the near future. The outcomes, more accurate data for decision making, will impact budgets and reserves.

No Replacement until Failure If the City adopts a policy of not replacing the AC watermain inventory until significant breakage occurs, there is the risk of causing extensive property damage, compromising fire protection and introducing contaminants into the City's potable water system. This would affect the public's confidence in the water system and may lead to legal challenges.

Though the City is protected under the Local Government Act, residents or insurance companies may still try to file suits against the City if we deliberately run our infrastructure to failure . If watercourses are contaminated with chloramines Abbotsford would very likely be charged and fined by Fisheries and Oceans Canada.

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Adopting a "run it until it breaks" philosophy would cause major inconvenience to residents and possibly loss of income to businesses. Major watermain breaks disrupt service and cause property damage. If we do not maintain the system our fire underwriters rating could also be compromised, which would result in increased fire insurance rates for residents and businesses. Appendix I shows the impact on insurance rates that the survey rating has.

FINANCIAL PLAN IMPLICATION

The 2013 Draft Financial Plan includes $14 million to be spent from 201;3-2017 on watermain replacement (also referred to as the asset renewal program). This consists of $3.5 million in each of years 2013-2017. The asset renewal program is entirely funded from reserves as the projects are not growth-related.

STRATEGIC DIRECTIONS

This report aligns with the strategic directions by focusing on infrastructure maintenance and sustainability.

COMMUNICATION PLAN

No communication plan is required.

SUMMARY

Currently the asbestos cement inventory within the City water system is approximately 114 km. Watermain breaks can cause significant damage to adjacent utilities, private property and roads. They also disrupt service to customers, compromise fire-fighting capability and can cause contamination of the water supply system. The City of Abbotsford assessment program looks to balance the cost of dOing the assessment and it's accuracy with the conseq uences of not doing it. The steps are pre-assessment, indirect assessment and lastly direct assessment.

Jim G con, P.Eng. Gen al Manager, Engineering & Regional Utilities

Filiatrault, Eng. L. ater Planning Engineer

TKiss

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Tracy Kyle, P. Eng. Director of Water & Soli

Tim Henry, Eng. L. Asset Manager

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Active Asbestos Cement

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Active Asbestos Cement

Capitalization Date

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-- 1946 -1964

-- 1965 -1970

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-- 1975 -1982

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Attachment C - Watermain Break Data

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Attachment D - Operational Costs to Repair Breaks

Break Repair Costs $180,000.00 -,---------------------------

$160,000.00 I $1S3;241c84-

$140,000.00 .!!-----

$120,000.00 ---.-------------------------1

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Attachment E - Municipal AC Replacement

City Amount of AC Annual Watermain Budget

Township 36 km confirmed, $500,000 of Langley additional 40+

km suspected

Chilliwack None but do N/A have a program for replacing aging ductile iron watermain

Maple 54 km N/A Ridge

Surrey 86 km 6km of AC and 4 km

of cast iron

annually

Vancouver 5 km $11 million (see letter in Appendix F)

Coquitlam 7.5 km N/A remaining. All AC watermain installed in the 50's and 60's have been replaced due to high failure rates.

Mission - 25 km N/A

Replacement Criteria

History of breaks, criticality of maintaining service, opportunity to coordinate with other -construction works. Fire flow requirements (hydraulic capacity), age of watermains, break history and road rehabilitation program Break history, condition assessment, capacity needs and critical customers Size (wall thickness and class), age and break history. Active development areas are lower priority than older sections which have smaller watermain and lower class of material. Replacing all old watermain at a rate of 0.8% per year.

Failure rates. Watermain installed in the 70's had a relatively low failure rate to date and is the remaining inventory.

N/A

, Report ENG 71-2012 Appendix E

Assessment Tools

Opportunistic testing during tie-ins or repairs

None

Needs to be investigated further

None

None

None

None until Summer/Fall 2012

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Attachment F - Letter from City of Vancouver

~TYOF VANCOUVER

October 10, 2012

Tracy KyLe, P .Eng. Director of Water & Solid Waste City of Abbotsford 32315 South Fraser Way Abbotsford, BC V1T 1W7

De.r Ms. Kyle:

ENGINEERING SERVICES Peter Judd, P .Eng., General Manager

RE: Question about Asbestos Cement Pipe in Vancouwr

I understand that there were questions regarding asbestos cement (AC) watermain In the City of Vancouver. I hope this infonnation provides some clarification.

During the period that many municipalities were installing AC watennaln, the City of Vancouver, for the most part, continued to install cast iron w8termain, aLthough some AC was instalLed. The City of Vancouver subsequently removed nearly all of the AC from inventory in the 80's and 90's due to premature catastrophic failures at about 35-50 years of age. The City does stiLL maintain a smaLL amount of AC watermaln (approximateLy 5 km), most of which is Located on Musqueam First Nation Lands. Of this remainlne 5km of inventory, we expect to repLace aU of it within the next 5 years, prior to the asset reaching 60 years of age.

Peter Navratil, P .Eng Manaeer of Waterworks Design 507 W~st BroodV«JY, VanCQUV~r, Be VSZ OB4 t~l: 604,873,7368 ~ttr,l'[email protected]~r,c(/

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City of V"ncouver, En~neerinii: Service5 f'kUing Address: J20-S07 West Broadway Vancouver, British Columbi" V5Z OB4 Dlnada t~l: 3·1·1, Out~de Vancou~er 604,B73,7000 fox: 604,873,7200 ~bsite: vancouver ,cal enasvc!>l

Report ENG 71-2012 Appendix F

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Value of asset due for replacement Year

$ 13,306,952.00 2011 Sum 2012 to 2017 Existing backlog added Required annual budget 2012 to 2017

$ 107,900.00 2012 $6,718,656.00 $20,025,608.00 $3,337,601 .33

$ 1,257,452.00 2013 Approved 2012 budget $2,500,000.00

$ 2,706,028.00 2014 2012 shortfall (required annual - approved 2012) $837,601 .33

$ 582,208.00 2015 2012 shortfall averaged over 5 years (2013 to 2017) $167,520.27

$ 505,404.00 2016 Required budget 2013 to 2017 $3,505,121 .60

$ 1,559,664.00 2017

$ 3,152,957.00 2018 Sum 2018 to 2023 Required annual budget 2018 to 2022

$ 2,330,740.02 2019 $11,520,233.02 $2,304,046.60

$ 1,771,446.1 2020

$ 1,239,589.70 2021 $ 3,025,500.19 2022

$ 1,298,703.95 2023 Sum 2023 to 2027 Required annual budget 2023 to 2027

$ 1,869,683.12 2024 $6,408,001 .18 $1,281,600.24

$ 1,213,332.70 2025

$ 441,231 .15 2026

$ 1,585,050.26 2027

$ 169,610.16 2028 Sum 2028 to 2032 Required annual budget 2028 to 2032

$ 118,672.92 2029 $893,683.54 $178,736.71

$ 209,171.14 2030

$ 344,961.38 2031

$ 51,267.94 2032

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W Fire Underwriters Survey ™ QI::= A SERVICE TO INSURERS AND MUNICIPALITIES

FIRE UNDERWRITERS SURVEY COST BENEFIT OF

IMPROVING FIRE INSURANCE GRADING

Report ENG 71-2012 Appendix I

Fire Underwriters Survey was originally developed after a number of communities across North America had massive conflagration losses. The fire insurance grading system was developed to provide insurers with information related to the levels of fire risk and fire protection within each community in Canada. The system is designed to provide a cost benefit to communities for providing fire protection. Communities that have effective and appropriate levels of fire protection for the level of fire risk within their protection areas, will receive lower fire insurance grades, which in turn will result in lower insurance rates for property owners. This memo gives an overview of the factors that affect a community's fire insurance grading and how these ratings affect insurance premiums.

Fire Underwriters Survey (FUS) is a national organization financed and directed by CGI Insurance Business Services (formerly lAO.) and the Insurance Bureau of Canada (IBC). The organization assesses, evaluates and grades the quality of public fire defences maintained in Canadian municipalities and communities. This technical information is conveyed to FUS subscribers for use in their fire insurance statistical, rating and underwriting programs. FUS member companies provide approximately 85 percent of the private general insurance written each year in Canada.

Major features assessed during fire protection surveys include:

1) Water supply systems 2) Fire department administration and operations 3) Fire service communications 4) Fire safety control including building and fire prevention codes and their enforcement.

These functions are measured against recognized standards of fire protection.

The grading system has two components, the Dwelling Protection Grade and Public Fire Protection Classification. Both grading systems begin with a community risk assessment.

Dwelling Protection Grades (D.P.G) The first fire insurance classification we establish and convey to FUS member companies is the Dwelling Protection Grade. The D.P.G. is a numerical system scaled from 1 to 5. One (1) is the highest grading possible and 5 indicates little or no public fire protection. This grading reflects the ability of a community to effectively respond to fires in small buildings (single family dwellings). An effective response requires adequate manpower (with appropriate training and equipment), apparatus, water supply and response time must be reasonably fast.

Public Fire Protection Classification The P.F.P.C. is a sophisticated grading system scaled from 1 to 10. One (1) represents the ultimate degree of protection and 10 indicates little or no fire protection. This system evaluates the ability of a community's fire defences to prevent and control major fires that may occur in commercial, industrial

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lii Fire Underwriters SurveyTM QI::;: A SERVICE TO INSURERS AND MUNICIPALITIES

and institutional buildings. This grading system includes a comprehensive analysis of the community's fire defences and risks.

-451-

Most insurance companies across Canada use the fire insurance grades (DPG and PFPC) as a factor in setting the premiums they charge for property insurance; the better the community's fire insurance grade, the lower the premiums the insurance company would charge for property insurance in that community.

How do fire insurance grading results affect insurance premiums? Table 2 shows how the premiums would vary for some typical single family dwellings under several example insurance companies' current rating schedules. It is important to note that every insurance company sets its own rates. While these figures are reasonably representative of how much difference the fire insurance grading can make in an insurance buyer's premiums, the amounts and percentages of the premium credits for the various fire classes will vary among insurance companies.

The first grade that communities are interested in is the Dwelling Protection Grade. The Fire Underwriters Survey method of assessment utilizes a 1-5 grading scale. Many insurers have simplified this scale into a "3 tier" system as shown in Table 1.

Table 1 Simplified 3 Tier System for Single Family Dwellings

Insurance Bureau of Canada Dwelling Protection Grades. Statistical 115 tier"

System.

System Used by Many Insurance Companies Underwriting 113 tier"

Insurance Companies refer to this grade as:

system.

2 Table I Protected

Table II Semi - Protected

4

5 Table III Unprotected

Insurers typically provide a reduction of approximately 60% when communities fire insurance grading DPG is changed from unprotected to semi-protected. Note that different insurers have different policies and rating systems in many areas. Common examples of such differences include but are not limited to:

• Some insurers will treat communities with DPG 4 as Table 111 - Unprotected • Some insurers may not accept 3B (S) as Table I • Protected

Insurers typically provide a reduction of approximately 32% when communities fire insurance grading DPG is changed from unprotected to semi-protected.

Cost Benefit of Improved Fire Insurance Grading Page; of 6 -452-

The following table shows average insurance premiums as they relate to different valued single family dwellings in typical Canadian communities.

Table 2 Example Insurance Premiums for Single Family Dwellings by Fire Insurance Classification 1

The second grade that communities are interested in is the Public Fire Protection Classification. This grade is calculated from a comprehensive evaluation of the community and fire defense capabilities. This grade is a number between 1 and 10 with 1 being superior fire protection and 10 being unprotected. The PFPC grade of a community is a significant factor that most insurance companies use to set insurance premium rates for all buildings that are not single family dwellings. All such buildings are referred to as licommercial", This includes assembly, institutional, industrial, multi-family residential and all others.

Many factors affect "commercialJl property insurance premium rates. The Public Fire Protection Classification is significant, however it is important to note that there are many other significant factors that w ill affect insurance premiums in commercial properties. Such factors include but are not limited to: construction (combustible, noncombustible, etc.); building size; building value; type of occupancy; type of business; etc.

For information purposes, several insurance companies were contacted and quoted rates for commercial insurance were provided to illustrate the influence the Public Fire Protection Classification System has on insurance premiums.

1 Note that Fire Underwriters Survey does not set rates for insurance. The values shown are based on data collected from a number of insurance companies quoted rates and U-rate insurance quote calculations. Cost Benefit of Improved Fire Insurance Grading Page 4 of 6

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Table 3· Example Commercial Insurance Premiums at varying PFPC Classifications'

~~-----,

I FUS grades I

Insurance Cost Forecast over 10 years

765 --------- - ---

$ 2,647.00 $ 2,455.00 $ 29,000.00 $ 26,470.00

Saving: 9% 15%

$ 17,868.00 $ 15,097.00 $217,180.00 $ 178,680.00

Saving: 18% 30%

$45,821 .00 $ 39,938.00 $ 35,488.00 $ 458,210.00 $ 399,380.00

13% 23%

$ 11,828.00 $ 11 ,160.00 $127,100.00 $ 118,280.00

For further information, the following table was developed to forecast what insurance premium savings would be if the community improved its Public Fire Protection Classification from PFPC 7 to PFPC 6 or PFPC 6 to PFPC 5. The cost savings were forecast over a 10 year period and were calculated for $500 million of each example risk type.

Table 4 Cost Benefit Forecast (10 year) of Varying Improvements to PFP('

$ 6,590,909.09 $ 6,015,909.09 $ 5,579,545.45

saving: $ 575,000.00 $ 1,011,363.64 ••. > $ 1,011 ,363.64

$ 21 ,718,000.00 $ 17,868,000.00 $15,097,000.00

saving: $ 3,850,000.00 $ 6,621 ,000.00 ••• > $ 6,621,000.00

$ 7,636,833.33 $ 6,656,333.33 $ 5,914,666.67

saving: $ 980,500.00 $1 ,722,166.67 ---> $ 1,722,166.67

$ 6,355,000.00 $ 5,914,000.00 $ 5,580,000.00 ... >

~ Average $ 2,532,382.58

As can be seen, the cost benefit of achieving a lower fire insurance grading can be significant. Communities can achieve lower fire insurance grades by providing an improved level of fire protection and reducing their fire risk,

The first and most important reason to provide improved levels of fire protection is to protect lives. However the cost of providing fire protection can be significant and in some cases communities find it is difficult to convince constituents and other stakeholders of the merits of providing an effective and

Cost Benefit of Improved Fire Insurance Grading Page 5 016

$ 24,550.00

$ 150,970.00

$ 354,880.00

$ 111,600.00

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Scheduling Factors

• Road condition and repaving schedule

• Potential to coordinate with development applications

• Criticality - consequences of failure - Impact on key facilities

- Potential environmental impact

- Economic impact

- Effect on fire protection

- Scale of service disruption.

.--

3s '~A ABBOTSFORD

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BUSINESS CASE TEMPLATE VERSION 06.06.2013

Business Case*

City Water 2014 Capital Program Oversizing Watermains (Development Driven)

Submitted by:

Karl Filiatrault, Eng. L. Senior Engineer, Water Utilities and Solid Waste

-461-

BUSINESS CASE - CITY WATER 2014 CAPITAL PROGRAM OVERSIZING WATERMAINS (DEVELOPMENT DRIVEN)

PAGE 1


[City Water 2014 Capital Program Oversizing Watermains (Development Driven)] What type of initiative is this? (select all that apply)

an increase in service level ☐ a decrease in service level ☐ a change in service delivery method to achieve savings ☐ an investment with a net financial payback (If so, complete the cash flow template.)

Program/project deliverables: (What will be done/built?) WWate




Watermains installed by developers will be oversized where necessary.

The City water distribution system will be upgraded by developers to meet future demands at a marginal cost to the City.

The cost will vary from project to project depending on the location and extent of the upgrades. The developer pays for all labor and installation costs as well as the materials costs for the pipe size required for their project. The City would pay incremental costs for materials only where a larger watermain is required for future downstream development. Funding for the incremental materials costs is from DCCs.

There is a slight risk that if downstream development does not proceed, the oversizing may not be necessary.

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BUSINESS CASE – CITY WATER 2014 CAPITAL PROGRAM OVERSIZING WATERMAINS (DEVELOPMENT DRIVEN)

PAGE 2


Description: In some cases the size of watermain required for a specific development project may not be adequate to support downstream future development. In these cases, installing a larger watermain during the development project results in significant cost saving. Instead of twinning the main at some point in the future, the developer is paid for the additional cost (of materials only) for installing the watermain size required for future downstream demands.

For example, if the developer only needs a 250mm watermain for their development but a 300mm watermain will be needed for future demands, they would be paid the difference in the price between 250mm and 300mm pipe. Additional labor or installation costs are not covered by this program. This is a fraction of the cost of twinning the main and uses less of the road right-of-way available for utility installations.




Deliverable Deliverable 1 – Installation of appropriate size watermains for future growth.

Adequate size watermains are installed at the time of development projects at a fraction of the cost of twinning a watermain at a future date.


N/A

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PAGE 3



Risks Risk Mitigation Strategy

1. Twinning the main in the future instead of right sizing at time of development would be significant increase in cost and cause additional disruption in the area.

N/A

Risk of Proceeding

Risk Assessment Risk Mitigation Strategy Slight to none N/A

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PAGE 4


Financial Analysis

Description:

Costs for the budget year are dependent on the location and extent of development. There would have to be a need for increasing the size of the watermain for the program to be implemented. The financial impact would depend on the amount of pipe installed. However, any costs incurred under this program would be a fraction of the cost of installing an additional watermain. Incremental Costs: The incremental cost depends on the length of pipe installed, how large of an increase in diameter is required and the difference in cost per metre of the pipe material. Incremental Revenue: N/A


Qualitative Summary Description Stakeholder(s) Impacted Benefits: None N/A Costs: None N/A

New Staffing Position Details

N/A

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City Water SCADA Upgrades and Replacement of Obsolete Equipment

What type of initiative is this? (select all that apply)

☐ an increase in service level ☐ a decrease in service level ☐ a change in service delivery method to achieve savings a replacement/maintaining existing service level ☐ an investment with a net financial payback (If so, complete the cash flow template.)





Supervisory Control and Data Acquisition (SCADA). This system allows us to remotely monitor many types of functions in the water system at real time, sends out alerts and alarms when problems are detected and provides the ability to change system settings from a remote laptop computer. SCADA is connected to wells, pump stations, treatment facilities and the City AMI meter reading system.

Replace serial SCADA radios with IP based radios. The 2006 SCADA upgrade project recommended upgrading in stages from all serial radios to IP radios. The IP radios provide faster speed and broader bandwidth to accommodate transmission of more data and data types (images, AMI data) through the communication network to SCADA.

Replace obsolete unsupported hardware at Selkirk and Highland water Booster stations.

Faster, more reliable communication capability Remote support capability Prevent system shutdown due to obsolete hardware failure

Cost is $66,000 Source is water reserves funded from utility rates

No risks

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City Water/Install Filling Station at Well Site

What type of initiative is this? (select all that apply) an increase in service level ☐ a decrease in service level a change in service delivery method to achieve savings ☐ a replacement/maintaining existing service level ☐ an investment with a net financial payback (If so, complete the cash flow template.)





An automated filling station will be installed at the Bevan Wellfield site. The filling station will complement two existing ones (at Townline and Farmer Wellfield sites). The fill station will be used regularly by contractors to fill up their water trucks (rather than using hydrants). The fill stations will also serve as emergency water fill locations for customers should areas of the City lose water service.

Better access for customers needing bulk water from the City Reduces the need for hydrant use permits and hydrant servicing after usage Reduces system contamination risk by minimizing the use of hydrants by contractors Provides a method of billing for bulk water based on volume Reduces the amount of non-revenue water

Estimated cost of the project is $60,000. The source of the funding is water reserves, which is funded from utilities user fees.

There is no risk.

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BUSINESS CASE - CITY WATER MOUNTAIN VILLAGE PUMP STATION RETROFIT PAGE 1

Business Case*

City Water Mountain Village Pump Station Retrofit

Submitted by:

Karl Filiatrault, Eng. L. Senior Engineer, Water Utilities & Solid Waste

-468-

BUSINESS CASE – CITY WATER MOUNTAIN VILLAGE PUMP STATION RETROFIT PAGE 2


City Water/Mountain Village Pump Station Retrofit

What type of initiative is this? (select all that apply) ☐ an increase in service level ☐ a decrease in service level ☐ a change in service delivery method to achieve savings a replacement/maintaining existing service level ☐ an investment with a net financial payback (If so, complete the cash flow template.)




Replace worn out pumps with new ones. Upgrade station controls and electrical. Replace old drives with variable frequency drives. The pumps are driven by electric motors. With the

existing drives the pumps can only be turned on or off. When they are turned on there is a large spike in energy use; the pumps can only run at 100% capacity and there is a pressure spike in the water system. When they shut off, a pressure wave can be created in the watermain. Variable frequency drives vary the voltage to the motors, start the pumps slowly and allow them to gradually ramp up to the required speed to provide the desired flow or pressure. The speed of the pumps can be varied from a near stop to 100%. This eliminates the large spike in electrical demand, saves money and prevents pressure surges in the water system.

Increased reliability of water supply to a large area of East Abbotsford. Electricity rates are calculated based on peak energy use. With the current drives, the large energy spike at

start up would be used to set the rate. With the variable frequency drives, the rate would be lower. In addition, the pumps can be run at a lower speed which uses less electricity. Energy savings in the range of 50% are expected when compared to the conventional drives.

Variable frequency drives eliminate the pressure surges encountered with the existing pump drive system. This will reduce the stress on watermains and extend the life of valves and pipes.

The estimated cost is $600,000. A station design and estimate is currently underway for this project. Detailed costs will be available when this work is complete. Grant funding for 50% of the more energy efficient pumps may be available for this project. For budgetary purposes, the cost provided has been taken from an earlier, similar project. Source is water reserves funded from utility user fees.

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Description: The Mountain Village pump station is the primary supply of water for Mountain Village, Eagle Mountain and the subdivisions east of Whatcom Road and south of the power lines. The secondary supply is a transmission main on the Whatcom Connector but this main only has adequate hydraulic pressure to be effective for short periods of time in the early hours of the morning.

This pump station was built in the early 1980’s and has never undergone a major upgrade. The pumps have been rebuilt and repaired a number of times, but are getting to the point where they are worn out and will not be serviceable. The existing drives are basic on/off systems and are not energy efficient. They are also obsolete and it is getting difficult to find parts for servicing.

If this station has a major failure, the secondary supply will not be able to maintain an adequate quantity of water for the area. The station retrofit has been deferred for two years, but it is recommended that it proceed at this time.

Section

Program/Project Deliverables 3


The specific deliverables of the project are: Deliverable Deliverable 1 – Replace worn out pumps Deliverable 2 – Replace electrical controls Deliverable 3 – Replace existing drives with variable frequency drives.


N/A

There are no risks.

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1. Pump failure – East Abbotsford water supply would be disrupted Retrofit with new pumps

2. Electrical or drive failure – East Abbotsford water supply would be disrupted Retrofit drives and electrical

3. Ongoing increased electrical costs The estimated annual cost to maintain the existing facility operable for a five year period is $17,500, with an initial cost of $180,000 to stock emergency replacement parts for one of the existing three pumps.

Risk of Proceeding

Risk Assessment Risk Mitigation Strategy 1. No risk N/A


Financial Analysis

Description: Estimated cost for the station retrofit is $600,000. Expected life expectancy of the new components is approximately 30 years. Incremental Costs: The total Capital cost of the proposed project is estimated at $600,000 with an anticipated useful life expectancy of 30 years. Operation of the new, more energy efficient pumps, drives and controls should result in a net reduction in the existing annual operating costs of approximately $2750. It is assumed that energy consumption for the facility will be reduced by 50%, resulting in a net present value for the project of $550,000 (rounded).

Incremental Revenue: N/A

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Qualitative Analysis – Non-Financial Benefits & Costs: Qualitative Summary Description Stakeholder(s) Impacted Benefits: Benefit 1 Provision of uninterrupted water supply Water customers in East

Abbotsford Benefit 2 Lower annual pump station operating costs All Abbotsford City water

customers Costs: N/A

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CASH FLOW TEMPLATE ‐ ABBOTSFORD BUSINESS CASE

Cash outflows are entered as negatives; cash inflows (or savings) are entered as positives.All figures used in this analysis should be "real" dollars; that is, no inflation should be factored in to this analysis.

Discount Rate 5% (real rate of return)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023CAPITAL CASH FLOWS (600,000) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

OPERATINGIncremental cashflow 1 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 Incremental cashflow 2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Incremental cashflow 3 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Incremental cashflow 4 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

NET CASH FLOWS (597,250)$ 2,750$ 2,750$ 2,750$ 2,750$ 2,750$ 2,750$ 2,750$ 2,750$ 2,750$

Net Present Value ($550,194)Discounted payback period (years) No Payback

-473-

SERVICE REPLACEMENTS (HWY 11 & BRADNER RD) PAGE 1

Business Case*

City Water Service Replacements (Hwy 11 & Bradner Rd)

Submitted by:

Karl Filiatrault, Eng. L. Senior Engineer, Water Utilities & Solid Waste

-474-

SERVICE REPLACEMENTS (HWY 11 & BRADNER ROAD) PAGE 2


Service Replacements (Hwy 11 & Bradner Road)

What type of initiative is this? (select all that apply)

an increase in service level ☐ a decrease in service level ☐ a change in service delivery method to achieve savings a replacement/maintaining existing service level ☐ an investment with a net financial payback (If so, complete the cash flow template.)





Existing non-compliant service connections will be replaced with new compliant ones.

Customers affected will have service connections that meet our current standard and will receive utilities bills and be accountable for consumption.

Estimated total cost is $250,000. Source is water reserves funded from utility user fees.

There is no risk

-475-


Purpose of an Executive Summary:


Description: We have discovered two service connections that do not provide an adequate level or service or meet the criteria of our bylaw.

In one case, at Highway 11, a service was provided across the railroad tracks to one property. This service is used to supply four other properties but there is only one account. When the service was installed, it should have been located further south and meters could have been installed for all the property owners. Currently the person that receives the invoice for water decides how they are going to split the bill between the property owners. The installation and distribution of costs contravenes a number of clauses in our bylaw.

In the other case, a property on Bradner Road was subdivided (we think in the 1970s) but the City did not require the owner to provide separate services to each new parcel. This is a requirement of our bylaw but the City seems to have missed this item or it may not have been a requirement at the time. Originally a service connection provided to the property supplied water to the barn and house. When the parcel was subdivided, the house was on one parcel and the barn on the other. In this case the owner of one property is charging the person on the other property an exorbitant amount to keep receiving water from their service (more than the total annual invoice). Unfortunately a short section of watermain needs to be installed to provide separate services so the cost is onerous for the homeowner affected. In addition to this, the service crosses a turkey farm and does not have a back flow prevention device installed on the service to the house. This could result in contamination of the water supply to the house.

In both cases, properly constructed and connected services need to be in place to preclude system contamination and to ensure accountability for water usage.

-476-





Deliverable Deliverable 1 – Install an adequate size water connection for the four properties on Highway 11 and provide metered services for each property Deliverable 2 – Install a short section of watermain on Bradner Road and provide a separate metered water service for the parcel that was subdivided from the farm.

This will provide individual metered services for each property and be in compliance with the City’s Waterworks Rates and Regulations Bylaw.




1. Health risk – the service line feeding the Bradner house does not have a back flow preventor and contaminated water could enter the service from the adjacent farming operation.

Disconnect the service to the house from the adjacent farm service.

2. Lack of accountability over bills leading to disputes and potentially legal actions.

Either forgive disputed bills in contravention of bylaw or take legal action.

Risk of Proceeding

Risk Assessment Risk Mitigation Strategy 1. No Risk N/A

-477-



Financial Analysis

Description:

The cost of replacing the non-conforming services is estimated to be $250,000. This is substantial due to the need for a rail crossing. We will collect user fees from all parties but it is not likely these fees will ever cover the cost of installing these services. The bylaw does give us the authority to have the non-conforming properties disconnected but they would not have an alternate source of water available. Unfortunately, due to the location of these properties, it is expensive to provide conforming service connections and it would be a significant burden for the property owners. These issues should have been dealt with at the time they occurred but forcing the issue now would put the burden on parties that were not responsible for the current situation. Incremental Costs: The capital cost of installing these connections is estimated to be $250,000. The bulk of the projects has a life expectancy of 75 years. Small service lines and meters, which only account for a few thousand dollars of the project, have a life expectancy of about 20 years. Incremental Revenue: The only revenue would be from water user fees, which is not considered incremental revenue.


Some of the costs and benefits may not be quantifiable (difficult to attach a dollar value). For example, non-quantifiable benefits may be changes in customer satisfaction, staff morale, or corporate image. Qualitative Summary Description Stakeholder(s) Impacted Benefits: Public health A separate connection to the City’s water supply

complete with back flow preventor would be provided.

A total of five properties

Customer satisfaction Each property would have its own metered connection for billing purposes

A total of five properties

Costs: N/A

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City Water/Replace Stairs on Cassiar Reservoir

What type of initiative is this? (select all that apply) ☐ an increase in service level ☐ a decrease in service level ☐ a change in service delivery method to achieve savings a replacement/maintaining existing service level ☐ an investment with a net financial payback (If so, complete the cash flow template.)





The existing stairs will be replaced with a new set that spans up a 50ft hill. The project requires a hillside stability assessment by a geotechnical engineer.

Service personnel will be able to safely access the reservoir for regular inspections and maintenance and during emergencies.

The estimated cost is $60,000. Source is water reserves which is funded from utility user fees.

None; however, there are safety and operational risks with not proceeding.

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roads sidewalks - jim approved done rb printed

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