Motion to Adopt Resolution #21-118 Modifying the Water Efficiency Grant Program to include a separate commercial/HOA rebate category.

The purpose of this case is twofold.  First, it is to provide City Council with an update on the Water Efficiency Rebate Program and secondly, it is to consider a program modification to create a rebate category catered specifically to Commercial/Home Owners Associations.

For background purposes, the City was awarded $28,000 in grant funds from the Metropolitan Council to implement a water efficiency grant/rebate program.  The program will run through June 30, 2022 or until grant funds are exhausted, whichever comes first.  The program currently allows for a rebate of up to $200 per device ($500 cap for household) to replace inefficient toilets and older, less efficient irrigation controllers.  Any property, commercial or residential, that is currently served by the City's water system is eligible to participate in this program. 

Notification is not required.

The rebate program began in May of 2020.  As of the writing of this case, there have been forty-five (45) property owners that have taken advantage of this program.  The bulk of the rebates have been for smart irrigation controllers.  More specifically, there have been thirty-two (32) rebates for smart irrigation controllers; eight (8) rebates for WaterSense labeled toilets; and five (5) rebates that have been for both smart irrigation controllers and WaterSense labeled toilets.  The grant funds have covered $8,224.39 worth of rebates with the City's contribution (per the Grant Agreement) covering $2,741.46. 

The City was contacted earlier this year by a resident within a Home Owner's Association about their ability to apply for a rebate.  While they are eligible under the current criteria, they noted that the equipment for the HOA was more aligned with that of commercial irrigation systems and that a smart irrigation controller of the commercial variety can be more expensive than that of a traditional single family residential unit.

While these commercial style units can be more expensive, there is also a much greater potential for water savings (cover much larger areas that a standard single family residential lot), which is the primary purpose of the rebate program.  The Environmental Policy Board (EPB) did review this request and supported the creation of a separate commercial/HOA category with a higher cap on the rebate.  The primary concern that the EPB raised was not allocating too much of the grant funds to a single project.  Essentially, the EPB supported incentivizing this type of a project, due to the potential for greater water savings, without drastically reducing the available funds, which would reduce the opportunity for all eligible properties.  The EPB also noted that as the grant deadline (June 30, 2022) gets nearer, increasing the rebate amount may make sense if it looked like there may be unused grant dollars.

After reviewing the costs of these commercial scale controllers, it appears that an average cost is around $700.  Depending on the property and the original design of the irrigation system, a single controller or multiple controllers may be present.  Additionally, commercial properties oftentimes have a greater number of toilets than a single family residence, so creating a separate category with a greater cap per property would also provide more incentive for commercial property owners to upgrade older, less efficient toilets.  Thus, Staff is recommending that the Water Efficiency Rebate Program be modified to include a separate, commercial/HOA category with a per device rebate cap of $700 (device only, excludes sales tax and labor, in line with the current program) with a cumulative cap of $1,400.

Funding for the Water Efficiency Grant Program consists of three sources: $28,000 from the Water Efficiency Grant from the Metropolitan Council, $9,340 from the City's Water Fund (this is equivalent to the required 25% municipal contribution), and any rebate participant would cover the sales tax on the purchase of the device (thus satisfying the requirement for the rebate participant to have a financial contribution in the program) plus any amount that exceeds the per device cap.

The EPB recommends amending the Water Efficiency Grant Program to create a separate rebate category specifically for commercial/HOA properties.

Motion to adopt Resolution #21-118 Modifying the Water Efficiency Grant Program to include a separate commercial/HOA rebate category.