Receive Overview of Framework for Water Efficiency Grant Program and Consider Recommending Adoption of Resolution #20-018 to Enter into Clean Water Fund Grant Agreement with Metropolitan Council to Receive Grant Funds

The City of Ramsey has been awarded $28,000 in grant funds through the Metropolitan Council's 2019-2022 Water Efficiency Grant Program (the "Program") for use in a rebate program. As the name of the Program implies, the purpose of the grant is to implement water efficient technologies to reduce the demand on water supply.

There are two (2) primary financial requirements of the Program. First, the municipality must contribute twenty-five percent (25%) of the grant award, which equates to $9,340, Second, that rebate recipients must also have a financial contribution (e.g. the grant funds and the City contribution cannot entirely cover the cost of the purchase). Other important eligibility requirements include the rebate recipient being a municipal water customer (this means that anyone on a private well is not eligible), only applicable to replacement devices (meaning that new construction is not eligible), and the rebate is only applicable for the cost of the device and its installation, excluding any owner labor costs.

Staff estimates 20 minutes for the presentation and questions.

While the funds are provided through the Metropolitan Council via the Clean Water, Land and Legacy Amendment, grant recipients are responsible for developing their own program. Staff from the Engineering, Utilities, Community Development and Administration Departments met to discuss the framework for a rebate program. While it was clear that more efficient irrigation controllers would likely provide the biggest water savings, it was acknowledged that that alone would exclude a number of otherwise eligible property owners (all properties that do not have in-ground irrigation systems). Thus, it was agreed to also consider WaterSense labeled toilets as another option for rebates.

During the summer months, the greatest demand for water comes from irrigation. Therefore, replacement of older, clock-timer irrigation controllers with a WaterSense labeled smart controller is one of the eligible rebate options. Additionally, an irrigation audit, which helps ensure an irrigation system is operating efficiently and accurately, conducted by a WaterSense certified irrigation professional, is another eligible rebate option. If residents take full advantage of this part of the Program, it could result in an estimated savings of approximately 1 million gallons of water (based on numbers provided by the Metropolitan Council from the 2015-2017 Water Efficiency Grant Program).

As previously noted, Staff wanted to ensure that any municipal water customer (excluding new construction/new development) had an opportunity to realize both water savings and financial savings. Thus, another option available for those customers is a rebate for the replacement of older toilets with a WaterSense labeled toilet. If residents take full advantage of this part of the Program, it could result in an estimated savings of about 900,000 gallons of water (again, based on numbers provided by the Metropolitan Council from the 2015-2017 Water Efficiency Grant Program).

The rebates would be available on a first come first served basis, as long as funds last (or until the close of the program, which is June 30, 2022). Rebates for an individual device can be up to $200, and cumulatively, shall not exceed $500 per metered water supply customer. The water supply customer shall be responsible for the sales tax on the device, thus satisfying the requirement that they have a financial investment in the upgrade.

There is a wide range of price points for qualifying devices (both WaterSense labeled smart controllers and toilets). The intention is to incentivize the water efficiency upgrades significantly by having the rebate cover as much of the device cost as possible while also attempting to spread the rebates out across a number of households. There are a number of these devices that could be entirely covered by the rebate amount; however, there are also eligible devices that greatly exceed the rebate maximum. Thus, the cap on the rebate amount will help spread the funds out to benefit more property owners.

Administration of the rebate program will be coordinated by the Community Development and Engineering Departments, but will also include Finance Staff as well for issuance of the rebates. Per the required Grant Agreement, the City will have to provide quarterly reporting to the Metropolitan Council. Reporting forms will be provided by Metropolitan Council staff and is assumed to include: property address, property type (residential/commercial), device replaced, number of devices, grant amount per device, estimated annual water savings, municipal contribution, and eligible grant amount (rebate amount per device minus municipal contribution).

At their January 13, 2020 meeting, the Environmental Policy Board reviewed this case and provided support with moving forward.  They did, however, note a desire for the City to offer a similar program for any property owner, regardless of whether they were a municipal water customer or not.  They acknowledged that those on private wells are not eligible for this grant, but if this program is successful, it should be considered a pilot program the City could build and expand upon in the future with the goal for further reducing demand on groundwater.

Alternatives

Alternative 1: Motion to recommend the City Council authorize the execution of the Clean Water Fund Grant Agreement with the Metropolitan Council and accept the $28,000 Water Efficiency Grant. A Smart Irrigation Rebate Program has been on the Environmental Policy Board's Work Plan since 2017 and in 2019 it was added to the City Council's Strategic Plan. This grant will help accomplish that action from both plans. Furthermore, if this program proves to be valuable and effective, it could serve as a blue print for an expanded program that also includes those on private wells. Staff supports this option.

Alternative 2: Motion to recommend the City Council not execute the Clean Water Fund Grant Agreement and not accept the grant funds. If the City wants to implement any sort of incentive program to reduce the demand on drinking water supply, this action would result in the City fully funding any such program.

Funding for this program would consist 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).

The Environmental Policy Board (EPB) reviewed this information at their January meeting and recommended City Council adopt Resolution #20-018 to enter into the Clean Water Fund Agreement with the Metropolitan Council to accept the $28,000 grant to implement a water efficiency rebate program.

Motion to recommend the City Council adopt Resolution #20-018 to enter into the Clean Water Fund Grant Agreement with the Metropolitan Council and to accept the $28,000 grant to implement a water efficiency rebate program.