Bottling of Toronto Tap Water (City Council on May 9, 10 and 11, 2000, adopted this Clause, without amendment.) The Works Committee recommends to Council the adoption of the report dated March 8, 2000, from the Commissioner of Works and Emergency Services. The Works Committee reports, for the information of Council, having requested: (1)

the Commissioner of Works and Emergency Services to report back to the Committee with a more detailed analysis of the net revenue generated in the jurisdictions cited in the report; and

(2)

the Medical Officer of Health to prepare a review of the literature and the policy considerations with regard to the use of chemicals, in particular the use of chlorine and aluminum compounds, and the presence of minerals and salts in the water, and report back thereon to the Board of Health and the Works Committee.

The Works Committee submits the following report (March 8, 2000) from the Commissioner of Works and Emergency Services: Purpose: The purpose of this report is to address a proposal by Mr. Tony O'Donohue, President, Environmental Probe Ltd., for building a bottled water processing facility at or adjacent to one of the City's water filtration plants, and to propose an alternative approach for bottling water produced at our plants. Financial Implications and Impact Statement : Financial implications of this report include the expenditure of up to $50,000.00 for professional services for a Market Research Study. These funds have been allowed for in the 2000 Water and Wastewater Operating Budget preliminary submission scheduled for approval in April. Recommendation: It is recommended that Water and Wastewater staff develop a strategy for the provision of City of Toronto bottled water in conjunction with Legal and Finance staff and report back in September of this year, and that Mr. T. O’Donohue of Environmental Probe Ltd. be advised of Council’s action. Background : The Works and Utilities Committee on May 19, 1999, had before it a proposal dated April 12, 1999, from Mr. Tony O’Donohue, President, Environmental Probe Ltd., with respect to the sale

of bottled water and the construction of a water-bottling plant. It was proposed by Mr. O’Donohue that a bottled water processing facility be built on or adjacent to one of the City’s water filtration plants, that the water be provided prior to fluoridation, and that different types of bottled water including carbonated or non-carbonated, with added salts and/or minerals, could be offered. The bottled water would meet all the Maximum Acceptable Concentration limits stipulated by the Ontario Drinking Water Objectives. It was indicated that if the City wishes to participate in a joint venture for the bottled water processing, it would be acceptable to Environmental Probe Ltd. Additionally, information was requested on the issues raised by the Members of the Committee. Such issues included: (a) (b) (c)

civic regulation of bottled water; volume required in the context of the whole water supply, in comparison with that required for (Toronto) beer; and odours from high algae content last summer.

Comments: Mr. O’Donohue’s proposal regarding the production of bottled water has been reviewed to assess its feasibility. This review has included determining the feasibility of his proposal considering the water treatment process used in our facilities. Regulatory and public perception issues were also addressed. Research in regards to bottled water experiences with other utilities was also conducted through the American Water Works Association Research Foundation. Work was also carried out in regards to bottling of Toronto water by Toronto staff to confirm the feasibility of this approach. Furthermore, there is ongoing quality assurance work to confirm the shelf life of this bottled water. The results of this review, more fully described below, will be communicated to Mr. O’Donohue prior to the Works Committee meeting. Toronto operates four water filtration plants. The R.C. Harris and R.L. Clark plants are located in predominantly residential neighbourhoods. The Island Plant is located on the Centre Island. The Horgan plant is located in a predominantly industrial area. Accordingly, the Horgan plant would be the most suitable location for accommodating a water bottling facility. To assess the impact on water treatment capacity of a water-bottling program, we have assumed the production of 200 cases of 12 half-litre bottles per day or 1,200 litres per day. The amount of water required for such an undertaking would be 438,000 litres on an annual basis. This is the amount of water typically delivered in 30 seconds in the City. Given that the average amount of water delivered in the City is approximately 1,250 million litres per day, the assumed volumes for bottling water can be readily accommodated. The proposal suggests bottling water supplied from a City of Toronto water treatment plant prior to addition of fluoride. Currently, at all plants, the water at that point in the process is not fully treated and would not meet drinking water standards. In particular, the water has not been disinfected and would not be safe for consumption without further treatment. Therefore additional processing prior to bottling would be required to carry out the disinfection along with associated laboratory testing to confirm the quality of the water produced by the bottling facility.

Completely treated water without fluoride can only be provided by interrupting fluoridation. Although it is possible to stop fluoridation for a few hours to enable supply of otherwise fully treated water, such a practice is not practical and would result in water supplied to our customers that is inconsistent in regards to fluoride content. Fluoride is added to water as a result of its proven effectiveness in helping to prevent tooth decay. Fluoridation continues to be endorsed by Health Canada, The Canadian Public Health Association, The Canadian Dental Association, other government and health-related organizations and Toronto’s Medical Officer of Health. To address concerns regarding possible over exposure to fluoride as a result of additional sources such as toothpaste, the level of fluoride added to Toronto’s drinking water was reduced to 0.8 mg/L (milligrams per litre or parts per million) during 1999 following consultation with Toronto and York Region’s Medical Officers of Health. This is at the lower end of Health Canada’s recommended range of 0.8 to 1.0 mg/L as an optimum concentration in drinking water following an extensive review of the risks and benefits of fluoridation. Mr. O’Donohue’s proposal also suggests that bottled water may be carbonated or non-carbonated and have salts and/or minerals added. The specific constituents and amounts would be limited so as not to exceed Ontario Drinking Water Objectives. Changes of this nature would result in a product that is significantly different in content than Toronto’s tap water. Toronto Water Supply cannot endorse bottled water as proposed by Mr. O’Donohue as “Toronto Water” since it is not fully treated at a City facility and will not be same as the water at the tap. A water processing and bottling facility at or adjacent to a water treatment plant producing water of a different nature could result in a perception that the quality of water produced at the plant is inadequate. Consequently, partnership or a joint venture with Environmental Probe Ltd. as proposed is not recommended. This does not preclude Environmental Probe Ltd. from constructing a plant and bottling water available from the “tap” with added carbonation, minerals, etc. As referenced by Mr. O’Donohue in his proposal, an independent study conducted by the Department of Public Health of the (former) City of Toronto in 1990 concluded that tap water was the best choice for drinking water in terms of overall health risk. The City of Toronto Water Supply has been pursuing its own bottled water project where the water that is bottled is the same as that leaving the water treatment plants. To date, bottling has been done on a small scale for promotional purposes on the initiative of our staff at the F.J. Horgan Filtration Plant. To further investigate this prospect, a number of utilities in the USA that have bottled their own water were reviewed. The following provides a brief summary of their experiences. In Louisville, Kentucky, the water utility began its bottle-your-own program in the fall 1997. Using focus groups to find out why customers bought bottled water, the Louisville Water Co. concluded that the convenience of a portable, potable package was an important factor, and participants often said they refilled the commercial water bottles with tap water. The utility’s bottle-your-own campaign called “PureTap” has four major messages: (1) Louisville’s tap water

tastes great, (2) water is good for you, (3) tap water is inexpensive, and (4) there are distribution centre taps everywhere. Within a year, the private utility, which serves 750,000 people, gave away 100,000 half litre sports bottles. Important to their campaign's success was the involvement of employees. The campaign was first presented to employees for their feedback, and employees selected the label design that is used on the bottles. Another utility, Water District 1 of Johnson County, Kansas, created a promotional campaign that began in 1997 to highlight the high quality of its water. Taking a lead from designer waters, the district created a special label and hang tag for sports bottles urging customers to "Fill'er up ... with H2Ohhh! Drink it up." Both the bottle and the hang tag indicated how to get complete information on the analysis of the district's tap water quality, and the tag pointed out that the bottle could be filled more than 25 times for less than a penny. In the City of Toronto, one penny would provide approximately 20 refills. The bottles were distributed free. The district gave out about 15,000 bottles in 1997. People come in especially requesting them for their children's baseball and soccer activities. A Southern California utility gives away municipally bottled water to public and private high schools to be used or sold by the schools to help raise funds. In addition to being a source of income for the schools, it helped the utility further its own educational and public relations goals. Calling the program “Splash Into Cash”, the Southern California utility began bottling its water first for its own promotional uses. Thus, the bottled water concept was formed, and the city began bottling its water and distributing or selling it at city and community events. The public outreach program promoted by the utility has received “positive feedback”. The Kansas City (Missouri) Water Department has diversified into the bottled water business. Their mission for the project is to provide convenience for the customer, promote Kansas City, and produce revenue. After researching the bottled water industry for two years with the help of a consultant, the city found the industry fragmented and consumers motivated to buy bottled water for a variety of reasons. The city decided to go with a private label from a commercial bottler, eliminating the need for building or modifying a treatment plant. The half-litre bottles are sold by the case (24 bottles) to city departments, city golf courses, not-for-profit organizations, and retailers. The city realizes about 24 percent profit, after donations of the product, on each truckload. In the United States, bottled water is regulated as a packaged food product by Food and Drug Administration (FDA), under the Federal Food, Drug and Cosmetic Act (FFDCA). This includes packaged water sold in smaller containers at retail outlets as well as larger five-gallon containers distributed to the home and office market. Bottled water is subject to FDA’s extensive food safety and labelling requirements. In Canada, bottled water is also classified as a food product as in the US. Although it is regulated through the Food and Drug Act, the regulations for bottled water are not as stringent as those for the municipal water. In a summary statement on bottled water, the Canadian Water Works Association (CWWA) states that “CWWA is concerned that marketing strategies of the manufacturers, distributors or retailers of these (commercial bottled water) products, plus the lack of regulation and inspection on the products may leave some residents vulnerable to

heightened health risks, unnecessary economic burdens, and may make it more difficult to provide municipal water services effectively and efficiently”. The Regional Municipality of Ottawa Carleton Water Division staff have bottled their own water at the rate of 5,000 to 10,000 bottles per year since 1997. They have distributed bottled water on a cost recovery basis to support internal events and non-profit groups in the community for promotional purposes. Due to high cost of manual operation and higher demand for bottled water, the Region has prepared a business case to develop terms of reference and a marketing plan for the bottled water for a pilot project of 20,000 bottles during the first year. The plan would investigate various options such as manual bottling, automated production, and/or out-sourcing and is being presented to the council/committee for approval and implementation by the spring 2000. We are also reviewing the plans and/or experiences of neighbouring municipalities (Durham, Peel, Halton and Hamilton-Wentworth) with respect to bottled water. This topic has also been placed on the agenda of the next meeting on June 29, 2000, of the Western Lake Ontario Water and Wastewater Groups of which Toronto Water Supply is a long standing member. Given the positive experiences of other utilities, it is advisable that the City of Toronto proceed with its own bottling water project on a larger scale. We believe that the fundamental purpose for provision of City of Toronto bottled water should be to: (i) (ii) (iii)

reiterate the quality of municipal water; provide convenience and portability of drinking water; and provide a marketing opportunity for related issues such as water efficiency.

Bottling of the City water using our own staff and facilities is feasible for producing small batches of up to 200 bottles per day. Since this approach is labour-intensive, it is not appropriate for larger-scale production runs of bottled water, but will be continued in the meantime for production of promotional bottles. We are planning to provide bottled water using this method for special events such as Drinking Water Month scheduled for June of this year. In the interim, City water could also be provided to other Departments on a cost recovery basis. The availability of staff to meet this need is being assessed. Interim labelling will be utilized pending final label design which would be part of the overall bottled water strategy. Options available for larger scale productions of bottled water include: (1)

Purchase a “mini” bottling facility for the F.J. Horgan Filtration Plant. A “mini” bottling facility is estimated to cost approximately $50,000.00 for purchase and would provide capability of automated production of about 500 cases (6,000 bottles) within an eight-hour duration. The production cost would be approximately $30,000.00 for every 100,000 bottles. Allowing for a ten-year life for the bottling plant, the cost would be approximately 40 cents per bottle.

(2)

Purchase and install a large-scale bottling plant.

(3)

Contract out bottling operation.

(4)

Enter into a public-private partnership for producing, marketing and selling bottled water.

These options require further assessment in the development of an overall strategy which would address business, legal and regulatory issues as well as public perception. These issues would be assessed by staff from Water and Wastewater, Works and Emergency Services Communications, along with Corporate Finance and Legal. Outside professional services will be required to conduct marketing research. The preliminary cost for this is estimated at less than $50,000.00 and funding will be obtained as required. The issue of drinking water taste and odour has been reviewed in the context of bottling Toronto tap water. It is acknowledged that in recent years there have been occurrences of unpleasant taste and odour in the drinking water produced at Toronto’s water treatment plants for several weeks during late summer and fall. These events are generally caused by seasonal changes in the lake water resulting in higher than normal temperatures and blooms of naturally occurring algae producing low levels of Geosmin and two-Methylisoborneol (MIB). The noticeable earthy, musty taste and odour is typically an aesthetic condition which does not pose a health risk to consumers. Taste and odour control facilities using Powdered Activated Carbon (PAC) installed at two plants namely Horgan and Clark Filtration Plants for the 1999 season were successful in reducing the intensity of taste and odour and will be enhanced for 2000. At the Island Filtration Plant, existing anthracite in the filter beds has been replaced with Granular Activated Carbon (GAC) for taste and odour control. Similar conversion (from anthracite to GAC) will be carried out at the Harris Filtration Plant prior to the 2000 taste and odour season. These measures designed to alleviate the taste and odour concerns are expected to preclude any impacts on a municipal water-bottling program. Following Mayor Mel Lastman’s announcement that Toronto would get its own beer, “Toronto's Own” debuted in 1999 in partnership with Molson Breweries. It was expected that the beer would have a unique Toronto character in its taste, colour and distinctive packaging. It was also reported that Molson Breweries would support the construction of two recreational waterparks in the city with the sale of the first 150,000 cases. The City of Toronto’s own bottled water “Toronto on Tap” could piggyback on “Toronto’s Own” beer initiative. Conclusions : In view of the above assessment, a joint venture with Environmental Probe Ltd. for bottling municipal water on the basis of the proposal received is not recommended. Water and Wastewater Services staff should develop a strategy to provide true municipal bottled water and report back to the Works Committee in September of this year. Pending development and implementation of this strategy, small scale water bottling will be carried out for special promotional activities.

Contact: Mr. H.A. Taniguchi, P. Eng., Director, Water Supply Phone: (416) 392-8220; Fax: (416) 392-3639 E-mail: [email protected] _________ Mr. Tony O’Donohue, President, Environmental Probe Ltd., appeared before the Works Committee in connection with the foregoing matter.