Corporate Report Report from Parks, Recreation and Culture Services, Director

Date of Report: July 5, 2018 Date of Meeting: July 9, 2018

Report Number: PRCS-171-2018 File: 68.31.99, 68.32.99

Subject: City Ban on Sale of Bottled Beverages in Municipal Facilities

Recommendation That Council direct staff to instruct Coca-Cola Refreshments Canada Company (CCRC) to remove all from its vending locations at City owned facilities effective immediately; and

That Council direct staff to exempt the Meridian Centre, FirstOntario Performing Arts Centre, Garden City Golf Course and Welland Canals Centre / St. Catharines Museum from the ban to sell water in plastic bottles for a period of three years or until such time that a more viable way to provide water to visitors is identified; and

That Council direct staff to notify CCRC of its intent to ban all plastic bottles within one year; and

That Council direct staff to negotiate the required changes to the current agreement between the City and CCRC resulting from the ban on all plastic bottles; and

Further, that Council direct staff to install five water filling stations in 2019 at City owned facilities and to fund the associated costs from the 2019 Operating Budget. FORTHWITH Summary This report provides Council with the information in order to implement an immediate ban on the sale of water in plastic bottles at City-owned facilities, as well as a ban based on best practices in Ontario municipalities. A report will be presented to Council at the appropriate time to provide Council with an implementation strategy, budget, implications for existing contracts and agreements, communications plan, and education strategy with timelines for implementation of the plastic bottle plan. Background At its January 29, 2018 meeting, Council directed staff to: 1. Ban the sale of plastic bottled water in municipal facilities effective immediately (Part One).

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2. That Part One be referred to staff for a report by March 5, 2018, on how to implement a ban, including information on required infrastructure for refill stations and an education campaign. 3. Prepare a comprehensive plan to fully implement a plastic bottle ban based on best practices in Ontario municipalities and to provide Council with an implementation strategy, budget, implications for existing contracts and agreements, communications plan, and education strategy with timelines for implementation. In response to Council’s direction, a staff working group has been formed to determine the appropriate next steps to address Council’s short and long term direction to staff. Staff have determined that the City must consider the impacts of Council’s direction on the following areas: 1. Current agreement with CCRC and the potential loss in revenue; 2. Current and future lease agreements with third party concessions operators at City owned facilities; and 3. Costs associated with the necessary communications plan and education strategy. In March 2018, a memo was circulated to Council to explain that this process had begun. Report Coca Cola Refreshments Canada Company Contract In 2014, and as part of the initial marketing strategy of the Meridian Centre, an agreement between the City and CCRC was struck. The agreement includes provisions which allows CCRC to sell beverages including its bottled water products at City owned facilities through its vending machines and through the City’s third party concessions operators. The agreement also includes an exclusivity clause which prevents the sale of any other beverage product not distributed by CCRC. The agreement expires at the later of May 31, 2024, or when the City has paid for a minimum volume of 120,000 standard physical cases.

The City gains from the agreement with CCRC through various means: 1. An annual lump sum payment of $75,000 from CCRC to the City of St. Catharines for sponsorship; 2. An annual amount based on sales performance from the sales of CCRC products (35% of the sales from CCRC vending machines); 3. An annual amount of CCRC products (cases of products valued up to $1,000) that the City uses for its annual staff appreciation lunch and other special events (but not sold); 4. An annual $1,000 cash allowance that may be used to purchase CCRC branded products such as patio umbrellas, coolers, waste receptacles, etc., which have been used at Market Square and its related events and at the Garden City Golf Course; 5. An annual rebate payable to SMG based on sales volumes at the Meridian Centre.

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Since the start of the agreement in 2014, the City has received $300,000 + HST in annual exclusivity and performance allowances plus an additional $59,060 in vending commissions from CCRC. A total of 400 cases of CCRC beverages and a number of other CCRC branded products have also been provided.

Staff have met with CCRC representatives to discuss Council’s short and long term plans. CCRC has recently informed staff that, under the existing contract, bottled water can be removed from vending machines and the third party operated concessions. However, staff were also informed that the bottled water product would simply be replaced with other CCRC products which may include flavoured water products. The immediate removal of water in plastic bottles from CCRC vending machines and from third party concessions operators at City owned facilities will not result in a material change to the current agreement.

Sales figures provided by CCRC from 2014 to 2016 show that sparkling beverages (soft drinks) represented the highest volume but that sales figures were trending lower each year. The figures also showed that CCRC’s bottled water brand (Dasani) represented the second highest volume but that sales figures were trending higher each year.

Staff are recommending that the City formally notify CCRC of its intent to eventually ban the sale of all beverages in plastic bottles. At this time, it is unknown how this would impact the current agreement and staff are asking for Council’s direction to negotiate with CCRC to determine what the impacts will be. Staff will report back to inform Council of the impacts and make recommendations to move forward.

Impact to Meridian Centre, FirstOntario Performing Arts Centre (PAC), Garden City Golf Course (GCGC), and Welland Canals Centre / St. Catharines Museum (Museum) At this time, staff are recommending that the sites listed above be exempt from the immediate bottled water ban. Representatives from the Meridian Centre and PAC have identified that their respective facilities have special needs as it relates to the sale of bottled water. Although water filling stations are available at both locations, they have not been promoted to the general public for various reasons such as: 1. Sales performance based rebates from the sale of beverages; 2. The distribution of water at the concessions areas would require additional equipment and capital upgrades to the facilities (fountain distribution); 3. Water will have to be dispensed in wax coated cups which are not recyclable.

At this time, the only source of cooled water at the GCGC is at the clubhouse and a mobile cart. Outdoor water filling stations with cooling can be installed at different locations throughout the golf course and at the clubhouse but would require infrastructure upgrades and equipment purchases or leases. Due to the uncertain future of the GCGC, staff are not recommending any capital expenditures at this time. Staff are however recommending that the GCGC be exempted from the ban on bottled water sales at this time and until the future of the GCGC is determined.

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The Museum is visited by over 40,000 visitors annually, including over 200 bus tours. CCRC sales figures show that 213 cases of bottled water are sold at the Museum annually, and the trend is increasing annually. While there is a newly installed water filling station at the Museum, staff are recommending that the Museum be exempted from the ban on bottled water sales in order to provide visitors, especially those who arrive on tour buses, the ability to purchase water if they do not have refillable bottles.

Water Filling Stations At this time, additional water filling stations were not included in the 2018 Operating Budget, but staff estimate that the indoor water filling stations range in price between $4,000 to $5,000, and the outdoor units range in price between $7,000 to $9,000. Staff can replace existing water fountains in City facilities quite easily in most cases. The installation of future water filling stations can be completed by City staff and can be scheduled throughout the year. Staff are recommending that the funds required for future indoor and outdoor water filling stations be sourced from the Civic Project Fund.

Five outdoor water filling stations are recommended to be installed in 2019 at the following locations at an approximate cost of $50,000: Kiwanis Field, Burgoyne Woods, Montebello Park, Lancaster Park, and Pearson Park. A strategy to identify future locations of water filling stations will be provided to Council at a later date, along with recommendations for funding. Financial Implications At this time, the complete financial impact of the City’s negotiations with CCRC are unknown. With the immediate ban on water in plastic bottles taking immediate effect, CCRC will simply replace water with other CCRC products. The City’s commission per units sold will not be affected, but the total number of units sold may be affected. The staff recommendation is anticipated to have a minor but negative impact of revenue in 2019. Should Council wish to implement a full ban with no facility exemptions (i.e. Meridian Centre, FirstOntario Performing Arts Centre, etc.), revenue would be more negatively affected.

The installation of five new water filling stations at Kiwanis Field, Burgoyne Woods, Montebello Park, Lancaster Park, and Pearson Park may cost up to $50,000. Staff are recommending using the Civic Project Fund for this initiative.

The future impact of a full ban on plastic bottles is not know at this time and would require a renegotiation of the existing contract with CCRC. However, there is the potential for significant revenue reduction compared to the status quo.

Relationship to Strategic Plan This report is related the environmental sustainability goal to lead in the protection of our environment for future generations and the action item to establish a plan to integrate green energy and sustainable technologies in municipal infrastructure and program delivery.

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Conclusion The Council approved ban on the sale of water in plastic bottles will take effect immediately, except at the Meridian Centre, FirstOntario Performing Arts Centre, Museum, and Garden City Golf Course. With Council’s direction to do so, staff will enter into discussions with Coca-Cola Refreshments Company Canada to determine the financial impacts of a complete ban on the sale of beverages in plastic bottles at City owned facilities. Five water filling stations will be installed at five parks in 2019. Notification It is in order to notify the following: • Coca-Cola Refreshments Company Canada • Mr. Richard McLaughlin • Ms. Callei Bellamy

Prepared by and Submitted by: Phil Cristi Director of Parks, Recreation and Culture Services

Approved by: David Oakes Deputy Chief Administrative Officer

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