The council applied to Canada’s main PPP authority for funding in June and must now assess the business case for the plan.
"Given the magnitude of the financial challenge facing the city's water utility, funding options have remained open," said a city staff report ahead of a council meeting on the issue this week.
According to Paul Groody, the head of the water utility, the city will need CAN$3.5m (US$3.46m) for the next round of water treatment projects, set to begin after stimulus funds dry up at the end of March.
Under an eight-year plan for the city's ageing water infrastructure, millions of dollars a year would be required - including more than CAN$60m in the fifth, sixth and seventh years of the plan.
The city has also been in talks with the Federation of Canadian Municipalities about accessing funding from its Green Municipal Fund.