Apparently they slapped this fee on the water bill that you can only get removed if you are inspected and they see you only have 1.6 (or 1.28 toilets). But it's only $4/month so it will take a lot of flushes to make up the difference in water savings. It's good to know though that Totos are still the first choice. We have been very happy with ours and if we go to the 1.28 (the city is currently offering a rebate on those), then I trust Toto to still make them work.
How much is the rebate? You are in the enviable position of having a toilet replacement payout in a reasonable period of time. You should be able to get a 1.28 gpf CEFIONTECT EcoDrake for something like $300. I've got three and they work well.
If you do the HET's you will be one step ahead of the game if they later instituted a $4/charge for toilets over 1.28 gpf.
From that you can deduct the following:
1. Rebate (You didn't say how much I'll guess $50)
2. Income tax deduction if you donate the old toilets to a Habitat ReStore or other similar. My local store sells toilets for $35/ea so I am going to claim that for the donation. Let's say this is worth 20% on your tax refund, it would work out to $7/toilet.
3. That $4/month penalty. ($48/year)
4. Reduced water charges (e.g. 8 flushes per day/toilet, $2/ccf water = 8 * (3.5 - 1.3) * 365 = 6,400 gal/yr toilet, about $17/yr per toilet)
5. Reduced sewer charges roughly the same calc as above if you have a volume charge for the sewer. Ours is adjusted annually based on winter consumption.
All told your economics could be something like:
$600 for toilets - $100 rebate - $14 donation credit = $486
$48/year removed penalty - $34/year water - $34/year sewer = $116/yr reduced utilities.
Payback would be 486/116/yr = 4.2 years. That's nearly 24% annual simple interest. Wish I could get that out of my 401k.