A pump is connected to the tank and grey water used to flush your toilets etc.
With respect to the drain at #5 I'm not sure what they are saying other than they will run a pipe to the street from your house and then run another pipe under the street or nature strips to a barrel drain at #5.
Yes this is very expensive and $25k is probably about right. It becomes a big project to do that because you are excavating a trench 4 houses long. Downside is that your neighbours will love you for it because they will just connect into it for free. You've done the hard work.
That was my understanding. I'm not sure why they are saying we need to pipe down to number 5. Shouldn't we just be able to discharge onto the street and let it flow down to the drain?