Sunday, 16 December 2012

City Council Monday - More Possible Conflicts of Interest?

Good afternoon Regina!

With all of the world events as of late, I won't say too much more on the subject other than, make sure you hug your loved ones, let go of grudges, celebrate good times and bad, and enjoy what you do have. Because, you simply never know what tomorrow will bring.

Well, here we are just over a week away from Christmas, and so much is happening, yet again, in the City of Regina, and specifically at City Council. Tomorrow at Council, there are a number of items on the Agenda, one notably being the update on the Waste Water Treatment Plant (WWTP) upgrades that has been going on (in theory) for a number of years now. This began several years ago, when the City of Regina began implementing 9% annual water rate increases in order to pay for these upgrades. It should be noted that the water utility is intended to be a self-sufficient program, and that is why the need for the rate increases, rather than through a property tax allocation or other financing arrangements.

Back in 2008, the cost estimates for the WWTP upgrades were around $120M, and the City of Regina applied to increase our debt by $100M to pay for these upgrades. At the time, it was noted in reports that the upgrades had to be completed by 2011-2012 in order to meet "tightening standards" by provincial and federal governments. Fast forward to today, December 2012, and the most recent updates show that the anticipated cost is now $207M+ by 2015, and the "tightening standards" are now by Dec 31, 2016. This brings up several unanswered questions. Where are we expecting to get the extra $87M+ that wasn't allocated back in 2008? Why has little been done in the last four years on this project? What are these new standards that it seems only the City of Regina is concerned about? Why did they not factor in a simple economic principle, such as inflation, into the original cost estimates? Why the need for continual mass construction projects in Regina, when other centres don't seem to be affected as much? Why are Reginans paying 56% higher for water than Saskatoon? Why were we deemed to be one of the best wastewater treatment facilities in Canada in the early 2000's and now, suddenly, we consider ourselves one of the lowest? (Note: I cannot find any external government document confirming we are one of the worst now.) If we continue to go to the Provincial and Federal Governments for handouts for our massive crumbling infrastructure, why don't we start using some of this extra money that we are allocating to projects like the WWTP and RRI? The RRI is definitely a want, and the WWTP seem to be far more expensive/massive than we require.

There are so many unanswered questions happening here, that it truly concerns me as a taxpaying citizen of the City of Regina, as it should concern you. These are SERIOUS questions that NEED to be answered, before we blindly allow City Council to simply rubber stamp these kinds of massive infrastructure projects. Mind you, this week is only an "update" report to be received and filed, but it certainly does open the door to a lot of questions that I had simply accepted as "oh it must need to be done, after all, it's our water".

As for the conflict of interest thoughts....Consider this: Members of Council are required to declare a pecuniary interest when they or a closely connected person (including employer) can potentially financially gain from a decision of council. Consider the role of the President of the Saskatchewan Construction Association, for example, and you can quickly identify that there is certainly a potential for a conflict there, as their primary role is to advocate on behalf of the SCA's members, which one would expect those actions would bring in more memberships to the SCA, and possibly a performance bonus to the President based on the increased construction activity. (Would make sense) Here is the job description of the President of the SCA: And, yes, I understand that Mayor Fougere is no longer the president, as he resigned due to a conflict of interest. However, how does being in the role of Mayor make it any more of a conflict, than being a Councillor? If anything, being Councillor is more of a conflict, because they Mayor is only a tie-breaker vote on Council. Food for thought.

Here is my delegation speech for tomorrow night:

Good evening Mayor Fougere, City Councillors, and City Administration. Thank you for letting me speak to you tonight about the Waste Water Treatment Plant Upgrades.

My name is Chad Novak, and I am here to speak as a taxpayer of the City of Regina. Initially, my intent was to come in and commend City Hall for all the work that has been done towards the Waste Water Treatment Facility, as I had thought that there had been some significant work done up to date. However, after reviewing some of the information that was presented to you this week, and what appeared in the media this week, there are some serious concerns that I have in regards to what has been done so far, and what the plans are for the future. And,  the more I look for answers, the more questions seem to arise.

First of all, I should speak to the fact that the update this week brought up a surprising(??) revelation that the costs have significantly gone up since 2008, when the planning was originally started to upgrade the facility to meet increasing environmental standards. It was mentioned that, in the planning stages, our City Administration neglected to factor in inflation into their cost estimates for this project. This honestly scares me. Why? Because we, the taxpayers, are putting our trust into our elected officials to represent us, and our City Administration to do their due diligence on these kinds of massive construction projects that require significant taxpayer investment. We elect our City Council in the hopes that they have the ability to represent us and ask the hard questions of City Administration when they need to be asked. I guess another question that comes up out of that is, what was the original expectation for project completion? Is it possible that inflation wouldn’t have really made a significant impact, had the project stuck to the original timeline. The report also states that a lot of preliminary work has been done in 2011 and 2012. This leaves the question as to what was being done since 2008, and why the long delay in getting the project started?

Now, let’s consider the fact that we overlooked a very serious, yet basic, issue like inflation, where the costs of this project went from $120 Million in 2008, to $150 Million, to $207 Million and beyond by 2015. During my research, I found that we already increased our debt level in 2008 to finance the original estimated $120 Million construction cost, so how are we expecting to make up the extra $87 Million+? Is this going to affect other major projects that we are currently considering and future projects? I’m hoping there is no talk about raising utility rates even higher, because as I will touch on in a minute, we are already paying some of the highest in Western Canada. I am not sure if this has been talked about yet, but considering the fact that we recently entered into a contract to actually sell off our wastewater to a mining operation for $80 Million, I’m hoping this money will be used to directly offset any extra costs.

The report notes that we will require at least $150M in debt financing to go ahead with this project, which I should note is $50M more than expected in 2008. It also states that the inflation is based on current markets. An obvious concern is what if the inflation goes even higher, and the debt required is higher than our current debt ceiling? Assuming we still need to spend the $207M+ on the WWTP, which of our capital projects are going to take priority? We currently have an expectation to finance the RRI, a new Library, and an expanded Police Station, just to name a few. The economic bubble can burst, and I feel as a responsible City Council and Administration, you should be preparing us for the worst and hoping for the best. It should also be noted that the report cautions that the allocation of City debt to this project will constrain the City’s ability to borrow for other major capital projects based on current borrowing limits and where existing debt is currently committed. As a result, it states that the City’s debt will need to be closely and strategically managed in the coming years. This statement should raise red flags when considering spending on WANT items like the RRI, and we should focus more on NEED items like this project or other essential infrastructure upgrades. For example, we keep hearing that there is a significant infrastructure deficit in our City, what is the total cost to correct that deficit and what is our plan to address it?

Speaking about how Regina’s utility rates are one of the highest in Western Canada, did you know that Regina residents pay 56% higher average monthly water bills than Saskatoon? In fact, when comparing to all major cities in the Prairie Provinces, we are in fact the second highest, topped only by Winnipeg by $1.05 per month. I am hoping that the steady 9% increases that Regina residents have incurred over the last few years, and going forward as well, will be put to good use. However, considering that we are already that much higher than our provincial counterpart, and we are the only City in Saskatchewan taking on such a massive, costly, project, it is hard for me to believe we are getting the best bang for our buck.

In this report, and back in 2008 as well, it continues to state that these upgrades are required in order to meet increasing provincial and federal regulations and standards for Waste Water Treatment plants. In 2008, it stated how the tighter provincial regulations were coming into effect in 2011-2012, and now in this update, it is saying 2016. I have researched all I can online, and I haven’t found a single document showing any tighter provincial restrictions coming up at all, and the last update to the provincial water regulations was 2007. As well, if these new regulations were coming into effect soon, I would reasonably expect other cities in Saskatchewan to be as concerned as Regina, as they should all be planning for the same regulations. However, that doesn’t seem to be the case. I researched Saskatoon, Moose Jaw, Prince Albert, Swift Current, and Yorkton. None of them seem to be spending on upgrades anywhere near our estimated $200 M+. In fact, I have found that there have been brand new facilities built for far less in recent years. Albeit, they are smaller communities, but it just makes it tougher for me to comprehend how upgrades can cost so much for us, compared to a brand new facility. In researching the provincial and federal regulations, I’ve found that we are currently meeting both provincial and federal regulations, or at least from the reports that I found. And, the Federal Government even stated that 75% of Canadian cities already meet or exceed their expectations, which is typically achieved by having a secondary treatment system, which we have already in place.

Also in the report, it states how a significant portion of the current plant can and would be retrofitted to meet these standards, but there are things that simply cannot be used, and we need to therefore replace and/or add to them. It states that the retrofit upgrades would be around $30 Million to “bring it up to original”. In regards to recent funding and/or upgrades, I noticed on March 5, 2007, we received $3.3M in funding from the Federal Government towards a $12M upgrade at the WWTP. Also, in 2012, we budgeted $19.6 Million in upgrades to the Waste Water Treatment Plant. Were these done, and if so, were they a part of these retrofit upgrades, or separate?

The report states that we are upgrading the facility to be capable of handling 258,000 people by 2035, which I see is what we have used as a benchmark for our Official Community Plan. This is a growth rate of 3,000 per year. While I commend the City for thinking big, I have to wonder is this realistic? Are we building something that we may not require for far longer? Considering the fact that this recent population boom is certainly not the norm for Saskatchewan or Regina over the past 20-30 years, realistically, we should be looking at our past as well to see what a realistic projection of our population would be in 22 years. For us to grow by 65,000 people (2011 Census shows the City of Regina at 193,000 people) seems far reaching at best. Also, consider that we have only increased our population by an average of 540 per year between 1991 and 2009, and actually decreased by 625 per year between 1996 and 2002. Factoring these more realistic numbers in, we should barely break the 200,000 mark by 2035.

I will now answer any questions you may have.

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