Wastewater Treatment a Waste of Public Money
by
Dr. Rebecca Warburton
Note:
These remarks were adapted from speaking notes for a presentation to the CRD Core Area Liquid Waste Management Committee, 23 April 2008.
No comments were actually presented, because the Committee opted not to receive the cost report to which my remarks would have referred. Cost figures have been updated to reflect more accurate information for Oak Bay.
Introduction:
· I speak to you once again as a citizen of Oak Bay who has been concerned about sewage treatment since before the 1992 referendum.
· By profession, I am a health economist, specializing in cost-benefit analysis of health-related public projects.
· I have a Ph.D. in economics; I worked as a program evaluator for the BC Ministry of Health for 10 years; and since 1998 I have been a professor at UVic’s School of Public Administration.
· From 1998 to 2000, I served as the Oak Bay representative on the CRD’s Liquid Waste Management Plan Public Advisory Committee.
· My remarks relate to agenda item 10, the cost figures.
My key message today is that although the report on costs is a start, it is not adequately transparent and understandable, and does not provide the information that citizens need to be well informed about the likely costs of treatment.
The report, as released, has several shortcomings:
· No comparative information is provided; there is no way to tell what kind of percentage increase in taxes is implied by the cost figures.
· Inflation has been added at 2.5% per year, so that the cost figures for 2017, with the system complete, are not comparable to today’s tax levels.
· Only locally-paid costs (after Federal and Provincial help with capital costs) are included, but this is not stated; in fact the cost figures in the report are only 54% of the resources that will be consumed by treatment. Total costs are what matter, in terms of whether this is a reasonable use of public funds. (Capital costs are to be shared three ways, but operating costs would be paid 100% locally. Overall, 69% of net present value costs are for capital, and 31% for operating costs. The local taxpayer share would be one third of 69%, or 23% of the total; plus the 31% for operating costs. Therefore local taxpayers would be expected to pay 54% of the total (capital and operating) costs.
More seriously, the CRD’s figures should be regarded as minimum estimates. There are significant risks that actual costs would be higher, and little chance they would be lower:
· Construction costs have escalated beyond all estimates in recent years, and massive overruns have become common. The Vancouver Conference Center has nearly doubled in cost.
· $10 million (or more) committed for planning and consulting fees has been omitted, as has the cost of thousands of hours of staff and committee time.
· Nothing has been budgeted for the cost of archaeological excavations required whenever native artifacts or human remains are found during construction. One Oak Bay homeowner has paid $250,000 for such work, on one city lot; the potential cost at the various treatment sites is unbounded, and could easily cost millions more.
· Land acquisition has been budgeted at $46 million. Given land values at the waterfront and other sites being contemplated, this estimate could be low.
· Nothing has been budgeted for compensating homeowners adjacent to treatment plants for decreases in property values.
· Resource or energy recovery, not yet included, would raise costs. Recent estimates for the CRD’s small Saanich treatment plant show that savings from resource recovery are less than half the amount required to pay off the capital costs in 20 years at 6%.
I understand the difficulty staff faced in doing the cost report, given that there is no certainty about how costs would actually be allocated to municipalities or how each municipality would choose to charge for treatment.
However, I think the public would benefit from knowing how much their costs would increase, supposing that the entire cost was added to current property tax bills, and I have done those calculations. I have also calculated sample tax increases for four large Victoria hotels, just to illustrate how businesses might be affected.
My calculations removed price inflation from the 2017 costs, to arrive at their equivalent in 2007 dollars. I then calculated both locally-paid and total costs, and compared these to 2007 property tax payments.
The results are striking:
· For homeowners, assuming federal and provincial capital cost sharing, the average increase in property taxes would range from a low of $123 (7%) in Langford to $557 (17%) in Oak Bay. View Royal would see a 19% increase.
· Total costs (ignoring cost-sharing) are more, of course, and are equivalent to average increases of $228 (12%) in Langford to $1,030 (31%) in Oak Bay, with View Royal seeing a 35% hike.
· Sample increases for four local hotels (The Empress, Grand Pacific, Laurel Point Inn, and Harbour Towers) would range from 6-14% for after cost-sharing, or 10-25% for total costs. The Empress would pay $191,000 (8%) more for the local share, but overall the project is equivalent to an extra $354,000 annually for the hotel.
These are stunning figures, unlikely to be acceptable to local taxpayers even if there were clear benefits from treatment. However, there are no demonstrable or likely benefits from land-based treatment plants.
I think this information I’ve given you should have been provided by the CRD, rather than by a private citizen calling around to the various municipalities. I would be happy to work with CRD staff to revise the report along the lines I suggest, and if you agree with my comments I hope you will direct staff along those lines.
I say to you today as I did back in January, that the CRD Board, Committees, and staff are still not adequately fulfilling their duty to inform the public about sewage treatment. The public still has not been given full and accurate information in five key areas:
1. the likely costs of land-based treatment to local residents and businesses;
2. the likely environmental harm from land-based treatment;
3. the alleged benefits to be obtained for the marine environment;
4. the weakness of the scientific evidence (no evidence has been provided of harm caused by the current system, as is attested by reputable marine scientists in a letter published in today’s Times Colonist);
5. the many cost-effective improvements that could be undertaken to improve our local marine environment (including measures to reduce or eliminate storm-related sewage flows to beaches).
In light of the information not currently available, including the Provincial report on resource recovery, I most strongly urge you not to make any binding decisions today. The public has a right to much better information, before more money is spent.
To sum up, the CRD and the citizens of Greater Victoria should be aware that:
· Wastewater treatment, as proposed, would consume resources equivalent to adding a minimum of 12% to 35% to core area property tax bills for at least 25 years.
· There is no medical or scientific need for land-based treatment, hence no demonstrable benefits, and clear environmental harm.
· Given the available evidence, only one conclusion is possible: land-based sewage treatment would be a huge waste of public money, and would come at the expense of foregoing important environmental and social priorities such as affordable housing, light rail, and actual marine-environment protection.
The Province’s proposed one-size-fits-all requirement for sewage treatment ignores Victoria’s unique situation, and is not evidence-based.
I welcome your comments or questions.
Homeowner Sewage Treatment Costs by Municipality
Actual Average 2007 Tax Bill1 | Additional Cost of Sewage Treatment2 | |||||
2017 Costs3 | 2007 Local Costs4 | 2007 Total Costs4 | Local % Increase | Total % Increase | ||
Colwood | $ 1,617.67 | $ 197.80 | $ 154.52 | $ 285.76 | 10% | 18% |
Esquimalt | $ 2,490.86 | $ 408.45 | $ 319.08 | $ 590.09 | 13% | 24% |
Langford | $ 1,873.38 | $ 157.49 | $ 123.03 | $ 227.53 | 7% | 12% |
Oak Bay | $ 4,177.82 | $ 712.98 | $ 556.98 | $ 1,030.05 | 13% | 25% |
Saanich | $ 2,737.86 | $ 471.12 | $ 368.04 | $ 680.63 | 13% | 25% |
Victoria | $ 2,370.43 | $ 464.85 | $ 363.14 | $ 671.58 | 15% | 28% |
View Royal | $ 1,760.66 | $ 430.88 | $ 336.60 | $ 622.50 | 19% | 35% |
Notes: | ||||||
1. After deducting $570 homeowner grant | ||||||
2. Allocated to municipalities based on total (wet weather) flows | ||||||
3. From CRD report “Implementation of Liquid Waste Management Plan in Core Area and West Shore Municpalities - Impact on the Average Household”, fourth item at http://www.crd.bc.ca/reports/corearealiquidwastem_/2008_/04april_/ | ||||||
4. 2007 dollars; 2.5% annual inflation removed from 2017 figure; “Local Costs” = cost after deducting federal and provincial capital cost sharing; “Total Costs” = total system costs, $1.2 billion for the region as a whole, including capital and operating costs over 50 years | ||||||
Hotel Sewage Treatment Costs
2007 | Locally-Paid Treatment Cost | Total Treatment Cost | ||||
Assessed Value | Tax Due | $ | % Increase | $ | % Increase | |
Fairmont Empress | $ 132.7 million | $ 2,278,850 | $ 191,266 | 8% | $ 353,720 | 16% |
Grand Pacific | $ 36.5 million | $ 886,483 | $ 111,337 | 13% | $ 205,903 | 23% |
Laurel Point Inn | $18.0 million | $ 437,164 | $ 24,146 | 6% | $ 44,656 | 10% |
Harbour Towers | $ 15.8 | $ 383,747 | $ 52,290 | 14% | $ 96,704 | 25% |
Presentation to: CRD Core Area Liquid Waste Management Committee
23 January 2008 by Dr. Rebecca Warburton
Introduction:
I speak to you today as a citizen of Oak Bay who has been concerned about sewage treatment since before the 1992 referendum. My remarks relate to sewage treatment, and specifically to agenda items 6, 7, and 8.
By profession, I am a health economist, specializing in cost-benefit analysis of health-related public projects. I have a Ph.D. in economics; I worked as a program evaluator for the BC Ministry of Health for 10 years; and since 1998 I have been a professor at UVic’s School of Public Administration.
From 1998 to 2000, I served as the Oak Bay representative on the CRD’s Liquid Waste Management Plan Public Advisory Committee.
My message to you today is that I believe the CRD Board, Committees, and staff are not adequately fulfilling their duty to inform the public about sewage treatment.
Informing the public has two main components:
1. publishing full and accurate information
2. actively countering erroneous or misleading statements made by others
I know that the CRD has made a lot of information public, but I hope to convince you that a more active effort is needed.
I recognize that the CRD is being ordered to implement sewage treatment, and therefore must continue to plan for treatment.
However, the CRD is not under any order to stop studying the issue, or stop informing the public, and I do not believe that the Minister could give such an order.
The CRD Board, Committees, and staff have not published full and accurate information in five key areas:
1. the likely costs of land-based treatment to local residents and businesses (no detailed estimates per resident or household have been released);
2. the likely environmental harm from land-based treatment (impacts have not been assessed, although I read that this is planned);
3. the benefits to be obtained for the marine environment (none have been described);
4. the weakness of the scientific evidence (no evidence has been provided of harm caused by the current system, or benefit from land-based treatment);
5. the many cost-effective improvements that could be undertaken to improve our local marine environment (including measures to reduce or eliminate storm-related sewage flows to beaches).
The lack of accurate cost information is particularly troubling, given the absence of evidence about benefits.
Aggregate present value costs (combined capital and operating, at 2007 prices) have been revealed in a CRD report to be $1.2 billion. The public has been treated to widely divergent published estimates per household, per year:
1. I did the first published calculations, in June 2007, using CRD cost figures and tax roll data from the assessment authority. I found total costs per $500,000 of assessed value (with no cost-sharing) to be $500-$700 at 2007 prices; if the capital costs were shared, this would become $300-$400. However, as an expert in cost-benefit analysis I pointed out, and still insist, that any decision about whether the project is worth the money must be based on the total costs, not just the local share. This is consistent with federal and provincial guidelines for cost-benefit analysis.
2. In November 2007, the Black Press reported on a CRD briefing and misunderstood the costs, first reporting $900-$1,700 and then correcting the figures to much less. However, it was never explained in print that these costs were only the portion of costs modeled as being paid through property taxes, with other costs to be collected on water bills.
3. The Times Colonist editorial of Dec. 21 said the cost was only $100-$150; however, this estimate by TC staff apparently assumed that both capital and operating costs would be shared by senior governments, when of course only capital costs may be.
There are still no detailed official estimates for taxpayers to consider. I understand the many uncertainties about how costs will be shared between municipalities and between different types of taxpayer; but it should not be left to private citizens and the local press to do these estimates. The CRD needs to produce and publish this information, and right away.
Even the $1.2 billion figure omits two potentially significant costs, which likely would not be cost-shared:
1. $10 million (or more) in planning and consulting fees, both past and those to be financed with the borrowing to be approved today;
2. The potentially unlimited cost for archaeological excavations that would be required when, not if, native artifacts are found during construction. One Oak Bay homeowner has been required to pay $250,000 for such work, on one city lot; the potential cost at the various treatment sites could easily be 1,000 times that, or $250 million. Under the legislation, the costs are unbounded.
Moving to my second point, about misinformation provided to the public by others, the CRD Board, Committees and staff have not challenged numerous erroneous or misleading statements. Here are a few examples:
1. statements by the Minister, and others, that the order for sewage treatment is evidence-based, when in fact the scientific evidence is weak;
2. statements by the Minister, and others, implying that “resource recovery” will provide significant revenues and perhaps completely cover the costs of treatment, when this is untrue;
3. the statement in Gary Lunn’s fall Constituency mailing that we need to stop discharging untreated sewage into Victoria Harbour (when obviously there are no discharges into the harbour from the current outfalls);
4. the cost estimates published by the Times-Colonist, which are completely inconsistent with internal CRD figures;
5. numerous statements that costs will be shared equally by local, provincial, and federal governments, when in fact
· only capital costs are to be shared;
· land costs may not be shared;
· operating costs are 31% of the total, so Victoria taxpayers would be paying that 31% plus one third of 69% - the capital costs – which adds another 23%;
· Local taxpayers would therefore be expected to pay 54%, rising to 58% if land costs are not cost-shared.
I note that the experts of the Marine Monitoring Advisory Group have expressed similar concerns to this committee (see Appendix D of agenda item 8). They have called for:
1. better publicity for the source control program, and for non-technical summaries of scientific reports, in order to help the public understand the evidence;
2. a critical review of the SETAC report, and discussion of the findings, as called for in the CRD’s strategic plan;
3. more correction, by the CRD, of misinformation being provided to the public through the press;
4. inclusion of the current treatment option in the CRD’s “triple bottom line” comparison; and
5. recognition that land-based treatment is not a high priority in regard to protecting the marine environment, with other actions offering better benefits.
Based on the information I have provided today, I call on this committee and the CRD Board to:
1. commission an independent cost-benefit study comparing the current system, the current system with enhancements such as better source control and beach overflow reductions, and one or more land-based treatment options;
2. create a simple web-based method for the public to report questionable, misleading, or erroneous public information on sewage treatment to the CRD, in order to alert the CRD that public clarification or rebuttal may be necessary; and
3. routinely and actively correct misleading or erroneous statements with a combination of press releases, public letters to the relevant editor, and accurate information at the CRD website.
I welcome your comments or questions.