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Council chooses P3 option for sewage plant expansion

Wastewater treatment plant upgrades to be designed, built and operated by a private company

The municipality has decided to partner with the private sector to upgrade Whistler’s notoriously smelly and at times overworked sewage treatment plant.

The public private partnership, or P3, could mean the upgrades – which include increased plant capacity and elimination of odours – will be finished by 2007.

That’s good news for all the businesses in Function Junction who must endure the stench wafting from the wastewater treatment plant.

Council’s decision to enter into a P3 is a break from the traditional model of construction.

"We’re not by any means the first to do this but it’s a change for us because we’ve been on a pretty consistent path, using our traditional design," said Mayor Hugh O’Reilly. "But this one’s a big expansion, the numbers were getting very significant. We thought it would be in the best interest of the taxpayers and the municipality to investigate the options."

Council has chosen a design-build-operate approach for the $22 million expansion and upgrade, which means one company, or a consortium of companies, will do the design, build it and then operate the plant. The contract would most likely run for 10 years with an option to renew.

"We think that that’s going to drive innovation and efficiencies," said O’Reilly. "I think that’s where we’re going to find our savings."

Last year the municipality secured $12.6 million for the upgrades through the federal-provincial infrastructure grant program. The balance, $11.4 million, would traditionally be made up by drawing down on municipal reserves intended for such projects. In its 2002 financial plan the municipality stated that it would pursue opportunities for sponsorship and public private partnerships to assist with capital financing.

Brian Barnett, the municipality’s general manager of engineering and public works, also believes the public-private partnership will increase efficiencies.

"I think that it will save probably 12 months worth of construction and that’s quite meaningful in terms of cost," said Barnett. "It (the design-build-operate model) will reduce the construction period considerably because the design takes place while the construction can be taking place as well."

For example, he said, the company could order parts, material and equipment, which can sometimes take months to deliver, during the design stage. Under the traditional model the design plans must be completed before going out to construction tender.

Barnett said the P3 would also encourage better performance from the private partner.

"The research that we’ve done on design-build-operate shows that you get not just savings in time and money but you get more compliance with environmental standards, you get better results in terms of the operation," he said.

But the Canadian Union of Public Employees, which represents 29 municipal employees, including workers at the treatment plant, bylaw officers and utilities employees, is concerned about the plans to privatize the public wastewater system in Whistler.

"There is nothing efficient or sustainable about inviting multinational corporations to turn a profit from your high quality, award-winning, public wastewater treatment operation," said CUPE B.C. President Barry O’Neill.

"I think that the public at the very minimum needs to have an avenue to bring input, to hear other debates, to hear other points of view and actually look at some of instances of privatizing mostly wastewater and drinking water in Canada."

CUPE is currently in contract negotiations with the municipality.

Analyst Finn Poschmann with the C.D. Howe Institute, an independent economic and social policy research institution out of Toronto, said private sector participation does bring good incentives to the table, however deals have gone bad in the past. He used the example of a hazardous waste disposal site near Swan Hills in Alberta. The province entered into a series of bad deals and ultimately they subsidized the site’s operators $445 million for a decade from the mid-80s to mid-90s.

The deal also left the province with a much bigger plant than they will ever need.

"Sometimes communities make bad decisions so everyone needs to keep their eyes open, (and) not just assume that everything’s going to work right," said Poschmann.

A good deal he added would be one where the private partner bears a healthy portion of the risk.

"Suppose your system doesn’t work as well or as cheaply as hoped, you want to make sure that some of the risks of that failure lands to the private partner and that the city isn’t left holding the bag," he said.

Barnett explained that by using the design-build-operate approach the municipality could divide the risks between the private partner and the municipality itself.

"The municipality will always have some risks but there’s some risks that the design-build-operator is best able to manage and so we’re giving them those risks," he explained.

The detailed contract for the P3 will have penalty and cancellation clauses, he added, to ensure the municipality retains some control.

Poschmann also encouraged the municipality and the private sector to be transparent in negotiations and to reveal the details of the deal once it’s struck.

"For competitive reasons, businesses tend not to like to show what they’re negotiating…" he said. "It’s understandable and it might not be plausible to see everything before a deal is done. But I strongly encourage the city and the partner to understand that the moment a deal is signed, everyone should be able to look in and see exactly what the deal is because sunshine is a wonderful disinfectant. It helps keep people honest."

Whistler’s wastewater system is a state of the art facility, which last year was rated as the second best facility in Canada by the Sierra Legal Defence Fund.

However the plant, located opposite Function Junction, has not kept pace with development in the resort. On the resort’s busiest days, particularly between Christmas and New Year’s, the plant is running at 135 per cent of its capacity. There are some days (between 10 to 15 each year) where the plant is not in compliance with the provincial standards because of the sheer volume in the system.

"This is over capacity," said Barnett, during a recent tour of the plant. "It’s not working as well as we’d like. It gives off a lot of odour."

The upgrades will not only ensure that the plant can cope with the volume during the peak times but will also address the considerable odour problems from the facility. The upgrades are designed to make sure the odour is not detectable at the property line. That bodes well not only for businesses in Function Junction but also the new communities in the area, including the future athletes village in the Cheakamus area.

An expression of interest will be issued in the spring, with construction expected to begin in 2006.