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P3 all over me

VC Powel investigates rationales in favour of and in opposition to public-private partnership proposed for Whistler's wastewater treatment plant.

By VC Powel

The only time I think about wastewater treatment is when I have to do something about it. The outhouse at my cabin, for example, is almost full. That’s a drag. I’ll have to either dig out the existing hole (oh, boy), dig a new hole somewhere else and move the structure over it, or better yet, use this opportunity to put in some kind of composting toilet.

Whistler’s outhouse is almost full, too. The wastewater treatment plant at Function Junction is operating at maximum capacity (as your nose may have told you on occasion) and needs to be upgraded. Unfortunately, the solution is going to be just a little more complex than my outhouse problem.

The treatment plant must take the toxic waste of up to 50,000 people a day and transform it into something benign enough to pump into the Cheakamus River without doing a CN Rail on the fish.

What are the options? Well, if you’ve been reading the papers you know that aside from the engineering technicalities of the process itself, there are two alternatives: Whistler could carry on with the traditional approach and contract out the construction while continuing to operate the plant itself. Or, they could take a new approach and form a partnership with a private corporation that would build and operate the plant. This is known as a Public Private Partnership, or P3. (In both cases, Whistler retains ownership of the plant.)

RMOW staff and council have been exploring these options for years and in 2003 they arranged for a $12.6 million federal-provincial grant to help cover costs. The next year, staff told council they had examined the two options and were recommending that Whistler stick with the traditional approach.

That’s when things took an interesting turn.

It is now over two years since staff made that recommendation and not only have costs soared, but construction hasn’t even started yet. Oh, and the RMOW is now going with the option they originally rejected — the P3 route.

What happened? That’s what I was wondering when I went to an open house at the Spruce Grove Field House in early February this year. I didn’t know much about the issue, certainly not enough to have an informed opinion, but what I’d learned about the process itself intrigued me, and since council planned their final vote on the project in a few days, I felt I should take a stab at getting up to speed. Little did I know the black hole I was about to be sucked into.

Soapbox opera

There was a table outside the Spruce Grove Field House set up by the brand new Whistler branch of the Council of Canadians. They were handing out free water as a way of making their point that public utilities should remain in public hands.

Inside, the walls were covered with poster boards of charts and diagrams and explanations of why this P3 route was now the recommended approach. Most council members were there, some of the RMOW staff involved in the project, a few suits I didn’t recognize, and an ever-changing number of locals coming for a look.

All in all, a very proper, well-controlled public relations presentation. Not surprising considering the municipality had paid the largest public relations firm in Canada, National Public Relations, to organize it.

And then local writer and musician Stephen Vogler pulled a plastic milk crate into the middle of the room, stood up on it, and announced in a loud voice, "I have a public service announcement…. It’s nice to see we have a PR firm here helping us with our community’s open house. I’ve got my own little PR company — it’s called the soapbox, and I brought it along to give a voice to the members of this town."

Vogler definitely had everyone’s attention, and as I looked around the room the expressions varied from glee to bowel-cramping anxiety.

"The Muni wants to privatize our water services, but the water that falls as rain and snow in this community comes from the sky and belongs to all of us," said Vogler. And he then went on to give a list of failed P3s and other reasons he was against the privatization of public utilities.

After Vogler stepped down, two or three more locals with similar opinions took a turn on the milk crate, and before long the audience was offering differing viewpoints with varying degrees of emotion.

I don’t imagine the PR guys were too pleased, but Vogler’s action had turned a sterile public relations display into a dynamic public dialog. I was hooked.

I rarely cross paths with Vogler these years but during one hazy period in my past we actually played in a band together, so I phoned him up later to ask about the milk-crate scene. We caught up a little and I was astounded to hear that his son is now 12 and the twins nine. "They’re the third generation of Voglers in Whistler," he said. "I came here when I was 12 and went to Myrtle Philip school the first year it opened."

He admitted he doesn’t have much time for political issues these days with his family obligations, freelance writing, and the novel he’s finishing, "But this is an issue of democracy. It goes beyond this town because Whistler is a very prominent place — what happens here affects other places. Why is this PR firm involved? Some guy tried to stop me from getting up on the milk crate. I’d never seen him before. Later, another guy representing the outside corporate interests came up to me and shared his views in a rather forceful and colorful manner, then stormed off.

"I think the provincial government is far too keen to invite corporations to make money off of public works, and that this community should be deciding what’s best for us without outside interests interfering."

I later discovered that the link to the provincial government in this case is through Partnerships B.C., a corporation formed in 2002 that is wholly owned by the Province of British Columbia and reports to the Minister of Finance.

The partner

Partnerships B.C. had a representative at the open house and is the entity that has been dealing directly with RMOW staff in putting together the P3 approach (also known as DBO, for Design, Build, Operate). RMOW staff later told me that Partnerships B.C. charges the municipality an hourly rate for its involvement but denied that Partnerships B.C. would receive any commission if the project goes the P3 route.

(The Sea-to-Sky Highway improvement is another P3 project involving Partnerships B.C. Figures from the corporation’s consolidated financial statements for 2004-05 indicate it charged almost $7 million in 2005 for expenses on the highway venture.)

The CEO of Partnerships B.C. is Larry Blain. With a Ph.D. in Economics from UBC, experience as an economist with the Bank of Canada, and as an investment banker with the Royal Bank before joining the Ministry of Finance, his credentials are impressive. He was also a member of the B.C. Liberals transition team prior to 2001.

What raised eyebrows in the Legislature earlier this year, however, was disclosure that his salary in 2004 was $499,132 (about $170,000 of that for performance bonuses), plus over $40,000 in expenses. The performance bonuses appear to be for Partnerships B.C. doing what it was formed to do — "encouraging and facilitating private sector involvement in the delivery of critical public sector infrastructure." Or, as Blain has been quoted as saying, "Our job is to drag government kicking and screaming into the marketplace — that’s our mandate. Our corporate interests are aligned with the markets."

Council climbs on

A few nights after the Spruce Grove open house, Council voted 5-2 in favour of the proposal to move forward with the P3 approach. Before the vote, a group called Whistler Water Watch presented a petition with over 500 signatures, "demanding a moratorium on the bidding process until thorough public consultations have been conducted." The people who signed the petition were concerned over the implication of international trade agreements and the fact that operation of the wastewater treatment plant was going to be turned over to a private company for up to 20 years.

Pina Belperio is a founder of Whistler Water Watch. I’d first met her when she was trying to set up a local chapter of the Council of Canadians, so I called her and we arranged to meet. I asked her what had motivated her to get involved.

"I got my degree in Environmental Science and have a Masters in Science, so I’ve always been involved in water issues," she said. "I’m a science writer for a large company, doing technical manuals and bulletins, so I’ve worked with engineers most of my career.

"And when I saw what the muni was planning, I just didn’t think the public was aware of the possible ramifications."

When I asked what ramifications she meant, she said: "There are examples all over the world where these P3s have failed, miserably in some cases, and I don’t think council has been given all the information they need to make the best decision for the community. Hamilton went the P3 route with their plant and it was a disaster. The contract changed hands five times. They had the biggest sewage spill in their history. The public was suing for damages from the spill and lawyers couldn’t decide who was responsible. In the end, the city took back control of the plant."

I pointed out that RMOW staff had received letters from other towns that seemed quite happy with their P3 projects — Goderich, Ontario, and Moncton, New Brunswick for example. And that the "blue ribbon panel" appointed by the municipality had examined the two options — traditional and P3 — and recommended P3 as the way to go: it would save the community an estimated $9 million over 20 years, get the plant built sooner, offer innovation, and involve less risk.

"When I first heard about the blue ribbon panel I thought it was a good idea," Belperio said. "Now I think it was a farce with a predetermined agenda. Look at the members. Many of them are connected in some way to P3 projects or are now working on this one. How can they be impartial?"

This was a point that Councillor Nancy Wilhelm-Morden had brought up in her address to council on the night of the vote.

"It may be that these people were experts," she said, "but they certainly were not independent."

Wilhelm-Morden, a lawyer, is back on council for the fourth time, and although she spent the least amount on the last election campaign, she got almost 500 more votes than any other candidate. I sat up and listened when she described the members of the blue ribbon panel.

"There were nine people. You had a representative from Associated Engineering Ltd — Associated Engineering Ltd is now a member of the Whistler Wastewater Treatment project team. There was a member from Price Waterhouse Coopers — Price Waterhouse Coopers is now a member of the Whistler Wastewater Treatment project team. Don Lidstone, one of our municipal solicitors, chaired the panel — Lidstone, Young Anderson, his firm, is now a member of the Whistler Wastewater Treatment project team.

"Three other members of the blue ribbon panel were representatives of three communities (Jasper, Chilliwack, and Canmore), all of whom have gone the P3 route. So to my mind, six of the nine members of the panel either had a vested interest or were very biased in their approach."

I was intrigued. Who appointed this panel? And why? It was time to pull out the copy of the report I had picked up at the open house and finally read it.

As I went through it, I was rather surprised. I’m certainly not an engineer, but I have read enough reports and research studies to recognize vague, unqualified generalizations. And this report seemed so full of them I had difficulty believing it had been the basis for any decision by anyone — let alone a complete reversal of the RMOW’s earlier position that a P3 was not the way to go.

There had to be more to this. I was missing something. And I needed to find it before I’d be able to decide whether I should drop the whole deal, or get involved.

I managed to track down one of the members of the blue ribbon panel and explained that I was trying to get a handle on the issue. He agreed to help. I asked about the blue ribbon panel itself.

He said he thought the panel had met perhaps two or three times, felt it had a reasonable representation of viewpoints, and that he had not felt any pressure to judge the data one way or the other. He didn’t recall who had appointed him to the panel, and said the panel had not actually voted, but that the chair, Donald Lidstone, had written up the report. The panel had seen numbers for the traditional proposal from the firm Dayton and Knight, he stated, but not for the other approach. He also raised a particular concern about the Dayton and Knight proposal that he suggested I follow up on.

I did as he suggested and about a week later contacted him again, explaining that I was now going to write an article for Pique and was hoping we could connect. He readily agreed and we scheduled an interview, but it fell through. We haven’t been able to reconnect since.

I didn’t know it at the time, but he would turn out to be the only member of the blue ribbon panel I was able to talk with.

Birth of the blue ribbon panel

Since 1988, Whistler has used the North Vancouver engineering firm Dayton and Knight to develop the town’s wastewater treatment procedures. Together they produced one of the first Liquid Waste Management Plans in the province, one that was used as a model for other communities.

In 1996, Dayton and Knight handled the $10 million upgrade to the treatment plant in Function Junction, the first stage of a planned $30 million project. The RMOW didn’t have enough funds at the time to complete the whole project, so the second stage has been on hold since then. Hence, the odour problem in Function.

In 2001 staff began looking for ways to cover the upgrade costs, and in 2003 Whistler secured a $12.6 million federal-provincial grant, which at the time was two-thirds of the total estimated cost. (Although the estimated costs have increased to about $40 million today, the amount of the grant will not be increased.)

Also in 2003, Dayton and Knight prepared a Pre-Design Report and the RMOW asked Partnerships B.C. for a feasibility study on the P3 approach.

Partnerships B.C. delivered its study in January, 2004, and two months later, in March, staff told council they had examined Partnerships B.C.’s proposal but found it lacking for reasons related to technology, risk to the community, and staffing. Council agreed and it seemed the project would proceed using the traditional model.

A short while later, however, a provincial ministry apparently suggested staff might want to take another look at the P3 option. In Wilhelm-Morden’s opinion, "That put staff in a box," and it was after this that someone came up with the idea for a blue ribbon panel.

The panel was struck in August 2004, exchanged documents electronically, then met for a one-day workshop in October, and on Jan. 6, 2005, submitted their report. Each of the nine members was paid $5,000 plus travel and expenses. Their report recommended Whistler go with a P3. Four days later, council voted to take their advice.

It was the middle of January and I was out of the country, but I’m told that few in the community took any notice of council’s decision. Except, that is, for staff at the treatment plant who would be affected if operations were privatized.

Guarded information

The P3 approach called for unionized staff to be protected for two years under their current agreement, but then the door would be open for the private operator to negotiate changes. And since the P3 model suggested savings could be made in staffing costs, it seemed likely to the union (CUPE) that cuts in staffing levels, wages and benefits were two years away.

CUPE asked the RMOW to give them copies of the documents from the blue ribbon panel. The RMOW declined due to its concerns that figures in the documents could compromise the RMOW’s bargaining position with bidders on the project. So CUPE filed for the information under B.C.’s Freedom of Information and Protection of Privacy Act. That was in April 2005. Over a year later they received a letter stating a hearing date set for May 30, 2006 was being cancelled because the RMOW had now agreed to release the documents. Among them was the Dayton and Knight report released last week.

Fear of secrecy and loss of control in the P3 approach have been concerns voiced by representatives of Water Watch and others in the community, but the mayor and other councillors have repeatedly stressed their intention to keep all aspects of this process open to the public. And if you go to the project website there is enough documentation to keep you wallowing in wastewater jargon for weeks: DBBs, DBOs, RFPs, RFQs, Addendums, Memorandums, contracts, reports… it all seems to be there.

And since Partnerships B.C. is covered by the province’s Freedom of Information Act, one would think the secrecy issue has been addressed. Until you consider that even under the current regulations, it took over a year for CUPE to receive the documents it requested. And they were lucky. The B.C. Health Coalition asked for information about the redevelopment of St. Paul’s Hospital (another project Partnerships B.C. is working on) and was advised by Partnerships B.C. and the Ministry of Finance that the information would cost $25,000 because, "There is no pressing or urgent need to disclose these records in the public interest at this time."

Of even more relevance is a Bill the province has just introduced that would seal almost any information about the government's financial arrangements with the private sector for a period of 50 years. That means CUPE would have had to wait until 2055 for the blue ribbon panel documents it requested. The province hopes to have this new Bill passed by May 18, so any P3 agreement the RMOW engages in through Partnerships B.C. would seem to be covered.

The councillor who delivered the strongest support for the P3 model on the night of the vote a couple months ago (and has taken a few shots because of it) was Ralph Forsyth. So I called him up and asked if we could meet. He agreed without hesitation and we arranged to get together at his home in 19-Mile Creek two days later.

A P3 proponent

When I arrived, Forsyth was taking care of his youngest son so we all sat at the kitchen table and I turned on the tape recorder.

"I suppose it’s ideological," he said, "but I’m a big believer in using the private sector to do a lot of things, if it saves money and creates efficiency. And that’s not for everything, right, but in this case it seems to make sense. I’m not an expert, but I talked to the experts — Brian Barnett, our legal advisor, my sister who’s a Councillor in Alberta and has been to international water conferences all over the world — and I think we can mitigate risks, protect the environment, and save money, and we can do that with clear contracts.

"Every month we delay the costs go up," he said, "so I’m really sensitive to the time frame. I guess I’d rather make mistakes than do nothing."

After growing up in Quebec the youngest of eight children, Forsyth came to Whistler in 1991 and met his wife, Stephanie, while working on the mountains.

"I think the enthusiasm and the ambition of youth here in the ’90s really drove the economy. I mean, the table had been set, but I remember working 10-, 12-hour days working for the mountains because we wanted to make things great. Just because it was fun, and you knew you were in a place that was on a roll. I’m proud of what we accomplished, and people may say I’m biased on this particular issue because ideologically I believe in P3s, but I’ll always do what I think is best for the town."

I told Forsyth that as a businessperson myself, I was having trouble with the uncertainty factor: How could there be less risk for the community to walk away from a company and model it has used effectively for almost 20 years, and enter into an agreement with a consortium it has never worked with before?

"This is an opportunity for us to legislate environmental protection into the contract," he said. "So the bigger efficiencies this company comes up with, the cleaner the effluent, the more money the company makes. So everybody wins. I don’t know anybody who could argue against that."

Didn’t Whistler already have that though, I asked. It was working with a private company (Dayton and Knight) that obviously looks at its bottom line, yet had delivered a wastewater treatment plant in Whistler that the Sierra Legal Defense Fund had ranked as second best out of 22 Canadian cities in 2004.

"I toured the plant," Forsyth said, "and I think second place is nowhere near good enough. I think we can do a lot better. And the estimate with the P3 approach is that we can save the community $9 million. People tell me ‘We elected you to be fiscally responsible,’ so when I look at any project I ask myself, ‘Is this good for tourism? Is it good for small business? Families? Is it good for the environment? Are there savings involved?’ And I think the P3 approach is. But I’m always open to listening."

When I got home from Forsyth’s I ran into my neighbour in the parking lot and we did the usual "How’s it going?" routine. He asked me what I was working on. When I told him he said, "Did you know I was the supervisor of the wastewater treatment plant for 15 years?"

Well, no, I didn’t. Talk about small towns. I had another interview to do.

Next week: Look who’s talking…