Metro Vancouver Reference Panel recommends a “total system approach” for regional infrastructure financing
The Need for a Road Map
When they presented their Final Report on A Liquid Resource Management Plan for Metro Vancouver to the Waste Management Committee on July 15, 2009, the Metro Vancouver Reference Panel included four recommendations related to infrastructure financing.
“The Draft Plan identifies the many investments that need to be made in our region (including treatment plants, new pipes, etc.) in general terms, and provides some very high level cost estimates, options for timing and suggestions for municipal, provincial, federal cost sharing. However, the Draft Plan does not provide a road map for how these significant capital investments will be funded or delivered,” states Mark Hodgson, a member of the Reference Panel.
Mark Hodgson is a specialist in developing and executing public-private partnership procurements and transactions. He is Chair of the Infrastructure Delivery and Finance Committee of the British Columbia Water & Waste Association.
According to Mark Hodgson, the four recommendations are intended to help Metro Vancouver create a road map so that the public will understand what is involved in resolving liquid discharge issues:
- Recommendation #13: Move from a facility-specific approach to a total system way-of-thinking about financing, constructing, operating and maintaining regional conveyance and treatment infrastructure.WHY? — “In accordance with the approach endorsed by the Sustainable Region Initiative, the Plan needs to explicitly endorse investment decisions on long-term thinking plus broader economic issues; and adhere to “green value” approaches that embed full-cost and life-cycle accounting – that is, including the need to put a price on the environment and the services it provides,” states Mark Hodgson.
- Recommendation #14: Increase the amortization period for treatment plant financing from 15 years to 30 years to achieve inter-generation equitability.
WHY? — “Financing over a longer period will reduce the annual cost borne by current taxpayers and better reflect the long life of these investments and their long-term environmental benefits.A 30-year amortization period would enable implementation of the Lions Gate and Iona plants in parallel.”
- Recommendation #15: Direct that rate-setting will adopt and implement the principles of ‘polluter pay’ and equity to provide municipalities (and homeowners and businesses) with an incentive to reduce their wet-weather flow contributions to the regional conveyance and treatment system.
WHY? — “It is about fairness and equitability; therefore, the region must provide a meaningful incentive/disincentive to the users to take responsibility for fixing their share of the problem.”
- Recommendation #16: Develop major capital projects in a manner that demonstrates value for money, including protecting ratepayers / taxpayers from the risks associated with these major projects.
WHY? — “It is a matter of affordability and risk management,” concludes Mark Hodgson.
In the Final Report, the Metro Vancouver Liquid Resource Management Reference Panel provided the Waste Management Committee with examples to support each recommendation. “When we met with the committee, we emphasized that the choice of amortization period has major ramifications over time,” concludes Mark Hodgson.
Posted August 2009