Secrecy over new treatment plants smells

They are gluttons for punishment.

This week, Mayor Sam Katz once again finds himself on the wrong end of the barbecue tongs, this time over allegations he is ramming through council a mysterious multibillion-dollar contract to oversee design, construction and operation of two city sewage-treatment plants.

It's a 30-year partnership with Veolia Canada, an engineering firm.

And despite the fact this contract will govern the operation of a key civic service for a generation, we know virtually nothing about the deal, including how much Veolia is being paid.

Although some details are always left out of government contracts, it is very rare to withhold the value.

Not this time. Katz claimed that information was proprietary and nobody is supposed to know. Even Katz said he was not privy to the total value.

It's a story we've heard before.

Last year, Katz was vilified for a similarly vague proposal to set up a utility to manage water and sewer services.

The proposal included several options, from publicly owned and operated to a public-private partnership.

The absence of hard facts and seemingly deliberate efforts to obfuscate the debate painted the majority of council, which ultimately voted to support a plan that had no central thesis, as a woeful bunch of toadies.

Hey, if it worked once before, why not try it again?

This time around, we are told Veolia Canada will be paid an unknown sum to oversee a $661-million overhaul of two sewage-treatment plants.

Over the three-decade life of the contract, we are told the Veolia deal will save between 10 and 20 per cent of the estimated $1.2-billion operating costs.

How will Veolia be paid? Likely a combination of a base fee and incentives for meeting performance targets, but that's just a guess.

What is the value of the fee, the incentives or the targets they must meet? Don't know, won't say.

All in favour, say "aye."

It's just another example of a poorly executed, poorly communicated plan that may make it impossible to tell if this is a worthy idea.

Right now, city council oversees the water and sewer system. For the most part, council has failed to demonstrate the intestinal fortitude required for this often thorny job.

Remember, the $661-million overhaul was ordered following the 2002 failure of a sewage plant that pumped hundreds of thousands of cubic litres of you-know-what into the Red River. Afraid of precipitous increases in water and sewer rates, council neglected the sewage-treatment system, right up until the effluent hit the fan.

Turning these services over to a utility would not be a panacea for everything that's wrong, but it's an improvement over the current system.

An arm's-length utility, for example, would be subject to oversight by the Public Utilities Board, which would set water and sewer rates.

The city and province are working on regulations that would govern the new utility. But the outcome is pretty clear: Provincial officials have indicated that, like all municipal waste and water utilities outside Winnipeg, the city's utility will also be subject to access-to-information laws, the ombudsman and auditor general.

The city should have had its utility in place before negotiating contracts to design, build and operate its new sewage-treatment plants.

This would have ensured all contracts signed by the utility were good for ratepayers.

It would mean that one way or the other, we'd be entitled to know exactly what's involved in the Veolia contract.

Why put the cart (contract) before the horse (utility)? It appears the mayor is involved in a bit of creative rebranding and an independent utility might just mess things up.

Last year, there was great furor when it appeared the city would strike a private-public partnership (P3) and privatize water and sewer services.

Katz and senior civic mandarins worked overtime to assure ratepayers nothing was farther from the truth, but it was an option on the table.

That option wasn't removed until early May, when council voted to keep the utility as a city asset. A little late in the game but there you have it.

So, what are we left with? We have the city about to enter into a contract with a private partner to design, build and operate plants owned by the city. The only thing missing from a classic P3

is the fact the city, and not Veolia, is financing the renovations. Instead of lease payments, the city pays Veolia a management fee.

There is nothing inherently wrong with this deal or a P3, when it comes right down to it. But Katz and his team don't seem to want us to see it as a P3.

In fact, they don't seem to want us to see it at all.

dan.lett@freepress.mb.ca

Republished from the Winnipeg Free Press print edition May 19, 2010 B1