The City of Winnipeg now expects it will cost $360 million more to complete the second phase of the upgrade to its north end sewage facility, thanks primarily to inflation and a provincial directive to reduce water pollution much faster.
The project to upgrade the city’s biosolids facilities was expected to cost $552 million, which a new estimate predicts will soar to $912 million, says a city report released Wednesday.
"I’m going to be asking some questions about this… It’s a huge increase," said Coun. Brian Mayes, head of council’s water and waste committee. "It’s hundreds of millions of dollars, so I’ll certainly want to get more information."
The key price increases include $130 million for work to reduce the amount of algae-promoting phosphorous in the plant’s effluent to 1 milligram per litre or less, which the province has ordered the city to do. That nutrient pollutes waterways, including Lake Winnipeg.
The added costs include $190 million for inflation/ project delays, $33 million for project financing and other smaller costs.
While the third and final "nutrient removal" phase of the overall $1.854-billion treatment plant upgrade was initially expected to slash the phosphorous output, the report notes the province is now calling for that target to be met by the second phase of upgrades, which Mayes said could improve water quality several years sooner.
"I think that’s money well spent… If we’re serious about doing something (to protect) Lake Winnipeg, this seems to be the way to do it," said Mayes. "Let’s try to (meet the target) as part of this phase instead of waiting for yet another generation to go by."
The staff report deems it urgent to proceed with the biosolids work.
"This project is critical for compliance with (the sewage plant’s) Environment Act Licence, and is also needed to increase the treatment capacity for future growth and wet weather events," wrote Cynthia Wiebe, Winnipeg water and waste’s manager of engineering services, in the report.
The project is expected to allow the city to treat more sewage during wet weather events and increase overall capacity to treat wastewater. City officials have warned that capacity must be increased, or the city could be forced to halt or restrict new development within the next five to nine years.
Despite the substantial price hike, city staff deem it "premature" to officially ask council for a budget increase, in part because the city doesn’t expect to award the construction project until 2025. Pending funding approvals, it’s expected to be completed within the following five years.
"There will be sufficient funds in the existing budget to start the required work without delay," wrote city spokesperson Lisa Marquardson, in an emailed statement.
Wiebe writes that the latest cost estimate is based on "unprecedented market conditions that include excessive inflation in fuel and commodity prices, global supply chain issues, recovery from a 100-year pandemic, and the Russia-Ukraine crisis."
The report does ask council to refer the new cost estimate to the 2024 to 2027 multi-year budget process, noting city staff will also attempt to mitigate costs and secure extra funding.
City officials also hope to "seek clarification" from the province on the "cost benefit" of speeding up phosphorous reduction.
The staff report warns the city could also be charged penalty fees by the province for failing to comply with its deadline for a schedule and funding plan to complete the entire plant upgrade by 2030. That’s due by June 30, a timeline Wiebe says the city can’t meet. If penalties are charged, a first offence could trigger a fine of up to $500,000, with fines of up to $1 million for each subsequent offence.
In 2019, the city applied for a tri-government funding deal to pay for the project, through the Investing in Canada Infrastructure Program. That application is awaiting federal approval.
Mayes said it’s not clear how the revised cost estimate would factor in, but he hopes the province and feds will agree there’s a critical environmental need for the work, since the city likely can’t afford to fund it alone.
"That’s a big piece of debt to take on," he said.
In a written statement, a Manitoba government spokesperson said the province is reviewing the latest price estimate from the city.
"We remain committed to working with the city on collaborative options to ensure our waterways are cleaned up as quickly as possible," the spokesperson wrote.
A separate report headed to council’s water and waste committee notes city council will be asked to approve another $23.5-million cost hike for upgrades to the south end sewage treatment plant. The report blames that increase primarily on repeated missed deadlines by a key contractor, plus increased shipping costs.
If the overrun is approved, that project’s total tab will rise to $375.6 million.
Born and raised in Winnipeg, Joyanne loves to tell the stories of this city, especially when politics is involved. Joyanne became the city hall reporter for the Winnipeg Free Press in early 2020.