Last line of defence

Audit committee begins review of $200 million waterworks plan

In January, Council directed staff to hire an independent firm to review the assumptions underpinning the $100 million waterworks expansion in Wellington. This was in exchange for permission for staff to award the tender for the trunk lines—water and waste—under the Millennium Trail from one end of the village to the other.

But then, last month, Shire Hall reported that no firm was interested in the assignment. Twelve firms had shown interest, but none raised their hand to do the work. In the meantime, progress was advancing toward a super regional plant in Wellington, a new intake pipe and a 20-kilometre pipeline to bring Wellington water to Picton.

The price tag had risen to more than $200 million. The good news was that the County had applied for provincial funding, which, if successful, could mean $18 million to offset the big spending.

So it was recommended the County’s audit committee could—in the absence of a thirdparty independent reviewer—take on the job. With some input from Shire Hall’s economic consultants, Council agreed the audit committee could ask the tough questions and peer underneath the hood of this mega project—a project that is unprecedented in scale, cost and risk in Prince Edward County. And so it was that the audit committee met last week to tangle with this thorny file.

First up were a pair of residents presenting to the committee. Wellington’s Dorothy Bothwell underlined the weight of the task before the committee. She noted that residents have repeatedly asked for a thirdparty review of the assumptions that form the project’s foundation—assumptions she suggests are simply not credible.

This plan and other big infrastructure spending plans risk an unsustainable financial burden on residents, according to Bothwell.

“The need to test the financial risk and viability of the water and wastewater capital costs is imminent and urgent,” said Bothwell.

Meanwhile, she notes the final design of the regional water plant is already underway.

“It’s full steam ahead,” said Bothwell.

Don Wilford is a retired engineer. He notes that it is unusual to build infrastructure for peak capacity— that is, for a projected population of 50,000—rather than design for expandability.

He says the engineering challenge of moving 12 tonnes of water daily from Wellington to Picton is neither easy nor climate-conscious, given the energy required.

He urges the committee to immediately request a value engineering review of the water servicing master plan.

“If the decision turns out to be incorrect, the cost to ratepayers will be ruinous,” said Wilford.

Councillor John Hirsch looked to set the table for a review. The South Marsyburgh councillor doesn’t have any questions or concerns of his own about the project or financing plan, but he was, in his capacity as chair, game to serve as an agent for the naysayers.

“I note four areas where doubt has been cast by members of the public: cost, financing methodology, growth projections, and debt,” outlined Hirsch.

Independent committee member Jane Lesslie wasn’t ready to jump into the terms of an audit committee review just yet; she was stuck on the fact that 12 firms had declined the assignment to look at the assumptions underpinning the immense spending.

“No one responded,” said Lesslie. “Is there a message in that?”

The County finance director, Amanda Carter, repeated the explanation that at least some of the potential bidders felt they didn’t have the capacity to take on the assignment.

Hirsch concluded, without evidence, that the large scope of work likely discouraged bidders.

He suggested to the committee that Watson and Associates, an economic consultancy, meet with the audit committee in public or behind closed doors to provide messaging that might inspire confidence among residents.

“We know that Watson’s are number one in their industry,” said Hirsch. “They have proprietary technology and so on to come up with this. We also know that the population is growing in Canada and Ontario. We just know that numbers of people are going to be coming to the County.”

But Hirsch sidestepped the fact that Watson’s regional population growth findings produced last year don’t align with the County’s aggressive growth projections. Shire Hall’s plans see the population rising to 50,000. Watson’s figures suggest the population may rise to 35,900 in 25 years. This matters because if the net population rise is in line with Watson’s calculations—rather than the Shire Halls’ forecasts—existing waterworks ratepayers will be on the hook for a significant portion of the debt currently being accumulated at an astonishing rate. Worse, the new waterworks may be obsolete or at the end of its life by the time folks arrive to use it.

“Nobody trusts the numbers,” observed Hirsch.

Chief Administrative Officer Marcia Wallace steered the discussion to the broader challenge of renewing the County’s infrastructure, of which waterworks are just one component.

“The bigger conversation is that you have a lot of infrastructure,” said Wallace. “We are trying to explain to Council the depth and breadth of the problem. Part of that strategy is to leverage growth as much as possible.”

That means leaning on developers to pay for the upgrades to waterworks.

“We want to max out growth,” explained CAO Wallace.

Yet, it is a strategy mired in risk and dependent wholly on population growth that even its consultants don’t see transpiring at that rate. It is the audit committee that must measure this risk and ascertain whether it is reasonable or dangerous.

The committee chair, however, understands the task differently.

“It’s hard for the public to understand,” observed Hirsch. “The picture is incomplete. Somehow, we need to explain it in a way that the naysayers will understand.”

In the end, the audit committee agreed to meet again in July and that it would seek council funding to engage Watson to meet with the committee to review population growth estimates. The committee will also ask the consultant to explain how it figures one million square feet of commercial development to occur in Wellington at fees 10 times greater than the rest of the County.

Finally, it will also review the third-party legal opinion that is taking another look at the County’s up-front development charges agreements.

“We need to find a way to portray the numbers so [the public] understands them and sees that it is affordable even with the inevitable cost increases,” said Hirsch.