Resurrection

Left-for-dead regional water plan rises again

It was dead. The assumptions underpinning the Regional Water Plan proved to be terribly flawed. There was no surge of new homebuilding coming—no wave of population growth that needed vast and unprecedented waterworks expansion.

The County’s limited experience with waterworks infrastructure construction— that is, the trunk lines in Wellington (see story on the previous page)—has become a years-long nightmare of spiralling costs. There is no financial plan to recover the $50 million spent so far. Most of this debt is on water ratepayers. None of these facts is in dispute.

Nevertheless, tomorrow, a committee of council will consider breathing new life into the badly-wounded-but-not-quitedead Regional Water Plan. Tomorrow (Thursday), Council is being asked to press the button on a massive new water plant in Wellington, extending a new intake out into Lake Ontario and running a 20-kilometre pipeline with assorted pumping stations along the route.

Estimated price tag: $215 million. It doesn’t include the $50 million already committed to the trunklines in Wellington and other plumbing gear. Once Council pushes this button, however, there will be no going back. Every option thereafter will be measured in the hundreds of millions of dollars.

Why are we here again? Why won’t this zombie plan stay dead?

In 2021, the logic driving the regional water plan was the certainty that a wave of population growth was coming. Developers said so. (“Why else would they buy land in Prince Edward County?” was the extent of the due diligence.) The new arrivals would pay for the infrastructure. Operators would get shiny new gear, and everyone would be happy.

That was the pitch.

No one believes it anymore. Not even Shire Hall or its consultant.

Today, the rationale to push forward is far less compelling. It is before Council on Thursday because:

1. Shire Hall has already completed the regulatory forms.
2. It risks not being able to use an $18 million grant from the province.
3. Plants are aging. That future replacement costs will need investment.
4. It enables the municipality to carry on with the water plant design contract— as if nothing has changed.

But everything has changed.

In 2021, Shire Hall argued that Wellington would grow to 14,000 people, from the 2,000 souls it had hovered at for decades. Picton was set to bust out to 35,000 folks from 5,000 today. The then-CAO explained that the anticipated wave of growth offered a rare opportunity to wrangle developers into paying for the infrastructure upgrades needed.

Those forecasts appear awfully naive today. Even Shire Hall now acknowledges that its growth expectations were grossly overstated. Yet it has stubbornly refused to alter its plan—rather, it is instead only offering to modify the timeline.

PROVINCIAL MONEY
The provincial grant ($18.3 million) was earmarked to enable housing growth in this municipality. Arguably, that money may still be used to expand or upgrade the Wellington and Picton water plants, thereby expanding new homebuilding capacity. But there is no consideration of this possibility in the report to Council on Thursday. Instead—the provincial money is positioned as being at risk of being lost. It isn’t, as long as the municipality uses it to expand capacity to enable growth.

Even if it were a risk, it could not justify embarking on another waterworks debacle that imposes hundreds of millions in costs on the backs of water ratepayers.

AGING ASSETS
Waterworks are always aging. They continually need care, upkeep and eventual replacement. Even new assets. But the estimated cost to completely replace the water plant in Picton, expand the plant in Wellington, and run a new intake into Picton Bay is still half the current estimate for the Regional Water Plan. Curiously, the cost of the mega water plant in Wellington ($37 million) is estimated to be $5 million less than the cost to replace the Picton plant ($42.5 million).

Lifecycle and operating costs estimates rely entirely on assumptions and inputs. These have proved to be flawed.

SUNK COST FALLACY
In August 2024, Council promised that much-needed rigour would be injected into its infrastructure planning before another step was taken. Before a gathering of 600 residents, Council promised to ensure that major infrastructure would be guided by a comprehensive program management plan, a detailed, fully recoverable financial plan and a timetable. It would also prepare a comprehensive communications plan to ensure residents and waterworks ratepayers were informed. Council promised to complete these plans and share them with residents before taking another step forward.

Yet none of it was done. None of it is in the report before Council on Thursday.

That Shire Hall would have to terminate design contracts and redo its regulatory paperwork is a sunk cost. It is incomprehensible that waterworks staff are making a decision risking hundreds of millions of dollars on the basis that the paperwork is already completed. It seems not to matter that it was done under flawed assumptions and estimates—that everything underpinning these plans has changed.

Shire Hall has not even offered a pretense to mask its twisted decision-making. It has taken the first steps toward its grand vision; therefore, it must be allowed to keep going—to keep spending money. This inverted reasoning has been dragged out at every step to rationalize the bad decision made before. Since 2020. Every step taken is used to justify the next. And on it goes.

VANISHING ALLURE OF DCs

Shire Hall report writers don’t bother to claim that growth pays for growth any longer. It wasn’t credible five years ago—it is less so now, with half a decade of experience. Instead, Shire Hall now expects growth will pay only a minor portion of the massive infrastructure costs it intends to spend. Someday.

They continue to state—as if it were fact—that 23 per cent of the capital costs (regional water plant, intake pipe and 20 kilometre pipeline) will be paid by growth in the form of Development Charges (DCs).

There is no timeline to suggest when that might happen. And no market drivers to suggest it ever will.

Several headwinds indicate it may be a long time. Resale home listings are currently at their highest level ever in Prince Edward County. There is an abundance of homes on offer. There is little incentive for a developer to add more homes to a market with oversupply.

Even if they considered dipping their toes back in the County market, the fees will quickly turn them around. According to the report before Council on Thursday, the builder of a single-detached home must pay $38,512 in waterworks development charges on top of regular DCs of $16,597—a total of $55,109. That compares to $32,183 in DCs in Belleville, $34,107 in Quinte West and $29,505 in Brighton.

Worryingly, Doug Ford’s government is pushing hard for municipalities to cut DCs. Standing beside Prime Minister Mark Carney in March, Ford described DCs as a hurdle to the construction of new homes.

There is a very real risk that developers will choose a less expensive market, or that the province will impose lower DCs on the County. In either event, Shire Hall will not generate the revenue needed from growth. Once again, the burden of the infrastructure will shift disproportionately onto the backs of waterworks ratepayers and ultimately County taxpayers.

WHY ARE DEVELOPERS OFF THE HOOK?

The argument for a water pipeline from Wellington was premised on the notion that development would largely fund massive infrastructure costs. According to a memo prepared by Watson and Associates, it is no longer the case. Growth, that is new homebuilding, is now liable for just 23 per cent of the cost of building the water plant, a new intake pipe in Wellington and a 20-kilometre pipeline to new Picton.

Existing ratepayers are on the hook for all of it, of course, until development shows up. But even when/if that happens, ratepayers will be required to pay a lopsided (75 per cent) share. That wasn’t the deal.

According to the County’s OP: “The existing water treatment plant(s) is (are) to be upgraded as needed to accommodate growth if it does not impose an unconsidered financial burden on existing ratepayers, and all costs will be recovered through development charges (DC).”

This guidance is being ignored and trampled upon. The premise for this entire project was that development would pay the bulk of the cost. Instead, it is now Shire Hall’s expectation that existing waterworks customers in Rossmore, Consecon, Carrying Place, Ameliasburgh, Wellington and Picton must fund at least 75 per cent of a project currently measured in the hundreds of millions of dollars.

Who is being served by this massive infrastructure spending?