Without a net

Allure of $18 million in provincial money masks risk of $200 million infrastructure spending

It was a good sign, according to at least one council member. Twelve consulting firms had declined to bid on the assignment to review the assumptions that underpin what is rapidly becoming—at $200 million—the largest infrastructure project ever undertaken in Prince Edward County. None, it seems, was interested in the work.

Shire Hall had reached out directly to the most likely consulting firm. It declined. Shire Hall then issued a request for quotation, and when that failed, it issued a request for proposal— in which the consultants could define the scope of the work and the price. Still, none of the twelve firms who considered the assignment chose to submit a proposal.

It was a good thing, concluded Councillor Phil St-Jean. The absence of bids meant prospective bidding firms agreed with the original consultants’ conclusions, according to the Picton councillor. That no firm was prepared to scrutinize the assumptions was proof they were accurate. The absence of scrutiny was scrutiny enough. It’s often how the sausage is made at Shire Hall.

It was evident in last week’s council committee meeting that many members have descended so far down the rabbit hole that some have lost their bearings. They do not understand the scale or implications of the project or how it will forever reshape Prince Edward County. Nor do they understand the assumptions that make it work. And, now, may never know.

What some haven’t quite admitted to themselves yet is that they have already committed to spending $45 million. Each incremental step risks Council sliding deeper into the $200 million hole. Each step makes it harder to turn back. Yet they still tell themselves the next step is cost-free. Risk-free.

Other councillors insist they owe it to developers. That slowing down to take another look at growth projections that call for Wellington’s population to explode from 2,000 to 14,000 people while Picton expands from 5,800 to 32,600 souls could be viewed negatively by developers.

“Please consider the message we’re sending to developers who may reconsider on the basis that Council is not moving forward in a straightforward manner,” pleaded Mayor Steve Ferguson.

Hanging over the decision at last week’s committee meeting was the prospect of provincial grant money. A week prior, Shire Hall had applied for $18.3 million from Ontario’s Housing Enabling Water System Fund. The potential of provincial money made it easier for Council to overlook the fact it was reneging on its promise of an independent third-party review.

Bullish council members urged their colleagues that, if they didn’t proceed, they would lose the chance at the provincial money.

“If we don’t do this, I get worried about the repercussions,” implored St-Jean. “If we don’t move forward with something as simple as the final design, I think we are going to screw ourselves,” added the Picton councillor colourfully.

Yet there were more temperate voices.

“Even if we receive the provincial money, we are still behind the eight ball,” warned Hillier councillor Chris Braney. “There are still millions and millions of dollars that we have to figure out how we are going to fund.”

Hallowell councillor Phil Prinzen worried that asking for provincial money might compel Council to make a decision it would not otherwise make.

“If we proceed and secure this grant, does it tie our hands?” asked Prinzen. “Can we say thank you for the offer, but we’re not comfortable with what it is going to cost us, so we are going to back out?”

Shire Hall senior leadership assured Prinzen that if Council declined to proceed with the regional water plant, the municipality wouldn’t get the money. Staff were unclear if a penalty might be attached.

But the allure of provincial money was too great, and the promise that this next step would be cost-free was too compelling. For those on the fence, County manager Marcia Wallace advised Council that 8,000 housing units are currently at the draft plan approval stage, as evidence of the coming new homebuilding boom.

Councillor John Hirsch assured his colleagues that the audit committee, which he chairs, was up to the job of reviewing the assumptions— without an independent third-party review and without the original consultant at the table.
“Our job will be to focus on the uncertainties–cost estimates and growth estimates,” explained Hirsch. “We need to get Watson’s to lift the veil on their proprietary modelling methods—to figure out where their numbers come from.”

Hirsch admitted that he didn’t know how the consultant’s numbers worked—though they formed the foundation upon which the project was built—four years into the project. Yet he assured his colleagues that his audit committee would get to the bottom of it.

He also assured his colleagues that agreeing to move to the final design of a regional waterworks plant and new intake pipe into Lake Ontario didn’t mean they had to build it.

“When the audit committee comes back, Council will decide whether to proceed or not,” assured Hirsch.

Yet, with every step Council takes, it becomes harder to turn back.

Who bears the risk?

Existing water bill payers

It was the first crack in a carefully constructed wall. The Wellington councillor pointed to the portion of the funding of the waterworks plan that depends upon a million square feet of nonresidential development being built in the village (at a cost more than ten times that of any other community in the County and many times greater than Belleville and Quinte West.)

“What happens if non-residential development doesn’t occur?” asked councillor Corey Engelsdorfer.

The County’s finance director, Amanda Carter, assured the councillor that she would use reserves to pay the debt until such development came about.

“And if the commercial development never occurs, will it be existing waterworks users who will foot this bill?” pressed the Wellington councillor.

“Potentially,” responded Carter, “unless residential growth exceeds projections and finances the debt.”

It was the first time Shire Hall leadership admitted that existing waterworks customers in Picton, Wellington, Rossmore Carrying Place, Ameliasburgh and Consecon bear the risk of this extraordinary infrastructure spending. Of the project going wrong. Of the assumptions being wrong. Of a plan that relies upon thousands of new homes in Wellington and Picton.

Chief Administrative Officer Marcia Wallace jumped in. Council members shouldn’t dwell on the numbers driving the project in Wellington. The decision to proceed with a regional plant and pipeline to Picton will trigger a fresh new calculation about who will pay for what.

“The most ideal option is to look at a combined development charges study for Picton and Wellington,” said Wallace. “If we had a development charge for both, it does afford us the opportunity to relook at the assumptions—the split between residential and commercial.”

Wallace said Shire Hall would look at these calculations this fall. Alas, it may come too late for this locomotive.

Unless or until Council intervenes, the tenders for a new regional water plant and intake pipe will be awarded before such a combined study. Once committed to a regional plant, the pipeline connecting Wellington to Picton will surely become inevitable. By this fall, the $200 million flight may be more than halfway across the ocean—there won’t be any going back.

Shire Hall will then hire a consultant to determine who pays—and what it means for your water bill.