Letter sent to:
Councillors Jan Harder, Rick Chiarelli and Gord Hunter

From:
Taxpayer, Brian Finch

On the City's Current Budget Problems

and how $8,500,000 to $12,500,000 can be saved

January 6, 2004

Councillors Harder, Chiarelli and Hunter

Re:  Current Budget Problems

I have a suggestion to save in excess of $4 million (M) from the capital budget.  Some independent engineers estimate that the savings could actually be as high as $8.5 - 12.5M. 

I am suggesting that the planned 11 km sewage forcemain between Munster and Richmond be cancelled and that a high tech, tertiary on-site treatment facility be installed instead.  Capital cost comparisons as well as other comparisons speak very convincingly in favour of the on-site treatment plant and against pipeline:

-           the cost of the pipe is not know with precision and will remain somewhat unknown until the rock in the trench has been removed and the pipe installed.  A December 2002 study said it would cost $6.6 - 7.6 M but the estimate does not include some costly additions to the plan made this fall, such as a new lagoon and pump house in Munster.  Nor does it include extensive roadway refurbishment of the Richmond Road.  These will add in excess of $1M.  An earlier study commissioned by the City indicated that the pipeline would cost in the range of $12-15M range.  By comparison, the December 2002 study states the onsite treatment plant will be $3.5 - 4.3M.  The lower price of $3.5M is the fixed price quoted by the firm CMS (now Seprotech).

-           there are other significant costs that have not been dealt with in any of the studies to date:

-           significant costs will accrue to the City when (not if) the pipe ruptures.  These costs will be in public health, in costs to the tax payer and in environmental damage.  Before I deal with these costs, I should deal with the probability of a rupture of the pipe.  City engineers indicate that the pipe will be welded HDPE pipe and that sophisticated controls will monitor the pipe operation.  However, here are some troubling facts:  1. City engineers have admitted that pipes do break; 2. sophisticated monitoring systems do not detect slow leaks; 3. the Richmond - Glen Cairn forcemain sewer pipe, now just over 20 years old has ruptured 5 times.  While the proponents of pipe indicate that this is a jointed pipe of different composition, the two most recent ruptures were directly related to slow, prolonged leaks at weldments in the pipe; 4. much of the engineering experience with HDPE pipe has been with drinking water pipe which is run at a constant pressure.  By comparison, the Munster pipe will be operated in stop-start mode, every 5 minutes through its lifetime, a far more stringent operating requirement.

            Now to get to the costs: the City proposes to run the pipeline through a shallow aquifer that most of Richmond relies on for its water.  The average well depth is 27 ft.  At least 140 homes will be in very close proximity to the route.  A slow leak will go undetected by the SCADA system and will contaminate the aquifer with untreated sewage.  The City risks another Walkerton and the City will be fiscally and morally liable.  If the aquifer becomes contaminated, the City will be required to provide clean water to Richmond but at what cost?  Millions.

            The pipe will cross under the Jock River once and pass through 1.7km of the Richmond Fen Wetland, the largest provincially wetland in Eastern Ontario.  A slow leak in the Fen would be difficult to detect (even more so in the winter) and difficult to clean-up.  The environmental damage would be significant.  While the costs to clean-up, investigate and repair (still incomplete) the two ruptured “Y” joints in the Richmond - Glen Cairn pipeline are not available, the total could reach $200k.

            A failure analysis of the Munster-Richmond pipe has never been reported to the public but if the pipe performs as badly as the 13 km Richmond-Glen Cairn pipe, the Munster pipe could rupture 13 times over a 60 year lifetime or 19 times over a 90 year lifetime. Total cost over the lifetime of the pipe - millions.

            The costs related to the failure of the pipe have to be treated as a reality and have never been factored into the dollar cost of the pipe.  The costs to the health of Richmond residents cannot and should not be reconciled in any way.  None of these costs could or would arise with on-site treatment.

-           the transport of Munster sewage over 60-70km will require large pumps (in the order of 80HP) in Munster and Richmond, and 7 “lift” pumps along the rest of the route to ROPEC.  The electrical consumption for this unnecessary transportation is significant in itself but the actual treatment at ROPEC is more energy intensive than the on-site treatment which requires only 3 x 5 HP motors and a handful of smaller motors.  All of the costing for the operating costs in the most recent study used an electricity cost of 8.44 cents/kWH.  The possibility that the electricity costs will remain near this level will fade quickly as Ontario’s energy costs catch up with reality.  Eventually, the costs of operating the on-site option, already a bargain, will be eclipsed many times over by the pipe option.

Another suggestion I have is a little more difficult to estimate and to deal with.  I suggest purging the culture in the bureaucracy that brought us to this point on the Munster sewage issue.  In particular, the problem appears to stem from the City’s engineering and legal departments, possibly aided with a dash of interference from some political components.  To provide you with some impetus, I can indicate what this “culture” has and will cost us: 

Historical:

After a failed attempt to expand the Munster lagoons and spray fields, City (Regional) Council directed staff in 1998 to implement a high tech, on-site sewage treatment solution in Munster.  At this stage, an addendum to an Environmental Study Report (ESR) had to be written, which needed only an evaluation of the on-site options and an addendum report indicating the reasons for the choice.  An on-site solution could have been in place in 1999 for a cost of about $3.5M.  However, a much more costly route was taken:

1. There was a request for proposal (RFP) for high tech, treatment in Munster but with support from legal and engineering staff, the consultant (Connestoga Rovers and Associates - CRA) recommended a full environmental assessment.  Cost of EA $250k.

2. The same consultant that recommended the pipeline solution was also given the contract for a full environmental assessment of the pipe route.  Cost $250k.

3. The City was warned of pending EA Bump-ups and OMB appeals but the City did not attempt discussion or conciliation with proponents of on-site treatments.  The Bump-ups were refused but the City lost the OMB appeal.  Independent lawyers have estimated the City’s costs to respond to the OMB appeal were approximately $500k.  The OMB ordered the City to pay appellant’s costs of $50k.  The City appealed the OMB decision to the Ontario Superior Court and lost.  Estimated cost $50k.  The Court ordered the City to pay respondent’s costs of $20k

4. The Richmond pumping station upgrade and twinning of Richmond-Glen Cairn pipe under the Jock River were done concurrently with the plans to install the Munster pipeline.  Neither the upgrade nor twinning was necessary within the current need or near 10-15 year build-out of Richmond (with exception of the use of the Richmond lagoons to provide storage capacity in 4-5 year high water table events).  But both of these projects are upgrades required to add Munster’s sewage to the Richmond-Glen Cairn pipeline.  The City has been unwilling to provide real costs but they are probably in the range of $400k-450k.  Munster’s share of these projects (proportionate population) is ¼ or $100k-113k.

5. The City awarded the engineering and oversight contract for pipe prior to OMB hearing on advice of legal department (OMB Chair was most upset on hearing that contract for work had been let.)  Cost $1.3M (unknown amount recovered on cancellation).  [Note that cost of engineering and oversight on a contract of this nature is typically 10% of total project cost - you do the math on the expected true cost of the pipeline project.]

6. City followed decision of OMB and hired R.V. Anderson to review CRA study.  Cost $179k.  Report recommended on-site options over pipe but staff and councillor do not like result and commissioned R.V.Anderson to do another study.  Cost $50k.

7. Costs for hauling sewage in winter months from Munster to ROPEC @ $650k/year.  Cost for 1998-2003 is $3.25M.

8. Miscellaneous staff costs estimated conservatively at 5 person years.  Cost $500k 

9.  Current design contracts?

Pending:

1. CMS (now Seprotech) has filed suit against City.  Court date is in 2004 so outcome is unknown.  City’s cost to fight the suit (est.) $500k.  Requested judgment against City ($1M) with costs and punitive damages puts total potential cost to City in excess of $2M;

2. Northern Watertech is currently filing suit against City.  Requested judgment is unknown but with costs and punitive damages on top, total potential cost to City could be in excess of $2M

Conclusion:

Since 1998, the estimated costs to implement a solution will add up to $5.2M-8.8M (or more) PLUS the actual cost of the solution to deal with the sewage.  (est. $37K or more per Munster household.)  If staff had followed Council’s direction in 1998 to install on-site treatment, the total costs would have been $35k-50k to write an addendum to the ESR and $3.5M to install the on-site plant. ($8.3k per Munster household.)

Councillors:  If you are unable to seize upon the clearly evident cost saving provided by canceling the Munster pipeline, I respectfully suggest that you will be unable to deal with the really difficult decisions you have before you in the current budget deliberations.

Respectfully,

Brian Finch
Ottawa (Nepean)

[Taxpayer]