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Water treatment plant debate GNWT denies forcing city to build $30-million project
Northern News Services
Published Friday, August 30, 2013
The reason why Yellowknife needs a new multimillion dollar water treatment plant and why borrowing for the project never received voter approval, is murky - a stark contrast to the quality of water currently flowing through city pipes.
New water treatment plant costs
- Expected cost: $30.2 million
- Original estimated cost (2006): $21 million
- Amount saved by the city as of 2013: $21 million
- Amount re-purposed away from project for critical infrastructure: $17 million
- Remaining carry-over funding: $5 million
- Loan secured by the city: $23.8 million
- Interest rate on loan: Between 3.5 and 4 per cent
- Loan to be paid back over the next 15 years through the city's capital budget
Source: City of Yellowknife
A Yellowknife MLA and a former city councillor, who asked not to be named, said shortly before city council approved a bylaw in 2012 to borrow $20-million for the project, a decision was made at city hall to make construction of the new water treatment plant a "public safety issue," which circumvented public debate. This allowed the city to spend $17 million it had saved for the project on other things.
"The city needed that money for roads and sewer replacement," said the former city councillor.
"We had enough money set aside to do the water treatment but then, all of a sudden, we said we should borrow for the water treatment plant and spend the money that we had on roads and water and sewer infrastructure, and I always thought that put the question of the borrowing as a safety issue ... I never did support that. That borrowing for the water treatment plant."
Mayor Mark Heyck insists there was never any attempt to avoid public discussion on the project by seeking a ministerial exemption to prevent a referendum on borrowing money.
"The bylaw came forward to council in early 2012 in an open and transparent fashion, and was publicly discussed and voted on by councillors," said Heyck.
Under the Cities, Towns and Villages Act, the minister of Municipal and Community Affairs can set aside the right for voters to give approval. In this case, Minister Robert C. McLeod stated in an e-mail he signed off on the borrowing because he deemed the project in the public interest.
Otherwise, there would have been public debate followed by a referendum, similar to the Con Mine geothermal project, which was voted down in a public vote in March of 2011.
The water treatment plant was the subject of controversy last month after council voted to award the contract to build it to Ontario-based NAC Contractors over two Northern firms - Det'on Cho Nahanni Construction, and Clark Builders - after the southern company put in a slightly smaller bid of $30,280,950. With a GST rebate of $1.4 million, the project is expected to cost taxpayers $28.8 million.
Meanwhile, whether or not a new filtration system is needed in Yellowknife remains under debate.
"We've maintained from the beginning that our feeling is we have very high-quality water that is more than safe, but we are duty bound to follow the legislation and regulations that are put in place by the territorial government," said Heyck.
In 2009, the GNWT adopted the Public Health Act, which states all upgrades to water supply system in the NWT must meet Canadian Drinking Water Guidelines set by Health Canada.
Those regulations include filtering water, as opposed to treating it with chlorine which is currently the standard in Yellowknife.
Through this legislation, the GNWT forced the city's hand in building the new plant, said city councillor Cory Vanthuyne. For this reason, holding a public vote was not an option, he said.
"It's one government telling us we have to do it so we need that government's approval to borrow that kind of money," said Vanthuyne.
He did question why no direct funding was granted by the GNWT for the project, since it is their legislation that made the new facility necessary.
"They've funded other municipalities' water treatment plants," he said.
In a written response to Yellowknifer, McLeod stated GNWT legislation is not to blame.
"The territorial legislation does not dictate that the city must build a new plant," he stated, adding it does say any municipality that decides to undergo construction or alteration of their facility must comply with the national guidelines.
In this case, because Pumphouse No.1 and the water supply pipeline need repairs, that means the city needs to build an entirely new water treatment plant that filters drinking water as opposed to chlorinating it, said Heyck.
"Regulations or not, we would have to rebuild that pumphouse in the very near future and given the regulations in place, that requires we put in a new filtration system," he said.
On the question of why MACA has not provided money for the project, McLeod pointed to the nearly $38 million received by the city in the past five years through the Building Canada Plan, the Gas Tax Agreement and the Community Public Infrastructure funding plan. The last two funding sources are ongoing.
On Wednesday, Yellowknifer published a guest column by Dr. Andrew Kostaka, clinical director of obstetrics at Stanton Territorial Hospital, who claimed that the risk for bacteria contaminating the Yellowknife water supply is negligible, and the money would be better spent on other areas of health, such as medical travel.
This issue has also never been debated at the territorial government level.
Weledeh MLA Bob Bromley said it is "unfortunate" territorial legislation is forcing the city to spend so much money on this project.
"We have a very high cost of living here to start with and it's very, very unfortunate that we're adding to that cost in a way that many members of the public agree is unnecessary," he said.
But when it comes to safe drinking water, one can never be too careful, said Range Lake MLA Daryl Dolynny.
"Are these guidelines and standards important? I think for public safety, yes they are," he said. "What we have are good standards and they're met for a reason."
What Dolynny did take issue with is the amount of money being borrowed by the city to build the new treatment plant.
When it originally started looking at upgrading the system, the city began putting money away for the project. Those savings were projected to add up to just over $21 million by 2013, said Heyck.
However, in 2012 "given the low interest rate environment," council decided to re-purpose $17 million of those savings for badly-needed upgrades to critical infrastructure such as roads, sidewalks, water and sewer lines.
Instead of taking out a $23.8-million loan to be paid back over the next 15 years, Dolynny said he urges the city to withdraw its tender and wait six months for the federal government to release its new Business Canada Plan.
"The opportunity here is any funds could be used for plant upgrades, and not taxpayers having to foot the bill," he said. "I've been strongly encouraging them to withhold at this point so we can take advantage of some of these opportunities."
When asked if he would consider delaying the project, Heyck pointed to ballooning costs of the new treatment plant.
"The more we delay this project, the more expensive it's going to get over time," he said. "We will continue to look for external funding as this project continues to move along over the next three years."
"It's a tough thing to swallow that we have to pay that much just to have clean drinking water when our water is actually really good to begin with," said Frame Lake MLA Wendy Bisaro. "Up here we have some of the best water in the world and we have to spend $30 million on a water plant."