Friendly Update, City Hall: EPCOR Makes A Fine P3 And Now You Can Too!

Three Villages Bar, Balzan, Malta
I did start writing this blog post in the Three Villages Bar. Wrote 1,500 words there, in fact. Sat on it for a few days. Realized it wasn’t working so deleted it. Rewrote it. Deleted that. Rewrote again. Etc, etc. Only the first paragraph remains from that first draft written in the Three Villages. But I kept it in otherwise I wouldn’t have an excuse to include the photo.

I’m sitting in the Three Villages Bar in Malta. It’s on a corner of a little medieval street in the town of Balzan. It’s late morning and pretty hot outside. The place is empty. It smells like my grandmother’s apartment in Galt, Ontario circa 1976, and it’s a business that seems to make its living selling bottles of screw-top wine, instant coffee, loaves of bread and dry plum cakes to very occasional, elderly passers-by. Someone stubbed out a cigarette on the floor under my seat at some point since a broom last passed this way. It’s exactly the kind of place I like to kill mornings in. So I should be enjoying this beer I’m drinking and writing goofy short stories for my kids.

That was the plan for my wife’s sabbatical.

Instead, I’m obsessing over the announcement of big savings on Regina’s wastewater treatment plant public-private partnership. By all accounts, the deal is really good. And by “all accounts,” I mean “everything I’m reading online in your Canuck media.”

“It’s a win all round,” your media tells me. Good. I don’t have to hunt through my inbox for press releases from the Mayor’s office. “It’s a triumph for Regina,” they say.

Yeah, it’s a triumph, alright. But not for Regina.

It’s a triumph for Edmonton. Though I’d be surprised if it got more than a passing mention in the business section of their paper of record. They’re the City of Champions, don’t you know. Too many trophies will make a town jaded.

Here in Regina, the much ballyhooed WWTP P3¹, rather than a cause for popping champagne corks and holding a ticker tape parade for council, should serve as a reminder of how we’re losing the municipal innovation war.

You didn’t know we’re engaged in a municipal innovation war? That’s okay. Neither does council.

No, they’re too busy patting themselves on the back for implementing policy tools 20-plus years out of date.

We’re Accessing Federal Grant Funds and Partnering With The Private Sector to address our infrastructure needs! How very 1990s of us!

And, have you heard? We’re also Finding Efficiencies! It’s the newest thing! We even did a Core Services Review! It’d make Brian Mulroney proud!

Edmonton on the other hand is raking in out-of-province cash through a water and power utility that’s also an exportable commodity.

Gee, having a municipal facility acting at arms length and shopping out its expertise so as to generate buckets of sweet cash for its lone shareholder, the city? Or, at the very least, generating enough sweet cash so that it doesn’t have to go begging for additional nine per cent utility rate hikes every time it needs to replace a gasket? That sounds suspiciously like one of those alternative revenue tools our council tells us it’s been meaning to find so that it doesn’t have to crank up our property taxes every year.

And yet somehow city hall thinks it’s a good idea to brag about partnering with a profit-generating water corporation that’s wholly owned by another municipality. The optics seem… warped on that. They went so far as to even suggest that those who opposed the P3 because they were worried about water privatization could take some solace from the fact that our wastewater is now in the hands of another city’s water utility.

Okay, I’ll take a little solace. But beyond that, I’m just marvelling at how few people seem to be talking about the irony of how we found our waste water solution not in a private corporation but rather in another Canadian city.

Of course, Edmonton isn’t synonymous with EPCOR. EPCOR isn’t exactly a public sector utility in the traditional sense. It’s an independent corporation. But a corporation’s sole job is to please its shareholders (or so they taught us on, I think it was, day five of business school). And seeing as EPCOR’s lone shareholder is the City of Edmonton, it isn’t a private corporation in the day-to-day sense either.

Shouldn’t all those staunch No side supporters be a tad taken aback by that?

I mean, I remember a council meeting before the referendum where Councillor Hawkins orated at the gallery about how the WWTP P3 was a good idea because Regina will benefit from the expertise of whatever private partner runs our wastewater plant. At the time, most everyone I talked to assumed it’d be one of those European water titano-consortiums with an inoffensive Swedish-designed name and a reputation for Teutonic perfection. We’d be accessing that free-money flywheel that only unfettered capitalism can set to spinning.

Screw Big Government. We were on the hunt for our own John Galt.

But here we are a year later and the John Galt we got is completely beholden to Alberta’s northerly Megalopolis — the province’s third biggest Big Government.

Ayn Rand was a severe mistress. I doubt she’d consider this arrangement ideologically pure.

And secretly, deep inside their withered hearts, that’s got to make Regina’s free-market fundamentalists a little nervous that maybe J-Galt won’t be fully free to deploy all his Objectivist mojo on the problem of making our poop flow faster and better.

But, hey, if it was never really all that necessary to go schlepping around Galt Gulch to find us an untainted Wizard of Capitalism who could bestow his sewage expertise on our little post-socialist backwater, maybe it’s time to do a serious rethink of the “Private” P in the P3 acronym.

See, the funny thing is, pre-referendum I remember speaking to academics and think-tank thinkers who seem to agree that the real experts on processing city wastewater are all those city employees you’ve hired to do that job every day. Wastewater treatment isn’t rocket science, they told me, and typically it isn’t the plant workers and engineers you have working for you who are throwing up barriers to innovation (hint, hint).

And that kind of suggests that every city has its own miniature water titano-consortium right there in its backyard. It just needs to find a way to unleash all that pent up public sector expertise.

The genius of the EPCOR/Edmonton model is that it recognizes this.

The City of Edmonton’s water utility isn’t just about it’s built-capital. And it isn’t tethered to its city of origin. EPCOR is also a team of highly skilled, highly trained employees. And instead of sitting back and wondering, “Who can we fire so as to achieve ‘efficiencies’?” EPCOR instead asks, “How can we sell this?

Enter willing buyers: in this case, Regina, eager to fob off its wastewater processing. We said a hearty 57 Per-Cent Yes to Harper’s offer of $58.5 million² and, by doing so, turned our city sewage into an indirect revenue stream for another municipality.

Now, everywhere I look, I see people saying, “What a great deal we’ve signed on to,” and not, “Why aren’t we doing what Edmonton’s doing?”

I suspect at the root of this is a long held belief that we’re a small prairie city with nothing worth exporting. How can we compete with giants like Edmonton who have a decades-long head start? What could we possibly have to offer the rest of Canada? We should just accept our lot in life as a buyer of services and not a seller of them.

If cities had gruff grandfathers hassling them over every adolescent misstep, Regina’s would be saying right now, “You’re never going to get anywhere with an attitude like that.”

And if Regina’s grandfather had a fondness for doling out folksy wisdom, he might also point out that boasting about your growing tax base and all your greenfield housing starts won’t do anything to win you that municipal innovation war.

You win the municipal innovation war with good people, he’d say.³

But when you’ve committed your organization to outsourcing, contracting, downloading, downsizing, partnering and utilizing outside consultants, then maintaining your own payroll starts to look like a major inconvenience.

That’s why you’ve seen public institutions mercilessly slashing their workforces since the days of Thatcher and Reagan.

And Regina is carrying on that tired practice.

For instance, the kick-in-the-teeth clause of that WWTP P3 deal is that we’re letting EPCOR hire away all those City of Regina people who’ve built careers at our wastewater treatment plant. We can no longer tap their genius to turn our city into a 21st Century powerhouse because Edmonton, via EPCOR, will be doing that.

And it doesn’t end with wastewater. I’ve spoken at length with representatives of the various unions representing City of Regina workers and they describe their ranks as “demoralized.”

“We’re dying by a thousand little cuts,” is a phrase I’ve heard a few times. It refers to how their workforce and their ability to take on projects has been dwindling for years as council starves them of resources, choosing instead to hand work over to private subcontractors.

And I don’t know if you’ve noticed but we’re also losing high-profile city managers at an alarming rate⁴; alongside which, we have City Manager Glen Davies rearranging administration’s org charts every 14 months or so. I’m sure behind all of his many cabinet shuffles there’s some master plan that he’s pulled from one of those management texts I’ve occasionally caught him reading during council meetings. But from where I’m sitting it sure looks… wellllllll, I first typed, “chaotic and desperate,” but I don’t know if that’s exactly warranted; let’s leave it at, “I just don’t see how this is helping anything, maybe someone can commission a report and hire a consultant to explain it to dopey ol’me.”

It’s all just so sad and disappointing because I think we’re headed into an age where cash-starved municipalities and other public institutions should really start looking into ways to mobilize their people to turn their organizations into revenue-generating operations. And I don’t mean just by charging their municipal constituents more for things. That doesn’t bring new money into the system.

I mean by finding stuff we can charge other, outside constituencies for.

Melita Gardens
I’m actually finishing up and posting this thing in the Melita Gardens. It’s really lovely. And the coffee is very good.

But not like we’ve done in the past; that is, we can’t be hiring out our public sector expertise or our services at a loss or on just a cost-recovery basis — say, the way we have with the water services we provide to the RM of Sherwood.

We should be thinking rather about a “cost recovery PLUS!” model.

Some would call that “profiteering” and outside the mandate of a city. I call it “finding innovative revenue tools.”

And even though we’ve given away the wastewater treatment plant and the people associated with it, and even though decades of budget cuts and organizational instability have left those at city hall feeling a little… shall we say, under the gun?…  there are still things Regina has that we can remake into revenue engines.⁵

What things? How will we do that? Don’t know, exactly. People who were elected or put on salary to think about this stuff all day can hammer out the details. (However, I am going to put the few notions I do have in another monster footnote.⁶)

melitacat
Meet the Melita Gardens cat. She’s very friendly and very interested in my Linguine Melita.

But I will end by saying that I’m very worried for Regina. Worried that when the next big, marquee project comes along and we’re figuring out how to finance it, the local business columnists and talk radio hosts and Sask Party policymakers and all the numbskulls I’ve blocked on Twitter will point to the bullish talk about the success of the WWTP P3 and use that as justification for us to embark upon more and more P3s.

If they do, they will have gotten the lesson of this EPCOR deal exactly backwards.

What we should be doing is investing here at home, making the stuff we have awesome — in house — cultivating our own virtuoso team of hungry, mercenary professionals, so that when other towns and cities are contemplating a P3 procurement, they’ll bring their projects to Regina.


FOOTNOTE
¹ Would it be okay if I started referring to the WWTP P3 as the W2TP4? No? Damn.

² From what I’ve read, the $58.5 million the No Side said we could expect to see from the federal government seems to have turned into $48.5 million now that the referendum is over and the project is underway. What gives? Seriously. I’m not being cute. I don’t know what happened. Technically, I’m also on sabbatical right now so I am NOT going to read the relevant reports. But some of you must have. So where’d the extra $10 million go? Did we only qualify for a smaller amount? Or was the other $10 million allocated to some associated expense and, while part of the larger P3 financing package, it isn’t being listed as part of the allotment for plant construction? Or am I remembering the referendum billboards wrong? I was sure we were told that if we said Yes to a traditional build we’d be kissing $58.5 million goodbye. Even made an infographic about it. Seeing that $48.5 million figure in the paper kinda shocked me.

³ And also, “Dress like a grown-up for chrissake! A Roughrider jersey and dungarees do NOT count as formal wear!”

⁴ Continuing the brain drain westward, two of those managers, Dorian Wandzura and Bob Bjerke, were hired on by EPCOR’s home city, Edmonton. Bjerke has since been made the chief planner for Halifax.

⁵ For instance, for the time being we still have the Buffalo Pound plant which provides drinking water to our city, Moose Jaw and surrounding communities. It’s in need of a major upgrade and maybe while we’re at it we could find a way to EPCOR-ize that facility.

Although, even if Buffalo Pound is already shopping out its water-engineering expertise to places beyond southern Saskatchewan (maybe it is, I don’t know enough about it to say definitely that it isn’t already doing that in some fashion), I doubt it’ll stay ours for long. I think we’re going to find that EPCOR itself isn’t going to rest on its laurels with running just our wastewater plant. When it comes time to fancy up Buffalo Pound, there will almost assuredly be tremendous pressure for us to entertain another 30-year, design-bid-build-operate-maintain public-private partnership. And with already established community ties and demonstrable local experience, EPCOR will be the leading contender for that contract.

That’s where I’m putting my money, anyway.

lizards
Also… lizards!

Oh sure, during the referendum Mayor Fougere declared that P3s aren’t right for every project and kept assuring us that no one was out to privatize our drinking water. But we aren’t the only entity with a say over what happens at Buffalo Pound. And history has proven that dangle a mitt full of millions in front of council and they’ll start dancing to the “Our Hands Are Tied (We’d Be Fools To Turn The Money Down)” tune.

It was a number one jam last year.

Half-baked Notion #1: Remember those National Infrastructure Summits Regina hosted? Those were great but it feels like we forgot all the cool stuff that other cities showcased at them — stuff that’s making those other cities more efficient and more awesome.

For example, a group from Scandinavia (or maybe it was Holland… shit, I left all my notes in a box in Regina), showed videos of this next-gen sidewalk system. It involved these modular slabs of cobblestones that could be installed and replaced by a single operator on these space-age machines with cool robot arms. I’m doing a terrible job of describing it but suffice it to say, it made the whole process of repairing damaged sidewalks cheap and easy. And seeing as the real cost of a sidewalk comes from maintaining it over a lifetime and not merely from its installation, this was a big revolution in infrastructure maintenance for their city.

And for a place like Regina — where that shifting, Lovecraftian soil beneath our feet means we’ve sidewalks with an uncanny inclination towards heaving and cracking — this seemed a perfect fit.

Councillor O’Donnell was sufficiently impressed by their presentation that he had city administration investigate its feasibility here.

Administration’s response, some double-digit number of months later? That there was no one in the region with expertise in this technology at present and it would be too costly for the city to undertake this on its own.

Balls!

I seem to recall learning in business school that when you have this really great idea, and no one in your area is doing it, what you have is AN OPPORTUNITY! not a dead-end.

Jesusfuckingchrist. I was pulling my hair out the day that report came back.

If we had followed through on that sidewalk system, by either building a crew and facility in-house to provide that service, or by partnering with one of the brick factories in the province and having them build it and then revenue sharing with us, we could have revolutionized the way cities in Canada build and maintain their sidewalks.

As far as I know, no local business has become an expert in this sidewalk system so we conceivably still could poach this tech from the Swedes (or Dutch or whoever they were). And then WE COULD SELL THAT SHIT!

Half-baked Notion #2: Remember last year when the city made that deal with the Rural Municipality of Sherwood about how we’d expand our city boundary? We set up this zone around Regina with the RM that’s considered a Joint Planning District where we’ll consult each other on what gets built there. And, there’s even a special zone in the southeast that’s called the Collaborative Planning Area where the two municipalities will come together in some yet-to-be defined, kissy-huggy collaborative planning love-fest.

It was all vague and meaningless, but there it is.

ANYWAY! I spoke with the deputy reeve of the RM at that time and he talked about how great the deal is and mentioned that he thinks there’s a lot the City of Regina can offer the RM in terms of planning capacity.

WTF?! I thought. Did he seriously just suggest that he was going to put our planners to work on mapping out Sherwood’s development ambitions? And we were okay with that?

Well, maybe we weren’t. Because the province is currently investigating the RM for some undisclosed but sinister-sounding reasons that have to do with the RM’s development plans — the Wascana Village suburb that overlaps with the Collaborative Planning Area being mentioned as of special interest. So that’s all on hold, I suspect.

But, that got me thinking… If our neighbours are so keen to access our local brain trust, why not turn our planning division into some kind of Urban Planning Utility? They could have their own budget and “bill” the city for services. They’d be 100% under Regina’s control, wholly owned by us. BUT! They could shop out their services to smaller centres in the region who can’t afford bigshot planners but need that expertise.

Then the next time the RM starts musing about availing itself of our planning capacity, WE CAN SELL THAT SHIT! None of this negotiating a mutually beneficial arrangement with cost-recovery development levies. I’m talking BILL THEM MARKET RATES! TIME-AND-A-HALF FOR OVERTIME!! PROFIT! PROFIT! PROFIT!!!

Ha-ha! Take that Wascana Village!

Half-Baked Notion #3: Former councillor Fred Clipsham used to lament how Regina doesn’t have its own landbank. Basically, what that is is a bunch of land owned by a city. And that city partners with developers to develop the land and sell it off. The city has some control over what gets built on the land in its landbank and it also rakes in a tonne of money when it sells the landbank properties. That’s cash it then uses to buy more land and to fund affordable housing programs and other social initiatives. Obviously, it’s more intricate than that and there are variations on the concept. But anyway, Saskatoon has a landbank. And that’s a small part of why they weren’t hit as hard as we were by the provincial housing crisis.

Regina, as I mentioned above, doesn’t. But it could actually have the seeds to start one.

A little over two years ago, we bought from the province a bunch of land in the southeast of the city — henceforth called the “Southeast Lands.” Previously, the province had been selling off the land and giving the revenue to us to use in our Social Development Reserve — that’s the fund that pays for all our housing grants. But the province for some reason didn’t want to keep doing that so it sold us the land for a song.

At the time the deal went through, city admin guessed the land could be worth upwards of $70 million over 15 years if we developed it ourselves and sold it off. Or we could sell it off undeveloped for a WHOLE lot less (about $6.6 million).

It seems obvious that the way to go would be to set up that landbank thing I described earlier, partner in the lands’ development and thereby reap the maximum amount of revenue from its sale.

We’d be able to control what kind of housing gets built there, meaning we could ensure there’s lots of good affordable rental in there and it doesn’t all become high-end condos and mansions. And, we’d reap loads of cash that we could use to fund more and better housing initiatives.

That’s actually what the province sold us the land for. To fund housing. I know because I interviewed the ministry that sold us the land and have one of their representatives on tape saying just that.

We could also reinvest some of the cash into the landbank to buy more land with. Then develop that land and sell it off and use that money to fund even more affordable housing. All of a sudden we wouldn’t have to scrabble in the dirt for change or beg the province for housing funds. We’d have that magical, sustainable source of housing funding the city says the province ought to provide.

Well, the province has provided a sustainable source of housing funding, in the form of a proto-landbank.

Unfortunately, we still don’t know what city hall has planned for the Southeast Lands. The administration has been working on/sitting on a report about what to do with it for at least two years now.

I think though it would be profoundly disappointing if the city decided to just sell the Southeast Lands off, toss the whole landbank idea in the bin, and forgo this whole cool opportunity.

It would be a really timid and short sighted move in my opinion.

I worry though because our London School Of Economics-trained mayor has said things on more than a few occasions that make me think he’d be very uncomfortable with expanding the city’s mandate into things like land development. I think he’s a pretty big fan of the whole small government school of thought.

And, funny thing, that’s a bit at odds with his stance on the stadium. He was a big champion of throwing hundreds of millions in public money at that project. And he voted in favour of the city retaining the operations and maintenance of it through Evraz.

Which is kind of maddening.

As you can see from all I’ve written above, I’m a fan of finding creative ways to generate revenue from city facilities.

But a stadium?!?!

First of all, the vast majority of money Regina’s new stadium will generate will come from the people of Regina. So it doesn’t inject much new cash into our economy.

But more importantly, if there is one public facility that has been proven over and over again in city after city to be a guaranteed money loser it’s the large-scale sports stadium. There’s mountains of research available to back that up. They’re fucking money pits. Total drain on the public purse. That’s why no private corporations will touch the stupid things.

And that’s what Regina city council is hitching its wagon to.

Meanwhile, real estate development — the thing that’s made every important family in Regina truckloads of worry-free cash that they whine and cry about having to pay taxes on — is something our city is being all circumspect about. They’ve spent years so far, fiddling around, trying to make a decision on this.

We didn’t spend that much time deciding whether or not to build that new stadium with public money.

Of course, maybe the decision would’ve been different if we had.

Author: Paul Dechene

Paul Dechene is 5'10'' tall and he was born in a place. He's not there now. He's sitting in front of his computer writing his bio for this blog. He has a song stuck in his head. It's "Girl From Ipanema", thanks for asking. You can follow Paul on Twitter at @pauldechene and get live updates during city council meetings and other city events at @PDcityhall.

9 thoughts on “Friendly Update, City Hall: EPCOR Makes A Fine P3 And Now You Can Too!”

  1. The epic nature of this post demands some responses.

    First off, the killing of city jobs you call the death by a thousand cuts is not new. It’s been in full swing from the day Pat Fiacco convinced council to give Glen Davies an oversized, sudden, and unwarranted pay raise early in his contract. The argument was that he was a rock star manager and if we didn’t lavish him with all kinds of extra pay and power, we could lose him. (Apparently great City Managers don’t need to have any affinity or loyalty to their communities, they will simply flee to whichever City offers the most money.)

    Once we told him his powers and compensation would be unlimited and unquestioned, he set to work outsourcing everything in sight. Now, City tasks are done by rich corporations who add juicy profit margins to everything they do and who suspiciously never seem to bid that aggressively against each other.

    Davies created a tier of subservient and docile “managers” who keep Facebook active and sign off on payments to the corporations. Some who questioned what was happening soon became unemployed without cause. The rest who keep their heads down and say nothing get to enjoy their 6 figure pay packages and parking privileges.

    The City Clerk for most of the last decade was even outsourced to the City of Brandon because she didn’t want to stay here or be subjected to the rapidly decomposing corpse of a pension that the regular employees get.

    Some would argue we’ve even outsourced the Mayor’s chair to the construction industry, handing that position to the Construction Association president who served for years as a councilor and didn’t see any conflict of interest in making countless municipal decisions that would benefit his day job.

    As the Smithers to his Burns, she found the ways to suppress public transparency and accountability that helped accelerate Davies’ demoralization programs, announce a radically designed stadium conveniently just days after the ballot deadline, and who attempted to throw out the Wastewater petition she herself had approved.

    Regina was once great but modest. It was a City whose hallmarks were boring balanced budgets, unexcitingly clean streets and efficient services, and that mundane lowest cost of living in Canada.

    Now it’s so much more exciting! Who cares that it’s now unaffordable, with terrible services and a skeleton crew of demoralized lowest common denominator employees? Who cares that we’ve run up the debt to the limit and then asked for more limit increases? We heart Regina!

  2. Good stuff Paul. Have you figured out how we compare to the Maltese on a municipal level?

  3. Paul for mayor!

    I’ve typed about this shit too, that the @cityofregina has hired a lot of “consultants”. WTF ?
    Hiring out of province ?

    We pay them there, so they can work & profit here?

  4. Regina couldn’t be happy with what it was, the “big boys” weren’t comfortable in Regina’s skin, so they had to try to take Regina neo-lib global. But I’m pretty sure anyone who’s not pandering to the party line would admit quality of life 25-30 years ago was much higher.

  5. Did you not say you are on sabbatical & ” the local business columnists and talk radio hosts and Sask Party policymakers and all the numbskulls I’ve blocked on Twitter” there Paul/

    Doesn’t that include taking time away from all of your Regina City Hall commentary?

  6. MB: the PD seems not to have the personnel to cover the city beat while Paul takes a great opportunity to enjoy some well-deserved family and personal time — and in a much warmer country. When he told us he was going to be away, he did mention that others would have the chance to write on city issues. OK: which others? Where are they? It’s not as though his sabbatical will cost him his place, so where’s the harm in exposing other writers to the experience, on a temporary rotating basis? Stephen? The questions are for you.

  7. Well, if Paul didn’t know he was appreciated, he does now!

    Paul is obviously an irreplaceable treasure. That said, we’ve continued to cover City Hall in his semi-absence. This issue, Vanda wrote about the lack of policies around potential conflicts of interest, and last issue Bryn wrote a great story about hikes in bus fare.

    Like Barb, everyone at Prairie Dog would love to expand our city hall coverage. As everyone knows, journalism costs money. Readers wanting to help out can donate to the paper here.

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