David Thompson, Director, Sustainable Communities, Sustainable Prosperit

1. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Financing, Pricing & Demand Management:
Waste Not, Want Not
David Thompson
Director, Sustainable Communities
Sustainable Prosperity
www.sustainableprosperity.ca
#SCC2011

2. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Wastewater Regulations
• A financial challenge for some cities
• An infrastructure management incentive
• One way to address both…
#SCC2011

3. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Financial challenge – up-front costs
• Federal and provincial grants
– Financial sector meltdown & crash public deficits
• Public-Private Partnerships (P3, PPP)
– Early hopes: panacea?
• Higher borrowing costs, shareholder ROI, other costs
• Transparency, accountability issues
• Ultimately, the user / taxpayer pays
• Hamel, “P3s and Municipalities” (FCM 2007).
– Experience: no free lunch
#SCC2011

4. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Financial challenge – up-front costs
• What’s left?
• Normal financing, i.e. borrowing
– Pay down debt over life of asset – gradual
– Revenues and spending: connected
• Same order of government – accountability
#SCC2011

5. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Financial challenge – paying down debt
• Default? Property taxes
– Calgary poll (IPSOS 2010)
Budget preferences New revenue preferences
10% Increase
8%
taxes Property
Maintain 29%
tax
taxes
27% 55% Cut taxes User fees
71%
None
#SCC2011

6. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Environmental Pricing Reform
• Environmental problems – local, global
– Nobody wants them; no ‘bad guys’
• Current set of incentives creates them
– Change the incentives
– “Tax bads, not goods” (EPR)
– Taxes / user fees can create another revenue stream
• Outcomes – benefits:
– environment, economy, jobs, diversify revenue, etc.
#SCC2011

7. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Pricing for wastewater
• Sewer discharge volume, substances
– Large users – can monitor discharges
• Stormwater (Kitchener, up next)
• Water supply – proxy for sewage
– Simple, and all users are covered
– Change rates to encourage conservation
– Reduces sewer demand and costs
#SCC2011

8. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
#SCC2011

9. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Overcoming challenges:
• Challenges to adoption of new policies
• Can arise from…
1. Equity and fairness concerns
2. Vested interest opposition
3. Fiscal impact on municipality
4. Political
5. Others
#SCC2011

10. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Equity and Fairness Concerns
• Lifeline rate
• Progressive block billing
• Rebate for high occupancy homes
• Rebate for lower income homes
#SCC2011

11. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Vested interest opposition
• Incentive to sell more water if…
– Utility is set up as for-profit corporation
– Management pay based on size of operation
• Ensure right incentives in place
– Utility: conservation mandate from regulator /
owner
– Management: bonuses for conservation
#SCC2011

12. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Fiscal impact on municipality
• Positive on revenues:
– Additional revenues
– Diversified revenues
• Positive on spending:
– Demand management
– Defer, reduce or eliminate infrastructure costs
#SCC2011

13. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Political
Remember Calgary (& Edmonton) polling
– OK with revenue increases
– User fees, not property taxes
#SCC2011

14. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
Summary
• Wastewater regs a challenge, opportunity
• Traditional sources of $ may not work
• Consider restructuring rates – progressive
• Overcome challenges – smart policy
design
#SCC2011

15. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
References
• P. Hamel, “Public-Private Partnerships (P3s) and Municipalities: Beyond Principles, a
Brief Overview of Practices” (FCM 2007)
http://www.fcm.ca//CMFiles/P3_report2007_en1NRL-6292010-417.pdf.
• Ipsos Reid, “Calgary 2010 Citizen Satisfaction Survey Report” (Oct 2010)
http://www.calgary.ca/docgallery/bu/customerservice/2010_citizen_satisfaction_surve
y.pdf
• Thompson and Bevan, “Smart Budget Toolkit: Environmental Pricing Reform for
Municipalities” (Sustainable Prosperity, 2010)
http://www.sustainableprosperity.ca/article172.
• Thompson, “The Power of Prices and the Failure of Markets: Addressing Edmonton’s
Environmental and Fiscal Challenges” (City of Edmonton, June 2010).
http://www.edmonton.ca/city_government/documents/Discussion_Paper_17_Power_
of_Prices_and_Failure_of_Markets.pdf
#SCC2011

16. Sustainable Communities Conférence et salon professionnel
Conference and Trade Show sur les collectivités durables
David Thompson
Director, Sustainable Communities
Sustainable Prosperity
dthompson@plrc.ca
www.sustainableprosperity.ca
#SCC2011