Sustainability Community Breakfast: Paying For Our Cities

Transcription

1 Sustainability Community Breakfast: Paying For Our Cities Trent Berry, Partner Compass Resource Management Ltd. April 11, 2013

2 Overview Some perspective on the infrastructure deficit Two things in cities control: - Doing more with less (efficient capital planning) - Pricing of services as a tool for cost recovery AND rationalization of demand Institutional changes to support improvements An example 2

3 Municipal Infrastructure Deficit: Historical Growth Source: S. Mirza (2007). Danger Ahead: The Coming Collapse of Canada s Municipal Infrastructure. Prepared for FCM 3

4 Municipal Infrastructure Deficit: Growth by Category Source: S. Mirza (2007). Danger Ahead: The Coming Collapse of Canada s Municipal Infrastructure. Prepared for FCM 4

5 Municipal Infrastructure Deficit: Age of Infrastructure Source: S. Mirza (2007). Danger Ahead: The Coming Collapse of Canada s Municipal Infrastructure. Prepared for FCM 5

6 Municipal Infrastructure Deficit: Projected Growth Source: S. Mirza (2007). Danger Ahead: The Coming Collapse of Canada s Municipal Infrastructure. Prepared for FCM 6

7 Share of Public Stock in Canada Source: 7

8 Share of Investment by Level of Government 8

9 Allocation of Total Tax Revenues One pocket. three hands. Source: S. Mirza (2007). Danger Ahead: The Coming Collapse of Canada s Municipal Infrastructure. Prepared for FCM 9

10 Intergovernmental Transfer Payments, % of GDP 10

11 Transfers from senior levels of government have a role to solve the infrastructure deficit but transfers... are not within the control of local governments, can (if not done carefully) exacerbate the infrastructure deficit, and are not the only change required to solve the problem. 11

12 Doing More with Less Formal capital budgeting process Credible cost benefit analysis (value optimization not just cost minimization) Leveraging synergies in infrastructure planning and installation Secondary revenue sources (Integrated Resource Planning) 12

13 Pricing is a Tool for Optimizing Demand for Services 13

14 Pricing is a Tool for Optimizing Demand for Services A 20% reduction in consumption 14

15 Pricing to Address Infrastructure Deficit Which services can / should be priced? - Ability to price service (measure usage) - Clear beneficiary of service - Efficiency signal Optimal pricing regime for balancing multiple objectives - Cost recovery - Effective price signals (for rationale investment / behaviour decisions) - Fairness / equity - Administrative feasibility / burden Tools to manage transition to user fees - Communications - Revenue neutral transition strategies - Regressive effects Clear separation of vision / principles (political) from ongoing administration (independent bodies) 15

16 An Example: Southeast False Creek (SEFC), Vancouver 16

17 Neighbourhood Energy Utility (NEU) 17

18 The Development 18

19 SEFC Technology: Sewer Heat Recovery 19

20 Illustrates Cost benefit analysis of infrastructure: Full business case. Synergies: Waste heat recovery from municipal sewer system to deliver energy services and GHG reductions. Co-location of facility with new sewer pump station. Pricing: Fully allocated cost recovery of energy services from user fees (no cross subsidies). Efficient price signals. New Revenues: Incremental property taxes and financing costs to City. 20

21 Some Outcomes (Before Expanded Service Area) Incremental Municipal Investment Incremental transfers from senior levels of government Rates Incremental Property Taxes and Rent Return ~ $23 million (2010) increasing to ~$40 million by build out ~ $9 million (plus low cost loan of ~$10 million) Competitive with green alternatives ~$300k per year Full recovery of debt + additional equity premium comparable to private regulated utilities. 21