The North Shore Wastewater Treatment Plant under construction in North Vancouver, B.C., on Oct. 22, 2021.DARRYL DYCK/The Globe and Mail
Residents of Metro Vancouver’s North Shore are absorbing news that a new water filtration plant is more than $3-billion over budget and 10 years behind schedule, and will cost each household in the region hundreds of dollars extra on tax bills for decades.
But why and how things went so far off the rails for the critical piece of infrastructure – just one of many sewer and water improvements the swiftly growing Vancouver region needs to build – aren’t questions to which area politicians and taxpayers are likely to know the answers any time soon. The project is mired in litigation, with public officials and a company hired to build the plant blaming each other for the delays and cost overruns.
The North Shore plant, originally approved by the Metro Vancouver board in 2013, when officials estimated it would be completed by 2020 for $700-million, is intended to replace the aging Lions Gate wastewater treatment plant. The new facility is meant to serve about 250,000 residents of the North Shore’s three municipalities and two First Nations.
Earlier this month, George Harvie, chair of Metro Vancouver’s board of directors, issued a news release with the project’s updated costs and expected completion time: $3.86-billion and 2030.
“This program is not optional,” he said bluntly in the release.
“Building a new wastewater treatment plant that provides a higher level of treatment is essential to comply with federal regulations, and it is absolutely critical that the facility is built to ensure human health and the environment are protected well into the future.”
Local politicians are hearing from taxpayers. Some in the District of North Vancouver are learning their tax bills could increase by as much as $725 a year for 30 years. Residents in other parts of Metro Vancouver could pay between $70 and $140 a year over the same period.
“The public deserves to know how this bill got so high,” said Catherine Pope, a District of North Vancouver city councillor. She and Daniel Fontaine, a councillor in the Lower Mainland city of New Westminster, have called for a public inquiry.
Mr. Fontaine said the public needs to be reassured that other projects in Metro Vancouver, such as the coming $10-billion upgrade of the Iona Island wastewater treatment plant, won’t have similar problems.
“To me, this is about public confidence,” he said. “What have we put in place to prevent this from happening again?”
But Metro Vancouver’s chief administrative officer, Jerry Dobrovolny, said a public inquiry or audit can’t be done for the time being. That, he said, is because of a lawsuit launched by the Spanish infrastructure company Acciona, the plant’s former construction contractor.
Metro Vancouver announced that it was terminating Acciona’s contract in October, 2021. Acciona filed its lawsuit, seeking hundreds of millions of dollars in damages and compensation, months later.
“It’s a difficult subject to talk about because of the litigation,” Mr. Dobrovolny said. He was hired by Metro Vancouver in 2019, years after the project’s beginning.
He added that many things contributed to the increase in the project’s estimated cost, including the impact of the pandemic and rising material and labour costs.
But there were also problems unique to the North Shore plant. For one thing, the project spent years on hold while the district waited for assurances about funding from the federal and provincial governments.
Eventually, the two senior governments came through with $200-million each. By then, costs had risen so much that those amounts barely covered the increase, Mr. Dobrovolny said.
Then, he said, Metro Vancouver was forced to terminate Acciona as its contractor because of construction deficiencies and delays. In court documents, Acciona has denied that it is at fault for the project’s troubles, and blamed Metro Vancouver for interfering in the construction process.
By the time officials were ready to issue a new contract, Mr. Dobrovolny said, public projects had entered a new era. Bidders would no longer agree to fixed-price deals, because the prices of financing, materials and labour were rising too rapidly.
“Fixed-price disappeared in all major projects,” he said.
As a result, he said, governments are having to take on risks that contractors were previously willing to assume.
Mr. Dobrovolny said Metro Vancouver is talking to the federal and provincial governments about the need for them to participate more in infrastructure projects at a time when the region’s population is surging.
Federal Minister of Energy and Natural Resources Jonathan Wilkinson has said that the federal government won’t provide any additional money for the North Shore plant. He told the North Shore News that Metro Vancouver needs to be more transparent with residents about what went wrong.
The history of the North Shore wastewater treatment plant is long and fraught.
Spanish firm sues Metro Vancouver over firing from wastewater plant project
According to the initial court documents filed by Acciona and the Greater Vancouver Sewerage and Drainage District in 2022, Metro Vancouver started looking to replace its Lions Gate wastewater plant in 2007, and ultimately chose a site in the flats near the Burrard Inlet.
Acciona claims an engineering firm had assessed the site and found that it was not the most feasible option and would be more expensive to build on than other sites.
Metro Vancouver decided in 2012 to use the site. One early estimate pegged the cost of the project at $418-million, another at $585-million. A geotechnical report noted that the area was “susceptible to liquefaction,” a term for when soil, subjected to an earthquake or other physical stress, loses its strength and behaves like a liquid.
Metro Vancouver selected Acciona from among three prequalified candidates in April, 2017. In October, 2020, a price of $621-million and a completion date of September, 2023 were set.
Acciona claims that Metro officials “interfered extensively” with the company’s design and construction plans. The company’s statement of claim says that “by mid-2021, it became evident it was impossible to build … in accordance with the requirements without further significant changes.”
The company also claims it discovered “rampant errors and conflicts” in Metro Vancouver’s design and construction specifications. In particular, the company says, it discovered it would need to double the amount of reinforcing steel needed, but that there was not enough space on the project site to accommodate this.
A statement of defence from Metro Vancouver claims that Acciona “was negligent and acted in a high-handed and reprehensible manner,” that it was incompetent, and that it demonstrated an inability to understand and implement the design and construction specifications.
PCL Construction, which has operations in Canada, the U.S. and Australia, was hired to take care of the site after Acciona’s contract was terminated.