January 5/04 Report
9:30 am

Committee Members present:
Chad Collins, Dave Mitchell, Sam Merulla , Murray Ferguson, Dave Braden, Margaret McCarthy, Tom Jackson (9:39 am), Phil Bruckler

Other Councillors attending:
Terry Whitehead, Brian McHattie, Andrea Horwath

1.1 Chad Collins confirmed as chairperson

1.2 Dave Mitchell selected as vice-chair

8.1 Brief overview of department presented by Peter Crockett.

8.2 Water and Wastewater Operations Contract - presentation by Jim Harnum, acting head of water and wasterwater

9.1 Subcommittees: Sam Merulla was re-appointed to the Community Liaison Committee of the Woodward Avenue Sewage Treatment Plant; Dave Mitchell was re-appointed to the Glanbrook Landfill Community Coordinating Committee; Andrea Horwath was re-appointed to the Hess Village Pedestrian Mall sub-committee; Phil Bruckler, Dave Mitchell, Dave Braden and Russ Powers were appointed to the Niagara-Hamilton Waste Management Working Group; Chad Collins, Andrea Horwath, Dave Braden and Sam Merulla were re-appointed to the Solid Waste Management Masterplan Steering Committee. A decision on re-establishing the Public Works Volunteer Coordinating Committee was deferred. The Fleet Review Sub-Committee has completed its work and was disbanded. The Expressway Implementation Committee was re-activated and McHattie, Bruckler and Maria Pearson were added, the latter two to replace Anne Bain and Larry DiIanni.

9.2 Outstanding Business: Items B, J, K, L, and Q were deleted with Q coming to the next agenda.

9.3 Adopted

9.4 Adopted

Staff want Water/Sewer Operations to Remain Private

City staff are arguing that Hamilton's water and wastewater operations should remain in private hands rather than revert to public control at the end of a controversial 10-year contract that expires in December 2004. In a presentation on January 5 to the Standing Committee on Public Works, Infrastructure and Environment, acting director of water and wastewater Jim Harnum said staff had done a comparison of private versus public operation "to take the emotion out of this issue". Several city councillors appear unconvinced and particularly challenged staff claims that privatization reduces the legal and financial liabilities of the City.

The staff recommendations were tabled by the committee to allow for public input at the January 19 meeting of the committee before a final decision is made. Individuals and organizations wishing to speak on the 19th should contact the City Clerk's office at (905) 546-2424 or clerk@hamilton.ca .

Harnum said that the objectives of the untendered 1994 privatization have all been met, and calculated that $703,000 is saved annually as a result of the contract. In addition, Harnum argued that "there have been considerable social economic benefits realized" as a result of the privatization, including the employment of 326 people in Hamilton. He also concluded that workers previously employed by the City had been protected, and that the minimum performance standards "have been maintained and improved on dramatically".

The staff report focused on the advantages of continued privatization, but only identified disadvantages in a return to public control. Major benefits of a private operation included:

• private staff are already trained to achieve immediate savings while public staff might require "a learning curve" that delayed improvements and cost savings
• private operator has greater depth of experience
• competitive bids from private contractors "would ensure lowest price for service"
• private operator would lower costs in order to improve its profit margin
• financial guarantees and economic incentives and disincentives can be applied to the private contractor
• legal liabilities and risks can be shared with the private contractor
• financial risks to the City are limited by the agreed upon contract price

Public works head Peter Crockett declared that the "key advantage is the sharing of legal and financial risks". He and Harnum argued that the province could charge the private operator without also charging the City. Several councillors challenged this view, including Sam Merulla and Terry Whitehead, arguing that the City was ultimately responsible and that the objective should be to avoid charges altogether by obeying the law. Councillor Murray Ferguson agreed and described the staff liability claims as "a red herring".

Councillor Brian McHattie noted that the report was "very thin" in its evaluation of the experience of the last ten years of private operation. He suggested that critiques of this period be circulated to councillors, including a CBC special and a Munk Institute report, both of which were very critical. In response, Harnum said the Munk report "focused on governance issues" and stated the staff "were not looking at governance". Councillor Dave Mitchell recalled that the current private contract prevented the securing of several hundred thousand dollars in energy savings.

McHattie recalled that the 1994 contract had changed hands several times as Philip Environmental and then the subsequent Azurix-Enron owners went bankrupt, and then American Waterworks was bought out by a German conglomerate. He noted that the City was unable to control these ownership changes and asked why this wasn't identified as a disadvantage of private ownership. Staff responded that the City had been able to extract some benefits when the contract changed hands.

Councillor Phil Bruckler worried about the risk to the City if the private contractor suddenly abandoned the agreement. Councillor Whitehead also suggested that a private contract could restrict the flexibility of the City to change directions, noting that a 30-year plan is currently under development.

Lawsuit not on City Radar

The head of the Public Works department says he hasn't yet had a chance to look into the $100 million lawsuit launched in late November against the City over the construction of the Red Hill Creek Expressway. Peter Crocket was responding to questions from Councillor Brian McHattie at the January 6 meeting of the Standing Committee on Public Works, Infrastructure and the Environment. McHattie expressed concern about the significant liability facing the City from the lawsuit. Mohawk citizen Larry Green and his lawyers Murray Klippenstein and Andrew Orkin filed the notice of action on November 25th. The lawyers have asked the City to stop construction until the court is able to rule on the lawsuit. Crockett said he hadn't "had a chance to talk to Chris", referring to Chris Murray, the acting director of the Red Hill project who is supervised by Crocket. Councillor McHattie also asked that he be provided with a copy of the letter sent to the City by the lawyers which was apparently addressed to Mayor DiIanni and "members of council".

McHattie also raised questions about media reports of the discovery of aboriginal burial mounds in the valley last week, and asked why the City was finding out about these sites so late in the expressway process. Crocket promised to provide information to councillors prior to the January 19 meeting of the Public Works committee.

Expressway Economic Implications to be Discussed

The Standing Committee on Public Works, Infrastructure and the Environment will finally discuss the economic development implications of the Red Hill Creek Expressway at its January 19 meeting. A report on the issue had been "tabled" on August 12, 2003, the day after the City launched court action to end protests that had blocked construction near Greenhill Avenue. It was 'remembered' when the Standing Committee reviewed outstanding business items at its January 5 meeting. Construction of the $220 million expressway project is now underway. The main justification used by its supporters has been its alleged contribution to the City's economic development.

Expressway Implementation Committee Re-established

A City Council committee to oversee construction of the Red Hill Creek Expressway has been re-established after several months of inactivity. The committee, formerly chaired by Larry DiIanni, stopped holding monthly meetings in August after the City's legal department ordered councillors and staff to stop making any comments on the expressway project. On January 6, the Standing Committee on Public Works, Infrastructure and the Environment voted to re-activate the committee and add Councillors Bruckler, Pearson and McHattie to its membership. Other members include Chad Collins, Sam Merulla, Dave Mitchell, and Tom Jackson. It is unclear if Larry DiIanni will continue on the committee now that he's become Mayor.

Inflation - Hamilton Style

The City's public works committee has approved a 70% jump in spending on a watermain project in east Hamilton. Staff recommended adding $350,000 to the $500,000 previously allocated for the Depew Street pipe replacement. Their report explained that "the additional increases in the project costs are the result of a project budget that was based on 2000 estimates and that had not taken into consideration the escalated rates for the current year." Under questioning from councillors, staff said inflation only accounted for 10% of the increase and that other factors included soil contamination and costs of dealing with railway crossings. They also suggested that the original cost estimates had not been rigorous, but that more recent improvements had corrected these problems.