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Region could use gas tax funds for digester

Staff propose diverting infrastructure funds from feds to pay for $44-million project

By Graeme McNaughton/The Oshawa Express

Regional staff have put forward one way to cover the costs of a future anaerobic digester – and it’s a tactic Durham has seen before.

Speaking at the first committee of the whole meeting of 2017, Mary Simpson, the region’s director of financial planning and purchasing, put forward the idea of diverting gas tax funds to finance the proposed anaerobic digester – a facility that uses compost to generate biogas that, in turn, can be used to generate electricity – as well as a mixed waste pre-sort facility.

According to a report presented to councillors, the anaerobic digester would cost $44 million and the pre-sort facility $28 million. To pay for it, Simpson proposes taking out a loan – or debenture – to pay for the immediate costs, with that loan paid back through funds gathered via the gas tax.

“At this point, we are proposing a potential debenture of $72 million in order to fund that project, which would require debt repayment servicing to come from the federal gas tax,” Simpson told councillors of the proposal.

Every year, municipalities receive money from the federal government gathered from taxes paid on fuel, with that money designated to go toward local infrastructure projects. According to Infrastructure Canada, Ontario is set to receive more than $3.8 billion in gas tax funding between 2014 and 2019.

Mirka Januszkiewicz, the region’s director of waste management, says that she expects a business case for the anerobic digester will come before councillors in March.

In the summer of 2016, several councillors and regional staff got a firsthand look at anaerobic digesters in action in France and Spain. The trip, which cost taxpayers approximately $90,000, saw the group of eight visit sites in Lyon, Le Puy, Montpellier and two in Barcelona. In 2015, regional staff visited sites in Germany, Holland and France at a cost of more than $40,000.

Should the region go ahead with such a funding plan, it would not be the first time that gas tax funds are diverted to pay for a single project. Currently, the region is diverting gas tax funds to pay for its share of the Durham York Energy Centre. That project, which sees Durham paying 78.6 per cent of the costs, has been paid for by gas tax funds since 2011, with those funds continuing to be diverted until 2019. In total, the Durham York Energy Centre has cost just under $300 million.

“Question of priorities”

With gas tax funding for the incinerator set to come off the books in the near future, some councillors expressed concern with continuing to divert those funds to one or two large projects, as opposed to numerous smaller projects across Durham.

“We’ve had reports here…where we have a real shortage in our funding to proceed with our roads network and some of our capital infrastructure programs that we need to do – nothing to do with waste,” Councillor Shaun Collier of Ajax said during the committee meeting.

“We’ve been told by (regional finance commissioner) Clapp on several occasions that once that gas tax commitment, that money will be used to help us catch up with our roads program. Now you’re suggesting we divert this funding source to repaying debentures for waste. How will this affect the road programs that…we have been reassured will be addressed in 2018, 2019 going forward?”

During deliberations for the 2016 regional budget, it was revealed that Durham was facing a financial shortfall when it came to maintaining its infrastructure. While the 2016 budget approved $23.7 million in spending, Nester Pidwerbecki, the Oshawa councillor who sits as the work committee’s chair, said that the region would actually need to spend $31 million in order to keep up.

It was also revealed that the region would need to find an extra $26.7 million by 2025 for needed maintenance, upgrades and replacement projects.

Mayor Steve Parish of Ajax said that, with the region having already forgone years of infrastructure funding in order to pay for the incinerator, councillors need to look at whether it wants to continue down that path.

“Although I’m not questioning the possibilities of anaerobic digestion, which has been done by many jurisdictions throughout the world for some period of time, we already paid a considerable price for the Durham York Energy Centre in deferred ability to provide for our transportation network,” he said.

“I would ask council to very, very seriously consider whether or not there’s to be another further deferral of another five or six or seven years in using that money for transportation because of anaerobic digestion. As it’s been pointed out by staff, it’s a question of priorities. That is a question that council and only council can deal with.”