Inside the federal funding agreement that put Metro Vancouver on the hook for North Shore Wastewater Treatment Plant overruns

A $149 million gap in the budget for Metro Vancouver's North Shore Wastewater Treatment Plant is forcing local governments to consider a massive property tax increase to pay for it.

The plant will cost $897 million, but the federal government is providing $300 million in grants and a $150 million loan, leaving the region on the hook for the remaining $447 million.

In 2014, Metro Vancouver obtained a $300-million federal grant for the plant’s construction under the Public Transit Infrastructure Fund, and a $150-million low-interest loan from the Clean Water and Wastewater Fund.

However, with the project now budgeted at $897 million, the three municipalities in Metro Vancouver will now have to figure out how they’re going to pay the remaining $447 million not covered by the federal government.

The 2014 agreement with the federal government contained a clause that the federal government would cover up to one-third of eligible project costs, to a maximum of $300 million. The agreement defined eligible project costs to include eligible capital costs, including design, engineering, construction, and associated project management costs.

Metro Vancouver staff were asked whether they considered asking the federal government for more money, but a spokesperson didn’t directly answer the question, saying only that staff “continue to work with all funding partners, including the federal government, to optimize funding opportunities.”

The plant is scheduled to be completed in 2026 and the region has until 2030 to pay off the federal loan. The three municipalities in the region are considering a property tax increase to pay for the additional cost.

In 2022, TransLink asked the federal government for another $400 million to cover cost increases on the Surrey Langley SkyTrain extension, which was approved, so there is precedent for seeking additional federal infrastructure funding after a project’s budget has been established.

The North Vancouver City Council voted Monday to ask the region to consider raising property taxes to help pay for the plant. The motion did not specify how much property taxes should be raised by, but a staff report said it could require a 12 to 20 per cent increase for the average homeowner in the region.

The West Vancouver council also directed staff to prepare a report on a potential property tax increase.

The District of North Vancouver council voted to have staff explore all funding options, including federal and provincial grants, partnerships with other levels of government, and development cost charges.

The project has been plagued by delays and cost overruns since 2011 when Vancouver city council voted to scrap plans for a sewage treatment plant in the city and instead build one on the North Shore.

The plant was originally scheduled to cost $627 million and be completed in 2018.

The plant will treat wastewater from North Vancouver, West Vancouver and the District of North Vancouver, and replace the Lions Gate Wastewater Treatment Plant, which is nearing the end of its lifespan.