Federal funds for Metro Vancouver sewage plant comes with a housing catch | Daily Hive

$250 million in federal funding for Metro Vancouver sewage treatment plant project comes with conditions on new housing fees

Artistic rendering of the new Iona Island Wastewater Treatment Plant. (Metro Vancouver Regional District)

Today, the Government of Canada officially confirmed $250 million in funding for Metro Vancouver Regional District to help cover the first phase of the Iona Wastewater Treatment Plant project.

The first phase, which focuses on the site preparation work currently underway, is expected to cost $750 million. With the federal government’s contribution, which was also previously noted in the federal government’s Fall 2024 economic statement, each level of government will now cover 33 per cent of the cost of the first phase of work, with the provincial and regional governments each also providing $250 million.

“We’re grateful for the Government of Canada’s support for this essential infrastructure project, which is driven by a need to meet updated federal wastewater treatment regulations and accommodate growth,” said Mike Hurley, chair of the board of directors for the regional district, and the Mayor of Burnaby, in a statement.

“Local governments have limited options to fund infrastructure upgrades, and this support helps us continue to protect public and environmental health.”

You might also like:

The new sewage treatment plant is being built just northwest of Vancouver International Airport, replacing an aging facility with a modern one that has expanded capacity, a better seismic code and flood resiliency, and significantly higher treatment capabilities.

With future major construction phases still to come, the total multi-phase project is estimated to cost $9.9 billion, based on 2022 dollars, with $6.4 billion being the actual project cost and $3.5 billion for a contingency fund and risk reserve for any unexpected costs, given the challenges and complexities of the project.

At a later date, under a similar one-third funding ratio, the regional district plans to seek additional funding from the provincial and federal governments to help ease the burden of future sewerage fee increases for households and businesses, which are already experiencing major fee hikes to cover the cost overruns of the North Shore Wastewater Treatment Plant project.

Artistic rendering of the new Iona Island Wastewater Treatment Plant and area ecological improvements. (Metro Vancouver Regional District)

In exchange for the federal government’s 33 per cent contribution from the Canada Housing Infrastructure Fund (CHIF) towards the sewage treatment plant’s first phase’s costs and an additional $590 million from CHIF to B.C. through the direct funding stream, it was announced today that the federal and provincial governments reached an agreement to “change the instalment payment timing of development cost charges (DCCs) that will give homebuilders more time to pay.”

As well, the provincial government will work on extending the existing in-stream protection for new housing projects that are subject to the regional district’s DCCs. This will provide homebuilders with greater certainty and reduce financial pressures by lowering project costs.

Furthermore, under the agreement, the provincial government will consider providing a strategy for municipal governments to waive DCCs for non-market homes within market housing projects. Such a policy would be applied across the province to help catalyze more affordable housing.

In Fall 2023, the federal government clashed with the regional district after it approved significant new development cost charges (DCCs) on building projects to help fund its growing multi-billion-dollar capital plan, particularly for sewage treatment and water supply infrastructure.

Depending on the location, the combined total DCCs rate increases by the regional district for residential projects are $18,506 to $24,106 per single-family lot, $16,952 to $22,182 per townhouse unit, and $11,360 to $14,657 per apartment unit.

At the time, the federal government opposed these increases, asserting that they undermined recent federal policies aimed at lowering the cost of new housing construction — going as far as threatening to withhold federal Housing Accelerator Fund allocations to some municipal governments in Metro Vancouver.

Site plan of the new Iona Island Wastewater Treatment Plant and area ecological improvements. (Metro Vancouver Regional District)

Footprint of the existing Iona Island Wastewater Treatment Plant. (Metro Vancouver Regional District)

Facility layout of the new Iona Island Wastewater Treatment Plant. (Metro Vancouver Regional District)

As for the Iona Wastewater Treatment Plant project, it is the single most expensive infrastructure project in the history of the Metro Vancouver region as a whole — exceeding the cost of major transportation infrastructure projects — and one of British Columbia’s most expensive after the Site C hydroelectric dam.

Construction on the first phase of work is expected to reach completion in 2026. The majority of construction will be performed in the middle phases from 2026 to 2034 and the final phase from 2035 to 2042. The plant will be operational by 2035.

The new facility meets new federal regulations for a higher level of sewage treatment, provides long-term capacity for population growth, and establishes seismic and flood risk resiliency design measures, which is critical for its delta location at the mouth of the Fraser River.

This plant specifically serves the city of Vancouver, University of British Columbia, University Endowment Lands, and parts of Richmond.

You might also like: