Priority Gateway Infrastructure Projects

Transcription

1 Priority Gateway Infrastructure Projects Cost-Recovery Mechanism Options Consultation November 27 December 22, 2017

2 Purpose Provide an overview of Vancouver Fraser Port Authority work in identifying and seeking federal funding for projects that will benefit the gateway Outline current understanding of potential port authority prefunding on behalf of industry over the next decade and need for cost-recovery Seek input from industry regarding potential costrecovery mechanism options 2

3 Outline 1. About the Port of Vancouver and the Vancouver Fraser Port Authority 2. Background: Gateway Infrastructure Program and Gateway Infrastructure Fee 3. The next round of generational infrastructure investments Gateway Transportation Collaboration Forum s Greater Vancouver Gateway 2030 strategy Other Vancouver Fraser Port Authority projects 4. Cost-recovery mechanism options Discussion regarding options 5. Feedback from industry 3

4 Background: About the Port of Vancouver and the Vancouver Fraser Port Authority 4

5 About the Port of Vancouver Canada s largest and most diversified port $200 billion in goods annually $550 million of cargo/day 28% of Canada s trade beyond North America 115,300 jobs across Canada 5

6 Vancouver Fraser Port Authority mandate and role Facilitate Canada s trade Protect the environment Consider local communities Operate safely Be commercially viable Work for the benefit of all Canadians 6

7 2.3 million people Federal port lands and waters 16 municipalities 7

8 Our five business sectors Bulk Breakbulk Auto Container Cruise 8

9 Background: Gateway Infrastructure Program and Gateway Infrastructure Fee 9

10 Gateway Infrastructure Program ( ) Roberts Bank Rail Corridor $310 million North Shore Trade Area $283 million South Shore Trade Area $127 million 10

11 Gateway Infrastructure Program ( ) 17 projects completed in North Shore, South Shore and Roberts Bank Trade Areas Projects largely removed road and rail conflicts and congestion at key bottlenecks, and increased capacity to accommodate anticipated growth in road and rail traffic associated with goods movement VFPA pre-funded $167 million on behalf of industry Leveraged more than $3 million of funding from federal, provincial and local governments, TransLink and railways for every $1 million contributed by industry These investments in turn led to rail improvements undertaken by the railways and private sector investment 11

12 Richardson $140 million Deltaport $400 million G3 Terminal $550 million Private sector investments Westshore $385 million Neptune $330 million PCT $170 million 12

13 Gateway Infrastructure Fee As part of its requirement to be financially self-sufficient, port authority needed to recover the $167 million investment from industry Four models were taken out to consultation in 2010: Value-based Tonnage-based Mode and tonnage-based Rail footage and truck unit-based Industry feedback was considered in establishment of the Gateway Infrastructure Fee 13

14 Gateway Infrastructure Fee Cont. The Gateway Infrastructure Fee was established in 2011 and will be in place for 30 years Tonnage-based fee allocated by benefiting trade areas (North Shore, South Shore and Roberts Bank) As of 2017, Gateway Infrastructure Fee is set at: Roberts Bank Trade Area: $0.05/tonne South Shore Trade Area: $0.17/tonne North Shore Trade Area: $0.08/tonne There were no projects in the Fraser River Trade Area in the Gateway Infrastructure Program Annual report is provided to industry on portvancouver.com Recalculation of Gateway Infrastructure Fee is done on an annual basis based on cargo volumes and project costs to ensure that there is not an excess or insufficient amount of cost-recovery 14

15 The next round of generational investment 15

16 Trade is growing and further investment is needed Millions of Metric Tonnes Others Other Fertilizers Autos Sulphur Bulk Liquids Potash Metals & Minerals Agricultural Products Forest Products Containers 0 Coal 16

17 The next round of generational investment Gateway Transportation Collaboration Forum (GTCF) Established in 2014 to identify priority projects related to trade and transportation in the Greater Vancouver area Membership and steering committee consists of Vancouver Fraser Port Authority, Transport Canada, Ministry of Transportation and Infrastructure, TransLink and Greater Vancouver Gateway Council Greater Vancouver Gateway 2030 strategy: nearly 40 projects identified by GTCF for federal funding asks through the National Trade Corridors Fund and others not all projects will have a funding commitment from VFPA Other identified investments In addition to GTCF projects, VFPA has announced funding commitment with the Province of BC for the Highway 91 to Highway 17 and Deltaport Way Corridor Improvement Project 17

18 Priority Gateway Infrastructure Projects Greater Vancouver Gateway 2030 Projects 18

19 Priority Gateway Infrastructure Projects Identified projects for VFPA pre-funding 19

20 Cost-recovery for investments As part of its requirement to be financially-self sufficient, VFPA intends to recover its pre-funding contributions from industry This cost-recovery mechanism will apply to all commodities The cost information in this presentation is a conservative estimate based on the current understanding of projects that may be funded by the port authority over the next 10 years VFPA s pre-funding contributions will not be recovered through its other fees (harbour dues, wharfage or berthage) 20

21 Cost-recovery mechanism options 21

22 Cost-recovery criteria Fairness: Cost recovery is based on the principle that gateway infrastructure improvements will benefit gateway users, therefore gateway users should be subject to the fee. The cost recovery should be transparent and should not compromise port or port operator competitiveness. Effectiveness: The cost-recovery mechanism should raise the required port authority pre-funded infrastructure investment plus the cost of borrowing. Efficiency: The cost-recovery mechanism should be as simple and efficient to collect as possible. 22

23 Cost-recovery assumptions The cost-recovery mechanism will apply to all trade areas and commodities The cost-recovery mechanism will be based on tonnage Options based on value and modal split were considered in the development of the Gateway Infrastructure Fee but were deemed by industry stakeholders to be too complicated The term of the cost recovery would be 30 years Recalculation of the per tonne cost recovery amount would be done on an annual basis based on cargo volumes and project costs An annual report would be provided on portvancouver.com 23

24 Model assumptions Total cargo volume estimates presented are for 2019, when the new fee is anticipated to take effect Fee model assumes: 3% cargo growth per year from 2019 to % annual cost of borrowing, the current VFPA bond rate $450 million capital costs do not include major repair/maintenance, property insurance or land cost, which are cost recovered through GIF and would be cost recovered through the new fee 24

25 Capital spend by trade areas and across the gateway The following table provides the assumptions regarding project costs and eligible cargo throughput by trade area and across the gateway, which result in the calculations of cost per tonne in the options. Roberts Bank Trade Area Fraser River Trade Area South Shore Trade Area North Shore Trade Area Total Estimated Project Cost Forecast Tonnage Subject to Cost Recovery $104 M $161 M $90 M $95 M $450 M 40 MT 5 MT 30 MT 35 MT 110 MT * project costs have been allocated to trade areas based on benefit to those trade areas. For example, a project located within the Fraser River Trade Area that also benefits the Roberts Bank Trade Area has had costs allocated, in part, to Roberts Bank. 25

26 Capital spend by trade areas RBTA FRTA SSTA NSTA Total GIP/GIF ( ) $50 M - $58 M $59 M $167 M Current Projects (2017+) $104 M $161 M $90 M $95 M $450 M Total $154 M $161 M $148 M $154 M $617 M Total 2019 Tonnage (forecast) 40 MT 5 MT 30 MT 35 MT 110 MT * project costs have been allocated to trade areas based on benefit to those trade areas. For example, a project located within the Fraser River Trade Area that also benefits the Roberts Bank Trade Area has had costs allocated, in part, to Roberts Bank. 26

27 Cost-recovery mechanism options Four options have been developed for consultation: Option 1: Tonnage-based cost recovery allocated by trade areas (no change to amount or collection of existing Gateway Infrastructure Fee) Option 2: Tonnage-based cost recovery allocated by trade areas combined with existing Gateway Infrastructure Fee Option 3: Tonnage-based gateway-wide cost recovery (no change to amount or collection of existing Gateway Infrastructure Fee) Option 4: Tonnage-based gateway-wide cost recovery combined with existing Gateway Infrastructure Fee 27

28 Option 1: Tonnage-based cost-recovery allocated by trade areas Option 1 would be a new fee with the same structure as the existing Gateway Infrastructure Fee (GIF): Tonnage-based fee Allocated by trade areas based on spending and benefit per area Based on assumptions, the new fee would be calculated as follows: Trade Area Option 1 (per metric tonne) Roberts Bank $0.12 Fraser River $1.30 South Shore $0.13 North Shore $

29 Option 1 considerations Each trade area would pay for infrastructure benefiting that trade area Liquid bulk terminals in Burrard Inlet previously exempt GIF would be subject to the fee FRTA would have the largest fee per tonne, as a result of the number and cost of proposed improvements in the trade area, and the lower amount of cargo through this trade area as compared to other trade areas Fraser River Trade Area is not subject to the current Gateway Infrastructure Fee GIPAC raised concerns that the high fee in the Fraser River Trade Area could impact competitiveness of the trade area, and may reduce future investment within the trade area 29

30 Option 2: Tonnage-based cost-recovery allocated by trade areas combined with existing Gateway Infrastructure Fee Option 2 would combine a new tonnage-based cost-recovery fee with the existing GIF For the 22 years that GIF and the new fee would overlap, the fee would be combined for ease of administration The new fee portion would continue for the remaining eight years Trade Area GIF portion (per metric tonne) New fee portion (per metric tonne) Option 2 (per metric tonne) Roberts Bank $0.05 $0.12 $0.17 Fraser River - $1.30 $1.30 South Shore $0.17 $0.13 $0.30 North Shore $0.08 $0.12 $

31 Option 2 considerations Simpler to administer and collect The liquid bulk terminals in Burrard Inlet that were previously exempt from the existing Gateway Infrastructure Fee would be subject to the new fee portion only As with Option 1, each trade area would pay for infrastructure benefiting that trade area Again, like Option 1, the FRTA would have the largest fee per tonne GIPAC raised concerns that the high fee in the Fraser River Trade Area could impact competitiveness of the trade area, and may reduce future investment within the trade area 31

32 Option 3: Tonnage-based gateway-wide cost-recovery Option 3 would be a new fee charged on cargo throughout the gateway: Tonnage-based fee Allocated gateway-wide The gateway-wide fee would be set at $0.18/tonne Trade Area Option 3 (per metric tonne) Roberts Bank $0.18 Fraser River $0.18 South Shore $0.18 North Shore $

33 Option 3 considerations Unlike with Options 1 and 2, the new fee in each trade area would be equal Liquid bulk terminals in Burrard Inlet that were previously exempt from GIF would be subject to the fee Existing GIF would remain unchanged, and would be collected from cargo through Roberts Bank, South Shore and North Shore trade areas The GIPAC noted that a gateway-wide fee would reduce the risk of affecting the competitiveness of any one trade area 33

34 Option 4: Tonnage-based gateway-wide cost-recovery combined with existing Gateway Infrastructure Fee Option 4 would combine a new gateway-wide cost-recovery fee and the existing GIF It would be calculated by taking the average of remaining GIP costs ($0.09/tonne) and combining with the new costs ($0.18/tonne) for a total fee of $0.27/tonne for a 22-year period Trade Area GIF portion (per metric tonne) New fee portion (per metric tonne) Option 4 (per metric tonne) Gateway-wide $0.09 $0.18 $0.27 As with Option 2, the rate would be reduced for the remaining eight years of the new fee, down to $0.18/tonne 34

35 Option 4 considerations The Fraser River Trade Area and liquid bulk terminals in Burrard Inlet, which were previously exempt from GIF, would be subject to the remaining GIF portion As with Option 2, simpler to administer and collect As with Option 3, the new fee in each trade area would be equal The GIPAC noted that a gateway-wide fee would reduce the risk of affecting the competitiveness of any one trade area 35

36 Quantitative comparison of options Option 1 Option 2* Option 3 Option 4* Trade Area Roberts Bank Fraser River South Shore North Shore GIF New fee Total New fee (includes GIF) GIF New fee Total New fee (includes GIF) $0.05 $0.12 $0.17 $0.17 $0.05 $0.18 $0.23 $ $1.30 $1.30 $ $0.18 $0.18 $0.27 $0.17 $0.13 $0.30 $0.30 $0.17 $0.18 $0.35 $0.27 $0.08 $0.12 $0.20 $0.20 $0.08 $0.18 $0.26 $0.27 *In Options 2 and 4, the GIF portion would be collected for 22 years. For the remaining eight years, the fees would be reduced to the new fee portion only (i.e., in Option 2, it would be $0.12 for Roberts Bank; $1.30 for Fraser River; $0.13 for South Shore; and $0.12 for North Shore; and in Option 4, it would be $0.18/tonne). 36

37 Feedback from industry In addition to attending a small group meeting, you are invited to provide input by: Reading the discussion guide and completing the feedback form in hard copy or online at the link in the discussion guide Sending an to Commercial_Enquiries@portvancouver.com 37

38 Discussion 38