Subdivision Wastewater Treatment - The Promise, The Myth, The Reality - a Different Perspective
October 29, 2007
As the Developer spars with the county with the engineering designs of its latest subdivision, preparing for ultimate approval by the State’s Department of Environmental Control, it becomes intriguing to analyze the process and what is really happening. It is a unique combination of business entrepreneurship, highly-trained licensed contractors, hard-working government officials, and a host of tangential participants making the approval process one of the more interesting aspects of economic growth in this or any country. Let’s look at what this process is really about.
The process begins with the Developer, whether a local real estate person, attempting his first soiree into the community development arena, or an established company with just another business opportunity facing him. Each, whether small or large, identifies a “business value” for the project. The future is bright, the opportunities great.
The Developer begins organizing his team, putting people in charge of particular aspects of the project. For larger projects, there are many people and companies involved. For smaller projects, the Developer takes many of the interface responsibilities, but in both cases, a team is built. A proper Civil Engineering firm or individually licensed civil engineer becomes part of the team, and the process of providing the background to prove site and project worthiness begins. The promise that is inherent in any development project, begins
The myth is that the schedule originally drawn up, will be met, on time and within budget and will meet all the promises made by the participants.
It would take much more space than this article practically permits, to describe this myth fully. But let’s take a shot at the major reasons. And from the person paying the bills, the Developer, it isn’t pretty.
1) The Process has liabilities like a corporation. In a corporation, the legal process in the country is designed to protect the shareholder. In the Development process, the participants to the process protect the new homeowners. In the corporate world, if the corporation willingly disregards the shareholders, the corporation and its officers and directors can be punished severely.
In a project that goes wrong, everyone involved in the process is investigated, therefore the penalties for messing up your portion is severe. So, just as in corporate life, at least well established corporate life, extra time is required to analyze and make sure that no mistakes are made. And that is the keyword, no “MISTAKES” can be made. And PREVENTING MISTAKES takes time.
2) The process is not built for performance. This relates strictly to how people are compensated for contributing. When the Developer accepts that responsibility, he pays. It is his role to pay. He is the risk-taker. Almost everyone else is paid regardless of what happens. The Civil Engineer firms bill on an hourly basis, and even if they have a fixed price contract, it is front-loaded so they don’t absorb governmental approval delays.
The Governmental agencies reviewing the project have “standards of performance” within their organizations, but they are standards that are defined by them and, understandably, very protective of them. With Government agencies notoriously understaffed, the standards are “employee-friendly” and the incentive to work harder or faster, may seem like a possibility, but, in reality, doesn’t motivate the government employee to act in any way that recognizes that the Developer is paying bank interest every day on land he can do nothing with until wastewater approval is reached. Don’t blame the Government employee, blame the process.
3) The process is highly regulated and licensed. Only licensed people can work in this process - specifically civil engineers and licensed contractors. Thus, in states where development hasn’t previously occurred, it is unlikely that we will have the technical manpower readily available to do a project. With less money, the Developer may pay for inferior, but licensed, help, however the approval process will be delayed by this inexperience. Similar to the world of teaching, tenure and credentials rule - so new, bright and forward-looking talent, can be stifled in the system.
4) All levels of government are involved. That means local, state and federal. Thus, each government bureaucracy has its fair shot at looking at and evaluating the project from it own perspective, perspectives, by the way, that can be at various odds with each other.
The developer and his team, has to satisfy them all before he can do something, and the process of just getting into the first meeting at the lowest level of approval, can be very costly indeed, just for early engineering and site work. And to get into that first meeting and be turned down is devastating to the Developer. So each presentation must be well thought out, completely conforming to all laws, administrative rules, and desires of each governmental agency, and presented in such a way that there will be a minimum of delays in passing approval. It is quite an effort, indeed.
5) Wastewater treatment responsibility is, by default, given to the engineering firms. The engineering firm has its own ideas of what might be best, and plugs in its own wastewater solution, either working with local equipment distributors, or friends they have worked with in the past. It tends to be local, and it tends to be based on movement of hardware to solve a problem, instead of providing a true wastewater treatment interface for the developer.
Remember, the wastewater treatment provider has no way to make money until his equipment is ordered. And, in such a highly complex and regulated process, it is unlikely that an equipment distributor has the knowledge or time to put into the proper sizing and planning for the project. Thus, whether the approved equipment manufacture has the best interest of the Developer at heart, the weakest link, the local sales rep can, without too much effort, make a mess of the wastewater treatment design and installation, promising things he can’t do, and not understanding how he must interact to make the process the best and most cost-effective for the Developer. And, I won’t even mention the unscrupulous reps who gauge the Developer, price-wise, and never really deliver.
6) Intentions are not understood. Each party has his own job in the process. And, these parties are a unique combination of public and private personalities, with different lifestyles, visions, and responsibilities. What is good for the engineering firm is not necessarily good for the County Commission, etc. And there are valid and honest reasons why they may differ.
For example, a county that does not wish to grow may have the greatest project in front of it, but it will change the heart and soul of that environment. So the commissioner will seemingly fight progress, even though, he is truly representing the view of his or her constituents. These types of philosophical disagreements can result in endless delays, more bank interest for the Developer, and emotional frenzies that only work to exacerbate the process and delay it further.
Well, there are many other reasons to beware before entering into the development process, but these are a few. The above listed realities exist in our commercial world and are imbedded in our system. Not all projects exactly fit the profile, and not all projects have each of the characteristics as part of their delays, but most projects are late and over budget because the realities, as listed above, are never quantified properly, especially for new entrepreneurs on their first development project. As I add future comments, I will try to look at each of the above, and others, and come up with recommendations that can be debated and better understood. I hope, that as an outcome, each person’s positions are better understood, and projects move through the cycle much more quickly.
My company has its place in this equation, and you will see that bias in my discussions. But I do believe that projects that can help the community’s economic future, and can make the environment better for having them implemented, should be the cornerstone of our building and development process. And, with the scarcity of water and other major resources, it is time for us to evaluate how we’ve been doing business and see if there is a better way for all of us - the wastewater professionals, the new homeowners, existing residents, taxpayers, legislators, etc.
CEO/International Wastewater Systems
President/RCC Holdings Corp.
Droplet 9 - New Water for Old: Speeding up the reform process
October 07, 2007
Forward: This Droplet proposes a pathway for the construction of a water entitlement register that will withstand the test of time.
Droplets explore ideas and propositions which, if developed further, might improve water use. They develop ideas and search for the fundamental concepts and building blocks that one might consider if not constrained by prior decisions.
New water for old: Speeding up the reform process
“The laws relating to the transfer and encumbrance of freehold and other interests in land are complex, cumbrous and unsuited to the requirements of the said inhabitants.” Torrens Title Act, South Australia, 1857-8.
There is an important relationship among water resource plans, entitlements, and registers. All three are of equal, essential and vital importance. Good registers do not fix bad plans. You can’t have a good plan unless it gives effect to a good entitlement system. Like Romeo and Juliet, plans and entitlements go hand in hand.
Knowing what we know today, to produce a good water resource plan, one would expect the planning process to begin by rigorously identifying the separate bodies or pools of water to be managed, and then establishing the rules for assigning water to each pool. The effect of one pool on another would be defined in a way that has hydrological integrity. Water can be assigned only to one pool at a time.
Entitlements to share access to the water assigned to each pool would then be defined and recorded on a register that guarantees ownership security and, through trade, facilitates efficient use and adjustment.
This is clearly not where we are today. Many entitlements were first issued in a developmental era when water resources were relatively abundant and were not defined to manage scarcity, interconnectivity and climate change. Today, many water allocation systems are under considerable stress. So much so, that some plans have been suspended. Entitlement trade, especially among States, remains cumbersome.
Given the circumstances Australia now finds itself in, we wonder whether or not there may be a need to adjust much more quickly than envisaged when existing water resource plans were put together.
What features would a new planning, entitlement and register system have to have to be deemed future proof? Could it be developed so that most entitlement holders would prefer it?
A way forward
In this Droplet, we explore the proposition that it may be advantageous to consider improving plans, entitlement systems and entitlement registers simultaneously. And, that this could be done in such a way that most water users would be keen to transfer their entitlements into this ‘new’ system.
The approach we have in mind draws upon NSW experience in persuading land holders to convert ‘old’ system land titles into a ‘new’ Torrens Land Title system. Conversion was voluntary and implemented over a number of years. The approach also draws upon experience gained when company share registers were moved from individual State registers to a single National register.
Water resource planning and entitlements
Good plans start by rigorously defining the relationship among the pools of water to be made available for environmental use, consumptive use and system maintenance.
Under the ‘new’ system and consistent with the National Water Initiative, plans and entitlements would be aligned in a manner that guaranteed that the water supply reliability would be a function of climate and nothing else. Entitlements would be defined as shares in the water assigned to each pool. Under this system, whenever one person’s shareholding is increased, another’s must be decreased. The system would have hydrological integrity. Amongst other things, each plan would require the offset of any adverse effects of land-use change or other similar processes on entitlement reliability.
An ‘indefeasible’ register
Good registers define ownership unequivocally. In the past, many of the processes used to issue water entitlements lacked consistency. Typically, entitlements were issued as licences. At the time, no-one envisaged that these licences would be separated from land title and be used to define assets that could be traded across large distances. When licences were first issued, it was always assumed that they could be changed as and when necessary. As a result of this history, even today, some governments remain reluctant to unequivocally guarantee the integrity of their water registers.
One of the most desirable features of the new register would be ‘indefeasibility.’ Whoever is named on the register as the owner of an entitlement is guaranteed to be its owner. The only way that ownership could be transferred to someone else would be to change the entry on the register. To provide for investment security changes are made only with the consent of all registered interests. Anyone who suffers a loss as a result of fraud, administrative error, etc. would be entitled to just compensation.
Throughout the world, banks are required to hold a proportion of their assets in extremely safe asset classes. Moreover, as a general rule, those who offer to mortgage these safer assets can borrow at a lower interest rate than everyone else.
While this may not seem important, if an entitlement register was defined so that it and its underlying assets were of the highest security, then irrigators should be able to use their entitlement to borrow money at cheaper rates than is presently the case. For this level of security, entitlements would need to be defined in a manner that prevented an entitlement from being forfeited or cancelled. There are many to ways to penalise bad water users. The threat of forfeiture of a water entitlement or, more seriously, the actual forfeiture of an entitlement need not be one of them.
Mortgageability and other interests
Well-defined registers record third party interests and guarantee that these interests will be protected. On the ‘new’ register, electronic access could be given to banks and other similar bodies so that they could clear part or all of a mortgage themselves. When loan payments are seriously in arrears, mortgagees (lenders) would have rights to foreclose their registered interest and sell enough entitlements to enable them to recover their interest. Mortgagors (borrowers) would have an equitable right of redemption. A mortgagee would not be able to recover more than that owed to them.
Imagine a register that provides maximum investment security and facilitates trading at very low cost. If the new register was built from scratch and designed for electronic trade, it should be possible to complete an entitlement trade in a few minutes.
Enter the name of the person to trade to, let the computing system check whether or not the proposed trade is possible, press the confirm button and the deal is done – done irrevocably! Partnerships with the banking system and brokers could be used to make execution conditional upon payment. No trade should cost more than the $60 or so currently charged for the electronic sale of shares in an ASX registered company.
Where to from here
If we had more space, we would add a lot more detail and also point to all the good work that States and the National Water Commission are doing to build state-of-the-art water resource plans, registers and trading systems. We also recognise the reality of the many water sharing plans and the constraints of plan review timelines and commitments among the various States and the Commonwealth.
In a few months, the results of the CSIRO Sustainable Yield Project for the Murray-Darling Basin will become available. One of the aims of this project is to identify over-committed water resource planning areas. One of the reasons for over-commitment is that some plans do not adequately account for ground-surface water interconnectivity and the consequences of a long drought. When the results of this project are considered alongside the impacts of the current drought, for some areas, it may be worth considering simultaneous improvement of the plan, the entitlement and the register system in a way that benefits all.
In areas where simultaneous change might be in the interests of all, an offer could be made to prepare a new resource area plan that properly accounts for system interaction and change, and then offer to issue new entitlements recorded on a new ‘state of the art’ register. Whilst we recognise that States may be reluctant to allow this to occur, we can see merit in letting the new Murray Darling Basin Authority offer to do this, and then invite all those with interests in a water resource planning area to choose between the ‘old’ and the proposed ‘new’ system.
For irrigators, this approach would involve no downside risk. There would, however, be a strong incentive for the Authority to get it right – reputations would depend upon it.
If a majority want the new system then, this process could set the standard for all to follow and provide a pathway for the progressive transfer of all water resource area plans and entitlements in the Murray Darling Basin to a single Basin-wide system.
Comments made on earlier drafts of this Droplet by Megan Dyson, Alistair Watson, Stephen Carroll, Murray Smith and our Steering Committee are acknowledged with appreciation.
Copyright © 2007 The University of Adelaide.
Production of Droplets is supported by Land and Water Australia and CSIRO Water for a Healthy Country. Responsibility for their content remains with the authors.
Biogas Boom Part 2: You've Read the News, Now See the Views on the Video Center
October 04, 2007
Here's another way to keep up with the booming biogas markets and technologies: visit our Video Center to view news and demonstrations of innovations like this wastewater plant that turns kitchen grease Into biogas.
This well-produced video from Chevron Energy Solutions, a unit of Chevron Corporation, and the City of Millbrae, California documents Millbrae's Water Pollution Control Plant, which transforms inedible kitchen grease from restaurants into biogas that provides electricity and heat to treat the city's wastewater.
The San Francisco Bay area city spent more than $5.5 million for new equipment and upgrades but the project pays for itself in energy cost savings and fees collected from restaurant waste haulers. This single facility reduces greenhouse gases by 1.2 million pounds a year. It’s a small plant in a huge market for renewable energy sources that actually save taxpayers money. According to the video, US restaurants generate an average of 14 pounds of grease per person per year. That’s 4.2 billion pounds of potential energy that’s largely left untapped and going to landfills where it releases methane into the atmosphere.
If you have a video about biogas or cogeneration (or other relevant topic) that you’d like to add to this site, see these instructions on how to upload your own video. It's free.