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Prepared by
Kirk & Co. Consulting Ltd.
Vancouver Fraser Port AuthorityPriority Gateway Infrastructure Projects
Cost Recovery Mechanism Options ConsultationNovember 27 – December 22, 2017
Consultation Summary Report March 2018
ABOUT KIRK & CO. CONSULTING LTD.
Kirk & Co. is a recognized industry leader in designing and implementing comprehensive public and stakeholder consultation and engagement programs. Utilizing best practices, consultation and engagement programs are designed to maximize opportunities for input. Kirk & Co. independently analyzes and reports on public and stakeholder input.
The views represented in this consultation summary report reflect the interests and ideas of consultation participants. Participants self-selected into the consultation process, and therefore do not reflect a random sample.
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Vancouver Fraser Port Authority | Cost Recovery Mechanism Options Consultation | November 27 – December 22, 2017
Table of Contents
1. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Engagement Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.1 Gateway Infrastructure Program Advisory Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Cost Recovery Mechanism Options Consultation Overview – November 27 to December 22, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Consultation Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4.1 Discussion Guide and Feedback Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4.4 Small Group Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Email Submissions and Online Feedback Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1.1 Quantitative Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1.2 Qualitative Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Small Group Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Next Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Appendix 1 – Discussion Guide and Feedback Form
Appendix 2 – PowerPoint Presentation
Appendix 3 – Small Group Meeting – Summary Notes
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1. Background
The Vancouver Fraser Port Authority and its partners are seeking federal funding for infrastructure projects that will remove bottlenecks impacting the flow and growth of Canadian trade. Building on the success of previous projects and initiatives as part of the Asia-Pacific Gateway and Corridor Initiative, the port authority worked with Transport Canada, the B.C. Ministry of Transportation and Infrastructure, TransLink and the Greater Vancouver Gateway Council to establish the Gateway Transportation Collaboration Forum (GTCF) in 2014.
This group, made up of organizations responsible for trade and transportation in the Vancouver area, has been engaging local government, First Nations and stakeholders to understand their interests and issues related to trade and transportation, and collaborating on the identification and design of priority infrastructure projects. Greater Vancouver Gateway 2030 is the Gateway Transportation Collaboration Forum’s strategy for smart infrastructure investment and identifies nearly 40 transportation infrastructure projects that would provide national, provincial, regional, and local benefits.
In November 2017, the port authority submitted nine funding applications in response to the first national call for projects from the National Trade Corridors Fund. Funding commitments and pre-funding contributions from the port authority, on behalf of industry, will leverage investments from others—including the federal government through the National Trade Corridors Fund, municipalities, railways and private sector industry—into trade enabling projects that will benefit the greater Vancouver gateway.
The total estimated capital cost of the Greater Vancouver Gateway 2030 projects is approximately $3 billion. Of these, the port authority anticipates that it might provide pre-funding to about 30 projects, with a total capital cost of about $2 billion. As part of its requirement to be financially self-sufficient, the port authority will recover pre-funding amounts from industry.
2Vancouver Fraser Port Authority | Cost Recovery Mechanism Options Consultation | November 27 – December 22, 2017
1.1 ENGAGEMENT PROCESS
The Vancouver Fraser Port Authority is undertaking a three-phase engagement with industry regarding cost recovery for priority gateway infrastructure projects.
The first phase took place in March 2017, where we asked industry to provide feedback about 13 projects that the port authority was considering providing pre-funding towards. We received 19 submissions from industry which were considered in determining which projects we have advanced for federal funding in 2017.
The second phase of consultation, which is summarized in this report, took place from November 27 to December 22, 2017, during which the port authority provided information regarding four proposed cost recovery mechanism options and invited industry stakeholders to provide feedback. The port authority will consider input received during this round of consultation in determining a cost recovery mechanism.
The third phase of consultation is anticipated for spring or summer 2018, where there will be an opportunity for industry to provide feedback on proposed fee language, prior to the implementation of the cost recovery mechanism in 2019.
1.1.1 Gateway Infrastructure Program Advisory Committee
The Gateway Infrastructure Program Advisory Committee (GIPAC) was established in 2009 to provide advice and feedback regarding the Gateway Infrastructure Program and Gateway Infrastructure Fee, specifically during consultation and implementation.
The Vancouver Fraser Port Authority has re-engaged the committee as part of this consultation process, and is seeking feedback from these key industry stakeholders about the structure and implementation of the cost-recovery mechanism, and how best to communicate and consult with port industry stakeholders.
The Gateway Infrastructure Program Advisory Committee includes the following associations and organizations:
• BC Chamber of Commerce
• BC Marine Terminal Operators Association
• Canadian International Freight Forwarders Association
• Canadian Manufacturers & Exporters
• Chamber of Shipping of BC
• Coal Association of Canada
• Fertilizer Canada
• Global Automakers of Canada
• Greater Vancouver Board of Trade
• Greater Vancouver Gateway Council
• IE Canada
• Shipping Federation of Canada
• Vancouver Terminal Elevators Association
• Western Canadian Shippers’ Coalition
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2. Cost Recovery Mechanism Options Consultation Overview – November 27 to December 22, 2017
2.1 PURPOSE
The port authority undertook this round of consultation to seek input from industry regarding cost recovery mechanism options. The purpose of the consultation was to gather feedback regarding the relative merits and considerations of the proposed options, to be considered by the port authority in determining which cost recovery model, or a refined version of one of these models, to implement.
It is important to note that the final list of projects and contribution amounts that will be cost recovered is evolving. Therefore, the cost information presented during the consultation period was a conservatively high estimate based on the current understanding of projects that may be funded by the port authority over the next 10 years.
2.2 PARTICIPATION
The following summarizes stakeholder interactions during the consultation period (November 27 to December 22, 2017):
• 43 stakeholders attended five small group meetings (four in-person, one webinar)
• 14 submissions were received through email from the following organizations:
• BC Marine Terminal Operators Association (BCMTOA)
• Canadian Association of Importers and Exporters (I.E. Canada)
• Canadian International Freight Forwarders Association (CIFFA)
• Chamber of Shipping of BC (COSBC)
• Fraser Surrey Docks (FSD)
• Global Container Terminals Canada (GCT Canada)
• Kinder Morgan Canada Terminals
• Neptune Bulk Terminals (Canada) Ltd.
• Pacific Coast Terminals Co. Ltd. (PCT)
• Richardson International Ltd.
• Shipping Federation of Canada
• Western Stevedoring
• Yang Ming Shipping (Canada) Ltd.
• 6 online feedback forms were completed by the following organizations:
• COSCO SHIPPING Lines (CANADA) INC
• Freight Management Association of Canada
• Neptune Bulk Terminals (Canada) Ltd.
• Yang Ming Shipping (Canada) Ltd.
• No organization name provided (2)
A summary of themes from feedback can be found starting on page 5.
2.3 NOTIFICATION
An email was sent from the port authority to industry stakeholders that included associations, terminal operators, shipping lines, and freight forwarders through [email protected] notifying them of the opportunity to participate. In addition, the port authority sent follow up emails and made follow-up telephone calls to industry stakeholders reminding them of the opportunity to participate and the deadline for feedback.
4Vancouver Fraser Port Authority | Cost Recovery Mechanism Options Consultation | November 27 – December 22, 2017
2.4 CONSULTATION METHODS
2.4.1 Discussion Guide and Feedback Form
A discussion guide provided information regarding the port authority’s cost recovery for priority gateway infrastructure projects, including the proposed cost recovery mechanism options. A feedback form at the end of the discussion guide sought input from participants.
The discussion guide and feedback form was provided to attendees at small group meetings and was available online through the online feedback form link ca.research.net/r/vfpacostrecovery. This link was included in notification emails sent from the port authority to industry stakeholders.
A copy of the discussion guide and feedback form can be found in Appendix 1.
2.4.2 Small Group Meetings
Small group meeting discussions provided stakeholders with an opportunity to participate in a facilitated discussion with the project team regarding the cost recovery mechanism options. At each meeting, port authority representatives showed attendees a PowerPoint presentation, listened to feedback and answered questions regarding the cost recovery mechanism options and associated information.
The PowerPoint presentation provided a high-level overview of the discussion guide content and was available online through the online feedback form link ca.research.net/r/vfpacostrecovery.
DATE TIME LOCATION ATTENDANCE
Vancouver
Monday, November 27, 2017 9:00 – 11:00am Vancouver Fraser Port Authority – Boardroom100 The Pointe, 999 Canada Place, Vancouver, BC
10
Monday, November 27, 2017 1:00 – 3:00pm 9
Wednesday, November 29, 2017 9:00 – 11:00am 11
Toronto
Thursday, December 7, 2017 10:00am – 12:00pm Marriott Airport Hotel 901 Dixon Road, Etobicoke, ON
6
Webinar
Monday, December 11, 2017 8:30 – 10:00am Webinar 7
A copy of the PowerPoint presentation can be found in Appendix 2. See page 7 for a summary of key themes from the small group meeting discussions. Meeting notes from each meeting are available in Appendix 3.
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3. ResultsThe following provides a summary of input received during the consultation period. The number of mentions may not equal the total number of respondents as participants may have provided more than one comment in a response.
Input received during this phase of consultation will inform the selection of a cost recovery model which will be presented to industry, along with more information about the cost recovery amounts, in spring/summer of 2018.
3.1 EMAIL SUBMISSIONS AND ONLINE FEEDBACK FORMS
3.1.1 Quantitative Results
Participants were asked to indicate their level of agreement with the proposed cost recovery mechanism options.
Option 1: Tonnage-based cost recovery allocated by trade areas, no change to amount or collection of existing GIF
Option 2: Tonnage-based cost recovery allocated by trade areas combined with existing GIF
Option 3: Tonnage-based gateway-wide cost recovery, no change to amount or collection of existing GIF
Option 4: Tonnage-based gateway-wide cost recovery combined with existing GIF
Total responses = 14
Strongly Agree
Somewhat Agree
Somewhat Disagree
Strongly Disagree
Neither Agree nor Disagree
Strongly Agree
15
1
0
0
2
3
Strongly Disagree
Strongly Agree
Somewhat Agree
Somewhat Disagree
Strongly Disagree
Neither Agree nor Disagree
Strongly Agree
0
3
6
0
0
2
1Strongly Disagree
Strongly Agree
Somewhat Agree
Somewhat Disagree
Strongly Disagree
Neither Agree nor Disagree
Strongly Agree
0
1
1
0
5
3
1Strongly Disagree
Strongly Agree
Somewhat Agree
Somewhat Disagree
Strongly Disagree
Neither Agree nor Disagree
5
1
0
0
6
2
6Vancouver Fraser Port Authority | Cost Recovery Mechanism Options Consultation | November 27 – December 22, 2017
3.1.2 Qualitative Results
The following are key themes from the 14 submissions and 6 online feedback forms.
THEMESNUMBER OF MENTIONS
Funding
Request that the port authority financially contribute to the infrastructure investments, with some respondents noting that the port should contribute a higher percentage this round than during GIF
7
Support for ports, railroads, municipalities, and Provincial and Federal Governments to appropriately share the cost of the infrastructure investments
5
Support for the port authority to utilize existing revenue streams to fund the proposed infrastructure projects
2
Cost Recovery Model
Support for a cost recovery mechanism allocated by trade areas 5
Opposition to any change to the existing GIF model 2
Opposition to a gateway-wide cost recovery mechanism 2
Opposition to being subject to the new fee, as the infrastructure investments appear to have no direct or indirect benefit to the stakeholder
2
Request that current non-contributing users of GIF be subject to the remaining 22 years, if a gateway-wide cost recovery mechanism is implemented
1
Opposition to the Fraser River Trade Area contributing to the remaining 22 years of GIF 1
Opposition to a new cost recovery fee 1
Support for implementation of an efficient mechanism that allows shippers of containerized cargo to fund a portion of the infrastructure improvements
1
Suggestion that a blended cost recovery model be implemented based on tonnage for direct benefit projects and another method for projects that benefit the entire gateway
1
Suggestion that the port authority introduce an evaluation process to determine which terminals will benefit from a project, and that contributions should only be collected from those that would benefit, and allocated only on actual increased volumes
1
Request to apply the new fee based on container unit base, as tonnage-based is complicated and controversial
1
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THEMESNUMBER OF MENTIONS
Concern that the proposed cost recovery mechanism continues to apply costs in a manner that is prejudicial to certain commodity carriers
1
Question regarding how the new fee will apply to industry members who are not located in the four trade areas, should a cost recovery mechanism allocated by trade areas be implemented
1
Cost-Benefit Analysis
Request for clarity regarding cost-benefit analysis to maintain the relationship between direct/indirect project benefits and cost allocation, to ensure that stakeholders pay for each project only to the degree that they benefit
5
Gateway Infrastructure Fee (GIF)/Gateway Infrastructure Program (GIP)
Concern regarding the port authority’s previous cost recovery mechanisms (GIF) and how they are tied to specific project commitments and to measurable overall capacity improvements
1
Comment that GIP was successful and resulted in valuable infrastructure projects, including support for the fair/transparency process of cost recovery through GIF
1
Concern that the cost recovery process and structure create the impression that the port authority is itself investing in gateway infrastructure
1
Other
Appreciation for the port authority’s and GTCF’s leadership in identifying and prioritizing gateway infrastructure investments
4
Concern regarding the accumulation of fees/administrative burdens, including how this could impact gateway competitiveness
3
Concern regarding infrastructure funding and efforts required in the Fraser River Trade Area (FRTA) given that it has been identified as a relatively new opportunity, and that the investments required are too significant for the FRTA to fund solely
1
Concern that container shipping lines were not included in the identification and development of the Priority Gateway Infrastructure Projects, including the Gateway Transportation Collaboration Forum, but are expected to assume the costs
1
Request that cost recovery be completed on a non-profit basis 1
Support for improving Canadian trade, including providing priority access to the North Shore Trade Area's (NSTA) limited rail infrastructure to cargo originating in, and destined for, Canada
1
8Vancouver Fraser Port Authority | Cost Recovery Mechanism Options Consultation | November 27 – December 22, 2017
THEMESNUMBER OF MENTIONS
Request that marine-specific infrastructure be included in the proposed projects 1
Request for an additional consultation meeting with those directly affected by the cost recovery mechanism
1
Concern regarding the number of priority projects identified for cost recovery, and that it could increase fees by 200%
1
Concern regarding the port authority’s consultation process, including disclosure of the rationale and details for how the new fee will apply to those previously exempt from GIF
1
3.2 SMALL GROUP MEETINGS
The following are the key themes from the small group meetings.
MEETING KEY THEMES
Small Group Meeting #1
Monday, November 27, 2017
9:00 – 11:00am
10 participants
• Participants sought additional information regarding the assumptions behind the cost recovery model and suggested that the port authority provide these assumptions to industry for clarity.
• Some participants noted that a gateway-wide fee might be viewed by their customers as subsidizing infrastructure improvements that would support their competitors, while others supported the idea of a gateway-wide cost recovery model.
• Some participants acknowledged the need for infrastructure improvements and thanked the port authority for its leadership in applying for federal funding.
Small Group Meeting #2
Monday, November 27, 2017
1:00 – 3:00pm
9 participants
• Some participants noted that railway service needs to be improved in conjunction with completing infrastructure projects, otherwise terminals and cargo owners will be paying for improvements without getting the benefit of more efficiency.
• Some participants requested more cost-benefit analysis information, noting that in the absence of being able to demonstrate benefits across the gateway, a trade area specific cost recovery model would be the easiest to explain to decision-makers.
• Some participants noted that a gateway-wide fee would not meet the fairness criteria because the North Shore, South Shore and Roberts Bank Trade Areas have been paying the Gateway Infrastructure Fee for several years, unless there was a way to retroactively charge the Fraser River Trade Area for their portion of those costs.
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MEETING KEY THEMES
Small Group Meeting #3
Wednesday, November 29, 2017
9:00 – 11:00am
11 participants
• Participants expressed support for the cost recovery mechanism being applied to all commodities using the gateway, including cruise and domestic cargo.
• Participants acknowledged the need for infrastructure improvements to maintain efficiency of goods movement within the gateway.
• Some participants representing terminal operators stated that a gateway-wide fee would not be fair because it would diminish the contributions that have already been made through the Gateway Infrastructure Fee and also subsidize improvements in the Fraser River Trade Area.
• Some participants asked whether the port authority would be making a financial contribution to the infrastructure improvements, with one suggesting that it should be more than the 10 percent that the port authority contributed to the Gateway Infrastructure Program.
Small Group Meeting #4 (Toronto)
Thursday, December 7, 2017
10:00am – 12:00pm
6 participants
• Participants representing container shipping lines and freight forwarders noted that their primary concern is the ability to pass along costs to cargo owners, noting that the third round of consultation regarding fee language will be important and asking the port authority to revisit options to levy the cost recovery mechanism directly on cargo.
• Participants sought clarity around which other parties would be contributing to the infrastructure improvements, suggesting that all who benefit, including railways, municipalities and others, should contribute.
• A participant noted that they are opposed to changing any aspect of the existing Gateway Infrastructure Fee, noting that they saw it as a commercial deal for a 30-year period.
• A participant expressed support for a trade area approach to the cost recovery, noting that it is more transparent for investors and decision makers to see benefits to their operations.
Small Group Meeting #5 (Webinar)
Monday, December 11, 2017
8:30 – 10:00am
7 participants
• Some participants sought clarification regarding the assumptions underlying the cost recovery model, specifically the cost-benefits to terminals within various trade areas.
• A participant representing a terminal operator expressed concerns about a gateway-wide model, noting that it would be difficult to support to investors.
• A participant expressed concerns regarding the future competitiveness of the Vancouver gateway if railways, municipalities and other jurisdictions were to impose higher fees or taxes on the private sector as a result of trade growth and investment.
4. Next StepsInput received during this consultation will be considered, along with technical and financial information, as the Vancouver Fraser Port Authority determines a cost recovery mechanism. There will be a third round of consultation in spring/summer 2018 where industry will have an opportunity to provide feedback regarding draft fee language. It is anticipated that the cost recovery mechanism would be implemented in 2019 and would be in place for 30 years.
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