Staff working on solutions to abuse of program.
The final numbers are not in yet but it looks like the sewer backflow program in Hamilton will experience a cost overrun of about half a million dollars. The program was budgeted for $2015 at $2.5 million but has seen the number of applications spike in the last three years as aggressive brokers have taken advantage of loopholes to drive up both the number of installations and the cost of the individual jobs. City staff reported last year that rather than a competitive process as was envisioned, where homeowners would obtain three quotes on installations, middlemen would go door to door with three quotes already filled out and all for the maximum city grant of $2,000. Hamilton’s Director of Water and Wastewater, Dan McKinnon says there will likely be some changes to the system including developing a roster of eligible contractors and some sort of cap on the city’s share of costs. The trick he says is to make the changes without running afoul of the city’s legal and purchasing procedures.
Asked if the apparent collusion on quotes might be a violation of competition law, McKinnon says the advice he is getting is that the brokers’ practices fall short of being illegal on a number of technicalities. “It doesn’t feel right, that’s for sure,” he said, “but it is probably technically legal.” He says the city may not be getting good value for its $2000 per installation. The nature of the job varies from house to house but Dan McKinnon thinks the way the contractors operate they could probably made a decent profit at $1200 to $1500. “At $1500 we could then do 25 percent more installations.” There is also the question of how much money overall city council will want to see spent on the program which has been in place since 2009 and has resulted in roughly 8,000 homes protected from sewer backups. The program originally was designed to assist homeowners in lower east Hamilton where many homes had been inundated with sewage backups after heavy storms; but with the changes in weather in recent years and the severity of storms, applications are now coming in from all parts of the city. Hamilton has also mandated backflow protection in new homes, resulting in an additional 5,000 homes receiving the systems.
Aside from the brokers who solicit the business with pre-authorized quotes from contractors, the two largest beneficiaries of the program so far are Rock Bar and the Ontario Contractor’s network—each of which are relatively new to Hamilton. Rock Bar has been participating in the program for approximately three years and OCN is a more recent arrival. The largest recipient from among more established Hamilton firms is Thomas M. Gauthier at $336,000 followed by Thomas R. Birnie and Sons at $171,000.