Las Brisas Could Cost Taxpayers $443,774,340 over Ten Years

The article in the Caller Times on Sunday, July 26, 2009 quoted a Corpus Christi Regional Economic Development Corporation commissioned study stating “Las Brisas a Property-Tax Boon”. The study, which stated the pet coke burning power plant which would increase pollution in the area by 70% and place four 500 foot smoke stacks on the inner harbor, would produce an area gain of $318 million in property taxes. The study claims to provide a cost-benefit analysis by deducting costs for providing municipal and school services for the projected 25 new residents expected to move to the area for plant operations. The only problem is that’s as far as it goes.

National studies have attributed other costs to power plants, they include health care costs, costs of pollution controls and compliance if the area goes out of attainment, damage to buildings, crops, domestic and wild animals, and secondary losses. In most of these economic studies, promoters parade a list of figures of downstream benefits, from direct jobs to an increased number of haircuts. It seems only fair that all of the direct and indirect costs are provided in order to truly evaluate the cost benefit of a project. While we didn’t project secondary costs, we were able to identify primary costs that the CCREDC did not look at. Let’s look at several and see how what effect they have on the public costs for Las Brisas.

Non-Attainment Costs A number of cities in the United States fallen out of attainment and have begun to look what non-attainment was costing them. I While Las Brisas claims it won’t put us out of attainment, it gives no guarantees and in fact has fought the Environmental Defense Fund to prevent the obtaining of information on a different permit application for the pet coke off loading and storage operation. Authorities within the Port industries gave only a neutral statement Las Brisas according to insiders because many are worried about what costs of possible non-attainment will bring on them.

There is good reason to be concerned, Wichita, Kansas Chamber of Commerce stated in a report that compliance costs there were $10 million/year. Wichita followed the lead of the U.S. Chamber of Commerce which stated “non-attainment designation under the Clean Air Act carries serious repercussions including the loss of federal highway funding and the loss of economic development opportunities.” They listed the following penalties to areas who fall out of attainment:
Loss of Federal Highway and Transit Funding -One year from the date of a non-attainment designation, federally funded highway and transit projects will not be allowed to proceed unless the state demonstrates there will be no increase in emissions associated with the projects.
Boutique Fuels- Non-attainment areas are subjected to the Clean Air Act’s reformulated gasoline program, which significantly raises the price of motor vehicle fuels for consumers.
Enhanced Regulatory Oversight-
Once an area is designated as being in non-attainment, EPA has the authority to intervene and revise permitting decisions throughout the state.
Restrictive Permitting Requirements- New and upgraded facilities in, or near, non-attainment areas are required to install the most effective emissions reduction controls without consideration of cost. Operators of existing facilities may also be required to install more restrictive control technologies than are otherwise required for similar units in areas that are in attainment.
Mandatory Emissions Offsetting
Prior to permitting the construction of new facilities, a state must offset any emissions increases by achieving reductions at existing facilities.
Loss of Economic Development Opportunities- The added regulatory and paperwork burdens, as well as expenses associated with constructing new facilities, or expanding existing ones, limit the amount of economic investment in non-attainment communities.

Pima County Association of Governments (greater Tucson area) estimated their costs including federal highway funds at $55 million a year. The Cinncinnati, Ohio Chamber of Commerce testified in Congressional hearings in 2004 that they conducted a study which estimated that 14,000 jobs were lost in the greater Cinncinnati area from 1995-2000 due to nonattainment restrictions. They went on to state that their economic development organization, “had been told by national site location consultants that nonattainment areas are frequently not even included as potential locations for major new manufacturing projects.

Another study by the EPA said that even cities in marginal nonattainment such as Atlanta, Knoxville, Reno and Seattle bore nonattainment costs of $76.22 per capita or in the case of Corpus Christi (population roughly 290,000) or $22,103,800/year. None of these studies covers increased healthcare costs, just compliance with new restrictions.

Healthcare Costs Numerous studies during the last few years have looked at the increase in healthcare costs associated with increased pollution. One recent study in Health Affairs: The Policy Journal of the Health Sphere looked at this cost from a number of different angles. When comparing 37 areas with the most pollution to 37 areas with the least pollution, the costs averaged $293/person/year (for Corpus Christi $84,970,000) but we aren’t one of the least polluted areas in the country, we already border on non-attainment. Another study by the same authors looked at it from a different angle (both studies examined costs of inpatient, outpatient, admissions, surgical admissions and respiratory admissions). Costs per 10ug/m3 (10 micrograms per cubic meter) increase in pollution and came up with $244.20/person/per year (for Corpus Christi $70,818,000).

Yet another study conducted by Muller & Mendelsohn in the Journal of Environmental Economics and Management (2007) looked at utilizing PM10 (particulate matter 10 microns or less in size) as an indicator of overall pollution increase and calculated healthcare and premature deaths due to pollution. They came up with a figure of $3300/ton of PM10 emissions or for Las Brisas at 2,808 tons per year of $9,266,400. This doesn’t include costs of missed work or school, lost state funds when school is missed or other secondary costs. For our purposes we will use the most conservative figure of $9,266,400/year.

Water Costs The other area not discussed in the Caller Times article, but the focus of a series of scare articles on the drought, is the cost of building a water line from the mouth of the Colorado River to Lake Texana where it would be piped via the Mary Rose Pipeline to Corpus Christi. While the City has projected it won’t need the water until 2030, the Port recently sent a letter to the City Manager asking that it be made the highest priority. The reason is that Las Brisas will require four billion gallons of water (or 15,000 acre feet, the amount of water it would take to cover 15,000 acres with one foot of water) a year. The City put in a request to the Texas Water Board for an $8 million dollar loan to design a line and establish a route. Nowhere in its application did the City indicate that Las Brisas was the reason but instead stated population growth which they predicted would need the water, by 2060. The cost of the line is estimated to be between $100-150 million dollars not including the interest on the bonds, which will of course multiply the eventual figure by several fold.

So let’s do a recalculation of the cost benefit of the Las Brisas Power Plant using conservative figures available over ten years as did the Economic Development Corporation. Costs of complying with non-attainment status (should the critics be right) using an average of the three studies or roughly $29 million dollars a year. If healthcare costs are dealt with the same way the average is $28 million a year and the cost of the pipeline is estimated at $125 million sold at current municipal bond rates of 4.33% for AAA rated tax free floated for even ten years would be $190 million (at 20 years it swells to $290 million). If you total these figures, subtract the taxes collected the costs to taxpayers is $443,774,340 over ten years in nonattainment, healthcare and waterline costs.