The Baguio City Council, during its regular session on April 15, 2024, approved the Baguio City Tourism Resilience Project, a comprehensive initiative that encompasses the rehabilitation and expansion of the city’s sewage treatment plan (STP) and the expansion of sewer networks.
The project is designed to enhance Baguio City’s resilience as a tourism destination. By improving sanitation facilities and practices, the city aims to provide a safer and more attractive environment not only for Baguio locals but also for tourists.
City Budget Officer Atty. Leticia Clemente clarified that the project’s funding, totaling 46.7 million USD (approximately P2.6 billion), will be acquired from two sources: a 36.7 million USD loan from the Asian Development Bank (ADB) and a 10 million USD contribution from the United Kingdom–ASEAN Catalytic Green Finance Facility (UK-ACGF).
The city government’s partnership with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) enables the city to access funding, since the ADB can only provide loans to the national government.
Clemente said the loan from ADB will be paid by the city government over 29 years with a grace period of eight years and a repayment period which extends for 21 years for most parts of the loan. The UK loan will be paid over 15 years with a grace period of 7 years and a repayment period of eight years.
The interest rate for the ADB loan is 4.63% while no interest payment is required for the loan granted by the UK.
Atty. Rhenan Diwas, city environment and parks management officer, said that the estimated cost of approximately P2.6 billion is based on the feasibility study’s findings. He said the final cost would be determined during the actual implementation phase, with the winning bidder’s detailed engineering design playing a crucial role in this determination.
The executive department plans to offset the project costs and cover the loan repayment through a combination of sources, including sanitation fees from residential and commercial properties based on a percentage of their water consumption. Additionally, an Environmental Users Fee (EUF) will be imposed on tourists staying in accommodations within the city.
Clemente said the estimated annual revenue from sanitation fees would be P208 million and from environmental users fees would be P350 million.
These fees are expected to generate significant revenue over the project’s duration, contributing to the funding of the sewer and septage project and covering operational expenses.
Mayor Benjamin Magalong said that in 2019, a sampling of the Pasig River’s coliform level was at 14 million per 100 ml while the Bued River’s coliform level was at 16 trillion and the Balili River’s was at four quadrillion. He said while there had been reductions in coliform levels over the past four years, with Bued river going from trillion to billion and Balili river from quadrillion to trillion, but they are still significantly more polluted than the Pasig river which is about a hundred times less polluted.
Magalong explained that if the City Government of Baguio does not act on these environmental concerns, the penalty would be P200,000.00 per day per river, totaling about P72 million annually for four rivers. He said the DENR had not imposed penalties on Baguio City yet in consideration of this project.
If implemented, the Baguio Resiliency Tourism Project would address various challenges and opportunities related to sanitation and tourism and improve sanitation infrastructure and services in the city, particularly focusing on upgrading the STP to meet the demands of residents and visitors.
The project also seeks to mitigate negative environmental impacts such as pollution of soil, groundwater, and water bodies by enhancing sanitation infrastructure and practices and reducing the contamination caused by untreated sewage to improve overall environmental quality.
Incorporated in this project is a City Fecal Sludge Management Plan which was adopted by the city council in 2020. This plan includes short-term solutions and improvements, such as increasing operational hours. Another offshoot component of the project is the Biosolids Reuse Strategy which will deal with the by-products of the STP, specifically biosolids, which can be reused for various purposes, including agricultural use, adding to the city’s revenue.
A project Management Unit (PMU) will oversee the project’s implementation for five years, including hiring technical consultants and managing costs related to project management and environmental mitigation.
Diwas emphasized the need for a holistic approach to sanitation infrastructure, including managing septage and sewer networks and ensuring everything leads to the Balili Treatment Plant.
Diwas revealed that 90% of Baguio residents use septic tanks, with only 10% percentage connected to sewer lines. He disclosed that, currently, there is a lack of regular desludging of septic tanks by residents due to high costs. Because of this, septic tank contents overflow into water bodies during heavy rains, posing environmental and health risks especially to children.
Diwas added that only a fraction of wastewater (22%) from connected sewer lines is safely managed, with the rest contaminating groundwater, rivers, and basins.
The Baguio STP which was built in 1986 is outdated and unable to meet modern wastewater treatment standards. Performance metrics show significant failures in various parameters. Diwas said a new technology-based approach is needed to address the environmental and health risks posed by the outdated facility.
During the April 15 discussion, Councilor Peter Fianza raised the important legal distinction between fees and taxes. Fees are typically charges imposed for specific services or benefits provided to individuals or entities. On the other hand, taxes are compulsory contributions imposed by the government on individuals or businesses for public purposes without necessarily providing a direct and proportional benefit in return.
Fianza explained that, unlike taxes, fees should only be enough to cover the cost of regulation or the specific services provided.
He further referenced recent legal developments where certain fee collections may have been disallowed or challenged. He suggested thorough legal review when proposing or implementing fee structures in relation to the project.
Councilor Arthur Allad-iw expressed support for the project but raised concerns on the proposed sanitation and environmental fees, particularly the 16% water bill charge for residents connected to the Baguio Water District (BWD). He also asked about the impact on residents not connected to the BWD and how they would contribute to the project’s fees.
Clemente explained that eventually, all residents would pay the same rate, regardless of BWD connection. She said the City Treasury Office would handle fee collection from households not connected to the BWD.
Councilor Betty Lourdes Tabanda questioned whether the project could concentrate solely on rehabilitating the plants and sewer systements, given the city’s reluctance towards loans. She suggested reducing the loan amount to cover only essential components related to STP rehabilitation.
Magalong explained that the loan amount would be based on actual project costs, not just the figures presented. He emphasized the need for proper fund management and utilization to ensure that expenses are rationalized and used efficiently.
Diwas clarified that certain project expenses are spread over the project’s timeline and tied to actual expenditure. He added that funds are allocated based on project proposals and terms of reference, ensuring that expenses are supported by specific project needs.
In response to Tabanda’s inquiry on loan payment, Clemente said that while the capital investment is part of the loan, the financial charges are the city’s responsibility. She assured that operating expenses would include provisions for sustaining and improving the project. She also explained that the loan repayment would be managed through a Trust Fund specifically for the project.
Councilor Mylen Yaranon questioned the decision to take a loan for the project, expressing concerns about the affordability of the loan payments compared to using the city’s funds. She emphasized the importance of public consultation to ensure transparency and accountability in funding decisions, considering that the public will ultimately bear the burden of the loan repayment. **Jordan G. Habbiling
