P3 Legislation Creates Uncertainty

Released: June 8, 2012 at 10:43 a.m.
Mayor Sam Katz says the provincial government's new public-private partnership (P3) legislation has created uncertainty, putting at risk the City's ability to work with the private sector to deliver on-time, on-budget infrastructure projects.

Councillors to Address Committee on Public-Private Partnerships

WINNIPEG - Mayor Sam Katz says the provincial government's new public-private partnership (P3) legislation has created uncertainty, putting at risk the City's ability to work with the private sector to deliver on-time, on-budget infrastructure projects.

"The provincial government appears to be ideologically opposed to public-private partnerships," said Mayor Sam Katz. "That's the only explanation I can see for throwing roadblocks in front of a process that has been so positive for the taxpayers of Winnipeg."

Katz went on to say the Chief Peguis Trail Extension was named Manitoba's best-managed project for 2012, as it involved public consultation, independent financial analysis and oversight by the City auditor.

"This legislation introduces overlap and duplication, not transparency and accountability," said Katz. "Chief Peguis came in on-budget, a year ahead of schedule, and with maintenance guarantees for the next 30 years. Plus, our public service benefited from knowledge transfer and private sector innovation."

Innovation on the Chief Peguis Trail Extension included:

  • Finding a way to avoid moving underground utilities,
  • Engineering the underpass to require a smaller pumping station,
  • Building an active transportation bridge within existing budgets.

The City of Winnipeg is now a leader in P3 projects and was the first municipality in Canada to receive P3 funding. The Chief Peguis Trail Extension received $23.7 million from the P3 Canada Fund - money that would have not been available outside of a public-private partnership.

Councillors Jeff Browaty and Russ Wyatt plan to address the standing committee reviewing the legislation in order to relay the City's concerns and ensure future P3 projects are not put in jeopardy.

Backgrounder

Key Issue

  • P3 legislation will limit the City of Winnipeg's ability to procure P3s in the future and may impact the City's ability to access the P3 Canada Fund.

History

  • In April, 2010, the City viewed draft P3 Legislation.
    • The P3 Act would apply to projects over $50 million.
    • The City was not allowed to retain a copy of the Act for review, consideration and input.
    • No draft regulations were provided for review.
  • In May, 2012, the CAO and COO met with representatives of the Province who advised that the Act had been finalized for presentation to the Legislative Assembly.
    • The P3 Act would apply to projects over $20 million.
    • The City was not allowed to retain a copy of the Act for review, consideration and input.
    • No draft regulations were provided for review.

Recent City of Winnipeg P3 projects

  • Chief Peguis Trail Extension
  • Disraeli Freeway
  • East District Police Station

Chief Peguis successes

  • This project was completed one year ahead of schedule.
  • The City of Winnipeg was the first municipality to receive P3 Canada funding. This funding, totaling $23.7 million, allowed the City of Winnipeg to complete the underpass.
  • The City of Winnipeg has no maintenance risk for the next 30 years.
  • The City's consultation included an open house early in the project (2008) to provide an opportunity for the public to make comments and suggestions and a public information session in March 2011 with members of the design and construction team.
    • The contractor found a way to avoid moving underground utilities.
    • The underpass was engineered to require a smaller pumping station, saving millions of dollars.
    • An active transportation bridge was built within the budgets proposed.

Benefits of P3s

  • Cost certainty - once a price has been set there are no further adjustments unless specifically requested by the City. In the City's experience with P3s, there have been few scope changes and always within budget.
  • Risk Transfer
    • Detailed design - design issues are the responsibility of the proponent.
    • Budget and timelines - all the responsibility of the proponent.
    • Transfer of maintenance risk to private industry. The City will receive a well maintained Trail in 30 years. Municipalities have traditionally been challenged in appropriately maintaining facilities.
  • Ability to start the project quickly and avoid construction inflation.
  • Projects have full due diligence prior to commencing construction, including financing.

City position

  • The City auditor has been involved in both the Chief Peguis and Disraeli projects. Under the new legislation, for the first time the City would be required to report to the Auditor General.
  • The City has consistently used best practices prescribed by independent external advisors in determining the Public Sector Comparator and in defining Value For Money. In addition, the City has engaged external fairness advisors, legal advisors, engineering consultants and financiers to assist in all aspects of the procurement decision.

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