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Nov 1,2006

By Jeff Nagel Black Press
Nov 01 2006

The debate over the merits of public-private partnerships is back on with a vengeance now that the province has unveiled a new policy forcing cities to use the strategy in order to get provincial grants.

And the Evergreen light rail line may be affected.

Any project worth more than $20 million will have to be seriously considered as a private-public partnership (P3) and be vetted by Partnerships BC in order to get funding from Victoria, Premier Gordon Campbell announced Friday.

This could apply to large projects such as recreation centres built by cities as well as regional projects ranging from water or sewage plants to transit lines.

And Transportation Minister Kevin Falcon says the $970-million Evergreen Line to Coquitlam will have to go through that process before Victoria will consider providing any more money to help TransLink bridge a $400 million shortfall. “The entire design-build-finance-operate option should be analysed,” he told Black Press.

The province maintains P3s save money compared to traditional government construction, financing and operation of projects.

Four major projects are now being built by the province as P3s in this region – the Canada Line, the Sea-to-Sky Highway, the new Abbotsford Hospital and an outpatient centre in Vancouver.

“The common theme of all of those is they’re either on schedule or ahead of schedule, and they’re on or under budget,” Falcon said.

“We are the guardian of taxpayer dollars,” he said. “This is the way we will insist major projects be examined if there’s major provincial dollars involved.”

Falcon said the province regrets not building the Vancouver convention centre as a P3.

“They have had to come back to government on at least two occasions asking for additional dollars,” he said.

And he said he can “sleep at night” without having to worry about the Canada Line going over budget or failing to open on time.

But Burnaby Mayor Derek Corrigan says budgets can easily be set high to make P3s look good. He said building the Canada Line as a P3 will mean less efficient operation because the new line’s bidders were barred from striking a deal with TransLink’s SkyTrain to operate it.

“Here we are running a system for SkyTrain all over the Lower Mainland except this one strip from Vancouver to Richmond will be run by a separate company,” he said. “The absurdity of not using the existing staff is beyond me.”

Corrigan says Canada Line costs were pushed up to $1.9 billion because only SkyTrain-type technology was going to be considered, resulting in serious bids only from Bombardier and SNC Lavalin, not a host of other competitors around the world.

The track record of recent P3 attempts at a regional level here is mixed.

TransLink’s planned Golden Ears Bridge is now under construction with work being led by private consortium Bilfinger Berger, which will also run the electronic tolling system and maintain the bridge. But costs ballooned from an original $600 million to $800 million.

That led the transportation authority last year to take on a greater role in financing because it would be cheaper for TransLink than the consortium to borrow more.

In fact, municipal financing is often cheaper than private sector borrowing because cities borrow through the Municipal Finance Authority – a kind of giant credit union of B.C. cities that has a AAA credit rating, historically higher than the province’s.

The GVRD also tried to build the $600-million Seymour Capilano Filtration plant as a P3 but abandoned the effort because all bidders were multinational corporations, spawning vocal protests.

“That project is on time and running about $30 [million] or $40 million dollars under budget,” Corrigan said. “If we had put it in the hands of a private sector company, they would be controlling our water.”

He accused the province of deliberately trying to force a mass privatization of municipal infrastructure.

Although Corrigan calls the edict “purely ideological” and one of the most “intrusive” policies ever, Richmond Mayor and TransLink chair Malcolm Brodie is less concerned.

Brodie said he will recommend TransLink examine the Evergreen Line as a P3. “If the analysis clearly demonstrates significant benefits, I’ll recommend that as part of the funding and procurement model,” he said.

Falcon said not every project vetted will be considered suitable.

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