July 14, 2010
The B.C. government is looking for potential bidders to build the long-delayed Evergreen Line, which shows the province is confident funding is available for the project.
“We would not start the procurement process for a project, unless we were 100 per cent confident that the project will be funded,” said Larry Blain, CEO of Partnerships BC.
“The project will be funded, but exactly how that will work is to be determined.”
The Ministry of Transportation and Infrastructure issued a Request for Qualifications (RFQ) to identify private partners capable of designing, building and financing the Evergreen Line, a rapid transit project in Metro Vancouver.
The announcement may signal significant changes in global financial markets, since a deal to secure financing for the Port Mann Bridge under a public-private partnership failed in February 2009.
“The debt markets have definitely improved, since we had a problem at the time of the Port Mann,” said Blain.
“The reason we are doing this now is because the market for debt has improved since the financial crisis.”
Macquarie Group, the lead proponent on the Port Mann Highway 1 project, had difficulties securing financing.
The government was forced to change from a public-private partnership to a more traditional procurement process.
“Also, in Canada we have more sources of finance than before the crisis,” said Blain. “Pension funds and life insurance companies are purchasing infrastructure bonds that are a long-term, high quality and stable cash flow.”
Blain said another important factor is that the P3 for the Evergreen line is for design, build and finance.
“It doesn’t include maintenance because it will be connected to the existing system,” he said. “This means that finance is only required for short-term construction, which is a type of business that Canadian banks are very interested in.”
Prior to the financial crisis, Blain said private sector financing for P3s often came from European or Australian banks.
Once the RFQ process closes on Sept. 7, the government will select up to three teams to participate in the Request for Proposals stage. The provincial government has already done planning and public consultation. However, TransLink has been having difficulty finding the funds to maintain and expand transit services over the next 10 years.
“Our challenge is to find a short-term solution for the Evergreen Line, without compromising our long-term transportation strategy,” said Langley City Mayor Peter Fassbender, who is the new chair of the mayors’ council.
TransLink needs to come up with its $400 million share of the line’s total cost.
The $1.4 billion Evergreen Line project is a new rapid transit line that will connect Coquitlam to Vancouver via Port Moody and Burnaby. The federal and provincial governments have both committed about $400-million to the project.
Construction of the 11 kilometre line is expected to begin in late 2010 and be completed in 2014. The project will create about 8,000 jobs. The Evergreen Line has been part of a regionally developed transportation plan for over 15 years.