40 LEXPERT MAGAZINE
|
APRIL 2016
| INFRASTRUCTURE |
e Regina project is an example of two
of the most important recent developments
in infrastructure procurement: the broad-
ening of the asset class to which the public-
private partnership (P3) model is being ap-
plied, and the enlargement of public-sector
participants employing the P3 model to
include the federal and municipal levels.
In recent years, P3 infrastructure, once
largely confined to Ontario hospitals and
to roads across the country, has expanded
to include waste-water treatment plants,
LRT projects and even power projects such
as BC Hydro's John Hart Generating Sta-
tion Replacement project on Vancouver
Island and Alberta's Fort McMurray West
500 kV Transmission Project.
Not everyone is enamoured of the P3
model. In December 2014, the Auditor
General of Ontario issued a report suggest-
ing that traditional procurement of public
infrastructure would be superior to P3 pro-
curement if projects were simply managed
better by government. However, a survey
sponsored by e Canadian Council for
Public-Private Partnerships (CCPPP) and
conducted by Nanos Research in 2015
found that municipal and Aboriginal
stakeholders who had experience with P3s
were generally positive toward them.
"e infrastructure deficit is particu-
larly acute in municipalities," says Greg
Southam, a partner at Davies Ward Phil-
lips & Vineberg LLP in Toronto. "Most of
the projects that have come aboard at the
municipal level have been north of $150
million. at's the minimum size that po-
tential bidders want to see to get involved
in these types of projects."
e P3 Canada Fund, by providing up-
front money to pay off projects' short-term
debt finance, is giving smaller hubs such as
Moncton and Saint John, NB and under
Bay, Ont. the opportunity to procure assets
they could not otherwise afford.
e federal dollars are spent in the con-
struction phase, as milestone payments and
completion payments. e city then funds
the operating payments over 30 years,
which is much more manageable given
budgetary constraints. "But when the fed-
eral government comes in," says Southam,
"it also brings a structure so that you're not
reinventing the wheel each time. e inves-
tors want to know that there's going to be a
standardized process, and the federal folks
provide that."
e federal Minister of Infrastructure
and Communities, Amarjeet Sohi, has
been mandated by Prime Minister Trudeau
to remove the mandatory P3 "screen" ap-
plied (since 2013) to infrastructure projects
of $100 million or more for which a prov-
ince or municipality seeks federal funding.
e purpose of removing the screen is to
cut down on the lengthy approval process
it necessitates. "In Sohi's view," says Cath-
erine Doyle, a partner at Blake, Cassels
& Graydon LLP in Toronto, "the screen
needlessly delayed Edmonton's LRT transit
project by more than a year and took away
from the municipality the ability to make
its own decision on how it was going to pro-
cure the project."
e federal Liberals are also committed
to creating a Canada Infrastructure Bank
(CIB) to assist municipalities with funding
and financing, working with the financial
community to provide low-cost financing,
including loan guarantees. Sohi has said
the CIB will be offering capital invest-
ments to municipalities as well.
For infrastructure lawyers, the new para-
digm has required them to bring in sector-
specific expertise, says Tobor Emakpor, a
partner at Osler, Hoskin & Harcourt LLP
in Toronto. "On an LRT project, you want
to bring in your rail specialists and on a
power procurement, your power special-
ists. But the basic contractual documenta-
tion typically follows the P3 template. Al-
GREG SOUTHAM
DAVIES WARD PHILLIPS
& VINEBERG LLP
"The infrastructure
deficit is particularly acute
in municipalities. Most of
the projects that have come
aboard at the municipal level
have been north of $150 million.
That's the minimum size
that potential bidders want
to see to get involved in
these types of projects."
PHOTO:
SHUTTERSTOCK
