November 30, 2010

Daily Commercial News

PETER KENTER
correspondent

When the notion of official public-private partnerships (P3s) was introduced in Europe almost two decades ago, the model was applied only to mega-projects. Early Canadian P3 projects likewise were larger projects, such as the Edmonton Ring Road.

Increasingly, however, the P3 model is finding favour as a realistic model for small projects, such as the Canmore water and wastewater system, and Lac la Biche wastewater system in Alberta, and Ottawa’s Shenkman Arts Centre.

“I believe that you can use P3s for smaller project,” says Jay Ramotar, deputy minister, Alberta Health and Wellness.

“I also believe that provincial governments have the responsibility to work with municipalities to develop the template for P3 projects.”

Alberta has set aside $2 billion for green transportation projects with large and medium-sized communities encouraged to adopt P3 contracts to deliver infrastructure.

“All you need is good accountants, or finance folks, and good lawyers to write up the agreement,” says Ramotar.

Ramsey Ali, vice-president and general counsel with FORUM Equity Partners Inc. worked with the City of Ottawa to create the $37-million Shenkman Arts Centre, part of the Orleans Town Centre project.

He credits Ottawa’s approach to P3s for its success. “A group of people at the city were tasked specifically with executing public-private partnerships,” he says. “They were given the latitude to work among departments in the city and the authority to negotiate and tailor-make the solution to allow the city and FORUM to work together in a true public-private partnership.

For smaller communities, P3s are attractive because they shift risk away from entities that may not have the resources to manage it. That was the case for Lac la Biche, which chose a P3 model for its $30-million wastewater project.

“The big crunch for our community was the shifting of risk and liability, where the onus was placed initially on the municipality, but would be placed back onto the private sector,” says Barry Kolenosky, director of planning and infrastructure with Lac la Biche County. “That risk will not only be transferred to the private sector for the immediate future, but within the next 10 to 20 years. If there are new standards coming forth over that time period, it will be the responsibility of the provider to recognize that shift.”

The contract for construction and operation the wastewater system was recently awarded to a consortium led by Maple Reinders.

The Town of Canmore was also concerned about shifting the liability risk of operating its wastewater plant to the private sector. It signed a 10-year operations and maintenance agreement with EPCOR Water Services in May 2000 in which there was no original capital component, since a new plant had already been constructed. That agreement has since been renewed for another 10-year period. “We chose a P3 because we were concerned about being able to operate it efficiently and meet all of the regulatory requirements,” says Lisa de Soto, Deputy Chief Administrative Officer with the Town of Canmore.

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