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Public-private partnerships help fund municipal infrastructure projects

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It can extend not only to coordination where the public sponsor operates during the development phase, but also to interim assumption of operations by the private contractor during the development phase. This arguably allows for better integration, interface and scheduling, as the interim operation and development risks are consolidated with the private contractor.

These are not hypothetical advantages of the P3 model. These elements are being implemented in the real world. As an example, the Regina Project involved decommissioning of the old plant, assumption by the private contractor of retained holding tanks and interim operation of the existing treatment facility. The Saint John Project saw the private contractor assuming obligations for the existing dam and reservoir structures. They contemplated the employment of slip-lining through the existing transmission infrastructure and operational assumption during performance trials of the new treatment facility, prior to substantial completion and commissioning.

Stakeholders

Water has historically been a sensitive and politically charged subject matter. The manner and method by which it is treated and distributed is subject to special scrutiny, particularly where the private sector has a meaningful role. Accordingly, if the business case for a project has demonstrated that a P3 approach achieves the best value for money, a concurrent and equal consideration is the buy-in of stakeholders.

There are generally two sets of constituents for which consultation and inclusion within the scope of any P3 procurement are essential. These are the taxpaying voter base and, in the case of existing treatment facilities, the employees of that facility.

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It is sometimes not enough to show that a P3 procurement model achieves savings over a more conventional procurement. Municipalities must be proactive in reminding the general public that water quality standards and water rates will remain under the exclusive control of the public sponsor, as will ownership of the new treatment facility. Accordingly, communications protocols between the public sponsor and the private contractor are a standard and important component of any P3 procurement.

notable public-private partnerships
Source: www.p3canada.ca

In addition, one must be mindful of those who will be most directly affected by the procurement and development of the new treatment facility – the employees. Since the earliest inception of P3s, any required transition of existing employees, including unionized employees, has been a key consideration. The framework of the model specifically contemplates early engagement with them to develop agreements or letters of understanding to ensure that an efficient, orderly and fair transition is implemented. Indeed, it is not unusual for such employees to be part of the user groups which provide input into, and inform the development of the project-specific output specifications.

Conclusion

With municipalities facing ever more constrained budgets, and with limited tolerance by the voting public

forgreater taxation, it is simply good sense to consider all available procurement and funding tools and, in particular, those which achieve superior value for money. Public-Private Partnerships should be considered. They have an established track record, broad political support and, more than ever, are accessible for use by municipalities.

Daniel A. Ford is a Partner at Torys LLP. With assistance from Mark Bain, Partner and Graeme Murray, Associate, Torys LLP. This article appears in ES&E Magazine’s April 2016 issue.

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