Keynote presentation

The City of Saskatoon’s use of Public Private Partnerships

Building Bridges for Success Prince Albert, Saskatchewan Wednesday, October 7, 2015 Murray Totland, City Manager City of Saskatoon

Overview of Presentation Setting the Context Saskatoon’s Infrastructure Approach

Saskatoon’s P3 Evolution and Experience Lessons Learned Comments/Questions

THE PACE OF GROWTH

Saskatoon Population Growth Projections

The Fiscal Challenges for Growing Cities Paying for Growth Capital Infrastructure Operation/Maintenance

Rapid Expansion of Services and Infrastructure A larger footprint/more people increases costs faster than revenues Limited revenue sources

City Operating Revenue Sources City Revenues

Own - Source

Tax

Property Tax

Non-Tax

External

Government Transfers

User Fees Licences Fines Penalties

7

Property Tax Revenue Growth

New Inventory

Rate Increases

Illustrating the Issue Property Tax

47

Other Own Source

Percentage Share of Operating Budget Revenues

46 45 44 43 42 41 40 39 38 2008

2009

2010

2011

2012

2013

2014

2015 9

“Triple-Double” of Urban Infrastructure  Financing: Pay as You Go Borrowing

 Funding: Taxes User Fees

 Delivery Public Private

Federal/Provincial Partnerships Leveraging financial resources through federal and provincial partnerships Since 2007:  City has partnered with federal and provincial governments to invest over $700 million on various infrastructure projects

The challenge:  Cities do not have control over the timing and the level of investment for projects

A New Fiscal Framework? Existing tax and fee structure will not meet our infrastructure needs Current Federal/Provincial infrastructure programs will not resolve the infrastructure issues New and innovative revenue tools to pay/charge for infrastructure

Evolution of Innovation June 2008

Circle Drive South

Design/Build

January 2013

Civic Operations Centre

Finance/Maintain

June 2014

North Commuter/ Traffic Bridge

Operate

Circle Drive South Highlights  Design/Build  $300 million  Federal/Provincial/Municipal Funding  6 lane bridge  5 interchanges  12 kms of freeway  Completed August, 2013

Civic Operations Centre Highlights  Saskatoon’s first P3 Project  $128 million Capital Cost  Up to $42.9 million from P3 Canada Fund  Design/Build/Finance/Maintain  City Transit Operations  Snow Storage Decontamination  180 acres of land  Completion: End of 2016  25 year concession period

Timeline of Major Events for the COC Project Date

Event

March 2010

Project Concept Finalized

January 2011

Preparation of Business Case

March 2012

City Council directs Administration to submit project to the Federal P3 Canada Fund

January 2013

PPP Canada makes funding announcement for project

May 2013

Council approves RFP for Financial, Legal, Technical, and Fairness Advisors

June 2013

Council approves awards for advisors

September 2013

Council approves issuance of RFQ for Project Proponents

March 2014

Council authorizes RFP to be issued for short-listed proponents

October 2014

Council approves the award of the RFP to winning proponent

January 2015

Council approves Financial/Commercial Close

May 2015

Project Design Finalized

June 2015

Project Construction Begins

September 2016

Facilities Commissioning

December 2016

Substantial Completion (Contractually Obligated)

Financial Details of the COC  Highly competitive procurement  Affordability threshold of $185 million, including capital and operating costs  Winning base project bid was $160.1 million, or $24.9 million savings over 25 years  P3 Canada Fund = $35.4 million (25%)  NPV Project Cost = $195.5 million  VFM Savings = $92.3 million (risk adjusted vs. public sector comparator)  Lump sum payment upon completion, then series of annual payments for 25 years

North Commuter Parkway and Traffic Bridge Replacement Project Highlights  First “Bundled” Bridge Project in Canada  $270 million  $66 million P3 Canada Fund  $50 million Government of Saskatchewan  New 6 lane 400 metre Bridge  Replace 2 lane existing Bridge  Completion: October 2018

Lessons Learned Have an open mind

Plan and Prepare

Follow the Business Case

Inform & Communicate

Understand Risk & Delivery Implications

Mitigate the Risks