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