Creating Sustainable Economic Development P3s in the City of Ottawa

1
Creating Sustainable Economic DevelopmentP3s
in the City of Ottawa

• Presentation to FCM
• 2 February 2006
• Rob Mackay

2
Content

• Context
• P3 Projects
• Ottawa Option
• Lessons Learned

3
Context

• Municipal amalgamation
• Provincial downloading
• Population growth
• 20/20 Plans and the Infrastructure Gap

4
P3 Program

• June 02
• July 02
• Oct 02
• Nov 02
• Aug 04
• Dec 05

• Support in principle by Council
• Creation of P3 Office
• Selection of five projects
• P3 process initiated
• Execution of fifth P3 agreement
• Projects 95 completed

5
Bell Sensplex (25.6M)
6
Bell Sensplex

• Design / Build / Finance / Operate / Maintain
  (DBFOM)
• 4 ice rinks and indoor field surface
• City to purchase 2400 hours of prime ice time at
  143/hour (2004)
• All other hours at market rates

7
Bell Sensplex

• P3 partner generates all revenues and responsible
  for all costs
• Operating costs
• Debt servicing
• Contribution to Operating Reserve Fund (1.6M)
• Contribution to Capital Lifecycle Renewal Fund
  (1.0 of construction cost annually)
• Management fee

8
Bell Sensplex

• Land and building transfers to City at end of
  term (30 years)
• City guarantees debt repayment
• City receives quarterly financial reports and
  audited financial statements

9
Thunderdome (3.5M)
10
Thunderdome

• State-of-the-art inflated dome with artificial
  turf
• City extends municipal services and pays for
  artificial turf (1.1M)
• Private sector partner erects permanent dome and
  expands existing field house (2.5M)

11
Thunderdome

• Partner operates facility and charges market
  rates
• Partner pays rent equal to Citys cost of capital
  and interests, over the 25 year agreement

12
Garry J. Armstrong Long Term Care Centre and
Retirement Home (34.0M)
13
Paramedic Service Headquarters (22.0M)
14
Ray Friel Centre (13.0M)
15
P3 Projects Under Development

• Kinburn Arena and Field Surface (7.0M)
• Orleans Arts Centre (27.0M)
• Light Rail Transit (725M)

16
The Ottawa Option

• Encourages new ideas
• Requires submission of business case
• Council supports idea and business case
• City sends Request for Proposal
• Proponent can match or better any other proposal
  received

17
P3 Opportunities City Perspective

• Many municipalities are asset rich, cash poor
• Leverage assets
• City covenants (leases, land, access to triple A
  financing, other levels of government)
• Reversion Opportunities
• Life Cycle Investment
• Risk transference fixed price O M

18
P3 Opportunities- Private Sector Perspective

• Stable partner and revenue streams
• Repeat business/ Economies of scale
• Risk is allocated to the best suited partner

19
P3 Lessons Learned

• No free money
• Define your objectives
• Every project is unique
• Assess risk vs control distribution

20
P3 Lessons Learned

• Citys covenant critical
• Significant time and resource commitment upfront
• Communication critical at all stages of process,
  including public consultation e.g. Business Terms
• Providing for incentives and remedies ensures
  that the objectives remain aligned

21
Thank You

• Rob Mackay
• Manager, Strategic Projects
• City of Ottawa
• 613- 580-2424, ext 22632