P3 projects a good fit for Peter­bor­ough

The Peterborough Examiner - - OPINION -

The new Louis St. ur­ban park that city coun­cil ap­proved Mon­day night is a for­ward­think­ing project in its own right.

A dumpy park­ing lot will will be trans­formed into an all-sea­son down­town meet­ing place linked to the equally for­ward-think­ing re­de­vel­op­ment of Bethune and Charlotte streets.

But there is an­other in­trigu­ing as­pect to the $5.5 mil­lion project.

The city bought the for­mer Shish-Kabob Hut restau­rant at the King St. end of the lot plan­ning to re­place it with a build­ing hous­ing pub­lic wash­rooms, stor­age and of­fice space.

Now a new wrin­kle has been added. The build­ing is to be de­vel­oped us­ing the pub­licpri­vate part­ner­ship, or P3, model. It could be up to six-storeys high with apart­ments or con­do­mini­ums on the up­per floors.

P3 mu­nic­i­pal in­fra­struc­ture is a hot trend among larger cities. Saska­toon com­pleted its first P3 ear­lier this year, a $154 mil­lion tran­sit and pub­lic works cen­tre de­signed, fi­nanced and built by a pri­vate com­pany that will op­er­ate it for 25 years.

Also this year, Edmonton ac­cepted a $2.7 bil­lion P3 bid for a new Light Rapid Tran­sit (LRT) line.

And the fed­eral Lib­eral gov­ern­ment orig­i­nally in­di­cated any project fi­nanced through its $125 bil­lion in­fra­struc­ture fund would have to be P3. Most will still go that way.

A P3 build­ing at the Louis St. park would be a first here. It would also be low-risk. Only the first-floor sec­tion would ac­tu­ally pro­vide mu­nic­i­pal ser­vices. Ev­ery­thing else would be more of a con­ven­tional pri­vate sec­tor de­vel­op­ment, in­tended to make money.

Up-front con­struc­tion costs for P3s can be higher be­cause the pri­vate com­pany as­sumes the risks of over­runs and con­struc­tion de­lays and has higher bor­row­ing costs than a mu­nic­i­pal­ity would. Crit­ics also say longterm op­er­at­ing costs to tax­pay­ers are of­ten hid­den.

How­ever, a re­cent study by the Ivey School of Busi­ness at Western Univer­sity found P3s are lower-cost in the long run. Gov­ern­ments have less in­cen­tive to be ef­fi­cient since they don’t have to make money and po­lit­i­cal goals can get in the way, lead­ing to poor de­ci­sion mak­ing.

The Louis St. build­ing rep­re­sents a chance for Peter­bor­ough to test the P3 wa­ters and de­velop some ex­per­tise be­fore tak­ing on a big­ger project.

An en­tic­ing tar­get for Step 2 would be the new down­town arena and en­ter­tain­ment fa­cil­ity that Mayor Daryl Bennett and a va­ri­ety of other sup­port­ers – in­clud­ing the Peter­bor­ough Petes – are pro­mot­ing on the cur­rent city tran­sit yard prop­erty.

A P3 build-and-op­er­ate model is en­tic­ing. The city could spread out con­struc­tion costs in the $75 mil­lion range and shift op­er­at­ing re­spon­si­bil­ity to a pro­fes­sional en­ter­tain­ment man­ager.

And, bonus, mil­lions of dol­lars in fed­eral/ pro­vin­cial in­fra­struc­ture fund­ing would be more likely to ma­te­ri­al­ize.

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