© 2008 The Canadian Council for Public-Private Partnerships

Mark Romoff President & Chief Executive Officer Warsaw, Poland January 30, 2012

The Canadian Council for Public-Private Partnerships

Public-Private Partnerships - Canadian Experience and Best Practices

Infrastructure Investment

• Drives Jobs

• Drives Growth + Prosperity

• Drives Global Competitiveness

But some realities....

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Canada’s Infrastructure Challenge

Infrastructure Deficit

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Fiscal Reality +

= P3

Canadian P3 Overview

• Federal

– PPP Canada Inc.

– $1.2 Billion P3 Canada Fund

• Provincial

– Partnerships BC

– Alberta Infrastructure

– Infrastructure Ontario

– Infrastructure Quebec

– Partnerships New Brunswick

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Models of PPP in Canada

Source: The Canadian Council for Public Private Partnerships

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Models of PPP in Canada

In a typical Design-Build-Finance-Maintain PPP:

• A single entity (“Project Co”) contracts with government and in turn contracts with consortium partners

• The private sector accepts responsibility for Design, Construction, Financing, Maintenance and in some cases Operations

• The facilities management component covers a long term concession period (25 – 35 years) with pre-defined hand back conditions

• Contracting arrangements are performance based

– Payment from Government only begins upon completion of construction

– On-going payments remain subject to deduction for failures in service delivery

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What PPP is Not

• It is NOT about the FINANCING:

• Accounting rules tightened – regarding off-book treatment

• Government borrows at lower cost

• It is NOT about sale & leaseback or asset sales (“privatization”)

• It is NOT about a Real Estate transaction

• Does not require private sector ownership of the asset

• It IS about Performance-Based Infrastructure & Facilities - RISK transfer:

• The partner is repaid through incentive-based availability of the asset either from the government or through user fees (tolls) or combination

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PPP – Key Success Factors

• Political champion

• Public sector champion

• Value for money

• Risk identification and allocation

• Lifecycle maintenance

• Competitive procurement

• Communication between partners

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The Canadian Model – Key Success Factors

• Consistency Among Provinces & Federal Government

– Procurement process

– Market sounding (process, projects)

• Transparency & Fairness

– Public postings of announcements, procurement documents

– Equal opportunities for bidders

– No preference for domestic or foreign proponents

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The Canadian Model – Key Success Factors

• Public Engagement

• Reliability - committed to the model

– Procurements result in a project

• Procurement Process Efficiencies

– RFQ to Financial Close (< 16 months)

– Preferred Proponent Selection to Financial Close ( < 90 days; Alberta = 6 weeks)

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Key Canadian P3 Players

Canadian P3 model, P3 project pipeline attracts the world

• Canada

• Australia

• United Kingdom

• Spain

• USA

• Japan

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Canadian Market Trends

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Canadian Market Trends

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Bridgepoint Health, Toronto, Ontario

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Bridgepoint Health, Toronto, ON

• DBFM contract with Plenary Health for 34 years

• New hospital will be 10 storeys high, capacity for 472 beds; approximately 680,000 sq. ft.

• Historic Don Jail will be incorporated into new site, refurbished into the administrative and education centre for hospital

• Construction began in August 2009; will be complete in March 2013

• Plenary will provide facility management and lifecycle maintenance for 30-year service period under pre-established maintenance performance standards

• Building envelope will include floor-to-ceiling windows, which maximizes natural light, energy efficiency and patient comfort

• Total agreement value is $820.2 million

• Cost savings of $95 million 15

Abbotsford Regional Hospital & Cancer Centre, British Columbia

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Abbotsford Regional Hospital, BC

• Opened in August 2008

• The first acute care P3 hospital in British Columbia

• 650,000 square feet with 300 beds

• DBFMO model for 33 years

• Capital cost of $355 million

• Cost savings using P3: $39 million

• Public benefited from an accelerated construction schedule, a fixed-cost construction, life-cycle maintenance and an innovative design

• Integrated facilities management services delivered through a single point of contact

• Further along the spectrum of services bundled for private sector delivery, including food, laundry and equipment procurement

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Canada Line, Vancouver, BC

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Canada Line, Vancouver, BC

• Began operating in August 2009 – three months ahead of schedule

• First major public transit P3 in Canada

• Provided significant traffic congestion relief for commuters and visitors – opened in time for the 2010 Winter Olympic Games

• 19.5 kilometre (12-mile) rapid transit line that connects downtown Vancouver with the City of Richmond and Vancouver International Airport

• DBFMO model for 35 years

• Capital cost: $2 billion

• $92 million in cost savings

• Ridership levels greatly exceeded projections

• Most construction cost and schedule risks, including geotechnical risk, as well as operational and maintenance risks, were transferred to the private consortium 19

Anthony Henday Drive Southeast, Edmonton, Alberta

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Anthony Henday Drive SE, Alberta

• Opened in October 2007

• First P3 road in Alberta

• Includes an 11-kilometre portion of Edmonton’s ring road between Gateway Boulevard and Highway 216/14. It consists of 11 kilometres, 24 bridge structures, five interchanges, three overpasses and three fly-overs.

• DBFMO for 32 years

• Capital cost of $365 million

• Opened two years earlier than conventional delivery

• Extended 30-year warranty and lifecycle maintenance

• Negotiated the form of the final agreement before selecting the partner, with no negotiation after selection

• Financing was arranged prior to financial close

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Confederation Bridge, New Brunswick - PEI

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Confederation Bridge, PEI

• Opened in May 1997

• Largest bridge over ice-covered waters in the world, replacing existing ferry service

• 12.9 km long and runs between Jourimain Island, New Brunswick and Borden-Carleton, Prince Edward Island

• DBFMO for 39 years

• Capital cost of $739 million

• Private partner is responsible for toll collection

• Partner assumed most construction and operating risks as well as environmental compliance, which is significant given the nature of the structure and the potential impact on aquatic life.

• Considered an engineering marvel - one of the main P3 pioneering projects in Canada

• Payment stream from the federal government is equivalent to the previous ferry subsidy

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Goderich Water & Wastewater System, Ontario

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Goderich Water/Wastewater System

• Town of Goderich has a population of 8,000; west of Toronto on Lake Huron

• Contract began with Veolia Water (formerly USF Canada) in 2000

• Includes operation & maintenance of water/wastewater processing and water distribution systems

• Rate setting still controlled by Town

• Employees were transferred, retained wages, benefits and pension plan

• Town retained ownership of assets

• Annual cost savings of $112,000

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Durham Courthouse, Oshawa, Ontario

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Durham Courthouse, Ontario

• Opened in December 2009

• First P3 courthouse project in Ontario

• Consolidation of court facilities in Durham Region (Ontario) previously delivered in seven locations

• 450,000-square-foot facility includes 33 courtrooms, two conference/settlement rooms and related justice services.

• DBFM model for 32 years

• Capital cost of $344 million

• Achieved $49 million in cost savings

• Is the province’s most technically advanced and the most energy-efficient new Ontario government building

• Delivered on-time and on-budget, despite significant site condition challenges that the private partner had to manage

• Significant increase in capacity and improved efficiency of consolidating previous 7 facilities

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Montreal Concert Hall – Maison Symphonique, Quebec

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Montreal Concert Hall, Quebec

• Opened in September 2011

• 1,900 seats; stage holds 120 instrumentalists and 200 choristers

• Highest international standards for acoustics

• Design-Build-Finance-Maintain model – private sector financed costs during construction period, after which the government pays in full

• $259 million total project cost ($2009)

• SNC-Lavalin Inc. provided 100% equity ($16 million); remainder financed by long-term bank loan ($137 million)

• Projected cost savings of $46.8 million; 7 months faster construction and commissioning than conventional project

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Canadian Pipeline

Market shifting to Municipalities and First Nations Communities

• Transportation (Highways/Bridges/Public Transit)

• Healthcare/Hospitals

• Justice (Courthouses; Detention Centres)

• Education (Schools/Universities/Colleges)

• Water/Wastewater

• Renewable Energy/District Energy

• Sport/Recreation Facilities

• Digital (Data Centres/Information Technology)

• Real Estate/Public Housing

• Service Delivery

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CCPPP: Who We Are

• Founded in 1993

• Non-profit

• Non-partisan (Public and Private Sectors)

• Member-sponsored

• National Representation

• International Members

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Who We Are

Vision

Recognized and respected voice for the Canadian public and private sector P3 communities

at home and internationally

Mandate

To promote innovative approaches to infrastructure development and service delivery through public-private partnerships with all levels of government

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Our Membership

Total Membership

Dec 2008

342

26%

Municipalities Provincial Governments Provincial PPP Agencies Federal Departments Non-Profit Organizations

Investment Banks Development Companies Construction Companies Law Firms Accounting Firms Advisors Consulting Engineers Service Providers Architects Pension Funds

Total Membership

450

Public Sector 21 %

Private Sector 79 %

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What We Do

• Promote collaborative partnerships between public sector agencies/departments and industry

• Educate stakeholders and the community on the economic and social benefits of P3

• Advocate for evidence-based public policy in support of P3s

• Facilitate the adoption of international best practices

• Promote Canada’s P3 model and expertise globally

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Our Focus

• Strategic Partnerships

• Education & Training

• Next Generation Leaders

• Research Program

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CCPPP Research

Breaking New Ground: P3

Hospitals in Canada

Public-Private Partnerships:

A Guide for Municipalities 36

Our Focus

• Cross-Canada Events

• Annual Conference

• National Awards for Innovation & Excellence in PPP

• Case Studies

• Project Database

• Opinion Poll 37

P3 2011: The 19th Annual CCPPP Conference

Recognized internationally as the premier forum for senior government & business leaders in the P3 sector

• 1,200 attendees from across Canada and abroad

• 103 speakers (Canada, US, UK, Australia, Brazil)

• Next generation

– Emerging governments

– Emerging sectors

– Emerging markets

– Emerging talent 38

Our Focus

• Cross-Canada Events

• Annual Conference

• National Awards for Innovation & Excellence in PPP

• Case Studies

• Project Database

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Canadian PPP Project Database

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Home Screen

Our Focus

• Cross-Canada Events

• Annual Conference

• National Awards for Innovation & Excellence in PPP

• Case Studies

• Project Database

• Opinion Poll 41

From the Ground Up:

Canadian Opinion on Public-Private Partnerships

2004 - 2011 42

Public Support for PPP in Canada

Public Support for PPP in Canada

• A strong majority of Canadians (70%) is open to public-private partnerships to deliver public infrastructure and some public services;

• Support has continued to grow since 2004 when 60% show support;

• The sectors that have experienced the most noticeable increase in support for public-private partnerships since last year are:

– transit systems (73%)

– water treatment facilities (67%)

– water sewage facilities (67%)

– schools (66%)

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P3s in Different Sectors: Support/Somewhat Support (%)

Hospitals Roads Water Sewage Recreation Transit Schools

2011 66 71 67 67 75 73 66

2010 62 72 53 58 74 67 62

2008 63 71 55 58 72 67 60

2007 63 73 55 60 71 66 63

2006 63 72 55 60 72 67

2005 63 71 53 58 73 67

2004 62 72 54 60 73 65

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Annual Conference - 2012

• November 26 - 27, 2012

• 20th Anniversary

• International focus

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Contact Us

The Canadian Council for Public-Private Partnerships

Mark Romoff, President & Chief Executive Officer

Direct: 416.861.9917

Email: mromoff@pppcouncil.ca

Website: www.pppcouncil.ca

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