Public Private Sector Public Private Sector PartnershipsPartnerships

Perspective from dealing with municipalities Perspective from dealing with municipalities and institutions (e.g., Colleges/Universities)and institutions (e.g., Colleges/Universities)Do they always have to involve all 4 major Do they always have to involve all 4 major elements?elements?

BuildBuildDesignDesignFinanceFinanceOperateOperate

Are they for everyone?Are they for everyone? Are they always Government, Institutional Are they always Government, Institutional

and Private?and Private?

City of London – PublicCity of London – Public Ellis Don Contractors (Build)Ellis Don Contractors (Build) Global Spectrum (Operators)Global Spectrum (Operators) BBB Architects (Design)BBB Architects (Design)

Financing: Total Capital Cost $47 millionFinancing: Total Capital Cost $47 million City of London, Province/Federal, Private Sector City of London, Province/Federal, Private Sector

Equity/DebtEquity/Debt

9000 seats9000 seats Home of OHL London KnightsHome of OHL London Knights Total # of Event Days 130 (concerts, community Total # of Event Days 130 (concerts, community

events, other sporting events)events, other sporting events)

London Sports & EntertainmentLondon Sports & EntertainmentJohn Labatt CentreJohn Labatt Centre

Benefits to the CityBenefits to the CityOne of the key elements of Downtown One of the key elements of Downtown

RevitalizationRevitalizationSingle entity to build, design and Single entity to build, design and

operate facilityoperate facility

London Sports & EntertainmentLondon Sports & EntertainmentJohn Labatt CentreJohn Labatt Centre

Reasons for SuccessReasons for Success City Clear on ObjectivesCity Clear on Objectives City undertook necessary background City undertook necessary background

studies studies REALISTIC EXPECTATIONS REALISTIC EXPECTATIONS Strong Advocate / Staff @ City HallStrong Advocate / Staff @ City Hall Experienced Private Sector team with Experienced Private Sector team with

proven track record in design, proven track record in design, construction and operationsconstruction and operations

City willing to take on some of the City willing to take on some of the operating risk together with Private operating risk together with Private Sector teamSector team

City able to independently confirm City able to independently confirm capital costs represented fair valuecapital costs represented fair value

London Sports & EntertainmentLondon Sports & EntertainmentJohn Labatt CentreJohn Labatt Centre

Student Residences @ Community Student Residences @ Community CollegesColleges

Seneca College, Niagara College, Seneca College, Niagara College, Sheridan College, Algonquin Sheridan College, Algonquin CollegeCollege

New concept for Colleges New concept for Colleges to provide residential to provide residential student accommodation on campusstudent accommodation on campus

Consistent with mandate to provide Consistent with mandate to provide Specialization of ProgramsSpecialization of Programs

Seneca College, Niagara College, Seneca College, Niagara College, Sheridan College, Algonquin CollegeSheridan College, Algonquin College

Successful Model Developed Over TimeSuccessful Model Developed Over Time Original Design / Build / Finance / Operate Original Design / Build / Finance / Operate

Model didn’t workModel didn’t work Realty Tax, Development Charge and Realty Tax, Development Charge and

Municipal Approvals Consideration did not Municipal Approvals Consideration did not permit simple model of selling/long term permit simple model of selling/long term leasing of land to private sector proponent leasing of land to private sector proponent to be economically viableto be economically viable

Student Residences @ Community Student Residences @ Community CollegesColleges(cont’d)(cont’d)

Student Residences @ Community Student Residences @ Community CollegesColleges(cont’d)(cont’d)

Generalized ModelGeneralized ModelDesign / Build Consortium (Architect / Design / Build Consortium (Architect /

Contractor)Contractor)Design / Build - Fixed Fee / Partnering Design / Build - Fixed Fee / Partnering

with Experienced Operatorwith Experienced OperatorCollege arranged their own financingCollege arranged their own financing

Student Residences @ Community Student Residences @ Community CollegesColleges(cont’d)(cont’d)

Benefits to CollegesBenefits to CollegesReceived turnkey student residences at Received turnkey student residences at

competitive pricecompetitive priceAllowed them to provide student Allowed them to provide student

accommodation previously not availableaccommodation previously not availableManagement of student residences Management of student residences

provided by experienced outside provided by experienced outside operator who was operator who was alsoalso able to realize able to realize third party revenuesthird party revenues

Student Residences @ Community Student Residences @ Community CollegesColleges(cont’d)(cont’d)

Reasons for SuccessReasons for Success

Colleges able to finance cheaper by their Colleges able to finance cheaper by their own sources 50 to 100 B.P.S. less that own sources 50 to 100 B.P.S. less that lenders to the private sector consortiumlenders to the private sector consortium

Colleges did necessary background to Colleges did necessary background to clearly understand the market potential and clearly understand the market potential and price points student willing to spend for price points student willing to spend for accommodation accommodation REALISTIC REALISTIC EXPECTATIONSEXPECTATIONS

Student Residences @ Community Student Residences @ Community CollegesColleges(cont’d)(cont’d)

Reasons for SuccessReasons for Success

Design / Build teams able to work effectively to Design / Build teams able to work effectively to produce desirable building @ economic and fair produce desirable building @ economic and fair market pricemarket price

Operator proven record of managing similar facilities Operator proven record of managing similar facilities andand ability to attract third party revenue that College ability to attract third party revenue that College probably probably not able to attract at least in the short to not able to attract at least in the short to mid-termmid-term

College able to independently confirm capital costs College able to independently confirm capital costs represents fair valuerepresents fair value

Development ChargesDevelopment Charges

Are they a Public Private Sector Are they a Public Private Sector Partnership?Partnership?

Development Charges ActDevelopment Charges Act allows municipalities allows municipalities to recover to recover growthgrowth costs from developers costs from developers

Development Charges 1997, Bill 98Development Charges 1997, Bill 98: : “An Act to promote job creation and increased “An Act to promote job creation and increased municipal accountability while providing for municipal accountability while providing for the recovery of development costs related to the recovery of development costs related to new growth”new growth”

Development Charges (cont’d)Development Charges (cont’d) Act benefits both municipalities and developers and Act benefits both municipalities and developers and

ultimately the end users of the new development by ultimately the end users of the new development by providing for timely installation of needed servicesproviding for timely installation of needed services

Hard Costs include:Hard Costs include:- WaterWater- SewerSewer- RoadsRoads

Soft Services include (only 90% of these growth Soft Services include (only 90% of these growth related costs are DC eligible):related costs are DC eligible):- TransitTransit- LibrariesLibraries- Parkland ImprovementParkland Improvement- Indoor Recreational FacilitiesIndoor Recreational Facilities

Certain facilities currently excluded:Certain facilities currently excluded:- City HallsCity Halls- Tourism Facilities / Convention CentresTourism Facilities / Convention Centres- Cultural Centre (e.g., theatres, art galleries)Cultural Centre (e.g., theatres, art galleries)- HospitalsHospitals

Interest Cost i.e., interim financing cost to Interest Cost i.e., interim financing cost to provide these facilities in advance of provide these facilities in advance of development (revenue) – an eligible development (revenue) – an eligible expenseexpense

In this sense, Development Charges In this sense, Development Charges represent Finance portion of PPPrepresent Finance portion of PPP

Development Charges (cont’d)Development Charges (cont’d)

Development Charges (cont’d)Development Charges (cont’d)

In addition, DC contemplates front-end financing / In addition, DC contemplates front-end financing / services in lieu provided by developer. This represents services in lieu provided by developer. This represents Build and in many cases, Design elements of PPP.Build and in many cases, Design elements of PPP.

- Costs generally subject to independent verification or Costs generally subject to independent verification or competitive bids through tender process.competitive bids through tender process.

Several municipalities in addition to Several municipalities in addition to DC Act DC Act eligible eligible costs have been successful in negotiation of:costs have been successful in negotiation of:

- Payments for Non-DC eligible services, e.g. performing arts Payments for Non-DC eligible services, e.g. performing arts centre, hospitals, 10% soft service mandatory discountcentre, hospitals, 10% soft service mandatory discount

- Cash Flow Assistance (Repayable Loan Payments) in Cash Flow Assistance (Repayable Loan Payments) in addition to Front End Financing Requirements for Certain addition to Front End Financing Requirements for Certain FacilitiesFacilities

Development Charges (cont’d)Development Charges (cont’d)

Developers agreed to these as conditions of Developers agreed to these as conditions of obtaining municipal approval and allowing obtaining municipal approval and allowing their development to accelerate in the their development to accelerate in the planning and servicing processplanning and servicing process

Benefits to the MunicipalityBenefits to the Municipality

- DC part of the way business is doneDC part of the way business is done- Extended DC regime provides in some cases Extended DC regime provides in some cases

monies not otherwise available and source of monies not otherwise available and source of funding / financing not otherwise availablefunding / financing not otherwise available

Development Charges (cont’d)Development Charges (cont’d)

Reason for SuccessReason for Success

- Long history of lot levy / DC regimesLong history of lot levy / DC regimes- Municipality undertakes necessary Municipality undertakes necessary

background studies background studies REALISTIC REALISTIC EXPECTATIONSEXPECTATIONS

- Developers keen to get their projects to Developers keen to get their projects to the marketthe market

CONCLUSIONSCONCLUSIONS

Not for everyoneNot for everyone

Need:Need: Willingness (benefits) of both partiesWillingness (benefits) of both parties Strong advocates on both sidesStrong advocates on both sides Understanding that PPP are not a panacea Understanding that PPP are not a panacea

REALISTIC EXPECTATIONSREALISTIC EXPECTATIONS In certain cases adopt only really beneficial In certain cases adopt only really beneficial

elements of PPPelements of PPP Risks / Rewards to both partiesRisks / Rewards to both parties Ability to independent confirm fair market Ability to independent confirm fair market

prices for buildings providedprices for buildings provided