Your SlideShare is downloading. ×
0
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
The Case for Municipal Public Private Partnerships
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

The Case for Municipal Public Private Partnerships

3,348

Published on

Published in: Real Estate, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
3,348
On Slideshare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
56
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Association of Municipalities of Ontario August 18, 2009 The case for municipal public private partnerships
  • 2. About Forum • Richard A. Abboud, President & Founder • Privately held • $500 million built/bought and sold since 2002 • 4 P3’s closed - $300 million • 2 P3’s in negotiation - $350 million total • Real estate portfolio of net leased single tenant primarily office buildings.
  • 3. Forum’s P3 Track Record • 6 P3s launched and selected to date • Total commitments $300 million • Ontario Power Generation, Design/Build/Lease/Operate - $12 M • City of Ottawa, Design/Build/Finance/Operate/Transfer - $22M • City of Hamilton, Co-Investment Program - $40M Target • City of Ottawa, Design/Build/Operate/Finance/Transfer, Sale leaseback, Mixed Use Development - $225M • Highway Service Centres - $300 million • Centre for Addiction and Mental Health - $50 million
  • 4. Key Forum Team Participants/Suppliers Kilmer Van Nostrand Capital Partner Johnson Controls/BLJC Operations Aecon Buildings Design Builder Lemay + Doyle Architects Architect YMCA/YWCA of Ottawa-Carleton Land swap/Options/ Services Partnership Communishare 10 Local not for profits
  • 5. Public Sector Benefits • Execution accountability transfer • Risk transfer • Schedule certainty • Cost certainty • Private sector innovation • Capital/Operating/Lifecycle Cost optimization • Total investment of $225MM • Economic spin-off of $75.2 MM • Annual realty taxes $3.2MM • Development and Permit fees of $12.1MM
  • 6. Risk Transfer • Driving Principle – acceptance of controllable risk • Completion risk (force majeure carve out) • Construction cost risk • Design risk • Unforeseen soils risk (except hazmat and antiquities) • Some operating risk • Mixed Use Development Schedule Risk
  • 7. Public Private Partnerships A YMCA Perspective
  • 8. YMCA of Hamilton / Burlington / Brantford 3 Examples of Municipal / YMCA Partnerships • Township of Flamborough • City of Hamilton • City of Brantford Other YMCA / Municipal Partnerships Factors Contributing to Successful Partnerships
  • 9. Township of Flamborough • In 1997, the community desired an indoor pool • Town of Waterdown had a population under 9,000, and Township population was 30,000 • Concerns about facility design and operations expertise, capital construction costs and ongoing operating costs • Mayor had a vision beyond an “indoor pool” • Centre of the Community that would focus on children and families, go beyond basic recreation and include
  • 10. Vision – Centre of the Community Programs and services would include • Variety of aquatic and wellness programs • Day camps • Youth drop in programs • Youth leadership development • Licensed child care • Adult fitness
  • 11. Project Partners YMCA and Township were key partners Additional benefits of project • Proximity to elementary and secondary schools • Proximity to green space • Future urban development in area • Centre of the community for Flamborough residents
  • 12. Project Overview Components of a new community YMCA • 45,000 sq ft on 4.7 acres of land • Adjacent to elementary and secondary schools • 8,000 sq ft aquatic centre with 2 pools & whirlpool • 3 “half gyms” in L shape (6,000 sq ft) • 8,000 sq ft of Health and Wellness space • 5 change rooms including Special Needs / Family • Licensed Child Care Centre
  • 13. Some Benefits to the Township YMCA expertise in design, build and operate • Staff and volunteer (Board & Committee) expertise National programs in aquatics, fitness, wellness, leadership Major community capital fund raising campaign (local & regional) resulting in lower cost to Township State of the art facility open 365 days each year Facility that is open to all, regardless of ability to pay a fee Ongoing annual campaign to provide financial assistance No ongoing operational costs and no ongoing capital costs
  • 14. Flamborough YMCA
  • 15. Project Costing Facility opened 2001 Project costs, all in, was $12M • Township provided $4M and land • Community Campaign (local and regional) $4M • YMCA contribution $4M
  • 16. Hamilton Mountain YMCA City of Hamilton’s population exceeds 500,000 Hamilton Mountain (south part of city) is major growth area Urgent need for a recreation centre Plans for a new Police Station and Library In 2002, the newly amalgamated City experienced the benefits of Municipal / YMCA partnerships Suggestion to build the three facilities together and experience possible synergies
  • 17. Project Overview - Final Partners Over a 2 year period, the final project includes • Mountain Police Station • 25,000 sq ft Library • 53,000 sq ft YMCA • Hamilton Health Sciences • Skateboard Park • City of Hamilton - 12 Ball Diamonds
  • 18. Library / Police / Hospital / City Partnership Benefits of community policing – community interaction Residents benefit from “one stop” community centre YMCA / Library / Skate park benefit from shared clientele Wider range of programs and services to all participants Hospital expertise and leadership in preventative medicine • Bone & joint, cardiac, cancer wellness, youth obesity Efficient capital construction and operations
  • 19. City of Brantford Project – Planning Stages Project Partners • City of Brantford • YMCA • Laurier University • Nipissing University • Mohawk College • First Nations • Private Developers
  • 20. Project Vision To assist with downtown revitalization, construct a new YMCA / Post Secondary recreation complex • YMCA facilities • University varsity athletic facilities • Shared instructional facilities – YMCA & Post Secondary Institutions • University residences, support facilities • Private developer partnerships for commercial investments
  • 21. Why Consider Partnerships? Currently over 40 YMCA / Municipal collaborations in Canada benefiting our communities, regardless of City size including • Vancouver, Edmonton, Calgary, Montreal, Toronto, Hamilton, Niagara Falls, Innisfil Township, Wasaga Beach, Cobourg, Quinte West, Goderich Every collaboration has been a success
  • 22. Monetary Benefits of Partnerships Philanthropic Revenues • Communities support effective & efficient partnerships Access to Provincial Funding • $2M from Province of Ontario for Hamilton Mountain • Provincial Recreation Infrastructure funding Access to Federal Government Funding • Recreation Infrastructure funding
  • 23. Critical Success Factors Project Champions • Mayor Ted McMeekin in Flamborough • Community Leaders – Mel Hawkrigg (McMaster) • YMCA – John Mayberry (Dofasco) Shared Vision and Values among all partners • Time to develop a common vision Big Picture Thinking • Keep your eye on the Vision Trust
  • 24. YMCA Learnings 50 years ago, all new YMCAs were built once money from community campaign was in the bank 30 years ago, new YMCAs built with community campaigns, operational funding and financing Past 10 years, new YMCAs built in partnership with Cities, community groups, schools, libraries and other organizations Next 10 years, in building new facilities, the YMCA will need to consider working with all of the above partners and the private sector
  • 25. Thank You Jim Commerford President & CEO YMCA of Hamilton / Burlington / Brantford (905) 317-4919 Jim_Commerford@ymca.ca
  • 26. Public Financing Support for Municipal AFP Projects The Infrastructure Ontario Loan Program Steve Rohacek, Vice President – Business Development & Customer Relations
  • 27. Agenda • Infrastructure Ontario • Overview of the loan program • How public and private financing can co- existing in a municipal AFP/P3 project • Financing considerations • Summary 2 www.infrastructureontarIo.ca
  • 28. Infrastructure Ontario • A Crown corporation dedicated to building and renewing public infrastructure in Ontario • Among the world leaders in public infrastructure development • Has two main business streams 1. Alternative Financing and Procurement (AFP) – Large, provincially-assigned infrastructure projects – Over $10.0 billion in capital brought to the market since 2006 2. Loan Program – Financed the development of over $4 billion in local projects – Advanced over $2.0 billion in loans – Over 220 public sector clients – Successful since 2003 3 www.infrastructureontarIo.ca
  • 29. Loan Program A public sector lending vehicle that provides efficient access to capital market financing 4 www.infrastructureontarIo.ca
  • 30. Providing Access to Capital Markets Borrowing Pool Capital for Eligible Loan Markets Clients Infrastructure $3M Long-Term g Renewal enewal Money Bonds $1M $30 Infrastructure million Ontario $.5M $5M 5 www.infrastructureontarIo.ca
  • 31. Loan Terms and Interest Rates • Terms up to 40 years or useful life of the asset • Interest rate based on market sector • Within a sector and a give term (i.e. 10 yrs) the interest rate is the same regardless of loan amount 6 www.infrastructureontarIo.ca
  • 32. Infrastructure Ontario Credit Ratings • North America’s three leading credit rating agencies have consistently confirmed IO’s stellar credit ratings: – DBRS AA – Moody’s Aa2 – S&P AA+ • Benefits of high credit rating: financial discipline and internal efficiencies are passed directly on to clients through affordable rates 7 www.infrastructureontarIo.ca
  • 33. Eligible Borrowers Borrowers include: • Municipalities and local services boards • Universities and affiliated colleges • Non-profit long-term care homes • Hospices • Municipal Corporations – Electricity distribution, power generation, transit • Non-profit professional arts training facilities • Housing providers – Social, affordable, co-operative, supportive 8 www.infrastructureontarIo.ca
  • 34. Municipal vs. Municipal Corporation Municipal Municipal Corp. • Debt vs. own purpose • 100% municipally owned – revenues can have more than one • Debt per household owner • Reserves • Business case approach • Economic, demographic and • Management & Governance population trends • Source of revenues • Debt to equity ratios • Debt service coverage ratios • Retained earnings 9 www.infrastructureontarIo.ca
  • 35. Financing of AFP (DBFM) Projects Three components: • Construction financing – Project Company • Long term private financing – Project Company • Take-out (long term) public financing - Municipality 10 www.infrastructureontarIo.ca
  • 36. RFQ Released 11 6 months RFP Released 6 months www.infrastructureontarIo.ca Evaluation of Proposals 11 to 12 months 4 months Selection of Preferred Proponent Commercial Close Financial Close and 1 to 2 months Construction Start Substantial Completion / Operational Phase Expiry of Concession Period DBFM Model – Transaction Phase Timeline
  • 37. Financing Considerations • Capital market conditions – Capital market liquidity (availability of funds) – Slope of the yield curve • Public and private long term interest rates – Cost of funds via the capital markets – Cost differential (spread) between public and private financing • Debt structure – Debt vs. equity (funds from grants, reserves etc.) – % of public vs. private financing – Blend rate and terms 12 www.infrastructureontarIo.ca
  • 38. Summary • Municipalities and municipal corporations – (100% municipally owned) are eligible for the loan program. • Traditional or AFP/P3 projects. • Public financing can co-exist in a municipal AFP project 13 www.infrastructureontarIo.ca
  • 39. Ministry of Municipal Affairs and Housing Ministère des Affaires municipales et du Logement Tools for Municipalities Addressing Infrastructure Needs Dana Richardson AMO Conference 2009
  • 40. Municipalities and Infrastructure Infrastructure is important to economic competitiveness and quality of life in every municipality and the province as a whole. Provincial and municipal governments invested heavily in infrastructure, especially in the 1950s and 1960s ƒ This infrastructure is, in many cases, reaching the end of its expected life. Municipalities are on the frontlines of infrastructure provision and management ƒ Broad powers under spheres of jurisdiction in the Municipal Act, 2001; ƒ In 2006, municipal capital expenditures totalled $7.3 billion; ƒ Municipal infrastructure makes up almost half of all public infrastructure in Ontario (see chart). August 18, 2009 Municipalities and Infrastructure 2
  • 41. PMFSDR Infrastructure Table Provided research and analytical support to the Coordinating Table of the Provincial-Municipal Fiscal and Service Delivery Review (PMFSDR) Looked at the funding of municipal infrastructure, including discussing respective roles and responsibilities. Considered linkages between municipal infrastructure and shared federal, provincial and municipal priorities, including: ƒ safe drinking water and the protection of water resources; ƒ effective transportation and transit systems for competitiveness and reduction in greenhouse gases; ƒ sustainable waste management systems; and ƒ cultural and recreational facilities that support healthy, vibrant, active communities. August 18, 2009 Municipalities and Infrastructure 4
  • 42. Infrastructure Gap The PMFSDR Infrastructure Table studied the infrastructure deficit in Ontario in roads and bridges, water and wastewater, stormwater, transit, conservation authorities, and solid waste management. It identified an additional $6 billion/year that needs to be spent for the next 10 years to close the infrastructure gap, in addition to existing spending. Modelling Ontario’s municipal infrastructure gap was driven by the need for better data ƒ Discussions about infrastructure are often clouded by lack of information about what stock of infrastructure exists and the related financial needs; ƒ Going forward, the implementation of PSAB capital accounting standards is an opportunity for municipalities and the province to begin collecting better data. August 18, 2009 Municipalities and Infrastructure 5
  • 43. Infrastructure gap estimates for Ontario municipalities ($ millions) Investment needs Lifecycle Eliminate Growth Total Average Gap deficit need spending, (need less past 5 yrs spending) Roads and bridges $2,671.1 $935.8 $651.6 $4,258.5 $1,460.2 $2,798.3 Water and wastewater $844.3 $1,277.7 $661.3 $2,783.3 $1,520.5 $1,262.8 Stormwater $525.3 $27.8 $234.7 $787.8 $106.7 $681.1 Transit $899.8 $0.0 $730.1 $1,629.9 $563.7 $1,066.2 Cons. Authorities $4.4 $3.2 $0.0 $7.6 NA $7.6 Solid waste mgt. $316.5 NA $77.4 $393.9 $291.1 $102.8 Totals $5,261.4 $2,244.5 $2,355.1 $9,861.0 $3,942.2 $5,918.8 Source: Ministry of Energy and Infrastructure. Excerpted from PMFSDR Infrastructure Table Report: www.amo.on.ca/Content/NavigationMenu/PolicyIssues/ProvincialmunicipalFiscalServiceDeliveryRe view/default.htm Note: Estimate was calculated using average annual estimates from 2006 to 2045, in 2006 dollars. Does not include an analysis of other municipal infrastructure such as libraries, arenas, parks and recreational facilities, and other public buildings.
  • 44. Tools to Help Address the Gap Addressing this investment gap represents a significant burden on municipalities ƒ Modeling results show the financial impact of addressing the infrastructure deficit on the average Ontario family is roughly $1,200 per year over the first 10 years and $700 per year over the next 30 years. There is no single solution. Both the province and municipalities have a role to play, and a combination of measures will be required. Possibilities include: ƒ Best practices in municipal asset management; ƒ Increased investment from all levels of government; ƒ Use of “user pay”, particularly in sectors such as solid waste management and transportation; ƒ Where appropriate, alternative financing and procurement (AFP) or alternative service delivery models (eg. municipal service corporations). August 18, 2009 Municipalities and Infrastructure 7
  • 45. Municipal Service Corporations Municipal Act, 2001 ƒ Section 203 of the Act provides municipalities with the authority to create corporations for most services that the municipality is able to provide. Ontario Regulation 599/06: Municipal Service Corporations ƒ The regulation outlines the general powers of municipalities in relation to corporations, in addition to the duties and rules for the municipality, and the rules by which corporations must follow. Corporations Authority ƒ Councils continue to determine how best to provide services and facilities for their citizens; ƒ Municipalities have broad authority to establish services corporations and can determine the method of financing and operating, including alternative financing. August 18, 2009 Municipalities and Infrastructure 8
  • 46. Summary Infrastructure remains a core business for Ontario municipalities Ontario must see a continuing partnership on infrastructure issues between the Province and municipalities. All orders of government need to be involved in finding a solution to the infrastructure gap ƒ Deteriorating infrastructure reduces quality of life in Ontario and threatens economic competitiveness. The Province has been making considerable investments in infrastructure ƒ 2009 Provincial Budget committed $32.5 billion over the next two years for new infrastructure that will support more than 300,000 jobs; ƒ Infrastructure Ontario’s role in providing project management, loans program and implementation strategies for AFP programs. Municipalities need to make full use of the tools already available to them, including municipal service corporations and potentially alternative financing/delivery models. August 18, 2009 Municipalities and Infrastructure 9

×