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Katz sings the praises of public-private partnerships
Charleswood Bridge (WINNIPEG FREE PRESS ARCHIVES) Photo Store
Mayor Sam Katz (WINNIPEG FREE PRESS ARCHIVES) Photo Store
OTTAWA - Winnipeg Mayor Sam Katz sang the praises of public-private partnerships to a House of Commons committee this morning, calling them a saviour for cash-strapped cities with crumbling infrastructure.
Katz was presenting to the government operations committee which is studying the usefulness of public private partnerships or P3s.
Katz called P3s a "phenomenal" tool for municipalities like Winnipeg which are facing bills to maintain and upgrade old infrastructure at rates they cannot possibly meet.
Katz said the infrastructure deficit in Winnipeg will hit $7.4 billion in six years.
He said compared to traditionally funded public projects, P3s offer long term budget certainty because the cost to the municipality is set in stone at the start. He said they provide contract discipline because the private sector carrying out the project doesn't want to pay any overages and if the project isn't completed as specified they don't get paid.
They provide maintenance guarantees for the life of the agreement, which is usually 30 years. It means the private partner, not the government, is responsible for maintaining the road or bridge or hospital or whatever project it is, for the life of the contract.
They also, said Katz, provide innovation as companies work to find the best and most efficient ways to build.
Winnipeg has had several successful P3s he said, including the Chief Peguis Trail and the Disraeli Bridge upgrades. He said the latter will save the city $47.7 million because it was done through a P3.
That is according to an independent assessment, Katz noted.
P3s work by having the city sign a contract with a private consortium to design, build and maintain a municipal project. The city pays a premium to the consortium but ultimately saves money through efficiencies and lower risk.
Some MPs questioned whether the risk to municipalities was greater than expressed or if the interest rates paid to the private sector over the life of a project were too high.
Katz said the benefits of a P3 are wholly dependent on the government involved setting up the agreement properly. He acknowledged for example the interest rate on the Charleswood bridge in Winnipeg is higher than some might expect but blamed it on a previous administration for agreeing to the rate when the agreement was signed.
The Charleswood bridge was the first P3 in Winnipeg, and Katz noted it is also the best maintained bridge in the city.
Katz said P3s aren't the answer for every project and said Winnipeg caps its use of them to 20 per cent of its capital budget. However he said cities simply don't have the money to do everything that is needed without using P3s.
History
Updated on Tuesday, October 23, 2012 at 11:57 AM CDT: Reference to Glen Murray and the Charleswood bridge replaced with a previous administration.
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