Katz ponders sanity of new rules

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   • The province has proposed new rules governing public-private partnerships. Mayor Sam Katz suggested they’re insane. What do you think of P3s?

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Disraeli Freeway (WINNIPEG FREE PRESS ARCHIVES) Photo Store

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Chief Peguis Trail extension ( WINNIPEG FREE PRESS ARCHIVES) Photo Store

Winnipeg Mayor Sam Katz is questioning the sanity of proposed new rules for public-private partnerships, claiming the province is trying to deprive the city of one of the few means it has to repair its aging infrastructure.

Earlier this week, Manitoba Finance Minister Stan Struthers introduced Bill 34, which would impose a standard set of rules upon major capital projects financed with the help of private-sector construction companies.

Struthers said the intent of the legislation is to improve the transparency and accountability of public-private partnerships, or P3s, which allow private construction companies to pay for public projects such as roads, bridges and buildings up front and then recoup the cost later through ongoing payments for design work, construction, financing or maintenance.

The new legislation would require all levels of government -- including the province -- to conduct cost-benefit analyses and engage in public consultation before going through with any P3 worth more than $20 million.

While most public-sector bodies already do this, the province insists the new legislation will make this a standard practice and ensure the best value for taxpayer funds.

Katz, however, said the proposed legislation may simply kill P3s and claimed the move caught the city by surprise.

"There was no dialogue. This just came out of nowhere. We heard about it the same time the media did," the mayor said Thursday in an interview. "They have nothing coming forward to help us with our infrastructure deficit. So while our infrastructure is rotting and decaying, the only work we've been getting done is through P3s."

Over the past two decades, the City of Winnipeg has used P3s to build the William R. Clement Parkway, extend Chief Peguis Trail to Lagimodiere Boulevard and build the East District police station. The ongoing Disraeli Freeway reconstruction is also financed partly through a P3.

"Why they would want to stop those kinds of projects in the future, you'd have to question one's sanity, in my opinion," Katz said.

"There is no legitimate motivation. There has been no reasoning behind it."

Provincial cabinet spokeswoman Rachel Morgan, however, said the province did consult the city about the bill's original draft in 2010. City officials accepted the bill and the province recently met with Winnipeg chief administrator Phil Sheegl and operations officer Deepak Joshi to review a revised draft of the legislation, she said.

City officials indicated they had concern, and the province did its best to accommodate them, Morgan said.

One of those concerns involves the proposed requirement to appoint a fairness co-ordinator for a P3, a move that would add $500,000 to the cost of a project, claimed city council finance chairman Coun. Scott Fielding (St. James-Brooklands).

Fielding called the proposed legislation "ridiculous" because the Selinger government has rejected city requests for access to new forms of growth revenue to pay for infrastructure, such vehicle-registration fees, gas taxes and a share of PST.

"Not only are they saying no to all these revenue ideas, but they're taking our tools away to finance infrastructure projects. It's more than frustration, it's ideologically driven," Fielding said.

North Kildonan Coun. Jeff Browaty, meanwhile, said he suspects the province has called for public consultations on the bidding process to ensure the construction firm in question supports unionized workers.

Browaty said the city already discloses the general terms of the payment schedule and the warranty of a contract.

Browaty, Fielding and Katz have long heralded P3s as a success story for Winnipeg, citing the good condition of the privately maintained William R. Clement Parkway and the early, on-budget completion of the Chief Peguis Trail extension.

P3 opponents, however, claim the privately financed projects cost governments more in the long run.

In response to those concerns, the city discloses P3 payments in budget documents and has set a self-imposed limit on the proportion of capital spending that can be made through P3s in any given year.

Katz also said the province is playing games when it demands more transparency from the city, claiming the NDP government failed to consult the public on infrastructure-stimulus projects such as the MTS Iceplex.

"It's a great project, but if you want to talk openness and transparency, come on," the mayor said. "It's the epitome of hypocrisy."

bartley.kives@freepress.mb.ca jen.skerritt@freepress.mb.ca

To P3 or not P3

The City of Winnipeg plans to spend $24.5 million in payments to private construction firms this year as a result of public-private partnerships, or P3s. Here are the terms of some of those deals (source: City of Winnipeg, 2012 capital budget):

William R. Clement Parkway (completed in 1995): Annual payments of $1.5 million until 2024.

Chief Peguis Trail extension (completed in 2011): Annual payments of $8.3 million until 2041.

Disraeli Freeway reconstruction (to be completed in 2013): Annual payments of $19.8 million until 2031.

Three new police district stations (East District complete, two more to come): Annual payments escalating to $4.1 million in 2013 from $2.1 million this year. Will continue until 2040.

Republished from the Winnipeg Free Press print edition May 25, 2012 A6