The P3 entity created to build and manage the new Oakville Trafalgar Memorial Hospital has reached a settlement with the project owner, Halton Healthcare Services Corporation (HHS), over certain building quality issues, prompting HHS to withdraw a Monitoring Notice.
Hospital Infrastructure Partners Partnership (HIP) announced the lifting of the Monitoring Notice on Aug. 23. The notice, a mechanism contained in the P3 agreement between the parties, was issued April 13 after HHS had experienced "a number of building issues in the first few months of operation" at the new hospital, explained Paul McIvor, a manager in the communications department at HHS, in an email.
The new facility opened on Dundas Street in Oakville last Dec. 13.
McIvor said issues included HVAC and mechanical systems concerns such as door failures, flooding and slow service provider response and rectification times.
Satisfactory progress was made and the notice was lifted July 29, McIvor said. There was no cost to Halton Healthcare as the remediation is covered under contract, he indicated.
Bill Bailey, vice-president, redevelopment for HHS, commented in a written statement, "These were largely unforeseen building issues, which either have been or are being resolved. Clinical services were unaffected. We’re working closely with HIP to improve services and prevent any similar issues in the future."
"We are pleased to have this Monitoring Notice lifted," said Marco Di Carlantonio, executive director of HIP in a statement.
"We take the operational integrity of our projects very seriously and continue to work diligently, in co-operation with the hospital, to ensure that all of the required repairs are made in a prompt and complete manner."
Courtney Ihnat, marketing manager for HIP/Fengate Real Estate Investments, added, "The remediation plans differ depending on the issue. In most cases, remediation has been completed, while in some instances, remediation plans, as approved by HHS, have been created and are in various states of completion. Our partners at the hospital continue to express the fact that they are satisfied with our plans for resolution of these issues."
A 34-year contract for the design, build, finance and management of the hospital project using Infrastructure Ontario’s Alternative Financing and Procurement (AFP) model was signed by owner HHS and HIP, a consortium led by Fengate Capital, EllisDon and Carillion, in 2011.
The contract included a four-year build of the hospital that was valued at $2.27 billion and post-build maintenance including life-cycle repair and renewal that took the total value of the contract to $2.7 billion. According to HHS information, contributors included the Province of Ontario, spending $2.27-billion; $270 million from HHS; $130 million from the Town of Oakville; $65 million raised by the Oakville Hospital Foundation; and $3 million donated by hospital volunteers.
In July, Fengate announced it had reached financial close on Carillion’s 40 per cent equity interest in OTMH as well as the rights to oversee the provision of facility management services at the hospital for the term of the contract.
The acquisition brought the total investment by Fengate-managed funds in OTMH to 90 per cent of the equity, said Fengate in a statement.
"We will continue to communicate regularly with all of our key audiences, including the hospital, bond holders, rating agencies and other stakeholders, to ensure that they are aware that the action plan is on track to resolve these operational issues," said Di Carlantonio.
"The timely and absolute resolution of these issues remains our number one priority."