OTTAWA — The Canada Infrastructure Bank (CIB) has announced an investment commitment of up to $20 million in the Ontario township of Mapleton’s water and wastewater project.
The township, located north of Kitchener, is seeking a consortium to design, build, finance, operate and maintain the municipality’s new and existing water and wastewater infrastructure, stated a July 15 release. Mapleton would continue to own all existing and new infrastructure assets.
The project calls for $15- to $30 million in spending on new infrastructure over the next 20 years. The township will upgrade its water system including building a new water tower, upgrading an existing water pumping station and undertaking a wastewater treatment project and a gravity sanitary collection system.
Mapleton is leading the competitive procurement process including selecting the preferred proponent. Its procurement approach can be considered a pilot project to demonstrate new models for structuring and financing smaller municipal water and wastewater infrastructure projects, said the statement. The CIB is offering a “stapled” financing solution to all proponents during the RFP stage, described as an “innovative and flexible financing option” available to all bidders that would involve a $20-million senior secured credit facility for the entirety of the 60-per-cent debt portion of the capital structure.
“The CIB’s investment commitment will improve the cost of project financing and attract private capital expertise while ensuring appropriate risk transfer to the private sector. This is an example of how CIB’s innovative financing model can be a catalyst for new infrastructure in both small and large communities,” the statement said.
The CIB will finalize a credit agreement with the project’s preferred proponent at financial close.
A report by PWC compared several options including a concessionaire model without CIB participation and concluded the concession model with CIB financing is the best option to deliver Mapleton’s water and wastewater networks given the financial, risk and qualitative benefits it offers. The model also offers rate savings given the lower financing costs.
Township Mayor Gregg Davidson commented in the statement, “The approach we are using will ensure Mapleton’s water and wastewater needs will be met safely, efficiently and affordably. We are proceeding with a competitive procurement process and are very pleased to have the Canada Infrastructure Bank involved to provide an innovative financing option. We hope that our approach to improve our infrastructure will create best practices for other municipalities to modernize their water and wastewater systems.”
“This is an exciting partnership between the Township of Mapleton and Canada Infrastructure Bank. CIB is a new model of federal support for projects including green infrastructure. Our innovative financing approach will help Mapleton invest in new, expanded and sustainable public water and wastewater facilities,” said Pierre Lavallee, president and CEO of the CIB, in a statement.