There are opportunities for municipalities to engage in public-private partnerships (P3s), but first things need to change, said a panel of experts at the Council for Public-Private Partnerships annual conference recently in Toronto.
At the session, Breaking Ground in the Municipal Sector, Luc Monty, general manager, Quebec City, noted P3 projects can be beneficial for municipalities especially when dealing with aging infrastructure, but cities need to be well positioned to deal with the complexities.
“To work well with P3s you need to develop a strategy and three things are important,” he explained. “First is a clear legal framework, secondly procurement rules have to be adapted for major projects and third is financial stability to support that kind of project.”
Jeff Fielding, chief of staff, city manager’s office, City of Toronto, said P3 relationships exist at the provincial and federal levels, but are not typically present at the municipal level.
“Two things need to change at the municipal level,” he explained. “One is the rules around engagement in procurement. It’s simply too cumbersome and too bureaucratic for many companies to get themselves involved in and the projects are too small to spend that much time trying to understand how to work through the whole process. The other comes back to relationships. How can politicians understand the value of P3s and that loss of control the municipalities seem to want to hold onto, that it’s not a bad thing to have other people take on risk and oversee projects?“
While P3s are often used to build roads, bridges and utilities, there are other opportunities at the municipal level with transit and housing.
“It relates to not only building the lines but building these transit-oriented developments that are a different view of how cities are put together,” said Fielding. “There is also a significant amount of money across Canada for affordable housing and social housing so the ability to be able to find a way in which we can make it attractive for the private sector to move into that market and own and operate those facilities and get the same types of social and health outcomes that we are looking for is important.”
Marco Fontana Giusti said the key to P3s is to create partnerships.
“Partnerships with private companies and municipalities are providing different solutions to water and wastewater management, energy, housing and so forth,” he said. “We need more time to get to that level… I think it’s interesting to have this holistic approach because that’s the only way we can have a real change.”
One of the challenges with P3s at the municipal level is that politics can change quickly, said Phil Bonds, director of urban design, Broadway Malyan.
“It’s important to find ways to counter that and to get the confidence of the contractor community and the investment community to make sure the projects continue the way they were originally conceived and that costly changes aren’t introduced in the middle of the project. There are ways in which you can do that,” said Bonds
One possible solution is to create an arms-length development corporation.
“That is an extremely effective way of generating project results without excessive political interference,” said Bonds.
In addition, municipalities can form alliances with other municipalities to bundle different types of projects or the same kind of project together to get economic efficiencies while addressing their common needs, said Bonds.
“When you’re bundling school projects together, to get an economy of scale, why don’t you consider bringing into that mix a range of other uses that could be complimentary to those schools which could include affordable housing,” said Bonds.
“Housing as a sector is something that doesn’t seem to be coming through the P3 system so much in Canada. I think there is a thirst and an appetite to take that on and its just a matter of looking at overseas practice to see where that’s been implemented successfully.”
Fielding used Alphabet’s Sidewalk Labs community proposed for Toronto as an example of innovation.
“In the next five to 10 years you’re going to see more private sector initiative,” said Fielding.
“We’re going to have to leverage private sector skills and abilities in city building. We simply don’t have the finances nor the wherewithal to be able to develop the type of cities that can be competitive throughout the world.”
To facilitate innovation, Bonds said collaboration is needed.
“There needs to be a lot more dialogue between the municipalities, the province, the federal government, NGOs as well as the national and international development community…to look at real advances in innovation and that’s working with universities, service providers, looking at best practices, benchmarking,” said Bonds. “I think all of these things need to be reflected in the objectives that you set in your P3 contracts.”
Follow Angela Gismondi on Twitter @DCN_Angela.