With more than 200 completed and ongoing public-private partnership projects valued at about $75 billion on the books in Canada, public-private partnerships have become increasingly entrenched a way of financing infrastructure projects over the past decade. So much so that several provincial governments have asked for increased federal spending. As well, and after a bit of a rough start, municipalities are taking a new look at the P3 model by way of addressing the infrastructure challenges they face.
From a subject-matter perspective, P3s involving hospitals, courthouses and roads, which drove the market as recently as three years ago, are experiencing reductions in activity. Still, Alberta, which not long ago rejected a P3 initiative for 10 schools because it turned out to be more expensive ($571 million as opposed to $557 million) than a traditional approach, has undertaken a new cancer care centre, the province’s first foray into P3s in the health sector. Last year, BC embarked on its P3 hydro generating facility when it signed the contract for the John Hart Generating Station Replacement Project in Campbell River. Wastewater projects appear to be the new the flavour of the month, particularly in Saskatchewan and BC.
Water, broadband, energy, transmission, renewables, urban transit, social housing and other projects are also picking up the slack. Examples include light rapid transit projects on the drawing boards in Ottawa, Waterloo, Edmonton and BC; a fiber-optic project in the NWT; water and wastewater projects in BC and Saskatchewan; and social housing in Alberta, BC and Toronto in conjunction with the impending Pan-Am Games. There’s also no shortage of mega-projects, including the multi-billion Eglinton Crosstown project in Toronto, the Edmonton Crosstown, transmission grids in Alberta, the Detroit River crossing, and the Champlain Bridge and redevelopment of CBC lands in Montréal. And with the financing community becoming ever more sophisticated about P3s, smaller projects are also emerging.
Looking to the future, the new majority Liberal governments of two of the most active provinces, Ontario and Québec, have made strong commitments to infrastructure development. Ontario, for example, has committed to $130 billion on infrastructure projects over the next decade. For its part, the federal government — whether it increases funding pursuant to provincial demand or not — reiterated its strong support for the P3 approach in its 2013 budget by renewing the $1.25 billion P3 Canada Fund, which contributes up to 25 per cent of the capital cost of qualified provincial, territorial, municipal (the Barrie bus line) and First Nations projects. Federal funds have been particularly important in the growing “MUSH” sector, which comprises municipalities, universities (student residences), schools and hospitals.
What is apparent is that the Canadian legal community is “inextricably linked to P3 projects.” As it turns out, that’s a good thing, because the country’s P3 environment has an excellent international reputation. Indeed, the Canadian market has stimulated a tide of international interest, attracting international construction companies, international money and international service providers from afar, including the UK, Australia and Europe. For lawyers and many others, all of this means increased exposure to international brands like Macquarie, Plenary Group, Bilfinger, Axiona, ACL Construction, Bouygues Construction, Balfour Beatty Construction and Sintra. And lawyers have benefitted from the exposure. It’s a far cry from the days when foreign law firms were the ones that saw the Canadian P3 market as a fertile fee generator.
With their increasing sophistication and the growing reputation of the Canadian P3 model, Canadian law firms have also spread their wings from the domestic to the cross-border and international markets. The US, for example, offers some intriguing possibilities, with many observers predicting that America will be the site of the next big P3 boom. Indeed, statistics presented at a recent P3 conference suggested that there were now more P3s in the pipeline in the US than in Canada. So with Canadian companies like Ellis Don and PCL already established on the international scene and seeking more opportunities south of the border, Canadian lawyers are well positioned to follow them.
The response has paid off with several US retainers from US and Canadian clients as well as strong expression of interests from international clients interested in spring-boarding to the US. While it is probably naive to believe that Canadian firms will dominate the US P3 scene, what some lawyers foresee is a continuing exchange of information and an approach to practice that allows Canadian lawyers some significant opportunities in the US space. As far as the rest of the world goes, the opportunities are broader. Indeed, it’s already happening. Canadian firms have acted for the Bermuda government on a P3 hospital project, been retained by the World Bank to advise the Peruvian and Sierra Leone governments about P3s, and are providing legal advice on P3s in South America.