The Role of PPP in Supporting Saskatoon's Growth

The Role of PPP in Supporting Saskatoon’s Growth

Olivia MacAngus

PUBLIC-PRIVATE PARTNERSHIPS

The PPP Structure

What Is It? When to Use It

Is it public infrastructure?

Is the capex > $80-100 million?

•Greenfield roads, bridges, community centres, WTP, WWTP, convention centres, etc.

Is there a significant long-term asset

management requirement?

•PPP locks in pricing & performance for maintenance & lifecycle replacement.

Can performance specifications be clearly defined?

• A contracting approach for the delivery of public infrastructure, characterized by:– Fixed-price delivery– Fixed schedule for delivery– Single bid, integrating

design, construction and asset management to produce low 30-year cost and better performing assets

– Defined performance guarantees by the concessionaire

Some Characteristics of PPPs in Canada

• A variety of models:– Each province has a unique solution– Most reward technical compliance and low 30-year

price– New focus on design solutions that reduce service

delivery costs (adjacencies, daylight, LEED design)• Typically not revenue generating assets for the

concessionaire– Few toll roads– Any revenues typically flow to the public sector partner

The value of PPP in a “hot” market

• Meet infrastructure needs sooner:– typically faster delivery timelines (~ 3.5 - 4 years for

facilities; 3 years for roads)– driven by low NPV evaluation & substantial completion

payments• Fixed price contracts provide budgeting

predictability• Concessionaire is at risk for long-term asset

performance – takes risk of labour pool, supply chain over 30 years

Plenary Group Case StudyThe Melbourne Convention Centre Precinct

• Multi-use project with civic and commercial components

• Catalyst for Urban Renewal

• Leveraged commercial components and private investment to enhance civic components

• Created a premier destination out of what was previously an underutilized area

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Philosophy

• Maximise Urban Renewal

• Exceed PPP Brief• Commercial Synergy• Active Equity• Aggressive PPP financing

given State retention of demand risk

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Project Overview – Core PPP

Design, Construction, Financing and Maintenance• New Convention Centre

– 5,000 seat plenary hall

– 4,800 sq m meeting rooms

– Pre-Function space

– Back-of-house facilities (e.g. foyer, kitchen, loading docks, etc)

• Integration with existing Exhibition Centre• Bridge across Yarra (no maintenance)

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Project Overview - Development

– Residual land made available – Proponents invited to masterplan– State had reasonably low expectations of any

premium to land value– State expected non-underwritten future

development proposals

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By the Numbers• The convention centre project achieved the following

investment

Total Investment $1400mState Contribution $370mPrivate Sector $1030m

Core Convention Centre $550mHotel $150mRetail / Office / Residential $700m

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Convention Centre Link

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Pedestrian Bridge

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Porte-Cochere Entrance

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ConventionCentre

Foyer

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Plenary Hall

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HotelFoyer

HotelDestination

Bar

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Room Interior

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Commercial Development

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South Wharf Retail

Key design features, elements and capacities of the South Wharf Retail include:

• Riverside restaurants and cafes

• Office tower

• Residential townhouses

• Lifestyle retail

• Entertainment Hub including art house cinema and rock climbing facility

• Premium brand homemaker retail complex

• Car parking facilities