Public Private Sector Partnerships

1. Public Private Sector Partnerships • Perspective from dealing with municipalities and institutions (e.g., Colleges/Universities)Do they always have to involve all 4 major elements? • Build • Design • Finance • Operate • Are they for everyone? • Are they always Government, Institutional and Private?

2. London Sports & EntertainmentJohn Labatt Centre • City of London – Public • Ellis Don Contractors (Build) • Global Spectrum (Operators) • BBB Architects (Design) • Financing: Total Capital Cost $47 million • City of London, Province/Federal, Private Sector Equity/Debt • 9000 seats • Home of OHL London Knights • Total # of Event Days 130 (concerts, community events, other sporting events)

3. London Sports & EntertainmentJohn Labatt Centre • Benefits to the City • One of the key elements of Downtown Revitalization • Single entity to build, design and operate facility

4. London Sports & EntertainmentJohn Labatt Centre • Reasons for Success • City Clear on Objectives • City undertook necessary background studies  REALISTIC EXPECTATIONS • Strong Advocate / Staff @ City Hall • Experienced Private Sector team with proven track record in design, construction and operations • City willing to take on some of the operating risk together with Private Sector team • City able to independently confirm capital costs represented fair value

5. Student Residences @ Community Colleges • Seneca College, Niagara College, Sheridan College, Algonquin College • New concept for Colleges to provide residential student accommodation on campus • Consistent with mandate to provide Specialization of Programs

6. Student Residences @ Community Colleges(cont’d) • Seneca College, Niagara College, Sheridan College, Algonquin College • Successful Model Developed Over Time • Original Design / Build / Finance / Operate Model didn’t work • Realty Tax, Development Charge and Municipal Approvals Consideration did not permit simple model of selling/long term leasing of land to private sector proponent to be economically viable

7. Student Residences @ Community Colleges(cont’d) • Generalized Model • Design / Build Consortium (Architect / Contractor) • Design / Build - Fixed Fee / Partnering with Experienced Operator • College arranged their own financing

8. Student Residences @ Community Colleges(cont’d) • Benefits to Colleges • Received turnkey student residences at competitive price • Allowed them to provide student accommodation previously not available • Management of student residences provided by experienced outside operator who was also able to realize third party revenues

9. Student Residences @ Community Colleges(cont’d) • Reasons for Success • Colleges able to finance cheaper by their own sources 50 to 100 B.P.S. less that lenders to the private sector consortium • Colleges did necessary background to clearly understand the market potential and price points student willing to spend for accommodation  REALISTIC EXPECTATIONS

10. Student Residences @ Community Colleges(cont’d) • Reasons for Success • Design / Build teams able to work effectively to produce desirable building @ economic and fair market price • Operator proven record of managing similar facilities and ability to attract third party revenue that College probably not able to attract at least in the short to mid-term • College able to independently confirm capital costs represents fair value

11. Development Charges Are they a Public Private Sector Partnership? • Development Charges Act allows municipalities to recover growth costs from developers • Development Charges 1997, Bill 98: “An Act to promote job creation and increased municipal accountability while providing for the recovery of development costs related to new growth”

12. Development Charges (cont’d) • Act benefits both municipalities and developers and ultimately the end users of the new development by providing for timely installation of needed services • Hard Costs include: • Water • Sewer • Roads • Soft Services include (only 90% of these growth related costs are DC eligible): • Transit • Libraries • Parkland Improvement • Indoor Recreational Facilities

13. Development Charges (cont’d) • Certain facilities currently excluded: • City Halls • Tourism Facilities / Convention Centres • Cultural Centre (e.g., theatres, art galleries) • Hospitals • Interest Cost i.e., interim financing cost to provide these facilities in advance of development (revenue) – an eligible expense • In this sense, Development Charges represent Finance portion of PPP

14. Development Charges (cont’d) • In addition, DC contemplates front-end financing / services in lieu provided by developer. This represents Build and in many cases, Design elements of PPP. • Costs generally subject to independent verification or competitive bids through tender process. • Several municipalities in addition to DC Act eligible costs have been successful in negotiation of: • Payments for Non-DC eligible services, e.g. performing arts centre, hospitals, 10% soft service mandatory discount • Cash Flow Assistance (Repayable Loan Payments) in addition to Front End Financing Requirements for Certain Facilities

15. Development Charges (cont’d) • Developers agreed to these as conditions of obtaining municipal approval and allowing their development to accelerate in the planning and servicing process • Benefits to the Municipality • DC part of the way business is done • Extended DC regime provides in some cases monies not otherwise available and source of funding / financing not otherwise available

16. Development Charges (cont’d) • Reason for Success • Long history of lot levy / DC regimes • Municipality undertakes necessary background studies  REALISTIC EXPECTATIONS • Developers keen to get their projects to the market

17. CONCLUSIONS • Not for everyone • Need: • Willingness (benefits) of both parties • Strong advocates on both sides • Understanding that PPP are not a panacea  REALISTIC EXPECTATIONS • In certain cases adopt only really beneficial elements of PPP • Risks / Rewards to both parties • Ability to independent confirm fair market prices for buildings provided