Canadian Lawyer InHouse

33 CANADIANLAWYERMAG.COM/INHOUSE MARCH 2016 I n d u s t r y S p o t l i g h t t "Modernization has evolved, although the business objectives remain the same," spokesman Tony Bitonti said in response to questions submitted by e-mail. "Our pro- curement process is projected to end later than initially scheduled, with moderniza- tion being fully implemented in 2018-19 — one year later than planned." He gave no fi gure for current expecta- tions for private sector investment, but added: "At a time when governments across Canada, and globally, are facing defi cits, it makes sense to look to the private sector to make these types of capital investments. Once modernization is fully implemented, OLG's dividend to the province will in- crease and remain sustainable." Bob Bauer, senior partner in the com- mercial real estate, infrastructure, and corporate/commercial practices at Davies Ward Phillips & Vineberg LLP, sees paral- lels between the promise to involve the pri- vate sector in Ontario gaming and the pub- lic-private partnership model that Ontario and other provinces have used for major infrastructure projects. The model allows private fi rms, or a consortium of fi rms, to bid to build a facility, and the winner often gets an operating/maintenance contract that could run for several decades. In the gaming model, the successful bidder will ef- fectively own the facility for the term of the decades-long lease, and also pay to keep the facilities up to date. "The pure [PPP] model is not to have any ownership interest in the hands of the pri- vate sector," Bauer says. "The risk is shift- ing, but it's shifting even further. It's put- ting ownership in the hands of the private sector . . . . The new operator is going to acquire the assets, the land, and whatever structures are there, and have to fund the capital expenses of building whatever they are going to build." The successful tender is followed by a pe- riod of perhaps 20 years with a "fi xed rent formula" to Ontario. "The risks have in- creased because they've taken on the risk of building these things, owning them, worry- ing about budgets and overruns," Bauer adds. The initial OLG document included plans for a gaming facility in the Greater Toronto Area, describing it as a way to meet unmet demand and to increase municipal revenues, and investors' hopes initially cen- tred on a Toronto casino. But Toronto City Council rejected that idea by 40 votes to four in a 2013 vote. Then-mayor Rob Ford had been a strong lobbyist for the proposal, which he said would create jobs. "I think the OLG was a bit overaggres- sive in relation to the zoning issue and the attitude of the Toronto City Council and it took a little while for that to play out," says Michael Lipton, a partner at Dickin- son Wright with experience in compliance, governance, and due diligence within the gaming sector. "It's only now it's somewhat resolved, although for the Greater Toronto area rather than for downtown Toronto." In the already allocated eastern Ontario bundle, Great Canadian's Ontario Gaming East LP unit gets the right to operate ex- isting eastern Ontario facilities for 20 years and to build and operate a new facility, in Quinte or in Belleville. The fi rm will pro- vide guaranteed annual payments to the OLG, which remains in overall control. CONNECT WITH IN-HOUSE COUNSEL COLLEAGUES AT LEXPERT.CA/CCCA Check out in-house counsel's best networking tool! The 2015/16 Lexpert CCCA/ACCJE Directory & Yearbook online edition is a user-friendly, outstanding key resource for all in-house counsel. Along with immediate access to more than 4,000 listees at more than 1,900 organizations, you'll also find fresh editorial content, information on deals and links to important resources. Directory listees and CCCA members can also receive log-in credentials for access to detailed contact information to be able to connect with colleagues or research the in-house bar. ANYWHERE. ANYTIME. ANY DEVICE.

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