Canadian Lawyer InHouse

JANUARY 2017 28 INHOUSE I n d u s t r y S p o t l i g h t CANADA'S CITIES WILL be the next frontier for risk-sharing public-private partner- ships, bringing new players and new complications into the now well-tested infrastruc- ture model. It's been a slow start, with logistical and political obstacles to using out- side groups to do the work that cities have traditionally carried out themselves. But some municipalities are commissioning private partnerships to build and operate new facilities or modernize creaking infrastructure, either because they are short of money or because they want someone else to shoulder the risks of construction delays or unexpectedly high maintenance and operating costs. "We were used to the traditional, hands-on approach to municipal con- struction, so this was very different," Claudia Pooli, a solicitor with the City of Edmonton, says of the Alberta capital's fi rst P3 project, a light rail transit system that's being built with participation from three levels of govern- ment: municipal, provincial and federal. "We had a model to work from, but absolutely it needed a fair bit of work from the initial draft that was issued, and I think we all learned a lot from that. We demonstrated that we were willing to change and revise accordingly in terms of what would make for the best deal for the project, and we made quite a lot of changes in terms of clarifying things and trying to get the best value for money at the end of the day. It wasn't all about just transferring risk. It was about making sure that both parties really understood what we were trying to accomplish. And you can only really get that through open dialogue." Under the P3 model, governments invite privately owned consor- tiums to tender to design, build and fi nance a project, and then to maintain and operate the facility over several decades. But the relative- ly small number of Canadian municipal P3 projects means legal teams have yet to develop templates that work for the type of project that cities may need — water treatment, waste management and the processing of organic waste are all likely examples. Municipal approval may involve many trips to a fractious city council and perhaps a referendum, as was the case for a waste water facility in Regina. And because it's a local issue, every voter and every councillor has a strong opinion on what to do. "As we do more projects in similar asset classes, as we do more municipal transit, as we do more water and waste water, I think that the market will be more familiar with those risks and those complexities will fall away. But every municipality is also slightly different from the other and they have their own challenges and their own perspectives," says Marianne Smith, a partner at Blake Cassels & Graydon LLP where she acts mostly for public authorities. Making municipalities work Cities look to P3 model to meet pressing infrastructure needs. BY JANET GUTTSMAN

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