THUNDER BAY, ON – Public-private partnerships (P3) are not the magic bullet solution for building an indoor turf facility, Thunder Bay’s municipal union warns, after city council voted in favour of launching an expression of interest (EOI) process to solicit new proposals for how to finance the long delayed project.
By rejecting the $39 million tender for the project that had been put before council in March, and initialing a new process, the union believes that council is opening the door to P3 proposals that may promise more cost savings up front, but will end up sticking tax payers with a larger bill down the road and will not ensure that the facility meets the community’s needs.
“I know we are only in the early stages right now, but I want to caution council and the public that the private sector is not the magic bullet that people might think it is when it comes to keeping costs down on projects like this,” said Dana Vacek, president of Local 87 of the Canadian Union of Public Employees (CUPE 87). “When proposals start coming in we will probably see much lower price tags than the $39 million that was rejected by council. But we can point to examples in our own backyard and elsewhere where the true costs of a public-private partnership are not reveled until the project is already built.”
A recent example of the hidden costs of P3 projects for a municipal recreation centre occurred in Ottawa where the city guaranteed the debt, waived property taxes and development charges, and agreed to purchase 2,400 hours of ice time annually for the private firm that they partnered with to build a community hockey rink. The city entered into a 20-year contract for the operation of the rink. After years of delays, increased costs and increased user fees for city residents, the City of Ottawa eventually had to break the contract after city staff discovered that the company had underestimated operating costs and overstated projected revenues. The city was responsible for $12 million in debt from the project.
“Too often with these P3 projects the ‘partnership’ involves the private sector reaping the profits and public sector being left on the hook for repairs or other rising costs, and if the profits aren’t realized, like in Ottawa, the company simply abandons the community. I am worried that council is going down this road, looking for a quick fix.” Vacek said. “We are in this situation because a privately-owned sports facility collapsed in 2016 and left the community without an indoor soccer venue. The goal is to build a place for people to play soccer, not subsidize a company’s profit with taxpayer money. If the purpose of building a new indoor soccer facility is to serve the residents of Thunder Bay then it should be publicly owned and operated. That is the only way we can ensure that it will continue to meet the community’s needs.”
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