ION - Waterloo Region's Light Rail Transit

[numberguy]

I'm afraid as well.  P3 is 2-3 times more expensive than going it alone.

This seems to say the costs of P3 are 2-3x those of non-P3.

Built in escalation rates.   Infrastructure Ontario is looking at a number of P3 agreements.   A number of very large P3 projects are experiencing escalation rates 2-3 times more expensive than CPI.  

So the private partner running the say, maintenance, experiences a 2% increase in a year.   The escalation rate in the agreement turns that 2% increase into a 6% increase that is passed onto the public partner.    This is real and has happened and is costing taxpayers on multiple levels huge.

But in fact the claim seems to be that the annual cost increases could be 2-3x those of a non-P3 arrangement.  Total P3 costs will not be 2-3x total non-P3 costs, based on this.  But I should think that every P3 contract would be different -- and no one was forced to sign one of these agreements.

I don't pretend to have any idea as to whether P3 is a good thing or not.  But let's at least be precise when comparing costs. 

Yes, every P3 contract is different.   But based on empirical, actual costs experienced, P3 annual cost escalations far exceed non-P3 cost escalations.    And yes, I am only referring to the annual cost escalations.  Sorry for the lack of clarity, mea culpa.   Most P3 will not be 2-3x non-P3 project costs.

One only has to look at RIM Park as an example of how the devil is in the details.   Until city of Waterloo staff started actually paying bills, it was not apparent that the contract signed was a one-sided deal.    The way cost escalations work in some existing P3 deals are having a similar (to a lesser scale) unintended consequence.

I want to see the deal between GrandLinq and the Region of Waterloo.   Is this available?    If not, why not?

I'll give a hypothetical example.   Many of us know about the added costs incurred by the Region of Waterloo due to 2 workers deciding to sign union cards, technically backing the Region into having to use higher scale union labour for a trade. Say that happens with GrandLinq.   Depending on how the labour escalation formula works, that increase could get passed onto the Region, 3, 4, 5 or more-fold.   It's happened with P3s in Ontario.

Oh and the posted GrandLinq's annual operations and maintenance cost for 30 years includes:
•Operations ($4 million, plus HST and inflation);
•Maintenance ($4.5 million, plus HST and inflation);
•Lifecycle (average $8.7 million, plus HST and inflation);
•Financing ($11 million, plus HST);
•Insurance ($1.7 million, plus applicable taxes)

Those are just budgeted.    Pending seeing the actual agreement between GrandLinq and the Region of Waterloo, I am thinking that those posted amounts are not final or binding.

What interest rate assumptions were used?   Until recently, Ontario's auto insurers were allowed an 11 percent return on equity.   Again, great alpha, with (except in the GTA, due to fraudulent claims) little beta.   (Sorry, alpha is vig/juice/profit/return.   Beta is risk)   With ION, what was the interest rate used for assumptions?