P3 A Trap The City Must Avoid
Published December 9, 2010
City council will soon consider using a public-private partnership to finance Edmonton’s LRT expansion, as well as other options, including money from the province, an additional charge on transit fares and tax increases.
While no one, transit rider and car driver alike, wants an increase in their taxes, using a P3 arrangement would likely result in a higher price tag for LRT, and more money coming out of everyone’s pocket.
The experience of other cities offers a bleak outlook. A report by a Quebec research group called Urbanisation Culture Society, commissioned by The Canadian Federation of Municipalities, says privatization appeals to city councillors because they can appear fiscally responsible, but the actual costs of a project increase.
“Officials appear to be adhering to ceilings on long-term debt or commitments,” the report reads, “while benefiting de facto from the same asset, although generally at greater cost.”
Ottawa used a P3 agreement to build an arena, and in 2007 ended up taking it back at great cost to the city.