B.C. government bails out Port Mann P3
There's a lot of questions being raised about the future of using so-called public-private partnerships to provide major infrastructure projects like the Port Mann Bridge and Highway 1 expansion.
Just yesterday, the treasurer of California argued that the P3 model Governor Arnold Schwarzenegger had borrowed from Premier Gordon Campbell was not fit for purpose and that raising capital by issuing municipal bonds was more cost effective than subsidizing the profit margins of private sector middlemen.
But today the provincial government moved to guarantee that the middlemen involved with the Port Mann P3 -- Macquarie Group, banks and the lawyers putting the deal together -- could still dine out on the taxpayers' dime.
British Columbia will put up one third of the money needed for the twinning of the Port Mann Bridge and expansion of Highway 1, Transportation Minister Kevin Falcon announced Wednesday.
He said the province has reached an agreement in principle with Macquarie Group, which he said should be finalized by March. Under the original plan, Macquarie was to raise the entire financing for the project.
Falcon said the province had not planned to finance any portion of the Port Mann project, but this intervention "made sense" given the state of the financial markets.
Falcon said this new arrangement was reached during a "tough negotiation process" while the capital markets are in "turmoil."