Transit Public-Private Partnerships: Legal Issues (2014)

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78 APPENDIX B—STRUCTURE AND FUNDING OF THE CANADA LINE IN VANCOUVER A Canadian PPP is of interest because of its multiple sponsors, organization, approach to project delivery, sources of private equity and debt financing, and success. The Canada Line, previously known as the Rich- mond-Airport-Vancouver (RAV) Rapid Transit Line is a 19.5-km rapid transit line that connects Vancouver, the city of Richmond, and the Vancouver International Airport.876 The line, which opened in August 2009, cost approximately $2.05 billion and is now part of the SkyTrain network. The project had five sponsors or funding agencies: the South Coast British Columbia Transportation Au- thority (TransLink), the Vancouver International Airport Authority, the government of British Columbia, the government of Canada, the city of Vancouver, and several other public sponsors, as well as private stakeholders. Based on a report prepared by Price Waterhouse Coopers, it was believed that the PPP would be able to attract private equity and debt financing for the project.877 SNC-Lavalin, Inc., delivered the engi- neering, procurement, and construction contract through a series of joint ventures formed by its affiliate SNC-Lavalin Contractors Pacific, Inc. (SLCP). The private partner was selected through a four-step competitive process: a request for expressions of in- terest, an RFP, a best and final offer, and the financial close and contract award.878 The partner selected by the Canada Line Rapid Transit, Inc. (CLCO) was SNC-Lavalin/Serco. In March 2005, TransLink entered into a concession agreement with InTransitBC, the “newly created private-sector joint venture that emerged from the SNC-Lavalin/Serco consortium.”879 Thus, InTransitBC became the joint venture company that “con- tracted to design, build, partially finance, operate and maintain the Canada Line.”880 The joint venture was comprised of SNC-Lavalin, the British Columbia Investment Management Corporation, and the Caisse de dépôt et placement du Québec.881 The draft concession agreement did not define “how the system was to be designed. Instead, it primarily specified the performance that the completed system was required to achieve.”882 In July 2005, TransLink, CLCO, and InTransitBC entered into a concession agreement for the design, construction, partial financing, operation, and maintenance of the Canada Line.883 Some features of the concession agreement are that InTransitBC operates and maintains the line for a 30-year period,884 TransLink makes performance 876 The Canadian Council for Public-Private Partnerships, 2009 National Award Case Studies, at 13 (June 2010), hereinafter referred to as the “Canada Line Case Study.” 877 Id. at 20. 878 Id. at 23. 879 Id. at 26. 880 Id. 881 Id. 882 Id. at 29. 883 Id. at 28. 884 Id. at 26.

79 “payments based on availability, quality of service and achievement of ridership forecasts,”885 and the line returns to the public sector at the conclusion of the concession period.886 InTransit BC also entered into a design and construction contract with SNC-Lavalin, Inc.887 After completion in August 2009, CLCO’s responsibility for management of the concession agreement was assigned to TransLink. Of the $2.05 billion needed to fund the project, there were $1.33 billion in public contributions and $720 million of private funding or about 35.12 percent.888 In regard to the private financing, there were two components: equity and debt. InTransitBC secured $120 million in equity through the placement of limited partnership units.889 A group of banks provided long-term debt financing in the amount of $600 million.890 Most of the risk for the project was transferred to the private sector, but the “public sector retained most of the ridership risk, even though a part was passed on to the private partner.”891 A final report on the project stated that the PPP approach for the Canada Line “is expected to cost $92 million less on a net-present-value basis in 2003 dollars.”892 885 Id. 886 Id. at 29. 887 Id. 888 Id. at 30. 889 Id. at 31. 890 Id. at 31, 34. 891 Id. at 34. 892 Id. at 37.