"Community Charter Will Give P3's a Huge Lift", Vancouver Sun

by Janice and George Mucalov

The proposed new Community Charter could benefit a lot of British Columbians by helping P3's get off the ground.

Ever since the Campbell government announced its commitment to public private partnerships as a way for the province and local governments to provide roads, hospitals and other badly needed facilities, P3's have been much in the public eye. Recent polls suggest that, special interests aside, British Columbians grudgingly accept that P3's are necessary to provide facilities that a cash-strapped government cannot otherwise build.

Usually the trick with P3's is for the private sector to figure out how to raise the money. When a government body invites proposals to create a facility, the private sector typically has to think up a way to finance it. That usually means figuring out how to make the project pay for itself.

But there are other stumbling blocks. Municipalities can face legal impediments that delay worthwhile P3 ventures or discourage bids. That's where the new Community Charter comes in.

Released on May 28th for consultation and public input, the massive 134-page draft Community Charter basically provides a new legislative framework for local governments in BC and their relationships with the province. A final bill is to be tabled this fall. Ted Nebbeling, Minister of State responsible for the Community Charter, has indicated an intent for the first phase of this legislation to take effect at the beginning of next year.

How will the Community Charter assist P3's?

First, it aims to identify new direct and indirect funding sources for municipalities to draw upon.

One idea is to help municipalities provide facilities and services and undertake P3 projects, without, for example, having to jack up property taxes. While details are yet to be finalized, options range from user fees to various other tax sources.

Another idea involves passing title to most roads inside municipal boundaries to municipalities. Municipalities currently have to maintain these roads, but they don't own them. So they're responsible for repairing potholes, but they don't see any benefits.

The ownership transfer will add to the municipal land base. If municipalities own the roads, they can then close unneeded roads or road allowances, and contribute these lands to P3 projects where appropriate, or sell them to raise funds toward needed community projects.

A second key aim of the Community Charter is to reduce red tape and eliminate legal obstacles that discourage private sector participation in P3's - and sometimes kill worthwhile P3 ventures altogether.

Let's look at an example. One of us was recently involved in a community project to provide recreational and other facilities, including a spectator arena, ice rinks, a festival market, a library and so on. The project was sponsored by a municipal council and other elected officials put in office to deliver such a facility. All the polls indicated the project would be favourably received when going through the referendum process mandated by current legislation.

When the project was basically ready to go, the time came for the referendum. To everyone's surprise, however, the project was defeated by a very narrow margin. Basically, the townsfolk were, after all, unwilling to accept a very modest increase in their property taxes to fund the project, and alternate funding sources weren't available.

It turns out that the success ratio of projects that have had to go through the current referendum/counter-petition process isn't good. In the past, as many as some four out of five such projects have been defeated - no matter how worthwhile. Knowledgeable industry players in the private sector know this, and for that reason, often refuse to invest time, effort and money in such P3 projects right from the start. The new Community Charter proposes to address this problem, so the private sector will be more encouraged to get involved.

Hopefully the Community Charter will succeed. We all have an interest in getting needed facilities in the most cost-effective way. Of course, we'll have to wait until the end of the consultation process to see the shape that the new legislation will ultimately take.

© Copyright by Janice and George Mucalov

A version of this column was first published in the Vancouver Sun. The column provides information only and must not be relied on for legal advice. Consult your lawyer if you need legal advice.