Sunday, November 13, 2011

To P3 or not to P3? Abbotsford's Stave Lake Water Project Woes

I'm finding this Stave Lake Water Project and the decision about whether or not to enter into a P3 agreement very interesting. Check out this presentation I found on the official SLWP website if you haven't seen it already. Also, here's an interesting blog on this project (again, note the City-owned twist)

Source: City of Abbotsford SLWP Presentation

Note that this presentation and blog are created by the City of Abbotsford, who, it seems very clear, WANT the P3 desperately (my guess is so that the incumbent can run on a platform about "saving you money"). But there's more to this.

I'm not convinced this particular P3 is a good idea. Makes me think of SNC Lavalin and the Canada Line being at full capacity on opening day because they wanted to drive the profit margin up by making the platforms smaller. Now, we're left with a poorly planned billion dollar capital investment project that we can't expand. duh. If it had been municipally planned and executed, they would have planned giant platforms like the Millenium Line that would last 100 years because they don't want to go back in again - and for them, there's no profit in it. Because it was a P3, going back in is big money. So I'm not convinced that P3's are the way to go with municipal responsibilities such as water - especially over 25 years! It's incredible how many responsibilities municipal governments are shirking.

What's even more interesting is that the annual cost difference between P3 and non-P3 water - although it will be much higher than it is now  - seems to be pretty minimal ($610/year vs. $550/year). I wonder how they account for such a small difference in annual costs when the P3 has almost $140 million more in savings to the City. Where is all that money going? Never mind how crazy it seems that the only way a municipality can get money from the Fed's for capital infrastructure investments is through P3's? That seems a bit wacky, to say the least.

If there's one thing that the banking crash taught us, it's that lax government regulations and P3's are putting government responsibilities in the hands of businessmen who are as wealthy as they are because they drive down the bottom line and plan poorly for long term sustainable development.

... and all anyone is seeing is "vote yes" signs. I wonder where the "vote no" signs are?

Am I way off base here? Wadda y'all think about this bizness?

To get way more information than what I'm supplying here, just google "Abbotsford Stave Lake Water Project". The Tyee has a great story on incumbent Patricia Ross.


  1. Although I enjoyed your insightful critique to P3 water, I have to disagree with simply disapproving it because as you know P3 is very young and needs time to mature. Issues like the ones you pointed out about Canada Line may be avoidable through foreseeing and incorporating them in the agreements; for example in the case of Canada Line they could have broken the goals of the project into required expectations, like comfort of the passengers as a goal and the minimum size of the platforms as a requirement, that must be fulfilled by the winner of the project. Besides, they might have taken this into account but for some other reasons such as potential future developments, they decided to carry out the project in a way that gives them more flexibility. Undoubtedly giant platforms are more costly to build and also more costly to destruct in the case that uncertain future needs or advancements leave us with no choice but replacing them. Getting to know the term "panarchy" at
    might be interesting to the readers who want to have a better appreciation of important terms such as sustainability, resilience, and flexibility.

  2. Hi Ali, thanks for your comments. I'll agree with you that P3's are relatively young and it is possible that regulatory improvements could make them a more reliable option for capital investments, but I have to disagree with you that this is merely a problem of lack of 'foresight' or more detailed contract negotiation on the part of the contractor (City) or contractee (SNC Lav). As is the case with many capital investment projects, it gets expensive, and tradeoffs must be made in order to meet an expected deadline (in this case, Olympics) and fiscal target. My argument is that because these are private companies who, as we have seen many times, are interested in image, deadlines and profit margin increases more than sustainable long term development, we aren't getting a good bang for our buck (compared to municipally constructed projects). You raise a very important point bringing up 'panarchy' and more specifically 'resilience' here. By short changing Vancouverites on an extremely expensive transit strategy, we are now left with a highly fragile and short-term transit line that, for a nominal increase in price (and larger increase in time needed - the real problem here) could have continued to service a growing population for another 50-100 years. We don't have to look much further than London or NY to see that sub-grade transit lines aren't going anywhere anytime soon - especially since as the track and fuel changes, we'll still use the lines.

    So my concern with Abbotsford's water project is primarily based on this line of argument, and that it seems we must be very cautious in entering into long-term agreements with high-power business when it comes to public capital investments.

    In the end, though, it's going to be up to the voters. The question this raises is - Are they being given an equal-sided flow of information about the benefits and trade-offs of P3's?