In what Mayor Sam Katz’s financial analyst calls a race against the clock, the City of Winnipeg is trying to fix as many roads and bridges as possible before skyrocketing construction costs make the repairs impossible.
The 2007 capital budget, an infrastructure-spending plan unveiled by Katz on Friday afternoon, will see the city spend $2 billion on roads, bridges and other infrastructure over the next six years – including $424 million in 2007 alone.
That’s a $600-million increase over last year’s six-year forecast of $1.4 billion and single-year spending of $308 million.
The increased spending is made possible by $209-million worth of federal and provincial infrastructure money and a plan to use public-private partnerships to pay for $107-million worth of new projects over the next six years.
And it’s designed to get the jump on construction costs that rose 30 per cent in 2006, thanks to the building boom in white-hot Alberta and the rising cost of materials around the globe.
“We’re doing a lot more work a lot quicker, which will avoid a heck of a lot of the escalation of construction prices,” said Old Kildonan Coun. Mike O’Shaughnessy, chairman of city council’s finance committee.
He described the 2007 capital budget as the biggest in the city’s history – and the first attempt in decades to whittle away at the city’s infrastructure deficit.
“We’re catching up a little bit for the first time since Unicity. We’ve fallen further and further behind every year since 1972,” O’Shaughnessy said.
“This is the first year where we’re minimally catching up. We need continued support from the provincial and federal governments to go on with what we’re doing.”
Major projects in the 2007 capital budget forecast include a $91-million effort to fix the decaying Disraeli Freeway, a $35-million plan to extend Chief Peguis Trail from Henderson Highway to Lagimodiere Boulevard and a $17-million rehabilitation of the Fort Garry Bridges over the Red River at Bishop Grandin Boulevard.
Other projects that will elicit cheers from motorists include extra lanes for stretches of Inkster Boulevard, McGillivray Boulevard and St. Anne’s Road, at a cost of $13.6 million, $11.5 million and $5.6 million respectively.
New funding initiatives, meanwhile, include $12-million worth of red light synchronization over the next six years and increased annual funding for both playground replacement ($1.75 million a year, up from $250,000 in 2006) and bike-trail creation ($1.5 million, up from less than $200,000).
“As everybody knows, for years, due to circumstances I won’t go into, we watched our city crumble. It’s been going on for a long time – we didn’t have the money to maintain it,” Katz said after he tabled the 2007 capital budget.
“Last year we made some inroads, and this year we’ve taken a major step forward.”
More contentiously, the city will explore the creation of public-private partnerships to pay for the Disraeli and McGillivray projects and also build three new police stations.
Public-private partnerships – or P3s, for short – allow the city to avoid paying for the cost of construction up front. Basically, the city asks a private company to build or fix a bridge, road or building, which the city then leases or buys back at a later date.
Usually, the private company is also expected to maintain the infrastructure as long as it owns it. Proponents of P3s say the deals could provide the city with cost certainty and spare taxpayers the pain of construction-cost overruns.
“There’s absolutely no doubt in my mind that P3s are a way of saving money,” said Katz, who promised to pursue P3s during his 2006 re-election campaign.
Both the mayor and O’Shaughnessy said the city will only pursue P3s after conducting due diligence to ensure the cost of the privately financed projects will be lower than construction financed by borrowing from banks, a practice Winnipeg has avoided during both the Katz and Glen Murray administrations.
But the plan to allow the private sector to front the cost of the three civic projects has created an unusual dynamic at city council: Left-wing Coun. Jenny Gerbasi is accusing conservative mayor Katz of being fiscally irresponsible.
“We’re borrowing $100 million up front to invest in infrastructure,” said Gerbasi. “We haven’t borrowed like for a long, long time, so this is a huge shift in policy.”
Coun. Dan Vandal, another left-of-centre councillor, added he is not convinced private companies can borrow money more cheaply than governments can.
Private construction consortiums can, however, be more flexible and creative than city-managed operations and ultimately deliver the work more cheaply, said Chris Lorenc, president of the Manitoba Heavy Construction Association.
He praised Katz for pursuing P3s, adding such deals have the added benefit of allowing the construction industry as a whole to plan ahead.
“We have been preaching this mantra to all levels of governments for years,” Lorenc said.
“As soon as you are able to let us know what your demands for construction projects are, the sooner you can tender them and the better off you’re going to be in terms of the industry being able to schedule itself and come to the table with more competitive prices.”
City council will vote to approve the 2007 capital budget on Jan. 25.
Wh[ere] the city plans to spend the money
MAJOR projects and new facets of the 2007 capital budget, the city’s blueprint for spending on roads, bridges and buildings:
The plan calls for $2 billion in infrastructure spending over the next six years, including $424 million in 2007. The previous capital budget called for $1.4 billion in spending over six years, including $308 million in 2006 alone.
The increased spending – which is being applauded by groups representing motorists and the construction industry – was made possible by increased funding from the federal and provincial governments.
SPENDING OVER SIX YEARS
* $823 million on sewers and wastewater treatment
* $498 million for roads and bridges
* $164 million on water treatment
* $145 million on Winnipeg Transit
* $82 million for land drainage and flood control
* $43 million for police stations and equipment
* $31 million to finish the $43 million rec-centre overhaul that began in 2006
NEW PROJECTS & INITIATIVES
The biggest new construction project in the city’s plans will see the decaying Disraeli Bridge and Overpass repaired as soon as possible, probably through a public-private partnership. The city hopes to complete repairs by 2009.
CHIEF PEGUIS TRAIL
After more than a decade of talk, the city will extend Chief Peguis from Henderson Highway to Lagimodiere Boulevard in 2008 and 2009.
FORT GARRY BRIDGES
Both eastbound and westbound spans of Bishop Grandin over the Red River are getting rehab in 2008 and 2009. An extra lane will be added to the westbound bridge to allow traffic to exit to Pembina Highway.
Answering the prayers of truckers, Inkster will be get extra lanes between Keewatin Street and Brookside Boulevard in 2009 and 2010.
TRAFFIC LIGHT SYNCHRONIZATION
The fulfilment of a Sam Katz re-election campaign promise will see traffic lights synchronized on as-yet-unknown major routes between 2008 and 2012.
Driving to Big Box Land and Whyte Ridge will no longer be a nightmare as the city will pursue a public-private partnership to add extra lanes to McGillivray between Waverley Street and Columbia Drive. The work will be completed in 2008.
OSBORNE STREET BRIDGE
Full rehab of both bridges over the Assiniboine River in 2011 and 2012.
STURGEON ROAD BRIDGE
A new bridge will replace the aging span over Sturgeon Creek in 2012.
Full bridge rehab of span above Pembina Highway in 2010.
ST. ANNE’S ROAD
Widening from Southglen Boulevard to Aldgate Road. No target date for completion.
$1.75 million per year
Playgrounds around the city get an annual replacement-funding boost from a paltry $250,000 in 2006.
NEW BIKE TRAILS AND WALKWAYS
$1.5 million per year
Following another Katz campaign promise – and a summer of conflict between cyclists and motorists – the annual funding for trail creation takes a big leap from just under $200,000 in 2006, when it was lumped in with sidewalks as a budget line item.
REGIONAL STREET REHAB & REPAIR
$30 million in 2007
Sections of Corydon Avenue, McPhillips Street, Henderson Highway and other busy routes get help. Visit www.winnipegfreepress.com to for a list of road-repair projects to major streets.
LOCAL STREET REPAIRS
$14.5 million in 2007
Visit www.winnipegfreepress.com to see if your street will be repaired this summer.
– Compiled by Bartley Kives
P3 OR NOT TO P3
That would be the question, as city hall is about to explore $107 million worth of public-private partnerships.
WHAT’S A P3?
A public-private partnership is a deal between a government and a private company or group of companies. For the purposes of the City of Winnipeg, it would be a construction deal that would see a private consortium build or fix a road, bridge or building.
WHAT’S THE ADVANTAGE TO THE CITY?
P3s allow the city to avoid paying for a new project while it’s under construction. Once it’s finished, the city leases or buys back the piece of infrastructure, which the private company usually is expected to maintain. The plan is supposed to provide the city with cost certainty – and avoid cost overruns.
WHAT ARE THE DISADVANTAGES?
Unless the city is very careful when it draws up the deal, P3s could wind up being more expensive than publicly financed projects. Critics say P3s are all about short-term gain and long-term pain.
HAVE WE SEEN A P3 IN WINNIPEG BEFORE?
Yes. The Charleswood Bridge was completed on time and on budget in the 1990s. But critics say it cost too much to conduct the due diligence before the contract was signed.
SO, ARE P3S A GOOD IDEA?
It really depends on the deal. There are examples of both beneficial and detrimental P3s around the world – just as there are examples of wise and foolish politicians.