Budget & Estimate Disasters

Sea to Sky Highway subsidy $12-$15 each vehicle

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Here is a good reminder of how behaviour of BC Liberals differs when it involves spending closer to their hearts, heads and wallets than public education.

This highway project demonstrates what Liberals mean when they say “on-time and on-budget.” It wasn’t on budget for the public but probably was for the private companies hidden behind the Sea-to-Sky Highway Investment Limited Partnership.

Liberals are masters of public finance in one particular way. They deliver opportunities to deal makers and deal flippers, with details of all transactions hidden from view. It wasn’t long before the first flip happened on the Sea-to-Sky project. This is from a 2010 press release,

A consortium of Canadian investors led by Fiera Axium Infrastructure Inc. and composed of Fiera Axium Infrastructure Canada L.P., Régime de rentes du Mouvement Desjardins and Nova Scotia Pension Agency (the “Consortium”) today announced it has acquired 100% of the economic interests in the design-build-finance-operate (“DBFO”) concession rights associated with the Sea-to-Sky Highway Improvement Project (“S2S”)…from Macquarie Essential Assets Partnership (“MEAP”)…a private unlisted fund established in 2003…

Sea-to-Sky completes a bond financing, Financial Post, Jun 10, 2016:

One year ago, …$583.1 million of debt that was to be issued by Sea-to-Sky Highway Investment LP. The issuer operates the British Columbia road from Horseshoe Bay to Whistler that’s part of Highway 99 under a private public partnership.

…the proceeds of which were to be used to repay bank debt, “to settle the interest rate swap arrangements,” as well as provide an “equity distribution” to the equity sponsor.

That was the plan. The sponsor — at the time called Fiera Axium Infrastructure — hired Scotia Capital, Desjardins Securities and Casgrain & Co. to round up buyers. For whatever reason — and market conditions were as good as any — the deal didn’t get done.
Early this year, Fiera sold the 35 per cent stake it held in the sponsor — back to the sponsor (now called Axium Infrastructure)…

News item, June 10, 2005:

VANCOUVER (CP) – The British Columbia government has signed a deal with a transportation consortium to design, build and manage improvement to the Sea-to-Sky Highway north of Vancouver.
Transportation Minister Kevin Falcon said the project is on time and on budget after he announced the $400 million agreement with the S2S Transportation Group…

In a 2009 letter to the National Post editor, Falcon had more to say about “on time and on budget:

Re: Vancouver Should Pay, editorial, Jan. 13.

This editorial incorrectly stated that the Sea-to-Sky Highway expansion is “behind schedule” and “over budget.” The fact is that the $600-million improvement project is both on budget and on schedule…”

A 2012 report by the Auditor General noted the capital costs were $795 million and reminded that the public private partnership was responsible for building only part of the Sea to Sky Highway:

…the Province (represented by the Ministry of Transportation and Infrastructure) entered into a P3 agreement with the Sea-to-Sky Highway Investment Limited Partnership (a group of private companies) to design, build and finance about two-thirds of the highway improvements and to operate and maintain the entire highway for 25 years. The ministry is responsible for managing the remaining one-third of improvements…

We shall examine whether or not the project was “on budget” or slightly over the $400 $600 $795 million figure.

From B.C. Public Accounts (updated in FY 2019):

Since actual payments are almost 3x the contractual obligation, it looks like the Sea to Sky Highway will eventually cost $1.5 billion. And remember, the province financed 1/3 of the project’s construction cost while the P3 financed 2/3.

From The Vancouver Sun, December 23, 2005:

The portion of the highway between West Vancouver and Squamish has the largest traffic volume, with an average of 13,500 vehicle movements each day.

The Squamish – Whistler traffic counted about 8,000 per day. Averaging the two segments over a full year suggests about 4 million vehicles using Sea to Sky Highway annually. With operating cost around $60 million a year, each vehicle movement costs taxpayers about $15. If traffic has grown by 15%, the subsidy would be about $12. However, the subsidy would be higher if we factored in the cost of the one-third portion of the Highway paid for directly by the province.

So, if you are a taxpayer paying tolls to cross the Fraser River or if you are using one of BC Ferries’ profitable routes—Tsawwassen, Swartz Bay, Departure Bay, Horseshoe Bay—take satisfaction in the financial assistance you provide through subsidies to the poor folks headed for Whistler ski hills.

Note:

More than three years ago, Laila Yuile wrote excellent pieces on the Sea to Sky Highway. Click HERE to begin looking at her work.

Categories: Budget & Estimate Disasters, Public-Private Partnerships, Sea To Sky Highway

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19 replies »

  2. Pingback: Laila rules – In-Sights

  3. It would be fun if a number of people contacted their BC Lib MLA and asked “I drove on the Sea to Sky highway and would like to pay my share of shadow toll. How can I do this?”

    I'm going to do this now. The answer might be fun!

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  5. Excellent review, and enough to get one's blood boiling all over again! You only included ONE of Laila's scathing reports. What became of the expose of the 'Crumbling Walls'?
    It IS refreshing to be reminded of other contemptible, corrupt schemes perpetrated on us after all the press the LNG fantasy has received. Do you think they'll try for a P3 on the Site C Dam? How would they implement a 'shadow toll' on it?

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  8. I had occasion to drive to Squamish on Monday, Sept. 15. Witnessed some heaby looking work being done on a bridge and was stopped for close to 30 minutes on the decent into Brittania Beach due to road work/paving that was in progress. Also noted other sections at various locations along the highway the had been recently paved. It would seem to me that it's a little too soon for such repairs to be needed.

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  10. I recall having read somewhere, perhaps Laila or Bob Mackin, that the monitoring devices installed to count cars on the Sea to Sky are duds so the Gov. relies on the numbers supplied by the contractor. Lovely!
    Hawgwash.

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  11. Don't forget that most of the Island voted NDP,and like the teachers we've tried to get rid of the LIEBERALS,so bend over boys and take your medicine from the most vindictive bitch there is in politics….

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  12. Hmmm, maybe I should have a chat with my dentist who lives in Lions Bay and works downtown.
    Hawgwash.

    It looks like his commute, plus that of his wife who manages the dental corp. costs us about 8 grand a year.

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  13. The utter corruption of the maintenance costs are very easy to see. The scam works this way. The maintenance company charge an annual fee then bills the government for nay extra, such as snow removal, slides, etc. By getting a set fee, the maintenance company only maintains the highway to the most minimum standards and here is where the profit is made.

    I would wager that Mainroad Howe Sound Contracting LP (and who owns them), company who has the Sea to Sky highway maintenance contract, is making a killing.

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  14. Maybe it's time we turned back to maintaining and building our roads, bridges, back to a public service paid for by our taxes before governments decided their friends could do it better and fill their own pockets. Roads were in much better shape, didn't cost us an arm and a leg for gas, no tolls.
    Taxes have continuously gone up and now we have carbon tax, gas tax, tolls, translink (useless bureaucracy that costs us way too much money). Yeah, things were better maintained back before the privatization of our “public” roadways/structures. I remember.

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  16. I'm not aware that Laila Yuile reported $5 billion in maintenance contracts for Sea to Sky Highway.

    Apart from road maintenance included in transportation P3's, the province paid these amounts in Fiscal Year 2013 to its main road contractors:

    Yellowhead Road, $86 million
    Mainroad Contracting group, $73 million
    Argo Road Maintenance, $62 million
    Emcom Services Inc, $55 million
    Lakes District Maintenance $35 million
    Emil Anderson Maintenance, $26 million
    Caribou Road Maintenance, $24 million
    VSA Highway, $19 million
    Interior Roads $19 million
    Nechako Northcoast, $9 million
    Capilano Highway, $6 million
    O'Brien Road, $5 million

    That is a total of $420 million in one year and the list probably is incomplete. A lot of public funds are spent on road maintenance and when he looked at contract administration, the BC Auditor General found shortcomings:

    “Roads and bridges have long life cycles that can be significantly
    extended with timely, periodic maintenance. Minimizing cost over the
    life-cycle of these assets requires long-term planning and action across
    the entire road network. The ministry does not yet have in place all
    of the tools necessary to bring this to life. And while the ministry has
    identified safety of the highway network as a key outcome, the impact
    of maintenance activity on safety is not adequately measured.

    This demonstrates one of the problems with paying a concessionaire to build AND maintain an asset that should have a long life. There is a conflict because excellent maintenance programs ensure long life. Shoddy efforts at maintenance ensure the builders are going to be back sooner rather than later.

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