Budget & Estimate Disasters

Port Mann losses “unsustainable”

Late Friday afternoon, the BC Government performed a document dump that included Public Accounts and financial reports of crown corporations. One of those is Transportation Investment Corporation, which, despite losses over half a billion dollars, is optimistically referred to as a “Self-Supported Crown Corporation.”

This is a summary recap of the audited financials of TI Corp:

TIC recap

Financial Statement Recap TI Corp

A promotional piece Partnerships BC published in 2011 gave background to the Port Mann / Highway 1 Improvement Project.

Following a rigorous evaluation process based on a design, build, finance and operate procurement model (DBFO), Connect BC Development Group was selected as the preferred proponent and entered into an agreement-in-principle with the Province of British Columbia…

…during final negotiations, the Province and Connect BC Development Group were unable to reach a mutually satisfactory agreement, and negotiations were concluded. In accordance with provisions in the RFP, the Province then exercised its option to enter into a fixed-price, design-build agreement (DB) with … Kiewit/Flatiron General Partnership, for design and construction…

Connect BC Development Group had been a joint venture led by MacQuarie Group. It included Transtoll Inc., Peter Kiewit Sons Co. and Flatiron Constructors Canada Limited. The Journal of Commerce reported in 2009 that Macquarie Group was having difficulties securing financing for the project.

costsIt was not publicly reported that, when MacQuarie left negotiations, they departed with a $6 million termination fee paid by taxpayers. Kiewit and Flatiron stayed on and were awarded a “fixed-priced, design-build” contract for $2.46 billion, which was substantially higher than the $1.5 billion estimated when the Gateway Program was first announced.

However, as the 2016 financials reveal, the “fixed-price” description was illusory.  The capital cost to date is $3.3 billion and capital spending is not complete. In addition, TI Corp has $88 million in contractual commitments to be paid.

Government contractors are now shifting attention down river. The Massey tunnel replacement is being talked about as a $3.5 billion project. If it follows the typical pattern of cost escalation it will be closer to $6 billion.

Since toll revenue at Port Mann has covered only 39% of operating costs, the BC Government needs to explain how it will finance existing and future shortfalls on Port Mann/Highway 1. These are growing by about $5 million a month and paying for an even more costly tunnel replacement will demand a solution. One possibility was proposed in the original Gateway Program. It contemplated:

“…tolling of all bridges connecting to the Burrard Peninsula, including the Lions Gate, Ironworkers Memorial, Pitt River, Port Mann, Pattullo, Alex Fraser, Knight Street, Oak Street and Arthur Laing bridges…”

If you wonder why BC Liberals maintain firm control of TransLink, be aware they don’t intend to compete with regional governments for revenues streams that will flow from every bridge crossing on a provincial road close to Greater Vancouver.

Now that is a situation BC Liberals won’t talk about until after the May 2017 election.


The original design concept for the Port Mann bridge expansion. But, why spend $400 million when you can spend $1.1 billion to get the same result.

twin

10 replies »

  1. Excellent fact digging and analysis Norm.

    There is reality and there is BC Liberal smoke and mirrors fantasy. The real numbers don’t lie, the BC Liberals… well they seem to do nothing but. Based on all past performance the massive Massey bridge project like all their mega projects will be another white elephant. A massive cost overrun failure hobbling BC citizens as it enriches the Liberal “family”.

    The shadow Liberals are actually all too transparent in their corruption aided by their funded media and a mostly oblivious electorate… but the Liberal schtick is now long in the tooth and more people are seeing the truth.

    I see three simple reasons for the ongoing take out the trash (bad news) Friday document dumps by the BC Liberals. First the timing of the dumps occurs when citizens are most distracted – going into their weekend break. They believe the dumped news will have less impact and get ‘lost’ maybe even over looked by some distraction / buried by other news events. Second many government officials are traveling and unavailable for comments and the news is given a lower profile and overshadowed by other distractions. Third the government captured media are given more time to gage the early public commentary and cobble their spin. It is no coincidence that negative news is regularly released during greatest distraction and ‘good news’ is highlighted and pushed during the work week prime news cycle.

    Liked by 2 people

  2. Thanks to you, Norm, for “dumpster diving” to pick up this info.

    Christy to Todd Stone, “Isn’t it about time Norm went on vacation? Maybe we can slip him a few tickets to China. I’ll see what Ben Stewart can arrange…”

    Liked by 1 person

  3. Speaking of Ben Stewart (no relation), I Googled the name and the top link led me to the BC Liberals page. Under “TEAM” menu, you can see their 2013 platform, if you care to compare their accuracy on reaching their targets.

    First page: “If it isn’t okay for parents to leave their children with debt, it isn’t okay for government to leave future generations saddled with debt either.”

    That’s what I call “180 speak.” If you’ll notice, Christy is in 180 mode much of the time… she takes two right turns away from what she says and forges on in the opposite direction.

    Liked by 1 person

  4. During the negotiations, at the time MacQuarrie left with a $6 million going away present from the taxpayers, and when the “fixed-price” contract was awarded, BC’s Finance Minister was Colin Hansen. He is coincidentally currently Chair of the Transportation Investment Corporation operating the result. One of the directors on the board of the corporation is Don Fairbairn, who is currently listed on LinkedIn as the Chair of the corporation’s Audit and Risk Committee. He is also listed as a due diligence advisor on transportation projects for Partnerships BC.

    These two would be fine candidates to answer questions about the “Self-Supported Crown Corporation” they run; before the May 2017 election. Too bad BC doesn’t have a functioning press capable of asking the questions.

    Liked by 1 person

  5. They made the big mistake of tearing down the “old Port Mann”. Their excuse is that it is too old!!! Look at the Burrard St. Bridge….Still going strong…..

    Liked by 1 person

    • This government is making an effort to hide information by making it difficult or impossible to find and by consolidating numbers that embarrass them, like gas royalties and mining taxes, into larger categories. Most recent financial statements for TI Corp are not found at the company’s website but are at the Comptroller General’s webpages under “Self-Supported Crown Corporations and Agencies.”

      That category is a wry commentary on the state of TI Corp. It is not self supporting and will not be until they double toll revenue. Since higher prices would result in lower traffic, that would require present toll rates to triple, or that alternative untolled crossing be eliminated.

      http://www.fin.gov.bc.ca/OCG/pa/15_16/Sup%20E/pdf/Transportation%20Investment%20Corporation.pdf

      Liked by 1 person

  6. all these new structures the Lieberals have formulated need to be eliminated and all bridge building ought to be where it once was, under the dept. of transportation/highways,whatever they are calling it these days. Have the depl. of highways over see the building and keep the budget in line. this “contracting out” is costing us the tax payers a bundle. We can’t afford to pay a decent living to the disabled but we have millions to waste on bridges.

    Note to Christy, people aren’t using the golden ears or the port mann bridge because they can’t afford to use them. the tolls are TOO HIGH. We have the highest cost of housing in Canada and the lowest min. wage. average salaries aren’t that great in this province and combined with the high cost of housing people simply can’t afford to pay these tolls.

    If tolls to go people will simply look for work closer to home, no tolls no sky train and save hundred per month when you add in the cost of gas. that will leave some employers with a problem.

    these bridges only benefited those who build them and run them like their private little fiefdoms. Christy and her cabal are sending this province into bankruptcy.

    If she builds the bridge to nowhere, what is the point. no one will be able to afford the tolls. they’ll all be on the Alex Fraser or Putolla. /there was no need to tear down the Port Mann bridge, it just made the contract more lucrative. I do sometimes wonder about the location of that new bridge, how safe it is. The old Port Mann was situated the way it was to ensure its footings were in the right spot, oh, well…………..

    the proposed bridge to no where, is simply to provide access up the fraser River for large ships owned by the Red Army of China and the communist government of china. So here we go as a province into debt of most likely $10 billion so a bunch of communists in china can make more money. There is no reason the tunnel could not be twined, as in 2 tunnels.

    Actually what is the point of a bigger bridge. It all narrows down into the Oak St. Bridge and then Oak St. and the City of Vancouver, unless Christy and Moonbeam have something cooked up we don’t know about. i.e, a super highway right through Vancouver and over onto North Van. Hey she and el gordo did crazier things. Right now there isn’t that much on the other side of the tunnel in Ladner, so is this bridge just to ensure developers can build more houses and get even richer and have even more people from Communist china buy up our housing? just asking.

    Liked by 1 person

  7. The BC Liberal Messy bridge gambit will twin the failed economics of the Port Mann bridge. A ‘win’ for Liberal cooked books and friends, a loss for users.

    Sarah Palin’s bridge to nowhere – Christy Clark’s bridge to crushing debt and greater grid lock. If the Libs structure a 3P public-private partnership well the private will profit and the public will dearly pay for the benifits of the builders and those wanting to expand the industrialization of the lower Fraser river.

    Liked by 1 person

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