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:
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.
It 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.