Infrastructure Ontario releases annual update summary of projects

The following market update letter from Infrastructure Ontario President and CEO Bert Clark was released last week. It included a summary chart of all projects and pipeline projections for the coming year. Below is an edited version of his report and a link to the summary list of projects.

The Government of Ontario is committed to investing more than $130 billion in infrastructure over ten years, including $11.9 billion planned in 2015-16. This strong commitment is leading to the renewal and expansion of transit, transportation and other public infrastructure. Investments in infrastructure are positioning Ontario to better compete in the 21st Century economy.

The 2015 Infrastructure Ontario (IO) Market Update confirms a robust pipeline of social and civil infrastructure projects using Alternative Financing and Procurement. In addition, the Market Update shows the Government of Ontario is investing in new direct delivery projects and new real estate capital repair initiatives. IO will continue to apply best practices and tailor AFP and traditional project delivery models to protect the public interest and meet client needs.

The AFP project pipeline includes projects with a total capital value estimated at $7.55 billion. This includes social infrastructure projects such as a new courthouse in Toronto in cooperation with the Ministry of the Attorney General and new Ontario Provincial Police detachments in various locations in cooperation with the Ministry of Community Safety and Correctional Services.

New health care facilities will move forward in cooperation with the Ministry of Health and Long-Term Care, including the Mackenzie Health facility in Vaughan. Transit and transportation projects are a priority for the Ontario government and IO is well positioned to assist clients like the Ministry of Transportation and Metrolinx to deliver major projects such as the Highway 427 expansion, Highway 401 High Occupancy Vehicle lanes, and Hurontario and Finch LRTs.

Eglinton Crosstown was awarded this week and  is progressing towards the potential start of construction in 2015. Building on our strong relationships with municipalities such as the Region of Waterloo and City of Ottawa, IO has been engaged by the City of Toronto to develop business cases and procurement options for the Gardiner Expressway Rehabilitation and Scarborough Subway projects for City Council’s consideration.

Transit-oriented development initiatives, such as the GO Port Credit station redevelopment and the Waterloo Region transit hub, are opportunities for IO to work with clients to leverage the benefits of new transit and transportation investments. In addition, IO continues to collaborate with PPP Canada to demonstrate the business cases for future AFP projects.

The recently announced federal transit fund focuses on partnerships with the private sector to deliver public infrastructure and could be an opportunity to advance AFP transit projects over the long term.

IO’s approach is informed by the 2014 AFP Track Record Report which shows that 36 of 37 projects that reached substantial completion of construction were on budget and the majority were on time. In 2014-15, nine AFP projects reached substantial completion of construction and procurements were completed and construction started on fourteen projects.

As a result, new hospitals, court facilities, children’s treatment centres, highways, transit systems, and sports facilities for the TORONTO 2015 Pan Am / Parapan Am Games are available for the use and enjoyment of Ontarians.

Refining AFP Enhancements and refinements to AFP have been introduced including local knowledge, health and safety requirements with the Certificate of Recognition Program, and a pilot project approach to encourage apprentices on projects.

In addition, IO will release a new Value for Money Guide that reflects the professional advice of external advisors, best practices, and IO’s ten years of experience using AFP. Based on direction from the Minister of Economic Development, Employment and Infrastructure (MEDEI), a new $100 million threshold will be used by ministries and IO to assess new projects not yet assigned for AFP delivery, although the government will maintain flexibility to assess complex projects under $100 million on a case by case basis.

Furthermore, IO, directed by MEDEI, will make prudent adjustments to progress and substantial completion payments in order to reduce long-term financing costs without reducing the transfer of risks to the private sector.

IO and MEDEI are working to implement all recommendations from the Auditor General’s 2014 annual report and will continue to strike a balance in determining which complex projects are suited for AFP and how much private finance is required to protect the government from risks.

Infrastructure Ontario continues to be the world-leading government agency that uses AFP to partner with the private sector in order to deliver publicly-owned infrastructure. AFP transfers risks to the private sector, protects taxpayers from cost overruns, and has produced a net benefit to the government of over $6 billion. Infrastructure Ontario’s AFP model is a homegrown Ontario success. As a result, Ontario companies are well positioned to compete for business in other countries and export their expertise.

Infrastructure Ontario, in cooperation with MEDEI and Ontario’s representative in Washington, DC, will continue to assist companies to target new markets, particularly in the United States. Collaboration with the National Governors Association, National Council for Public-Private Partnerships, World Bank, Inter-American Development Bank and International Monetary Fund will assist Ontario companies to be infrastructure leaders around the world.

Over 40 jurisdictions have already visited Ontario to understand how our approach to infrastructure investments can be exported.

The Ontario Government, through MEDEI, holds Canada’s second largest real estate portfolio. Like many public sector realty assets, the portfolio is large, diverse and includes assets that are aging. IO is mandated to maintain the portfolio in a state of good repair with the resources available, right size and rationalize the portfolio, maximize the value of assets during the disposition process, and provide real estate services that support public service program needs.

IO is advancing the Ontario Place Urban Park and Waterfront Trail project as part of the long-term vision for Ontario Place and is cooperating with the City of Mississauga regarding the OPG Lakeview site.

Also, consistent with broader efforts regarding assets, IO will continue to implement the Government of Ontario’s vision for the Seaton Lands in Durham Region and pursue transactions that maximize the return on high value assets such as the OPG Headquarters.

The LCBO Headquarters land disposition continues on track and will deliver positive returns to the government.

In 2014, IO made significant advances in how it partners with the private sector to manage and maintain the portfolio of government assets through a new Project Management Service Provider contract. Capital repair projects are now being implemented in partnership with our real estate Vendor of Record members that are across all regions and various specializations.

IO will put out an estimated $70 million in new capital repair projects this year as part of the estimated $250 million worth of projects managed each year.

IO’s real estate expertise has created the potential for direct delivery projects using traditional methods. Through competi
tive procurements, IO anticipates bringing to market an estimated six direct delivery projects this year.

All of these projects are opportunities for companies of various sizes from across the province to partner with IO.