Divisions applaud shift away from P3 funding

Local school divisions are welcoming the news that the latest round of new school builds will not be done using the public-private partnership approach.

Local school divisions are welcoming the news that the latest round of new school builds will not be done using the public-private partnership approach.

The province announced funding for three new local school projects last month — two in Red Deer and one in Sylvan Lake.

The last four rounds of school builds in Alberta have been done through the P3 method, with one single consortium taking on a bundle of 10 or more schools each time.

The province says the approach has saved taxpayers upwards of $245 million; critics argue that P3s cost more than more traditional methods in the long run.

The delivery method for the 31 most recently announced Alberta school projects has not been finalized, according to Alberta Infrastructure spokesperson Tracy Larsen, but “it’s very unlikely” the P3 method will be used.

With the intention to have each school open in time for the 2016/17 school year, she said the method is prohibitive because it requires a lot of lead-in time before construction can begin.

Nineteen new schools, including one for Blackfalds, were announced in 2013, and were bundled together under the P3 model.

But only one consortium responded to the government’s request for proposals to construct the schools, forcing a surprised government to write to school divisions to say construction may be delayed.

A subsequent Deloitte report analyzing the situation found that developers and contractors in the province would rather pursue other building opportunities, as the P3 model has become more and more price-competitive, with diminishing margins for builders disincentivizing bids.

The report concluded that the project bundles had grown too large, leaving smaller contractors who may otherwise be interested in bidding unable to participate.

Larsen said time constraints, not the findings of the report, are the reason for the move away from P3s.

The Blackfalds school was announced in April 2013; Larsen said the earliest ground will likely be broken is this fall, though she added that much planning work has already taken place.

Under the P3 format, industry is to design and build new schools, financing at least half the cost of construction before being paid out over 30 years.

Red Deer Public and Catholic school divisions will be opening new elementary schools in September that were part of a 2011 P3 bundle.

While both say the construction process has worked well under the model, they will be glad to be able to manage the next projects themselves.

“It’ll be nice to be a little more in control of the progress and the status of the project, so that’s good news for us,” said Cody McClintock, associate superintendent with the public division, referencing the $13.6 million kindergarten to Grade 5 facility it will build in northeast Red Deer.

For the Catholic division, a new 900-capacity high school cannot open soon enough, but board chair Guy Pelletier said the 2016 target date is very ambitious, considering some servicing work still needs to be done at the site northeast of Clearview Ridge.

Pelletier said the design process for the $30-plus million project will go on for months, and autumn would be the earliest any building on the site could begin.

Also in February, a new elementary school was announced for Sylvan Lake. The province has committed $15 million for that project, and Chinook’s Edge School Division superintendent Kurt Sacher said the district is happy it will be able to provide input into the build.

Larsen said the final round of P3 builds will only go ahead if the single consortium bidding on the work submits a proposal that amounts to less money than it would cost the province to build all the schools itself.

mfish@bprda.wpengine.com

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