Civic financing poses problem
There’s little doubt that the commitment of $116.8 million by senior governments toward Saskatoon’s request for help with building two bridges to cope with the traffic congestion associated with rapid growth will be greeted with relief by many residents and civic politicians.
Given Saskatoon’s vital and increasing contribution to Saskatchewan’s economy, the $60.8 million being provided by the federal government, and the $20 million upfront commitment by the province with a further $1 million annual contribution for 30 years, toward the $252.6 million project are entirely reasonable, if not overdue.
It’s all but certain that proponents of a bicycle/pedestrian bridge will continue to press their case that vehicles be kept off the $35 million replica to replace the century-old Traffic Bridge that was decommissioned in 2010. However, the only concern about the $194 million North Commuter Bridge is how soon it can be built to alleviate the frustratingly long traffic tie-ups faced by commuters from Saskatoon’s expanding northeast suburbs to the city’s north industrial area.
The federal funding was contingent upon the projects being built under the public private partnership model. While the provincial government’s contribution isn’t earmarked to come out of its SaskBuilds P3 program, Saskatoon’s willingness to proceed under the P3 process obviously helped secure funding from Regina.
Saskatoon nominally is responsible for $141.8 million of the $252.6 million cost of the two bridges and associated roadway improvements, although citizens might be taken aback by the $127.4 million in interest costs the city will pay over 30 years to the contractor selected to finance, design, build and maintain the infrastructure. It’s a reasonable debate as to whether proceeding as a P3 project will save $26 million, as the city suggests, or whether higher borrowing costs faced by a private company compared to a government might offset the savings.
However, as was the case with Regina’s waste water treatment plant that proceeded as a P3, Ottawa’s $60.8-million contribution would have been nil had the city chosen to proceed in the traditional borrow and build process, making it more expensive for civic taxpayers.
However, it’s in looking at the contortions the city has performed to minimize the mill rate impact of construction that one begins to realize why civic governments need a better financing model than being so closely tied to the value of real property.
Essentially, the city’s plan to keep the impact on taxpayers only to the $2.5 million to $3 million a year it will cost to maintain the new bridges boils down to a head-spinning array of moves: relying on continued growth and the associated sale of properties from the land bank; diverting $30 million in proceeds from loans it had anticipated in taking out to replace transit buses; using its share of federal gas tax money; and using the $1 million a year promised by the province.
It’s based on many assumptions about the actions of senior governments, and leaves Saskatoon tight on cash for discretionary spending.
It’s good news that the bridges are going ahead. It’s the details involved that cause some concern. The editorials that appear in this space represent the opinion of The StarPhoenix. They are unsigned because they do not necessarily represent the personal views of the writers. The positions taken in the editorials are arrived at through discussion among the members of the newspaper’s editorial board, which operates independently from the news departments of the paper.