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University of Guelph
Political Science
POLS 2250
Tim Mau

Cases of Failed P3’s March 11, 2013 Guelph Sports and Entertainment Centre  Key details o P3 arrangements between city of Guelph and Nustadia Developments Inc. o $21 million facility  City - $10.5 million; loan guarantee of $9 million for Nustadia  Nustadia - $1.5 million o Intended city benefits  Downtown revitalization  Reduce cost to build (particularly important since it could have been built cheaper in west end)  Would’ve been a lot cheaper, parking would not have been an issue neither would placement of the arena  No risk of operational loss o Guelph Centre Partners (GCP) – 35 year lease o Opened Fall 2000 o Operational problems  Lower than expected at Storm fames  Lack of facility rentals  Did not sell naming rights  Lack of mall business  Mid-2001 – company had no money to pay principal and interest payments o 2 options for moving forward  Terminate agreement  Renegotiate partnership  City to pay taxes and loan payments until June 2005 ($750,000/year)  GCP to repay  June 2005 – GCP ended partnership  Public administration issues o Additional costs to taxpayers ($4 million debt & $9million loan) o Transparency – lack of access to company books  Conceded to very limited amount of city officials to look at the books in Toronto o Risk must truly be shared  GCP was on the hook for risks in theory, were not risking that much with regards to tax breaks and cuts and purchasing the Guelph Storm o Poorly negotiated agreements  Not very good understanding of the contracts at hand Andersen-Comsoc Affair  Key details o P3 between Ontario Ministry of Community & Social Services (COMSOC) and Andersen consulting o Common purpose procurement policy – governs use of partnerships  Deputy ministers and officials had to give up some control  Aim is to ensure better, more creative solutions  Only supposed to be used when ministry is short on skills and resources o 1995 – issues RFP (request for proposals) to overhaul family benefits and general welfare assistance programs o aim was to replace computer systems and new business processes o Jan 1997 – entered into a 4 year agreement with Andersen Consulting o Initial Andersen cost estimate - $50-70 million; Jan 1997 cost was $180 million  Public administration issues o Funds were reimbursed without proper documentation and receipts o Power differences between public and private partners  If lack skills, money or time, can it be an equal partnership? o Cost pool & benefits pool  Andersen – 79% of costs; 82% of benefits by end of 2000  Agreement no benefits until exceeded costs, yet Andersen paid anyway  Many of benefits attributed to an earlier initiative  Spirally costs – Andersen’s labour costs exceed those outlined in RFP by an average of 63% o Tension in terms of democratic accountability  Who do you hold responsibility in these sorts of arrangements?  Effective oversight? o Government as subordinate partner  Public interest vs. profit o Administrative control & accountability remain important  Provincial auditor & public accounts committees Public Sector Values & Ethics  NPM movement – resulted in significant transformation in public sector values  Values – “enduring beliefs that influence our attitudes, actions and the choices we make”  Ethics – sub-set of public service values “enduring beliefs that influence our attitudes and actions as to what is right and wrong”  Traditional values o Neutrality – political neutrality (nonpartisanship) vs. value neutrality  Politics-administration dichotomy  Appointments  Political activity  1918-1976 (none)  Received jobs and promotions based on “who you know” not on skill or merit  Public service Employment Act, 1967  1991 supreme court ruling  Reasonable limit was not achieved to keep deputy ministers and other
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