Bridges vs Ferries

By Kelly Sinoski,

Vancouver Sun

February 4, 2009

METRO VANCOUVER — The provincial government has scrapped its plan to twin the Port Mann Bridge in favour of building a new 10-lane crossing over the Fraser River, at a cost of $3.3 billion.

Premier Gordon Campbell said the new bridge, which will be built to accommodate rapid bus service, expanded cycling and pedestrian lanes and a possible light rail line, will ease congestion clogging the crossing and commuter delays by about one-third.

The project design calls for two lanes each way to be reserved for local commuters heading south of the Fraser or to the Tri-Cities, as about 40 per cent of the bridge’s traffic never goes past Surrey or Coquitlam, Campbell said.

Public transit users using the new bridge are expected to be able to get from Langley to a SkyTrain station in Burnaby in 23 minutes.

But those driving will have to pay for it. Set to open in 2013, the new bridge will be financed primarily by tolls, which will start at $3 each way for all commuters, with concessions for truckers, bus and taxi drivers and van-poolers to encourage public transit.

The tolls, to be in place for 40 years, will rise with inflation but will be capped at 2.5 per cent annually, government officials said.

“Currently in B.C. we lose about $1.5 billion in our economy every year to congestion,” Campbell said. “A single span will clear up the bottlenecks that have been plaguing commuters for years and years.”

Transportation Minister Kevin Falcon said the government’s private partners — consortium Connect BC Development Group, a group that features Australian-based Macquarie Group — believed it would be cheaper and save on maintenance costs to build a new bridge.

“They didn’t want to be pouring money into aging infrastructure,” Falcon said, adding that in 40 years the existing Port Mann Bridge will be older than the Pattullo Bridge is now. “There will be savings over time.”

The 37-kilometre project includes widening Highway 1, adding two lanes each way on the east side of the bridge and an extra lane in both directions on the west side. The capital cost of the project is about $2.46 billion, but the total cost, including operating and maintenance, is expected to be $3.3 billion.

Of that, the province is financing $1.15 billion in the form of a repayable loan, which is being matched by bank financing. Its private partner is putting forward its own equity for the remaining $1 billion.

The government came to the rescue of its private partners with the loan last month after Macquarie, an international toll-road operator and investor, encountered financing difficulty as a result of the global credit crisis.

Falcon said construction of the new bridge is a historic event for Metro Vancouver, which is expected to add a million residents in the next 20 years, most of them south of the Fraser.

He noted commuters and truck drivers now have to spend hours in traffic on the bridge, which was built in 1964 and is one of the most important routes for goods traffic to and from Metro Vancouver ports and businesses.

Paul Landry, president and CEO of the B.C. Trucking Association, said trucks can be delayed up to an hour on the Port Mann. He supported the idea of toll discounts for trucks to encourage them to operate out of peak hours and keep traffic flowing more smoothly.

Right now, “It’s terrible,” he said. “It’s very tough and it’s not only the delays and the cost of the delays but the uncertainty. If you’re trying to run on any schedule you have to arrange to leave early. If there’s any kind of an incident on either side of the bridge or on the bridge, things grind to a halt.”

He said the additional lanes on the highway to the bridge will make a huge difference in cutting the congestion, as will the tolls since they will push commuters to use transit more.

TransLink spokesman Ken Hardie said that due to congestion, no buses now use the bridge. When the new bridge is built, buses will be able to use it for the first time in 20 years.

Hardie added that rapid bus lanes on the bridge could be converted to light rail in the future.

Park-and-ride lots will be added in the Fraser Valley and there will be access lanes for buses on and off the freeway from 216th street in Langley to Lougheed Town Centre.

The project, which will create 8,000 jobs, ties in to provincial and TransLink plans to boost rapid transit and build the Golden Ears and Pitt River bridges and the South Fraser Perimeter Road.

Campbell said the province has to create a Pacific Gateway, noting that by 2020, anticipated trade from Asia could bring in $76 billion for B.C. and $230 billion for Canada.

B.C. Chamber of Commerce president John Winter said the new bridge — along with the other infrastructure — will make it easier to live and work in the Tri-Cities, Maple Ridge, Pitt Meadows and south of the Fraser.

“That’s where the economic growth is going to be,” Winter said. “It’s absolutely imperative that this bridge — and the other bridges — connecting with the ports are improved.

“If we’re investing all this money in [Deltaport], this is all tied together and inextricably linked to progress.”

Coquitlam Mayor Richard Stewart and Surrey Mayor Dianne Watts said it makes more sense to build a new bridge than hold up the old one until it has to be rebuilt in 40 years.

“What do you do with a twinned bridge in 40 years when you have to tear one down and build a replacement for it?” Stewart asked.

Cecil Damery, president and business agent of Ironworkers Local 97, said the impact of the recent Pattullo Bridge fire and repair underscored the need for a new bridge as a useful backup in case of emergencies.

He said the plan is financially sound, since it would cost more to maintain and fix the old bridge.

Damery added he was confident the project will be a boon for his industry.

“For every construction job, six other jobs are created. It’s a trickle-down effect,” he said.

Jack Davidson, president of the BC Road Builders and Heavy Construction Association, said the project shows the government is looking toward the future rather than just short-term.

The province will have to get environmental assessment approval to build the new bridge, but expects that can be fast-tracked, since most of the work was already done for the twinning of the bridge, Transportation Ministry spokesman Dave Crebo said.

Crebo said the new bridge is expected to have less impact on the environment because it will be a single span. The old bridge won’t be demolished until the new one is completed.

NDP MLA Bruce Ralston criticized the government for re-negotiating a deal with its private partners, since other bidders who applied to twin the bridge wouldn’t have had the same opportunity.

He said the government eight months ago said it would cost $1.6 million to twin the bridge and is now quoting $2.5 billion for the new plan.

“The minister and premier say this is a way to save costs,” he said. “Table the contract, open it up. How’s it going to escalate over time? We were led to believe they were twinning the bridge. It seems this was negotiated after the contract was awarded.”

With files from Mary Frances Hill

ksinoski@vancouversun.com

METRO VANCOUVER — The provincial government will now finance the $3.3-billion Port Mann Bridge project after it announced Friday it was unable to reach a funding deal with the private consortium that was supposed to build the span.

Transportation Minister Kevin Falcon insisted this is not a bad deal for taxpayers, as the government hopes to recoup the debt financing through $3 tolls.

However the plot twist appears to be a setback for the Liberal government, which has long touted P3s — public-private partnerships — as the way to build infrastructure without the government assuming financial debt.

The government now assumes a risk with the Port Mann that didn’t exist before: If future traffic volumes are lower than anticipated, fewer tolls will be collected, meaning it will be taxpayers, not a private company, who will have less revenue to pay the debt.

“We feel comfortable with that risk. We’ve had [several] independent analysis undertaken as to what the traffic loads will be on the bridge,” Falcon said.

He said the province will not be on the hook for any cost overruns or construction delays while the “fixed-price project” is being built between now and 2013, noting those issues will be the responsibility of the contractors building the bridge.

It was less than a month ago when the province announced it had reached an agreement in principle with the consortium, Connect BC, and just three weeks ago when it unveiled the design for the 10-lane span.

The province remained optimistic the financing would be secured — and even agreed to provide one-third of the money — but in these tough economic times, Connect BC couldn’t arrange a big enough syndicate of financiers to back the rest.

NDP critic Bruce Ralston called this a “colossal failure” for Falcon, who has consistently backed the P3 model.

Ralston, who is opposed to P3s, has always maintained the cost of borrowing is cheaper for governments such as B.C., with a triple-A credit rating, than it is for private consortiums. He argued that net benefit doesn’t apply to the Port Mann now because construction was delayed while the negotiations dragged on.

“It’s very clear the minister was fixed on this way of doing it, and I think he has caused more cost to this project and we’ll all pay the price in the long run,” he said.

Partnerships BC, the agency that oversees P3s, sent a letter to Falcon on Tuesday saying Connect BC could not reach an agreement on financing, and Falcon then decided to kill the deal.

Connect BC was led by Macquarie Group, an Australia-based toll-road operator and investor that has has encountered financial difficulty as a result of the global credit crisis. Macquarie’s only role now is to provide advice on tolling operations.

Reports out of Australia noted Macquarie’s share price continues to fall, and has plummeted 82 per cent since May 2007.

Partnerships BC CEO Larry Blain said Macquarie’s financial troubles did not play a role in the Port Mann deal collapsing.

Blain remains confident in the other P3 projects, including the Sea to Sky Highway, for which Macquarie is project manager.

He is optimistic that projects not yet started, such as the South Fraser Perimeter Road, can secure financing because they have smaller price tags. “The market is changing and we are watching it carefully,” Blain said.

Falcon dismissed suggestions the Port Mann financing could become a hot-button topic during the provincial election in May, arguing the public will be more interested in the 8,000 construction jobs it will create.

“I hope it turns into an election issue,” Falcon said. “Probably not a lot of people are going to have sleepless nights about how these things are financed.”

lculbert@vancouversun.com

Private builders struggling to raise money, ask Victoria for more time

By Jonathan Fowlie and Lori Culbert,

Vancouver Sun

January 15, 2009