Tag Archives: Sarah Bridge

The Art Of The Deal

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This shouldn’t be considered some nyah, nyah, nyah, I-told-you-so. hahaWhile I remain sceptical about the magical powers of public-private partnerships to heal our infrastructure deficit, pending a definitive study to prove/disprove their rationale beyond simply a case-by-case basis, I’ll keep my mind as open as I ideologically can toward the possibility that an argument can be made for the P3s’ merits. After all, the private sector blah, blah, blah, am I right?

But this, this, “First-of-its-kind condo deal…mired in financial troubles”, does little to engender much feeling of goodwill toward the concept. I know, I know. Why emphasize the one deal gone wrong when so many have gone right but the same thing might be said about those purely public projects that make so much noise when they go over budget and/or face significant delays. This one’s significant because Metrolinx, the provincial agency directed to get Ontario moving with a proposed massive public transit build over the next quarter century, has stressed the importance of P3s as an integral component of a successful implementation of that plan.

The lack of one being in place was cited as a reason for the recent and ongoing woes of the Yonge-Univesity-Spadina subway extension. The premier wagged her finger at the city. toogoodtobetrureThe TTC chair put forth a motion to ensure P3s were on the table going forward with future transit projects. No more opportunities would be lost in accruing the obvious benefits that come with bringing private sector expertise into building better public facilities.

Yet, it’s hard not to look at this particular deal, an attempt to integrate the concept of intensification with transit hubs, and not come away with the sense that the real expertise the private sector provides is assuring its own best outcomes. In a nutshell, a developer of some property near the Mimico GO station got official approval and rezoning for additional height of a condo project which would be directly connected to the GO station in return for building additional parking spaces specifically for the use of the GO station. Things went south, financially speaking, the development company had a little solvency problem, it seems, and Metrolinx had second thoughts.

“Some information had come to our attention that made this a less than desirable agreement to enter so we pulled out of that agreement,” a Metrolinx spokesperson told the CBC. This was back in 2012. No harm, no foul. Live and learn. Onward and upward. Metrolinx will renovate the GO station and build the extra parking spaces on its own.

But here’s the real kicker, in my opinion.ripupcontract

Despite the cancelling of the agreement, and no connection between the proposed condo development and the Mimico GO station, no additional GO parking provided, the developer still gets to keep the increased height for the project. Rebuffed by the city’s Committee of Adjustment after the deal went sour, the OMB swopped in to save the day, OKing the 7 extra stories. Private sector benefits 1, obligations nil.

This is where my dubious disposition toward P3s stems from. Private enterprise looks out for number one. That is the foundation it is built on, is it not? Self-interest. Emerging with a net gain is the key to survival.

How the public sector arrives at a win-win situation in a relationship with a private partner is therefore tricky at best. Is it possible to maximize profits at the same time as maximizing the public good? That’s the pounding sound of constantly trying to square a circle.

Governments just have to make sure contracts are signed tightly, all the eyes are dotted and tees crossed, risk fully and properly assessed, managed and allocated. Make the right deal and watch the magic happen. It all just makes such sound, intuitive, fiscal sense for everyone involved.

Except that there’s one fundamental disparity in this relationship that makes it ultimately unequal. The private sector can just walk away from any deal that becomes unworkable for them. leftholdingthebagContract signed? So, sue me. To think that any P3 agreement doesn’t include that kind of assessment built into it is probably naïve, the definitive out clause.

Public projects are ultimately the responsibility of the public sector. Failure to deliver a transit stop, for example, is not an option for them. One way or another, over budget or not, on time or not, it must come to pass. It’s the key bargaining chip a private sector partner always has in its back pocket, moral hazard a friend.

It’s difficult to imagine any cost or efficiency savings enough to trump that advantage the private sector always brings to the negotiating table.

— side-eyely submitted by Cityslikr

Less Is Not Always More

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In today’s ‘how not to city council and still hold public office for over a decade’ news, I give you Ward 6 Lakeshore-Etobicoke councillor, Mark Grimes, first elected in 2003.

What am I looking at, you ask. Basically, Councillor Grimes putting forth a ‘technical amendment’ that states the builder of a condo development in the councillor’s ward will pony up $150,000 in Section 37 money to the community via the councillor. Section 37 money? A negotiated amount a developer agrees to pay in return for variances to their development. Variances? Essentially, aspects (usually increases) of the building that are not in accordance with city by-laws.  More stories, higher density. Bacceptlessuilding by-law indulgences, let’s call them, in which money is offered up to compensate for any negative consequences the variances might have on nearby communities.

In a nutshell.

So, on the surface, there’s nothing out of the ordinary about what Councillor Grimes is doing in the above video. Except for the fact, as the CBC report points out, what the ‘technical amendment’ the councillor successfully pushed through did was reduce the amount of Section 37 money the developer would pay from $250,000 to $150,000. No, it didn’t, the councillor told the CBC in an email response. “There was never an agreement reached with the applicant for $250,000 in Section 37 cash contribution,” the councillor wrote. “I recommended the $250,000 to try and negotiate the maximum benefit for the community.”

Again, except the CBC flags a final staff report sent to the Etobicoke York Community Council a month before the councillor’s city council ‘technical amendment’ that states, right there in black and white (page 11), expectless“It had been agreed by the owner that they will provide a cash contribution in the amount of $250,000 for local parks improvements as their Section 37 contribution.”

In essence, the local councillor (Mark Grimes in this case) has it in writing in a city staff report that the owner of a proposed development has agreed to pay $250,000 in Section 37 money but a month later introduces a ‘technical amendment’ reducing that contribution by $100,000.

Who does that?!

Let’s avoid going to the darkest corner of possibilities here. The potential shadiness of Section 37 transactions are always bubbling near the surface.  “A shakedown”, then-mayor Rob Ford once called Section 37 money.  While wildly off the mark (as Rob Ford tends to be about almost everything to do with governance), it’s difficult to fully justify the practice.followthebouncingball

Follow the bouncing ball. Developer wants to build something not allowed by current city planning by-laws. If the city doesn’t agree, the prospect of an OMB appeal going against it, granting the developer free rein, always hangs over the proceedings. So negotiations begin to arrive at some solution that makes nobody entirely happy but is something most can live with. Part of the deal making involves money, a payment to, as I wrote earlier, compensate for any negative consequences of the development might inflict on the community. Assuaging bitter feelings.

A far from perfect way of doing business, obviously, with plenty of open space for behind closed door unsavoriness. Moreover, it’s probably the least efficient or productive way to maximize the community benefits from such projects. Section 37 never provides enough money to ultimately offset the infrastructure stress these kinds of developments impose on communities like public transit. Instead, the city has to be content with building parks and green space, occasionally a library.spikeandchester

But it’s something. An unsatisfying solution to a highly problematic dynamic in terms of city building. The best councillors make the best of a bad situation. If there’s been any genuine claim of any sort of impropriety from a Toronto city councillor in terms of misusing Section 37, I don’t know of one. There’s no reason to think anything different with Councillor Grimes and this case of the disappearing $100,000.

The only conclusion I can arrive at, however, is hardly more heartening. “Councillor Grimes purpose at City Hall,” Luca De Franco tweeted in reaction to the CBC story, “as he sees it — aiding developers, even against the interests of Ward 6 residents.” That’s not corruption. It’s just willful disregard of the people who voted for you.

— sadly submitted by Cityslikr