Law Times

Page 12 July 11, 2016 • law Times www.lawtimesnews.com Funding for First Nations could boost P3s BY MICHAEL MCKIERNAN For Law Times F irst Nations infrastruc- ture could be the next frontier for public-private partnerships after the fed- eral government delivered a mas- sive cash injection for reserves in its latest budget, according to a legal pioneer in the P3 field. The Trudeau government used the March budget to detail its first phase of infrastructure spending, with a large chunk of the $11.9-billion total ear- marked specifically for First Na- tions communities, including $500 million for housing over the next two years, plus $2.2 bil- lion devoted entirely to water and wastewater infrastructure over five years. Michael Ledgett, the co- chairman of the national P3/ infrastructure practice group at Dentons Canada LLP, says the announcement could trans- form the current slow but steady stream of P3 projects involving First Nations, calling the budget a "watershed moment." "It's almost like somebody has shot off the starter pistol to say 'OK, we're now in this game,'" he says. "To this point, public-pri- vate partnerships have been be- tween governments — whether federal, provincial, or municipal — and private companies. But with First Nations, there's anoth- er seat at the table, which adds a whole new element." P3 lawyers may be better pre- pared than most for the chal- lenge though, with adaptability a key skill for anyone who intends on making a career in a field that barely existed two decades ago. Ledgett got involved in the late 1990s, shortly after P3s de- buted in Canada with the con- struction of the Confederation Bridge, which joined Prince Ed- ward Island to New Brunswick and the rest of the Canadian mainland. Transport Canada drafted him in to help with the commercialization of the St. Lawrence Seaway, a project to transfer operation of the seaway from the Crown to its users. By 1998, the St. Lawrence Seaway Management Corporation had been formed, striking a 20-year agreement with Transport Can- ada to take over. "We started more or less from a blank piece of paper. There were no templates out there, and we basically had to make it up as we went along," Ledgett says. Since those early days, Can- ada has built a solid back cata- logue of major P3 projects that can match almost any other ju- risdiction in the world. As parties and their lawyers became more comfortable with the transactional side of P3, that left room for experimentation in the types of projects they could fund, according to Judy Wilson, a partner in the Toronto office of Blake Cassels & Graydon LLP. "Initially, the focus was on so- cial infrastructure like hospitals and schools. Then it moved into more linear projects: highways and roads. "Right now, the move has been towards transit projects, as well as some in wastewater and bio-solids," she says. Most of Wilson's clients are government authorities, which means her own public-service history comes in useful. Wilson spent her first 12 years in practice in the legal department at the old Regional Municipality of Otta- wa-Carleton, including spells as the director of solid waste, and later as director of wastewater. "I think acting for the public sector is very different from act- ing for the private sector. There is a skillset and knowledge base that I got from being in munici- pal government that has served me well," she says. "Municipal projects are a growth area for us. It's led by the nature of the funding, but a lot of the significant infrastructure in this country is in the hands of municipalities." Chris Bennett, a Toronto part- ner at Osler Hoskin & Harcourt LLP, says he expects the pace of change to remain high in the P3 sector. He got his own start in the area in the early 2000s as counsel to the lending syndicate for the William Osler Health System in Oakville, Ont., Canada's first ma- jor health-care P3 to reach finan- cial close. "The model is expanding into new asset classes all the time," Bennett says, highlighting trans- mission line deals in Alberta and renewable energy projects in B.C. "It's further evidence the model can be adapted beyond typical infrastructure," he adds. "It's been very exciting to be part of an industry that has grown the way P3 has during the span of my career. When I started, it was in its early stages, but it has now become a very big business, and a core practice area." According to Ledgett, the most significant change in the P3 landscape during its relatively short history in Canada has been its embrace by various levels of government. At first, he says pri- vate sector players such as invest- ment bankers and consultants were the most enthusiastic pro- ponents of P3. "By and large, governments at all levels were not that keen. They didn't see the point," Led- gett says. That began to change as they built experience on projects, but a key moment came in 2002, when Partnerships B.C. was formed to oversee the procure- ment of complex capital projects in that province. In 2005, Ontar- io incorporated its own version: Infrastructure Ontario, and at the federal level, PPP Canada fol- lowed in 2009. "You've got this institution- alization of the P3 procurement model across the country, and massive political support. It has become the default model for large infrastructure projects," Ledgett says. Tim Murphy, a partner at McMillan LLP who teaches the law and policies of P3 at the Uni- versity of Toronto, says the level of comfort with the model at all levels of government has helped make Canada a global leader in the field. "It has been a bit stop-start in the U.S.," says Murphy, a former chief of staff to former prime minister Paul Martin who re- turned to private practice in 2006 just as P3s began to take off. "One of the great things for Canada is the predictability of the process and the strong f low of deals that move quickly from announcement to close. People globally are looking to invest here because they can see this is not just a one-off." LT FOCUS Order # 986422-65203 $394 4 volume looseleaf supplemented book Anticipated upkeep cost – $413 per supplement 2-3 supplements per year 978-0-7798-6422-5 Supplements invoiced separately 00232FC-54917 Canadian Franchise Guide, Second Edition Osler, Hoskin & Harcourt LLP Managing Editors: Andraya Frith, Dominic Mochrie, and Gillian Scott When you have important franchise issues to resolve, consult one of the most comprehensive resources on the market. 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