Transcript: Inside Public-Private Partnerships | Jun 20, 2019

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, pale pink shirt, and spotted purple tie.

A caption on screen reads "Inside public-private partnerships. @spaikin, @theagenda."

Steve says BACK IN THE DAY, WHEN
GOVERNMENTS WANTED HOSPITALS OR
SUBWAY LINES OR TRAIN STATIONS
BUILT, THEY HIRED A COMPANY TO
BUILD THAT INFRASTRUCTURE, THEN
OVERSAW THE PROJECT THEMSELVES.
BUT IN RECENT YEARS, COMPLAINTS
ABOUT BILLIONS IN COST OVERRUNS
AND POOR MANAGEMENT HAVE
PROMPTED GOVERNMENTS TO TRY
ALTERNATIVE MEANS OF GETTING
THESE MEGAPROJECTS DONE.
AND SO
PUBLIC-PRIVATE-PARTNERSHIPS OR
P3S ARE NOW WHAT TYPICALLY
HAPPENS.
HERE TO REVIEW THE PLUSES AND
MINUSES OF THE P3 PROCESS: LOU
SERAFINI JR., PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF
FENGATE ASSET MANAGEMENT.

Lou is in his late forties, clean-shaven, with short wavy brown hair. He's wearing a gray suit, blue shirt, and brown tie.

Steve continues NICE TO HAVE YOU HERE AND IN
THAT CHAIR.

Lou says THANK YOU.

Steve says JUST PUT A BIT MORE
MEAT ON THE BONE THAT I
DESCRIBED IN THE INTRO HERE.
GOVERNMENTS HAVE TYPICALLY GOT
OUT OF THE BUSINESS OF
OVERSEEING THESE BIG
INFRASTRUCTURE PROJECTS WHY?

The caption changes to "Lou Serafini Junior. Fengate Asset Management."
Then, it changes again to "Looking back."

Lou says WELL, THE MAIN REASON IS
THERE WAS A POOR TRACK RECORD
HISTORICALLY OF MEETING PROJECT
BUDGETS, DELIVERING THEM ON
TIME.
AND THE OTHER PART OF IT IS
TRYING... HOW TO DELIVER IT
BETTER BY CREATING CENTRES OF
EXCELLENCE AROUND THE COUNTRY SO
THAT THESE PROJECTS, YOU KNOW,
COULD MEET A SCOPE OF WORK THAT
WAS DELIVERED ON TIME AND ON BUDGET.

Steve says GIVE US SOME EXAMPLES
HERE IN THE PROVINCE OF ONTARIO,
SOMETHING THAT WOULD HAVE BEEN
BUILT BY THE P3 PROCESS AND
MAYBE WE DIDN'T EVEN KNOW IT.

Lou says SURE, SO HOSPITALS, THERE WAS
A PROGRAM IN THE MID-2000S, 2006
TO 2010, WHERE THE AVERAGE AGE
OF A HOSPITAL IN ONTARIO WAS
ABOUT 43 YEARS OLD.
THE GOVERNMENT CREATED A CENTRE
OF EXCELLENCE IN... THROUGH
INFRASTRUCTURE ONTARIO WITH THE
INTENT OF, YOU KNOW, FINDING THE
LESSONS LEARNED SO THAT WE CAN
DELIVER THESE PROJECTS ON TIME
AND ON BUDGET.
HISTORICALLY, WHAT WAS HAPPENING
IS THESE DECISIONS WOULD FALL TO
A LOCAL AUTHORITY.
THE LOCAL AUTHORITY WOULD HAVE
NEVER BUILT A HOSPITAL.
THEY WOULD HAVE BEEN IN THERE...
AS I SAID, THEIR HOSPITAL WOULD
HAVE BEEN OVER 40 YEARS OLD.
AND MOST TIMES BUDGETS WEREN'T
MET BECAUSE THE SCOPE OF
SERVICES WASN'T DEFINED, OR THE
DESIGN ELEMENTS OF THE BUILDING
DIDN'T ALLOW FOR A LONG LIFE
CYCLE, IF YOU WILL, FOR THESE
BUILDINGS TO LAST THE 50 YEARS
THAT THEY WERE.

Steve says THESE ARE... I MEAN,
WE'RE TALKING BILLION DOLLAR
PROJECTS HERE, RIGHT?

Lou says BILLION DOLLAR PROJECTS.

Steve says OKAY, WHAT'S YOUR ROLE
IN THESE THINGS?

The caption changes to "Lou Serafini Junior, @LouSerafiniJr."
Then, it changes again to "Government and business, hand in hand."

Lou says SO IN PUBLIC-PRIVATE
PARTNERSHIPS, THERE'S THIS
NOMENCLATURE THAT THE PRIVATE
SECTOR IS TAKING OVER THE
PROJECT.
THERE'S NOT THAT AT ALL.
THERE'S ALWAYS BEEN PRIVATE
SECTOR INVOLVEMENT, EVEN WHEN
THE GOVERNMENT PROCURES THESE
PROJECTS.
THE GOVERNMENT DOESN'T KNOWN
ARCHITECTURAL FIRMS OR
ENGINEERING FIRMS.
THEY DON'T OWN CONSTRUCTION
COMPANIES.
WHAT'S REALLY, IN MY MIND,
HELPED THIS BECOME A REALLY
LEADING CLASS WAY OF DELIVERING
PUBLIC INFRASTRUCTURE IN ONTARIO
IS THE IDEA OF PRIVATE SECTOR
FINANCE.
AND MY ROLE IS TO PLAY THAT...
TO DEVELOP THE DEBT SOLUTION AND
PROVIDE THE EQUITY THAT SUPPORTS
THE DEBT SOLUTION.
SO IF YOU WERE TO THINK OF A
STOOL WITH THREE LEGS, IN
ONTARIO THERE WOULD BE THE
CONSTRUCTION ELEMENT, THE
SERVICES ELEMENT, AND THEN THE
FINANCE ELEMENT, AND THAT'S
WHERE FENGATE PLAYS A ROLE.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says WHEN SOMEBODY SAYS I
NEED A NEW HOSPITAL BUILT,
YOU'RE THE GUY WHO GOES OUT AND
SORT OF PARTNERS UP WITH THE
CONSTRUCTION COMPANY, FINDS ALL
THE SOURCES OF REVENUE TO MAKE
IT HAPPEN, THAT KIND OF THING?

Lou says SO IN ONTARIO, THE MODEL IS A
LITTLE BIT DIFFERENT.
THERE ARE TWO TYPES OF
INFRASTRUCTURE THAT ARE BEING
DELIVERED.
ONE WOULD BE AVAILABILITY-BASED
AND ONE WOULD BE SUBJECT TO
REVENUE RISK.
IN ONTARIO, IF IT IS A HOSPITAL
OR AN ACCOMMODATION BUILDING, A
COURTHOUSE OR AN ADMINISTRATION
BUILDING, WHAT WOULD HAPPEN IS
THE GOVERNMENT WOULD COME OUT
WITH A SCOPE OF WHAT THEY
REQUIRE, AND THEY WOULD BE
LOOKING TO PAY A FIXED PAYMENT
ON A MONTHLY BASIS FOR A
CONTRACT TERM.
DURING THE CONTRACT TERM, THE
CONSORTIUM DEVELOPS PRICING FOR
THIS SCOPE, AND THEN SO LONG AS
THE FACILITY IS MADE AVAILABLE
TO THE GOVERNMENT, THE
GOVERNMENT REPATRIATES THIS
MONTHLY PAYMENT TO THE
CONSORTIUM.

Steve says OKAY, COULD WE DO A
REAL LIFE EXAMPLE HERE?

Lou says SURE.

Steve says I'M THE PROVINCE OF
ONTARIO.
I CALL YOU UP ONE DAY AND SAY,
LOU, I WANT TO REDEVELOP ONTARIO
PLACE, OKAY?
I WANT YOU TO BRING IT BACK TO
LIFE.
IT'S BEEN KIND OF LEFT FALLOW
FOR FAR TOO MANY YEARS, AND WE
WANT YOU TO BID ON HAVING THE
RIGHT TO SPRUCE IT UP AND DO
SOMETHING WITH IT.
GO.
WHAT DO YOU DO?

Lou says WELL, IT'S MORE COMPLICATED
QUESTION WHEN IT COMES TO
ONTARIO PLACE AS OPPOSED TO A
HOSPITAL, BUT IN ONTARIO PLACE,
NOW IT'S ABOUT CREATING
INNOVATION AND CREATIVITY.
WHAT DO WE KNOW NOW?
WE KNOW THAT IT'S BASICALLY A
SHELL OF ITS FORMER SELF.
WE KNOW THAT THE GOVERNMENT IS
SPENDING MONEY TO MAINTAIN WHAT
IS THERE.
SO THE IDEA IS WHAT IS IT WE'RE
TRYING TO ACHIEVE HERE?
ARE WE TRYING TO CREATE A
WORLD-CLASS DESTINATION?
ARE WE TRYING TO CREATE A NEW
NEIGHBOURHOOD WHERE THERE WILL
BE RESIDENTIAL AND OFFICE AND
MIXED USES?
ONCE THAT SCOPE IS DEFINED, OUR
JOB IS TO FIND THE RIGHT
PARTNERS WHO CAN ANSWER TO THIS
REQUEST FOR PROPOSALS IN THE
BEST WAY POSSIBLE TO TRY TO
GET... TO WIN THAT DEAL.
AND THAT DEAL THERE WOULD DEPEND
ON MOSTLY WHAT REVENUE IS
AVAILABLE TO PAY THE BILLS.

Steve says OKAY, TO THAT END, I
HAVE A FEW MORE IDEAS FOR YOU, LOU.

Lou says SURE.

Steve says ACTUALLY, I DON'T HAVE
THE IDEAS.
THE MINISTER OF TOURISM, CULTURE
AND RECREATION HAD THE IDEAS.
HERE IS WHAT HE HAD TO SAY ABOUT
ALL THIS.
SHELDON, IF YOU WOULD.

A clip plays on screen with the caption
"May 28, 2019. Michael Tibollo."
In the clip, Minister Tibollo gives an official statement.

He says I WANT TO BE CLEAR.
OUR VISION FOR ONTARIO PLACE
DOES NOT INCLUDE RESIDENTIAL
DEVELOPMENTS OR CASINOS.

The clip ends.

Steve says OKAY.
SO I COME BACK TO YOU AND I SAY,
LOU, AGAIN, I WANT YOU TO BID ON
THIS THING, BUT NO CASINOS, NO
CONDOS.
WHAT DO YOU DO NOW?

Lou says WELL, LIKE ALL PUBLIC
INFRASTRUCTURE, YOU NEED MONEY
TO PAY THE BILLS.
SO WE'RE GOING TO MAKE A CAPITAL
INVESTMENT, THAT CAPITAL
INVESTMENT HAS TO BE... IT HAS
TO BE REPAID.
AND TYPICALLY YOU HAVE TO MAKE A
RETURN FOR THE RISK THAT YOU'RE
TAKING.
SO CONDOS OR DEVELOPMENT
ENTITLEMENTS ARE A GOOD WAY TO
GENERATE NEW REVENUES.

Steve says AS WOULD CASINOS BE.

Lou says AS WOULD CASINOS BE.
AND IN ONTARIO PLACE, IF THE
INTENT OF GOVERNMENT IS TO
CREATE A DESTINATION FOR
FAMILIES, AND THERE ARE NO
ENTITLEMENTS AVAILABLE IN THE
RESIDENTIAL SECTOR, THERE ARE NO
LEASE PAYMENTS AVAILABLE FROM A
CASINO OPERATION, THEN THE
ASSESSMENT HAS TO HAPPEN: WHAT
WILL DRIVE TRAFFIC AND WHAT WILL
DRIVE REVENUE AT THAT SITE SO
THAT WE CAN RECOVER OUR
INVESTMENT?

Steve says IF... OKAY.
LET'S KEEP PLAYING WHAT IF HERE.
IF I SAY TO YOU NO CASINOS, NO
HOUSING THERE, LOU, IN REAL
LIFE, DO YOU PUSH BACK ON ME AND
SAY, WELL, LOOK, IF YOU'RE NOT
GOING TO ALLOW ME TO PUT A
CASINO OR CONDOS THERE, THERE'S
NO BUSINESS MODEL FOR ME TO MAKE
IT WORK SO I'M OUT.

Lou says AND THAT'S LIKELY WHAT WILL
HAPPEN IF IT DOESN'T MAKE SENSE
FOR THE PRIVATE SECTOR.
SO THE WHOLE IDEA OF PRIVATE
SECTOR INVOLVEMENT IS TO CREATE
MORE DISCIPLINE FOR THE PROCESS
SO THAT THERE CAN BE A TRUE
ASSESSMENT MADE OF WHETHER THE
PROJECT IS VIABLE.
IF THAT PROJECT IS
UNFINANCEABLE, IT'S VERY LIKELY
THAT IT WILL ATTRACT A BID THAT
MAKES THE PROJECT A REALITY.

Steve says CAN YOU THINK, JUST
BLUE SKYING HERE, IF NO CASINOS
AND NO HOUSING, WHAT COULD BRING
LOTS OF PEOPLE DOWN THERE THAT
WOULD MAKE IT A REASONABLE
INVESTMENT FOR THE PRIVATE
SECTOR AND ALSO BE A GOOD
TOURIST DESTINATION AS WELL?

The caption changes to "Watch us anytime: tvo.org, Twitter: @theagenda, Facebook Live."

Lou says I MEAN, YOU SAID IT, A
TOURIST DESTINATION IS BASED ON
MANY ELEMENTS.
IT COULD BE FOOD AND BEVERAGE.
IT COULD BE PROGRAMMING FOR
YOUTH.
IT COULD BE PROGRAMMING FOR
KIDS.
AN ENTERTAINMENT VENUE, IF YOU
WILL.
AND THERE ARE GOOD EXAMPLES ALL
AROUND THE WORLD WHERE THIS
HAPPENS.
IN TORONTO AND IN CANADA IN
PARTICULAR, VERY RARELY DO YOU
SEE PROGRAMMING THAT GOES 12
MONTHS OF THE YEAR.
AND THE REALITY IS IF WE WERE TO
EMBRACE OUR ROOTS AND OUR
WEATHER, YOU KNOW, THERE IS A
POSSIBILITY TO CREATE YEAR-ROUND
DESTINATION AT ONTARIO PLACE.
THERE IS A GOOD EXAMPLE IN THE
STAGE AND THE MUSIC VENUES, VERY
POPULAR, BUT THERE ARE SOME
FUNDAMENTAL FLAWS WITH THAT SITE
THAT WOULD PREVENT THE... A
CONSORTIUM OF TAKING UNDUE RISK.
SO FOR INSTANCE, TRANSPORTATION
IS WEAK IN THAT AREA.
IF YOU HAVE TO TAKE YOUR CAR
THERE, IT'S DIFFICULT TO PARK
THERE.
IT'S JUST NOT CONVENIENT.

Steve says LET'S SAY, AGAIN, YOU
COME IN, YOU'VE GOT THIS
HOSPITAL BUILT, WHATEVER, YOU'VE
GOT THIS NEW LIBRARY BUILT,
YOU'VE GOT THIS NEW BRIDGE
BUILT, WHATEVER IT IS, AFTER
IT'S ALL SAID AND DONE, WHO OWNS IT?

The caption changes to "When all is said and done."

Lou says THE GOVERNMENT ALWAYS OWNS IT.
THERE IS A MISCONCEPTION THAT
THE PRIVATE SECTOR OWNS IT.
WE HEAR MANY TIMES THAT THE FULL
SEVEN IS A BAD EXAMPLE OF A
PUBLIC-PRIVATE PARTNERSHIP.
IT WAS NOT A PUBLIC-PRIVATE
PARTNERSHIP.
IT WAS A TRUE PRIVATIZATION, AT
LEAST PHASE ONE WAS.
AND WHERE WE COME IN IS WE COME
IN AND DELIVER A SERVICE, AND
THE SERVICE IS THE DESIGN OF
THIS BUILDING, AND INCORPORATING
THAT DESIGN WITH THE LONG-TERM
SERVICE OF THIS FACILITY.
WE WILL MEET A SCOPE.
WE WILL MEET A MINIMUM SCOPE
THAT SAYS THAT THE GOVERNMENT
CAN PAY US ON A MONTHLY BASIS.
SO WHEN THAT HAPPENS, YOU TEND
TO GET A LOT MORE INTEGRATION
AND UPFRONT DESIGN.
SO WE'RE INVESTING MORE AT THE
BEGINNING SO THAT WE'RE SPENDING
LESS AT THE END, AND TODAY'S
DOLLARS ARE CHEAPER THAN DOLLARS
FROM 20 YEARS FROM NOW.

Lou says ONCE THE HOSPITAL IS DONE,
IT'S UP, IT'S BUILT, PATIENTS
ARE COMING IN, SERVICES ARE
BEING PROVIDED, DO YOU HAVE AN
ONGOING ROLE WITH THE FACILITY?

Lou says YEAH, WE DO.
WE OVERSEE THE SERVICE PROVIDER.
WHAT'S REALLY IMPORTANT TO KNOW
IS HOW THIS FINANCIAL MECHANISM
WORKS.
WHEN THE GOVERNMENT TURNS OVER
THIS PROJECT AND IT'S DELIVERED,
ALL OF A SUDDEN THESE RULES KICK
INTO PLACE.
SO IF WE'RE LATE OR IF WE'RE...
WE HAVE COST OVER-RUNS, WE'RE
RESPONSIBLE FOR THOSE.
IF WE... ON OUR BUDGET, WE'RE
PAYING THAT BILL.
IF WE'RE LATE, WE'RE PAYING THE
LIQUIDATED DAMAGES, THOSE
PENALTIES.
IT COB HUNDREDS OF THOUSANDS OF
DOLLARS TO MAKE UP FOR LOST
REVENUE.
AND WHEN YOU GO THROUGH THE
SERVICE ELEMENT OF THESE
CONTRACTS WHICH TYPICALLY RUN
LONGER THAN 25 YEARS, IF WE'RE
NOT MEETING OUR SCOPE OF
SERVICE, IF SOMETHING THAT WE
DESIGNED AND ARE RESPONSIBLE FOR
IS NOT WORKING, WE'RE
RESPONSIBLE FOR FIXING IT.

Steve says HOW OFTEN DO THESE P3S
GO OVER-BUDGET OR GO PAST DUE DATE?

Lou says WELL, THE TRACK RECORD IS
THAT IT HAPPENS LESS OFTEN WHEN
IT'S UNDER A P3 PROCUREMENT
MODEL.
THERE HAVE BEEN EXAMPLES,
THOUGH, WHERE THEY'VE GONE
OVER-BUDGET, BUT A VERY
DIFFICULT THING FOR A CONTRACTOR
TO WALK AWAY, IF THAT'S THEIR
BUSINESS, IN TERMS OF NOT
DELIVERING.
IF THEY WANT A FUTURE OF DOING
CONSTRUCTION PROJECTS IN CANADA,
THEY HAVE TO STEP UP AND PUT
THEIR NAME ON IT.

Steve says HMM.
HERE'S ONE OF THE CRITICISMS I
HEAR, WHICH IS THAT IF I'M JUST
GOING TO DO THIS MYSELF AS THE
GOVERNMENT OF ONTARIO, I CAN
BORROW MONEY AT A MUCH BETTER
RATE THAN, FOR EXAMPLE, YOU
COULD WHEN YOU'RE PUTTING YOUR
CONSORTIUM TOGETHER.
AND THEREFORE, IT'S GOING TO BE
CHEAPER IF I JUST DO IT AS
OPPOSED TO HAVE YOU DO IT.
IS THAT TRUE?

Lou says THIS IS TRUE.
THE GOVERNMENT CAN BORROW MORE
CHEAPLY THAN THE PRIVATE SECTOR.
BUT IT'S THE DISCIPLINE OF THE
PRIVATE SECTOR FINANCING THAT
RAISES THE BAR, IF YOU WILL.
WHAT THE GOVERNMENT HAS BEEN
DOING HAS BEEN MAKING
SUBSTANTIAL COMPLETION PAYMENTS
OR MILESTONE PAYMENTS.
THEIR BALANCE SHEET CAN BORROW
MUCH MORE CHEAPLY THAN US, SO
YOU ARE STILL GETTING AN ELEMENT
OF RISK TRANSFER.
AND WHAT DOES THE PREMIUM THAT
YOU'RE PAYING PRIVATE SECTOR,
WHAT VALUE DOES THAT CREATE?
THAT IS REALLY THE ISSUE AT
STAKE.
SO IF OUR PRIVATE SECTOR IS
PAYING MORE IN DEBT COST, HOW
DOES THAT TRANSLATE TO VALUE?
WELL, THERE'S A VARIETY OF WAYS.
ONE IS IF THE PROJECT DOES GO
WRONG, AND THERE HAVE BEEN
EXAMPLES WHERE PROJECTS HAVE
GONE WRONG, WHAT IS IT THAT THE
LENDERS DO?
THE LENDERS REQUIRE EQUITY TO
BACKSTOP THAT.
WE HAD THE CASE AT CAMH WHERE
THE SERVICE PROVIDER WENT INTO
RECEIVERSHIP.
A GLOBAL COMPANY, LARGE, FROM
THE U.K., AND WHEN THE SERVICE
PROVIDER WAS REPLACED, THAT COST
WAS MORE EXPENSIVE.
BUT THAT IS THE BURDEN OF
EQUITY, CONCESSIONAIRE, IF YOU
WILL.
IF THAT WAS A GOVERNMENT
PROJECT, PROCURED SIMPLY BY
THEM, THEY WOULD BE THE ONES
BEARING THAT EXTRA COST.
THE TAXPAYERS WOULD HAVE TO EAT
THAT.

Steve says BUT IN THIS CASE.

Lou says INVESTORS DO.

Lou says AND DO THEY TAKE A HAIR CUT
ON THESE THINGS?

Lou says ABSOLUTELY.

Steve says THEY CAN'T GO BACK TO
GOVERNMENT AND SAY SOMETHING
HAPPENED ON IT AND WE DIDN'T
PLAN ON IT, CAN YOU HELP US OUT
BY TOPPING US UP A BIT?

Lou says THEY CAN ALWAYS ASK.
SOMETIMES IT GETS DOWN TO
NEGOTIATION.
THERE HAVE BEEN MANY EXAMPLES,
THOUGH, IN CANADA AND IN THE
U.S. WHERE PROJECTS HAVE NOT
GONE THE WAY THEY WERE INTENDED
TO.
AND THERE ARE COSTS TO BEAR.

Steve says ANY PROJECTS YOU CAN
THINK OF WHERE DOING A P3 WOULD
NOT BE APPROPRIATE?

Lou says YES, THERE ARE MANY.
IT'S NOT FOR EVERY PROJECT.
PROJECTS... MANY PROJECTS AT THE
MUNICIPAL LEVEL WOULDN'T BENEFIT
FROM THE INCREASED COST OF
FINANCE, LEGAL WITH RESPECT TO
DELIVERING A SOLUTION.
AND YOU KNOW, MUNICIPAL PROJECTS
THAT ARE STANDARDIZED IN SCOPE,
ARENAS AND SMALLER ACCOMMODATION
BUILDINGS, FOR INSTANCE, SOME
TYPE OF ROAD WORK WHERE THE
SCOPE IS SIMPLE AND THERE IS A
VERY GOOD TRACK RECORD OF
DELIVERING, THOSE ARE PROJECTS
THAT DON'T MAKE SENSE FOR THE
PUBLIC-PRIVATE PARTNERSHIP
MODEL.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says I'M TRYING TO THINK OF
OTHER REASONS WHY THE GOVERNMENT
MIGHT WANT TO DO IT THIS WAY,
AND I GUESS IS ONE OF THEM THAT
THE EXPENDITURES, YOU KNOW, THE
BILLIONS OF DOLLARS IT COSTS TO
GET THESE THINGS DONE, THEY
DON'T ACTUALLY SHOW UP ON THE
BOOKS OF THE GOVERNMENT IN THAT
YEAR, AND THAT HELPS THEM AT
BUDGET TIME PRESUMABLY IF THEY
WANT TO SHOW THEY ARE GETTING
CLOSER TO BALANCE OR WHATEVER?

Lou says WELL, THE GOVERNMENT IS STILL
RESPONSIBLE FOR THE DEBT BECAUSE
THEY'RE RESPONSIBLE FOR A
CONCESSION PAYMENT TO THE
CONSORTIUM.
THE REALITY IS WHEN YOU'RE
LOOKING AT COMPLICATED PROJECTS,
IF WE WERE TO BURY THE GARDENER
AND CREATE A TUNNEL, THIS IS
COMPLICATED WORK.
AND THIS IS WORK THAT YOU WOULD
NEED TO ATTRACT WORLD-CLASS
PLAYERS TO COME TO THIS MARKET
TO HAVE A COMPETITIVE PROCESS IN
DELIVERING THIS INFRASTRUCTURE.
SO THAT WOULD BE A GOOD... A
REALLY GOOD AREA WHERE PRIVATE
SECTOR INVOLVEMENT WOULD HELP.
YOU KNOW, OTHER AREAS WHEN YOU
START TO LOOK AT EXPERTISE,
THERE'S CERTAIN EXPERTISE OF
BRIDGE WORK THAT HAVE BEEN DONE
AROUND THE WORLD THAT MAY BE
LIMITED IN CANADA.
SO HERE'S ANOTHER WAY WHERE WE
WOULD BRING IN THE PRIVATE
SECTOR TO HELP WITH INNOVATION
AND CREATIVITY IN DELIVERING
PUBLIC INFRASTRUCTURE.

Steve says HAVE YOU GOT ANY
PROJECTS ON THE GO RIGHT NOW?

Lou says WE HAVE SEVERAL.

Steve says ANYTHING WE'D HAVE
HEARD OF HERE IN ONTARIO?

Lou says WE JUST CLOSED ON ONROUTE,
WHICH IS AN INFRASTRUCTURE
PROJECT, THE SERVICE CENTRES
ALONG THE 400 SERIES HIGHWAYS.

Steve says ALL OF THEM?

Lou says ALL OF THEM.

Steve says YOU GOT ALL OF THEM?

The caption changes to "Actual opportunities."

Lou says YEAH, WITH OUR PARTNERS.
AND THAT ONE THERE IS
INTERESTING.
WE MODELLED OUT ON HOW WE SEE
TRAFFIC FLOWING AND HOW MANY
PEOPLE STOP AND HOW MUCH DO THEY
SPEND WHEN THEY GO IN THERE, AND
IT'S A GOOD INVESTMENT FOR OUR
INVESTORS.
AND AT THE END OF THE DAY, IT'S
HARD TO FIND GOOD INVESTMENTS IN
CANADA OF THAT QUALITY.

Steve says HMM.
LET'S FINISH UP ON THIS, THEN.
ANY OTHER POTENTIAL PROJECTS OUT
THERE THAT YOU THINK COULD BE OR
NEED TO BE DONE THAT WOULD BE,
IF IT'S NOT MID MARKET, WHAT DO
YOU CALL IT?
UPMARKET?

Lou says MARGIN FOR INFRASTRUCTURE
PROJECTS CAN BE IN THE 10S AND
20S OF THE BILLIONS.
WE PARTICIPATE MOSTLY IN THE
CANADIAN SPACE AND IN THE U.S.
SPACE, PROJECTS THAT A COUPLE
BILLION SMALLER.
THAT WOULD BE CONSIDERED MID
MARKET IN OUR WORLD.
AND I THINK WE NEED TO TAKE A
REALLY HARD VIEW ON HOW WE
DELIVER TRANSPORTATION PROJECTS.
I SEE IT THAT WE'RE BUILDING
THESE LRTS.
WE NEED AN EXPANDED REGIONAL
SYSTEM.
WE'RE REALLY PLEASED TO SEE THE
UPLOADING OF TTC TO THE
PROVINCE.
YOU KNOW, TORONTO NEEDS TO
CONNECT TO THE COMMUNITIES
AROUND IT.
AND WHAT I NOTICE AND I THINK IS
A MISSED OPPORTUNITY IS THAT
THESE SYSTEMS ARE CREATING REAL
ESTATE VALUES, AND THE ONES THAT
ARE DOING WELL ARE THE PEOPLE
SELLING THE REAL ESTATE, AND YET
IT IS THE TAXPAYER CREATING ALL
THIS VALUE BY PUTTING IN TRANSPORTATION.

The caption changes to "Producer: Steve Paikin, @spaikin; Producer: Harrison Lowman, @harrisonlowman."

Steve says GOTCHA.
THAT'S LOU SERAFINI JR.,
PRESIDENT AND CEO AT FENGATE
ASSET MANAGEMENT.
I THINK WE KNOW A LOT MORE ABOUT
P3S NOW THAN WE DID 20 MINUTES
AGO. SO THANKS FOR THIS, LOU.

Lou says THANK YOU FOR HAVING ME.

Watch: Inside Public-Private Partnerships