New Brunswick

Saint John's water agreement shows operating company can be sold

The City of Saint John made public this week the legal agreement for what it calls the Safe Clean Drinking Water Project.

Document shows private partner can be transfered to new owners

Saint John's $216 million water treatment contract was signed during a council meeting in February.

The City of Saint John has made public the legal agreement for its Safe Clean Drinking Water Project.

The agreement contains 2,000 pages of documents, including the contract with Port City Water Partners, the P3 consortium that will design, finance, build, operate and maintain the city's water treatment facility over the next 33 years.

The deal is worth $216 million, $114.6 million of which is being picked up by PPP Canada and the Government of New Brunswick.

Included in the contract is a section that allows the company to be sold one year after the construction phase of the contract is fulfilled.

A change in ownership could occur earlier if the city agrees. 

Will Chow, chair of Port City Water Partners, referred questions about the contract to the municipality's communications department.

Assets will be owned by the city

In a statement on Thursday, Nancy Moar, the city's communications manager, confirmed the project company's ownership could change, but that the water treatment assets will be owned by the city and cannot be sold.

It doesn't mean that necessarily the same owners will stay in place.- Matthew  Pearn , Lawyer
Fredericton Lawyer Matthew Pearn examined the section and agrees with that assessment. "It doesn't mean that necessarily the same owners will stay in place one year after construction is finished," said Pearn. "So there will be the same folks in place who built the project during the first year that it's running, but after that it's open to be changed." 
The City of Saint John depends largely on treated surface water.

A change in ownership is not unusual in public private partnerships says Emma Liu, water campaigner for the advocacy group, Council of Canadians.

"That's very concerning," said Liu. "The permission isn't needed by the city — that's a huge concern — but also consultation with the public as well."

About 80 pages in the project agreement that has been uploaded online have been left blank, except for a brief note referring to the Right to Information and Privacy Act. 

Moar said sections of the project agreement were redacted in cases where disclosing the details would have been an unreasonable invasion of a third party's privacy, would have been "harmful to a third party's business or financial interests," or where it would have been "harmful to an individual or to public safety, or in the public interest."

Not all costs reported

Not all of the project's costs are included in the $216 million deal with Port City Water Partners. 

An October, 2013 report to city council noted that $5 million had been budgeted to "advance various aspects" of the initiative.

At the Oct. 28, 2013 meeting, council approved the hiring of engineering consultants CBCL Ltd. to act on the municipality's behalf as Saint John Water pursued a P3 deal. 

The company was to be paid an hourly rate and the estimated cost was described in the report as approximately two per cent of the overall project cost. Two per cent of $216 million is $4.3 million.

nancy Moar says Saint John Water will produce a report for city council at a future date detailing those other costs.

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