NDP critic questions costs for Okanagan jail

Province looks to forge P3 agreement that would see private company finance $273.5 million correctional centre near Oliver

  • Dec. 20, 2012 3:00 p.m.

Building the Okanagan Correctional Centre as a public-private partnership will saddle future generations with inflexible payments and funnels millions of dollars out of the province, says the B.C. NDP’s public safety critic.

Those were among the concerns Kathy Corrigan raised last week following the provincial government’s announcement that it had issued a request for qualifications to officially seek three suitors to bid on financing, building and maintaining the new jail.

Documents attached to the RFQ note the government intends to sign a 30-year service agreement with whichever company it chooses to run the jail, which is to be sited on Osoyoos Indian Band property north of Oliver and was originally projected to cost $273.5 million.

“Your kids and mine will be paying for this for 30 years, so there’s a real lack of flexibility,” said Corrigan, the MLA for Burnaby-Deer Lake.

There will also be a profit margin built into the deal for the private partner, Corrigan added, and “usually the ones that are bidding on these big P3s are international companies so you’ve got money flowing out of the province.”

The bid process itself is expected to be so comprehensive that the province will reimburse $250,000 each to the two unsuccessful short-listed bidders, according to the RFQ package.

John Slater, the Liberal MLA for Boundary-Similkameen, said the jail should create 500 direct and 500 indirect jobs during construction, plus another 240 permanent, full-time positions once it’s open, and that going the P3 route will keep capital dollars available for other projects.

“In the long term, $273 million is a huge amount of our capital budget, right? So if we can get the operator to put up that money up front and we pay them back over 30 years, it’s way easier on our economic budget.”

Slater said if the successful bidder finances most of the project, it would essentially hold the mortgage on the jail.

“What they would do is they would charge a fee to the province on an annual basis, and part of that fee would be offsetting the capital as well as the operation,” he explained.

B.C. Corrections spokesperson Marnie Mayhew said in a statement that the province is looking for a partner to “partially finance” the project, and said the public will enjoy reduced risks through a P3 arrangement.

“The P3 model provides significant benefits including a stringent fixed-price contract that will transfer key risks to the private-sector partner to manage. Any cost overruns or schedule delays will be the responsibility of the private partner, not the taxpayer,” she said, adding it will also ensure “that government maintains control and decision-making over services, and owns the asset.”

Mayhew also said that although the jail was originally expected to cost $273.5 million, which included soft costs like planning and land agreements, the new estimate is “considerably lower.” She didn’t name the new price though because it “could compromise our negotiating position and cost taxpayers money.”

In addition to the originally proposed 360 cells for men, that lower price also covers the addition of 18 cells for women on a separate unit that hadn’t been announced previously but is mentioned in the RFQ package.

That ladies-only unit “will reduce pressure on existing facilities, such as local police lock-ups, which were not built with female offenders in mind,” Mayhew said.