Belleville courthouse project to cost taxpayers $270 million
It was all smiles last week as provincial and municipal officials gathered to turn over the dirt on the empty lot on the corner of Coleman and Bridge Streets in Belleville. The local news stories dutifully reported the event—describing the shiny new six-storey building that would soon grace the down-in-the-mouth corner. They repeated the press release enthusiasm that as many as 200 folks would work in constructing the new building, and it would consolidate four courtrooms—three in Belleville and one from Quinte West— into one new downtown centerpiece overlooking the Moira.
They reported the cost as well—$270 million by the time the province is finished paying for it. They failed, however, to explain how a 173,000 square foot provincial courthouse could cost more than it cost to build the Air Canada Centre in Toronto—or more than 22 and a half Wellington and District Community Centres.
The fact is that $270 million is an astonishing amount of money for a building of this size.According to Hanscomb’s Yardstick for Costing Projects, an independent industry resource, current courthouse construction costs range from $280 per square foot on the low end to $342 per square foot for all the bells and whistles. Using the highest measure, the Quinte Consolidated Courthouse should cost the province about $65 million.
So why is the province going to pay Brookfield Partnerships Quinte—a consortium of banks and corporations including Brookfield Financial, Morguard, PCL Constructors, TD Bank and Canada Life—$270 million for this building?
It comes down to risk—or, more precisely, paying the private sector to take the risk off the province’s shoulders.
Rather than use a traditional construction method— hire an architect and a builder and such—the province has entered into a contract to build the courthouse using a method called design, build, finance and maintain (DBFM). Essentially this means the contractor agrees to design the building, construct it, cover its own financing costs and fix any structural or system problems over the next 30 years.
Or as Paulette den Elzen, spokesperson for Infrastructure Ontario, explained to the Times, the purchasing method provides certainty in terms of cost and delivery to the province.
“Brookfield Partnerships Quinte has signed a contract for the design, build, project financing and lifecycle renewal of the new consolidated courthouse,” explained den Elzen. “You typically don’t see all four included in the package.To ensure the courthouse is well maintained this contract contains a lifecycle renewal component, which means that anything on the exterior that needs replacing will be done at the cost of Brookfield Partnerships Quinte for 30 years. If it needs a new elevator or HVAC system, that will all be done at Brookfield Partnerships Quinte’s expense.”
Den Elzen wouldn’t comment on the wide difference between the construction cost estimate indicated by industry experience and the price the province will pay.
“I don’t have all the components that went into the estimation of the cost of this building. I do know the Ministries of the Attorney General and Infrastructure Ontario work with experts to provide estimates on these projects and these estimates are typically quite accurate.”
But if we don’t know the cost of the various components— design, build, finance and maintain—how do we know if the price is fair?
Den Elzen explains that a Value for Money (VFM) analysis was completed on the project before it was awarded. She explained this Alternative Financing and Procurement (AFP) method passed the test or else this method would not have been permitted.
“We will issue a Value for Money report in about two weeks,” said den Elzen.“It will spell out the cost of the building using a traditional approach compared with the design, build, finance and maintain. Since it was determined that this approach does deliver value for money it will demonstrate this clearly in that report. And the project will be beneficial to the taxpayers in your area.”
But how will we know? The assumptions and formulas used to quantify and assign dollar value to risk, rely on predictions of the future. No one can say with certainty the value of the risk the province is handing off to private corporations in this deal.
It seems, however, Ontario taxpayers are paying them a hefty premium for their trouble.