Ottawa to pay for REM station at airport
The federal government is going to pay to extend the REM to the airport.
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Kate
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Faiz imam 13:57 on 2020-11-27 Permalink
Very interesting that the dept of finance is straight up paying $600 million for this, as opposed to asking the newly created infrastructure bank to provide a loan for the purpose.
I wonder how that sort of decision is negotiated.
Also I wonder if this impacts in any way the extension to Dorval station, which Is obvious and is best done now when the machine is literally in the tunnel.
Apparently they will announce it next week.
Ant6n 16:13 on 2020-11-27 Permalink
But remember, cdpqinfa is paying 51% of the full construction cost, which is why they have monopoly control over everything. Oh and since they take on all the risk, which the minority shareholders (qc, fed givt) are apparently not, cdpqinfra is entitled to preferred dividends giving them most of the profit of the scheme.
Le sigh…
Ephraim 21:05 on 2020-11-27 Permalink
Yes, but there is less income from the airport spur, in that they can’t really build around it for extra profit.
Phil M 03:20 on 2020-11-28 Permalink
If I read this correctly, which I may not have, though I trust Google Translate better than my own French, the feds are providing a loan, that would be repaid by ADM eventually.
Also, if the REM is taking the risk, and absolving the govt partners, I think it’s relatively fair that they should benefit from first dibs on profits. That’s always how it goes with venture capital.
ant6n 05:33 on 2020-11-28 Permalink
The point is they`re not taking the risk: originally CDPQInfra were supposed to pay for the airport station, it was part of the project. Then they gave the airport super a minimal design, which the ADM considered inappropriate, and told the aiport “if you want something better, pay for it yourself”. That cost for that airport station has gone from 250M to 600M. that´s one of the ways that CDPQInfra has taken project risks (cost risks) and shoved them back to the public. In return, the public won´t get any equity (which would mean that by now we have control again, because we pay for most of it).
Presumably, the project is conveniently sliced so that the airport station doesn´t belong to the REM – so CDPQInfra can still claim the 51% ownership. This has happend multiple times for this project, necessary infrastructure that belongs to this project was taken out of the REM and given to the public, then they got some loans and some funding out of certain development funds, none of which gave the government equity in return.
So overall CDPQInfra has taken on very little of the increasing project costs, while still mainting the contolling ownership stake. And this is all within a contract framework that gives them preferred dividends because suppossedly they´re suppossedly taking on greater risk.
This is not a normal PPP-contract.
(Mark my words: if this starts operating and for whatever reason the ridership is low, which is unlikely but possible given Corona, CDPQInfra won´t take that risk of low operating profits either, but get another subsidy)
david211 14:38 on 2020-11-28 Permalink
My blood runs cold when I see anything reminding me that Chrystia Freeland is that finance minister. Like, is the media asleep at the wheel? Does the role of finance minister no longer require any subject matter expertise? Starkly insisting that we not forget: the people running the show don’t know what they’re doing.
Ephraim 07:59 on 2020-11-29 Permalink
david211 – It’s not really who is at the top, but rather, the function bureaucracy below. The people at the top make decisions, mostly on offer. For example, we can lower tax on group A by taxing group B, which id politically favourable to your political messaging and promises. You just want to avoid being in group B all the time. Or you give group B something to placate them, like a TFSA.
So, politicians would need to have backgrounds in law, political science, international relations, economics, statistics, etc to be able to actually fully function. But the actual requirements to get elected are… NONE.
David77 21:42 on 2020-11-29 Permalink
Ephraim – I know it, and it’s what’s so worrying. We’re talking about a so-called ‘super minister’ and her function is to preside, and get Justin’s top line priorities implemented. It’s scary.