In July 2005, the city of Guelph, On took over an arena P3 that had been in financial trouble from the start. The $21-million Guelph Sports and Entertainment Centre opened in 2000 as a 35-year public private partnership with Nustadia Developments Inc. The city was carrying much of Nustadia’s risk, footing half the construction costs and guaranteeing a $9-million loan to the corporation.
When Nustadia missed its first loan payment in 2001, the city took over those as well. Having already subsidized the project with almost $20 million in capital funding, the city now found itself covering the private “partner’s” debt costs, not to mention their taxes.
While Nustadia has repaid the money, the company apparently wasn’t able to make the money it was hoping for. A clause in the P3 allowed either side the ability to walk away from the deal with no penalty, and in late June Nustadia did just that.
While the city is trying to put a positive spin on the takeover, the final tally of extra costs to the public has not yet been made. CUPE municipal workers in Guelph will be pointing to the fiasco as city council weighs contracting out solid waste and recycling.
Guelph’s headache is not an isolated incident. Visit www.communities.cupe.ca to download a new CUPE fact sheet on the problems with recreation P3s.