Regina councillor says P3 timeline put city in 'sticky situation'

A Regina city councillor, Shawn Fraser, says provincial government downloading has landed the city in a "sticky situation" as the developer of a new P3 school site has run into financial trouble.

The city contracted with the developer, Rosewood Park Alliance Church, to service the land where a new joint-use school is being built as part of a public/private partnership (P3) led by the province. However last month the city served Rosewood with a notice of default, saying it had failed to meet its timeline and financial obligations.

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The government offered to build four schools in Saskatoon, one in Martensville, one in Warman and three in Regina, on condition that the municipalities provide serviced land where they can be build.

That servicing has to be complete by the end of this year, and city administration said Rosewood's troubles may mean the city will have to pick up the pieces. Fraser said the transfer of risk to municipalities and tight deadlines imposed by the province's P3 model have put the city in a bad spot.

"It looks like something that was the provinces problem and [it] seems like they have sort of tried to transfer it onto the city," Fraser said. "Sure there's less risk because they've taken a risk that would traditionally have been theirs and they've just transferred it to the city. So it's now the city's risk."

City administration recommends that if Rosewood can't get its financial house in order by the end of the month the city will have to take over development. It's a deadline Rosewood said it will be able to meet thanks to a new development partner. If that doesn't happen the city said taking over the project would cost Regina taxpayers at least $1.5 million.

A different approach to building schools

Donna Johnson, assistant deputy minister with the Ministry of Education, defended the province's approach.

"The schedule is aggressive. It's one that all parties were aware of since 2013 and I think all parties have been working quite well within the schedule to date," Johnson said.

"This is the first real challenge we've had brought to our attention." 

According to Johnson, in 2013 the province started negotiating with municipalities about a new model for building schools. She said the province committed to building nine schools and asked the municipalities to provide the fully serviced land.

She told CBC's iTeam this is not an entirely new approach, arguing there are other examples of municipalities providing the province with fully serviced land for schools.

"I think that we landed on the best result here and I think on the whole it is … less expensive than paying a developer residential market prices for the land," Johnson said.

Province put city 'in a bit of a pickle' said mayor

In a July report to Regina's city council, administration described this as a new approach driven by the provinces desire to cut costs.

"Prior to 2013 the province purchased school sites directly from the land developers at fair market price," the report explains. "The city was informed that the province can no longer afford to continue this practice and instead the province would like the city to dedicate portions of their land as municipal reserve space for school sites."

This is an approach that the city has expressed concern about in the past. In a July 2015 council meeting Mayor Michael Fougere said the province had put the city "in a bit of a pickle."

He complained the province was essentially telling cities "we can't afford to do this so we're going to have the city become involved in education," and he concluded "That's a problem."

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Shortly before that council meeting, it had become clear that the location the city had chosen for the northwest school, Skywood subdivision, wasn't going to work because the developer concluded it wasn't affordable.

The city had received $6 million from the province to provide the school sites and it used that money to offer Skywood a $3-million grant and a $3-million loan. However that wasn't enough to make the project work.

City scrambled to find a developer

So the city was forced to scramble to find another developer as deadlines loomed.

In that July meeting council selected Rosewood. Given the tight timelines, Mayor Fougere acknowledged Rosewood could struggle.

"We hope given the shortness of time they will be able to build this school -- not for lack of effort but a very short timeline -- that once again is superimposed on us by the province," Fourgere said. "Unfair to everyone."

Council selected Rosewood against the objection of administration which warned council "the risks associated with the developer delivery of the site are too high."

Instead, administration recommended council select Dream Development's Elmbridge project, saying its risks "are the lowest of all options."

Based on that recommendation, Fraser voted against approving Rosewood. And he points out that less than a year later administration's concerns have been borne out. 

"Administration's initial report was to not allow Rosewood neighbourhood to go forward. For these exact concerns and these exact concerns have played out," Fraser said.

'I think we can just say no' said Fraser

Fraser said tight timelines put the city into a tough spot, which forced council to make a decision under pressure.

"It's frustrating for me when other factors like this get in the way of smart planning."

In that July meeting he told his fellow councillors "I think we do have an option actually. I think we can just say no."

It's frustrating for me when other factors like this get in the way of smart planning.- Shawn Fraser, Regina city councillor

"Why rush into some development? That ultimately our job is to make sure we leave a good legacy of development."

Despite that concern he doesn't fault his fellow councillors for their support of Rosewood.

In the July council meeting the Mayor said he "unequivocally" supported Rosewood developing the site because the consequences of saying no were unthinkable.

"There is no option in my view. Our option cannot be to say no. Because we would wear this as a city council if we said no to a school."

Now council has to sort out what to do next at its meeting Monday night at city hall.