TPA initiates Public-Private Partnership process to construct pedestrian tunnel

At a meeting earlier today, the Board of Directors of the Toronto Port Authority ("TPA") initiated a process that will bring forward Public-Private Partnership ("P3") proposals to design, build, finance, operate, and maintain a pedestrian tunnel connecting to the Billy Bishop Toronto City Airport ("BBTCA") under the Western Gap of the Toronto harbour. To be conducted over the coming months, the process will involve three key elements: an environmental assessment of the proposed tunnel; a rigorous public consultation process managed by an independent consulting firm; and the consideration of private sector proposals to design, build, finance, operate and maintain the proposed pedestrian tunnel.

"In light of the popularity of the Billy Bishop Toronto City Airport with travellers and airlines, it's the right time to move forward with the pedestrian tunnel initiative," said Mark McQueen, Chairman of the TPA Board of Directors. "Although the idea of a government-funded tunnel concept received broad public support last year, this P3 approach is a perfect marriage of accepted public infrastructure financing strategies and the concept of 'user pays'. The TPA Board has designed this financing strategy to ensure that the private sector takes on the initial equity and construction risk of the project. Over time, Airport Improvement Fees collected from passengers will pay for both the construction of the tunnel and the cost of its annual operation."

Under this process, the TPA has attempted to address certain concerns that were raised in 2009. The TPA's pedestrian tunnel initiative is also predicated upon the following themes:

– The BBTCA is expected to receive in excess of 1 million passengers in
2010, a 50-fold increase from 25,600 passengers in 2005;
– "Public-private partnerships for infrastructure are saving time and
money" for the public agencies involved in the project, according to
a new study by the Conference Board of Canada, released on
January 28, 2010;
– The project will benefit from a rigorous public consultation process
in conjunction with the environmental assessment. This consultation
process will be managed by an independent consulting firm with broad
environmental assessment experience;
– The private sector proponent would arrange Bank financing
representing approximately 50 per cent of the project's estimated
$45 million cost. In addition, the TPA will consider providing up to
20 per cent of the project's cost in the form of a subordinate loan
or other instrument.
– 100 per cent of the cost of designing, building, financing and
maintaining the tunnel will be ultimately borne by passengers via the
BBTCA's Airport Improvement Fee ("AIF"). Recognizing the cost of the
proposed improved passenger service, the AIF that departing
passengers currently pay will increase to $20 from $15 per departing
flight (GTAA passengers currently pay an AIF of $25 per departing
flight);
– The operation of the pedestrian tunnel will have a zero carbon
footprint, using electricity provided by Bullfrog Power(TM), Canada's
100 per cent green electricity provider;
– The tunnel project will be maintained by the private sector proponent
during the life of the proposed 20 year concession period;
– Up to 100 per cent of the equity required to design, build and
finance the proposed tunnel project will be provided by the private
sector proponent. The winning consortium is also expected to take on
100 per cent of the risk associated with any cost overruns during the
construction phase of the tunnel project; and
– Once the 20 year concession period ends, operation and maintenance of
the tunnel will revert to the TPA and the P3 proponent is expected to
have no further economic interest in the project.

"This project is a natural fit for a number of experienced institutional infrastructure investors," added Geoffrey A. Wilson, President & CEO of the Toronto Port Authority. "We intend to run a broad qualification process, and expect to generate a wide range of attractive construction and financing proposals to consider."

The TPA would continue to operate the ferry Marilyn Bell I to provide airport access for fuel and catering vehicles, construction equipment, cargo operators and ambulances transporting Medevac patients to Ornge's helicopter and fixed wing medical evacuation aircraft. The TPA's existing ferry service does not operate between midnight and 5:30 a.m. and as such, the tunnel would provide Ornge paramedics and their patients safe, reliable, round-the-clock access to downtown Toronto hospitals.

"Although the TPA provides suitable ferry capacity for the current commercial air traffic, our ability to provide efficient peak service to airline passengers in the coming years requires consideration of more than just a single access strategy," continued Mr. Wilson.

The TPA also advised that it has not approached any level of government for financial assistance in relation to this specific project concept, and has no intention of seeking public sector funds to assist in the construction and operation of the proposed P3 pedestrian tunnel. According to an independent public opinion poll, 62 per cent of Toronto residents surveyed support the construction of a pedestrian tunnel to improve access to the Billy Bishop Toronto City Airport. Only 21 per cent of respondents "strongly oppose" the concept, while 10 per cent "somewhat oppose" it. The 500-person survey was conducted July 6-7, 2009 by Pollara Strategic Insights.

Supporters of the BBTCA pedestrian tunnel initiative have this to say:
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"The evidence is clear: Building a pedestrian tunnel to the Billy Bishop Toronto City Airport makes economic sense by creating much needed construction jobs. This tunnel will clearly be a benefit to the City of Toronto and the GTA and I support its construction."

Mark Adler
President & CEO
The Economic Club of Canada

"Ornge works to reduce the barriers to accessing Ontario's medical system by operating one of the largest and most innovative transport medicine programs in North America. One of our busiest bases is located at the Billy Bishop Toronto City Airport. We believe that a pedestrian tunnel would improve our operational capabilities…and we are pleased to wholeheartedly support this proposal."

Tom Lepine
Chief Operating Officer
Ornge

"Since the launch of Porter Airlines in 2006, the Billy Bishop Toronto City Airport has demonstrated itself to be an enormously important economic asset to Toronto's regional economy, linking our downtown business and tourist hub to an every-expanding inventory of destinations. A pedestrian tunnel would not only increase the reliability and convenience of the use of the airport, it would eliminate the risk of occasional ferry service interruptions associated with weather conditions."

Carol Wilding
President & CEO
Toronto Board of Trade

About the Toronto Port Authority

The Toronto Port Authority was incorporated on June 8, 1999, as a government business enterprise under the Canada Marine Act as the successor to the Toronto Harbour Commissioners. It is a federal public authority providing transportation, distribution, storage and container services to businesses. The TPA owns and operates the Billy Bishop Toronto City Airport, Marine Terminals 51 and 52, and the Outer Harbour Marina. The TPA also provides regulatory controls and public works services to enhance the safety and efficiency of marine navigation and aviation in the port and harbour of Toronto.

Further information about the TPA is available on the TPA website at www.torontoport.com.

Relevant Survey Results

Details: Pollara Strategic Insights surveyed a random sample of 500 City of Toronto residents by telephone between July 6-7, 2009; the margin of error is +/- 4.4%, 19 times out of 20. It is the third annual survey probing Torontonians' views of the TPA, its performance and its strategic objectives. A key question posed by Pollara sought to gauge the potential support for the construction of a pedestrian tunnel connecting the mainland with the BBTCA.

Q25N: As you may know, access to this airport is by a short ferry ride
across a distance of 400 feet (or 121 metres) of water. Do you strongly
support, somewhat support, somewhat oppose, or strongly oppose the
construction of a pedestrian tunnel underneath this waterway to improve
access to the Toronto City Centre Airport?

Total Support………………………………. 62%
Strongly Support………………………….. 34%
Somewhat Support………………………….. 28%
Total Oppose……………………………….. 31%
Somewhat Oppose…………………………… 10%
Strongly Oppose…………………………… 21%
Don't Know…………………………………. 7%
Refused…………………………… (less than)1%
N Size…………………………………….. 500

For further information: Janet MacDonald, Toronto Port Authority, (416) 863-2003