Chicago P3 privatization scheme shows why accountability matters | National Union of Public and General Employees

Chicago P3 privatization scheme shows why accountability matters

As a recently announced rapid transit project in Chicago shows, the need for disclosure can change when P3 privatization schemes are involved.

Ottawa (04 July 2018) — Usually when cities propose infrastructure projects that have the potential to cost billions of dollars, those proposals are subject to a lot of scrutiny. People expect to see evidence: is the project needed, are the cost estimates realistic, and will the technology used in the project actually work?

As a recently announced rapid transit project in Chicago shows, the need for disclosure can change when P3 privatization schemes are involved.

Untried technology, extremely ambitious cost estimates and no evidence

Last month the City of Chicago announced that The Boring Company had been selected to build an express route between downtown Chicago and O’Hare International Airport. The project will be a design, build, finance, operate, and maintain P3 privatization scheme.

The Boring Company was founded only 2 years ago by Elon Musk. It has never built, or helped build, a rapid transit route — or any other type of public infrastructure — before.

According to The Boring Company, it expects to be able to build tunnels for only 10 per cent of the cost of tunnels on other rapid transit projects. Vehicles for the express route will use an untested design “built on a modified Tesla X model chassis.”

Even though what is being proposed is radically different from any existing rapid transit route, no evidence was released to support the decision to select The Boring Company. According to the Mayor of Chicago, details will be worked out when the contract is negotiated.

Contract negotiations not a public process

The problem with details being worked out during contract negotiations is that the process takes place behind closed doors. The public gets no information about contract negotiations and has no chance to have input. Even when the contract is signed, the public may not be able to find out what is in it. It’s common for all or part of P3 privatization scheme contracts to be kept secret.

This means that claims that there will be no cost to the public should be taken with a grain of salt.

Chicago residents have good reason to be nervous about P3 privatization schemes

In 2008, the then mayor of Chicago gave a private consortium a 75 year lease for the city’s parking meters for a one-time payment of $1.6 billion. That deal has been very bad for Chicago residents. In the first 5 years after the deal took effect, parking costs doubled. The city is forced to compensate the private consortium every time it closes a road for repairs or a festival.

Now 10 years later, Chicago could be lumbered with another expensive P3.

Public procurement makes it easier for public to see if proposals make sense

With public procurement it is harder for details to be kept hidden. It’s easier for the public to see if there’s evidence that what’s being proposed will work. That’s important for any large infrastructure project, but it’s particularly important when a project is relying on untested technology and extremely ambitious cost estimates.


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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 390,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE

 

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