Editor’s note: This is the final part – for now – in a series in which we tried to unravel the complex financial underpinnings of public-private partnerships such as the ones in place for the Okanagan Correctional Centre and Penticton Regional Hospital, and determine if they are actually a good deal for taxpayers. You can read Part 1 here, Part 2 here and Part 3 here.
VANCOUVER – Companies that do business with the government should expect their contracts to face scrutiny from taxpayers, a lawyer argued Wednesday at a hearing to determine if the financial model underlying the Okanagan Correctional Centre should be released to The Herald.
“When the government is spending million and millions of dollars to build a correctional facility, the public wants to know, to put it simply, if they’re getting bang for their buck,” Mark Underhill said in his submissions on behalf of the Office of the Information and Privacy Commissioner for B.C.
“If you’re going to do business with the government… your profit margin, how much money you’re making off the public purse, is fair game.”
Underhill was defending a decision of an OPIC adjudicator who in December 2016 ordered release of the OCC financial model, contained in a 587-page spreadsheet, to The Herald.
The release was placed in limbo, however, when Plenary Justice, the company that won the contract to design, build, finance and maintain the jail, asked for the judicial review, which concluded Wednesday in B.C. Supreme Court.
Justice Douglas Thompson reserved his decision until an as-yet undetermined date, likely in a few months.
The OIPC order resulted from an appeal by The Herald after the Ministry of Citizens Services denied an August 2014 freedom of information request for the OCC financial model and construction schedule.
The ministry cited Section 21 of the Freedom of Information and Protection of Privacy Act, which allows public bodies to withhold information that could harm third-party business interests.
Information afforded such protection is that which is “supplied, implicitly or explicitly, in confidence and the disclosure of which could reasonably be expected to harm third-party business interests,” according to that section of the act.
Much of the two-day review hearing focused on that point.
In their submissions Tuesday, lawyers for Plenary Justice argued the financial model was delivered to the B.C. government during the OCC bid process and later incorporated virtually unchanged into the final contract, except for some clarifications and “mechanical adjustments” to interest rates, therefore making it supplied.
Exceptions are made however, if the supplied information was susceptible to change or negotiation, which the OIPC adjudicator found to be the case with the financial model.
In defending the OIPC order, Underhill argued the adjudicator is an expert in the “complex and specialized” area of freedom of information legislation, and the judge should therefore give deference to her decision.
He later allowed that some of the data in the financial model, such as Plenary Justice’s pre-existing arrangements with its lenders, may indeed have been non-negotiable, but noted “that’s not the case for the vast majority of the information.”
Underhill also suggested that if the judge does not uphold the adjudicator’s decision, it should be sent back to the OIPC for a fresh, but more focused, review of the financial model to determine what is “true proprietary information.”
Lawyers at the hearing also sparred over whether the adjudicator’s reasons for her decision were sufficiently detailed and whether it was unfair for her to analyze the main body of the OCC contract without allowing Plenary Justice and the ministry to make submissions on it.
So far, partial release of information from The Herald’s original FOI request revealed the 30-year deal with Plenary Justice is worth $419.2 million in 2015 dollars.
According to schedules of payments, the B.C. government anted up $72.3 million during construction and will hand over another $255.6 million in capital payments over the life of the deal.
That would seem to put the true capital cost of the jail at $327.9 million – nearly double the $192.9-million sticker price.
In addition, Plenary Justice will receive monthly lifecycle payments totalling $28.3 million and maintenance fees totalling $63 million.
It’s unclear exactly what’s covered by those fees or the effective interest rate to taxpayers resulting from Plenary Justice financing the jail through the private bond market.
Plenary Justice’s parent company is privately held and headquartered in Australia. It boasts of operating 44 P3 projects around the world worth a combined $32 billion.
Full disclosure: The Herald was represented at the hearing by city editor Joe Fries, who filed the original FOI request and made submissions on the newspaper’s behalf.