"Traditionally, governments borrow money for things like hospitals and bridges. They use that money to pay the private sector to design and build the projects. Once built, the facility or infrastructure is wholly owned, operated and maintained by government on behalf of the public. In P3 projects, however, the government typically enters into multi decade contracts with private corporations to design, build, finance and operate facilities, whether that be hospitals, toll highways or sewage treatment systems. Rather than financing and operating these facilities, the government effectively leases them from the private partner, paying for the right to use them over the life of the contracts...When private companies finance public projects, they pay higher interest rates on what they borrow and require a high rate of return on what they invest. The higher costs of private financing for P3s are built into the lease rates that taxpayers ultimately pay, and are much higher than the debt service costs that government would pay if it financed the projects itself. For large, expensive public infrastructure, that can add hundreds of millions of dollars to the total expenditures government incurs over the life of the project."[emphasis added]
And that's what is going on with public-private partnerships in Canada. So what are we doing here in Chicago? Mayor Rahm Emanuel is cramming through the City Council a public-private partnership arrangement called the Chicago Infrastructure Trust, expected to pass on Tuesday. It amounts to a privatization of the funding for infrastructure. Question: why would a city with the ability to sell bonds bother to do this? No city has ever done this. It makes no sense...unless you are a new Mayor who wants to pad his resume so he can run for higher office as The Man Who Rebuilt Chicago's Infrastructure While Solving the Budget Crisis at the Same Time. Maybe he figures to be in Springfield or Washington when the people of Chicago are paying the exorbitant bill in the form of charges and user fees. That's what happened with the privatization of the Chicago Skyway, four municipal parking lots, and the City's parking meters. The rates went through the roof, but they aren't taxes or user fees paid to the city, they are charges that are paid to, and controlled by, faceless corporations backed by sovereign wealth funds and who-knows-what, so there is nobody to complain to. The decisions are beyond political control, and that's the way things will be with this Infrastructure Trust.