Municipalities have been under pressure to use private partner financing and P3 arrangements that are difficult to acurately assess for risks, given the provisions for secrecy in both negotiations and contracts. A recent study of P3s in British Columbia examined the costs of private financing of public projects and found that public financing is less risky and less expensive. 

Last year, Millenium Development and its financial guarantor, the City of Vancouver entered into a $750 million dollar line of credit with Fortress Investment Group to fund its Olympic Village construction budget.  Unfortunately, they chose to do so using very risky currency swaps.  

According to Kenneth Bayne, the City’s director of finance, quoted by the Vancouver Sun:  “”This exposes the loan to both interest rate and currency risks between the two countries [hedging risks].”

Fortunately for British Columbians, the Municipal Finance Authority of British Columbia (MFA) provides low interest financing and other financial services to BC communities and institutions.  The MFA has saved BC taxpayers millions of dollars in debt repayments as a result of their excellent credit rating.