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Client Update: The New Building Canada Fund

In the Federal Budget 2011, the Government of Canada stated that it would develop a new plan to support public infrastructure beyond the expiry of the 2007 Building Canada Plan in 2013-14. The Government has now fleshed out some of the details of this commitment, with the announcement of the New Building Canada Plan on February 13, 2014.

The details now released include: provincial-territorial allocations, eligible project categories, specific allocations for small communities, the role of other entities, public-private partnership (P3) requirements, and cost-sharing criteria.

Provincial-Territorial Allocations

The New Building Canada Plan will operate from 2014 through 2024. The estimated breakdown for Atlantic Canada is as follows, based on 2011 census data:

NS: 
$426 million from the New Building Canada Fund
$580 million from the federal Gas Tax Fund

NB:
$394 million from the New Building Canada Fund
$472 million from the federal Gas Tax Fund

NL:
$349 million from the New Building Canada Fund
$325 million from the federal Gas Tax Fund

PEI:
$277 million from the New Building Canada Fund
$163 million from the Federal Gas Tax Fund

In addition to the above amounts, all provinces and territories will also stand to benefit from the following funding pools:

  • $4 billion for “projects of national significance”.
  • $1.25 billion in additional P3 project funding.
  • $10.4 billion in GST rebates to municipalities across the country.

Eligible Project Categories

The New Building Canada Fund has two general components: the National Infrastructure Component, for projects generating the “greatest economic impact”, and the Provincial-Territorial Infrastructure Component focusing on those with strong economic benefits.

National Infrastructure Component

  • highways and major roads
  • public transit
  • rail infrastructure
  • local and regional airports
  • port infrastructure
  • intelligent transportation systems (ITS)
  • disaster mitigation infrastructure

Provincial-Territorial Infrastructure Component

  • highways and major roads
  • public transit
  • drinking water
  • wastewater
  • solid waste management
  • green energy
  • innovation (post-secondary infrastructure for advanced research & teaching)
  • connectivity and broadband
  • brownfield redevelopment
  • disaster mitigation infrastructure
  • local and regional airports
  • short-line rail
  • short-line shipping
  • northern infrastructure (territories only)

Note that the New Building Canada Fund eligible project categories no longer include local roads, culture, tourism, recreation and sport, which are now eligible under the Gas Tax Fund.

Specific Allocations for Small Communities

The Small Communities Fund will provide a $1 billion pool of funding for communities with less than 100,000 residents. It will be part of the Provincial-Territorial Infrastructure Component, with the same eligible categories.

The Role of Other Entities

In addition to provincial, territorial and municipal governments, the New Building Canada Fund will be available to other entities for “economically focused projects that are critical to the support of international trade (including rail infrastructure, port infrastructure and Intelligent Transportation Systems)” and “projects under the innovation category (post-secondary institutions)”. Eligible recipients include band councils, provincial public-sector bodies, private sector entities (both for-and-non-profit), Canada Port Authorities and public or non-profit post-secondary institutions.

Public-Private Partnerships

Any proposed project with a total eligible cost of over $100 million will undergo a “P3 Screen” to determine if it could proceed as a P3 project and generate better value for money. If so, funding will be conditional upon the project being delivered on a P3 basis.

Cost-Sharing Criteria

The general principle is that the maximum federal contribution to a project will be one-third (33.3 per cent) of total eligible costs. However:

  • For highway and major road projects, the federal government will contribute 50 per cent.
  • For projects with a for-profit private sector recipient, the federal government will contribute 25 per cent.
  • For P3 projects, the federal government will contribute 25 per cent.

Stay Tuned

Some details are yet to come. The Federal Minister of Infrastructure, Communities and Intergovernmental Affairs, The Honourable Denis Lebel, will consult with provincial, territorial and municipal governments to “seek input on outstanding parameters” such as the application process for the fund. It is clear, however, that much of the spending will depend on how provinces, territories and municipalities prioritize the projects that are most important to them.

The foregoing is intended for general information only. If you have any questions or require further information on participating in these programs, please visit our business practice group and government relations counsel at www.stewartmckelvey.com.

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