There appear to be a number of drivers for TransLink to partner with the private sector:
• The need to find a private-sector partner with relevant design, construction, and commissioning expertise who could present a cost-competitive proposal and is able to contract on a fixed-price, date-certain basis. This was important as the construction phase was technically challenging, involving both elevated sections and tunneling.
• The need to partner with a private-sector party with light rail operational experience.
While these factors are not necessarily financial drivers, the significant contribution of equity at C$120 million by the concessionaire, together with its ability to raise commercial debt, represented almost 40 percent of the project's financing needs.
TransLink also had to demonstrate at each stage of the procurement that the public-private partnership represented better value for money over the whole life of the concession than the public-only solution.
The mix of public and private finance created some contractual complexities, in particular:
• Public-sector contributions: The majority of these contributions were planned to be made during the construction period subject to achieving predeter mined milestones. The concessionaire did not want the risk of disputes between TransLink and their advisors as to whether the milestones were met or not. The solution to this was the appointment of a single engineering consultant on whom all parties would rely.
• Intercreditor: Given the number of funding sources, there needed to be detailed agreements describing each funder's obligations and rights in situations such as non-payment by another party, and how the lenders ranked in order of seniority.
• Accessing international banking markets: The contracts, in particular the financing agreements, needed to reflect the fact that commercial debt was being provided mainly by non-domestic banks. A particular area of focus was tax management.