GOLDEN EARS BRIDGE. Alternative Transportation Financing ITE Quad Conference - May Fred Cummings Vice-President, Major Construction Projects

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1 GOLDEN EARS BRIDGE Alternative Transportation Financing ITE Quad Conference - May 2009 Fred Cummings Vice-President, Major Construction Projects

2 Golden Ears Bridge Project Context/Project Overview Project Progress Project Benefits Financing Value for Money Questions

3 Project Features 968 Metre Main Bridge - extra-dosed cable-stayed design - 6 arterial-standard GP lanes - wide sidewalks and connections to municipal cycling routes 14 kms of New Road - 8 kms of municipal asset roads and improvements 13 bridges - 9 rail crossings Project Cost: ~ Cdn$1 billion - funded by user tolls Roads & Overpasses Bridge Deck & Approaches Roads & Over/ Underpasses

4 Project Objectives Reduce travel times and traffic congestion for commuters and goods movement Promote residential and industrial development Improve accessibility between residential and industrial developments Minimize impacts on green space and agricultural land Improve transit connections across the Fraser River Link existing pedestrian and cycling networks Provide north-south connectivity to east-west routes

5 Master Municipal Agreement

6 Construction Progress

7 Construction Progress

8 Construction Progress

9 Construction Progress

10 Construction Progress

11 Construction Progress

12 QuickPass Electronic Tolling

13 QuickPass Electronic Tolling Tolling Classifications & Rates

14 Project Benefits USER BENEFITS Additional capacity in an area poorly served Reduced congestion on existing routes Travel time savings 30 minutes ($1.6 billion) Vehicle operating cost savings ($1.4 billion) Safety benefits($0.6 billion)

15 Project Benefits ECONOMIC BENEFITS Induced population growth 22,000 New businesses 700 Residential units 7,000 Commercial floor space 40,000 sq.m. Property tax $23 million Development cost charges $100 million 7,000 person-years employment $400 million GDP $155 million government revenues

16 Project Financing BUSINESS MODEL CONSIDERATIONS Cost of public borrowing vs. private borrowing needless debate Identifying, quantifying, managing and in some cases transferring risk Allow for innovation in both technical and financing proposals Value for money

17 Project Financing BUSINESS MODEL CONSIDERATIONS GEB to be self financing Robust revenue stream Ramp up preference to defer payment Most of risk is in construction phase Potential for latent defect (geotechnical conditions) Recognize potential synergies (design and OMR) Life cycle considerations

18 Project Financing APPROVED BUSINESS MODEL TransLink retains revenue risk TransLink sets the tolls TransLink contracts with separate toll operator DBFO Contractor for infrastructure License fee Cap the debt repayment in ramp up TransLink acquires property (and finances own costs)

19 Project Financing Risk Allocation Risk Factor Land Acquisition Accuracy of Geotech Data Interpretation of Data Environmental Certificate Environmental Authorization Environmental Permitting Archaeology Finds (disclosed) Archaeology Finds (undisclosed) TransLink GCGP

20 Project Financing Risk Allocation Material defects Utilities Severe weather River flooding Risk Factor Approvals and Permits Design and Construction Material and labour costs Consultation and communication TransLink GCGP

21 Project Financing Risk Allocation Damage to works Safety Risk Factor Quality Management Insurance and bonding Operations, Maintenance, Rehabilitation Meeting handback standards Contamination (pre-existing and undisclosed) Contamination (pre-existing and disclosed) or arising from works TransLink GCGP

22 Project Financing Risk Allocation Inflation Toll revenues Risk Factor Financing (all risks) Changes in Law First Nation Issues Commitments to First Nations TransLink GCGP

23 Project Financing Contractual Structure

24 Project Financing Project size CAD$ 1,117 million Construction value CAD$ 746 million Senior Debt to Mezzanine/Equity ratio 92:8 Senior Debt financing CAD$ 928 million, 34.5 years Senior Debt rating AAA (S&P) and Aaa (Moody s) Senior Lenders/MLA s DEPFA Bank plc and Dexia Credit Local Guarantors/Monoline Insurers (Monolines) XL Capital Assurance (UK) & Ambac Assurance (UK) Mezzanine Debt Financing CAD$ 31 million, 34.5 years Mezzanine Lender DEPFA Bank plc Interest Rate Swap Providers DEPFA Bank plc and Dexia Credit Local CPI Swap Provider RBC Capital Markets

25 Project Financing FINANCIAL INNOVATIONS Financing package designed to meet TransLink s requirements. capped revenue period lowest NPV inflation considerations First time in Canada, senior loans from mono-line guarantor Wrapped interest rate swap for senior and equity bridge loan facilities. Wrapped revenue (CPI) swap facility to protect the project from inflation volatility.

26 Value for Money "Value for Money" is a broad term that captures both quantitative factors, such as costs, and qualitative factors such as service quality and protection of public interests.

27 Value for Money REFERENCE CASE ANALYSIS Define reference case scope Identify and categorize risks related to reference case scope Quantify range of impacts of individual risks Determine the distribution of outcomes within the risk ranges and Conduct a Monte Carlo simulation and evaluation of the cumulative outcome of all the risks for each risk category Assess cumulative impacts of risks

28 Value for Money GEB RISK CATEGORIES Construction specific risks including municipal extras, utilities, traffic management, project management, staging conflicts, geotechnical conditions, environmental remediation, archaeological discoveries, noise mitigation, drainage, etc. Global risks including the integration of five construction contracts, construction schedule delay, time delays (review and approvals process), lost tolling revenue, etc. OMR risks including latent or material defects, delayed rehabilitation, different heavy vehicle volumes than forecast, etc.

29 Value for Money 90th PERCENTILE RISK TOLERANCE* Quantified Capital Cost Risks (NPV) $ million Quantified OMR Cost Risks (NPV) $ 27.6 million * A choice of the 90th percentile confidence level can be interpreted as an acceptance that, on a balance of probabilities, the actual cost will not exceed the estimated value more than once out of 10 times

30 Value for Money PPP SAVINGS ESTIMATE: $6.3 to $10.7 million NPV depending on the treatment of schedule delays.

31 Project Financing WHAT DID TRANSLINK RECEIVE? Received value for money Ultimately will solve traffic problems Stakeholders happy with outcome Establishes TransLink in the roads and bridges business Fair commercial terms

32 Value For Money TRANSLINK S OBJECTIVES ACHIEVED BY: Providing an affordable stream of Capital and OMR payments No payments to the DBFO Contractor until the bridge goes into service Capital payments over the first five years are capped to allow the redistribution of traffic Protects TransLink at a time when the project is at its most vulnerable the early years of operation (deferring payments) TransLink has the ability to independently effect a refinancing of the project, if more favourable terms can be leveraged

33 GOLDEN EARS BRIDGE Questions?