Infrastructure&DevelopmentMunicipal Advantages to Public Private Partnerships

Public Private Partnerships are also known as P3’S

A public-private partnership is a contractual agreement formed between public and private sector partners, which allows more private sector participation than is traditional.

Another DefinitionP3’s

A public-private partnership exists when public sector agencies (federal, state, or local) join with private sector entities (companies, foundations, academic institutions or developers) and enter into a business relationship to attain a commonly shared goal that also achieves objectives of the individual partners.

Typical Uses

Contracting with a private company to: Renovate Construct Finance Operate Maintain Manage

A facility, system, or for economic development

History

Goes back to the earliest construction in the United States

Used extensively in Europe and other countries Significant renewed interest in the 1980s FHWA Legislation, ISTEA (1991),

SAFETEA-LU (2005)—SEP 15

Why?

Traditional funding sources are not keeping pace with infrastructure investment needs and the growing public demand for services like transportation and new water delivery and waste water systems.

Why? Continued

In short, P3 is a tool that can help governments meet demands for the development of modern and efficient facilities, infrastructure and services while providing value for taxpayers..

Benefits

Expedited project completion Project cost savings Improved quality Use of private resources Access to new sources of private capital

4 basic dimensions of P3’s

Although each is unique, all P3’s include four basic characteristics: Shared goals Shared resources (time, money, expertise,

people) Shared risks Shared benefits

Why are States and Municipalities using P3’s

Changing economic conditions Maxed out bond financing Declining value of Credit Rating Reluctance to increase taxes Growing infrastructure needs

Old way of funding projects

Tolls Tax Increment Finance Fees Grants Loans Bonds Other Revenue Streams

Successful P3 projects by State DOT’s

There is no limit to the type or scope of a municipal project. Municipal partnerships with third party operators are flourishing

General P3 Categories

“Greenfield” projects Involve the development of new infrastructure. Design, Build,

Finance, Operate, and Maintain

“Brownfield” projects Operate, maintain, preserve, or improve existing infrastructure.

Generally limited to long-term operations and maintenance contracts or lease concessions.

Blended “Greenfield- Brownfield” projects Example: adding additional high-occupancy toll lanes to an

existing highway to increase capacity

Genesis

What’s the need What’s driving the need, rationale

Facility non-compliance, natural disaster, budget deficit, new facilities, crumbling infrastructure, business development and retention

Preliminary Project Definition

Getting Started with Reserve Capital Holdings, Ltd

How do you create a P3? How do you implement one?

A Public entity’s opportunity in finding and contracting with the best private sector partners is right here.

2 Major Steps

1. Crafting the Partnership 2. Implementing the Partnership

Crafting Implementation

P3 Project Management

CraftingDesign Build Finance

ImplementationOperate Maintain Transfer

Option Options Options

P3’s provide infinite varieties of structuring and expertise from the private sector

So what are the benefits versus the way it has always been done? Access to private capital Reduce costs borne by design and engineering Accelerate project delivery Shift project risk Spur innovation Provide for more efficient management Utilize existing assets to reduce bonding capacity Generate cash flow from new technology Maintain your credit rating by reducing bond exposure

More benefits from private operators

Long-term concessions can improve asset management-the same party that constructs the project is responsible for long-term operation. This creates incentives to build a higher quality facility that is easier to maintain.

P3 usage advantage

P3s can be valuable options for states seeking innovative approaches and funding to repair existing and build new infrastructure projects. They are best suited to medium to large scale projects that have ongoing maintenance needs.