comparison of international p3 model, 63-20 corp and hybrid lease

Comparison of International P3 Model, 63-20 Corp and Hybrid Lease

The Great Debate:

National Development Council

Public-Private Partnerships

2

What is 63-20?

Through an “on-behalf-of” not-for-profit

Ownership

Private Performance Based

Operations

100% Tax Exempt Debt

Financing

Privately contracted Dedicated repair and replacement reserve

Maintenance

Lowest in the industry

Occupancy CostsPrivate

Build-to-Suit Integrated Delivery

Incentives to perform

Development

National Development Council

The Development Process

3

Design Phase

Architect & Engineer

General Contractor-Construction Manager

Public Agency

Sub-contractors

DeveloperSpecial Purpose

Entity

Lease

Architect & Engineer

General Contractor-Construction Manager

Public Agency

Sub-contractors

DeveloperSpecial Purpose

Entity

Development Phase

Typical PPP structure

4

AvailabilityPayment

Equity Provider Senior DebtAgreements

Senior Debt Provider

Operations & Maintenance

(including life cycle)

FM Agreement

Design & Construction

D&C Contract

Project Company/Developer

DBFOM or DBFMAgreement

Governmental Sponsor

Interface Agreement

Attributes of typical PPP structure

5

Investment Grade Transaction

+

+

=• Non-recourse project financing• License structure – no charge in ownership• Significant risk transfer• Strong value proposition

Strong balance sheet – credit rating

Parent Company Guarantee + Security+

Payment Guarantee(assuming performance)

Efficient Risk Allocation

Hawkins

Delafield & Wood LLP

Developer Lease/Hybrid Model

Lease of Commercial Development Rights in connection with Implementation of Public InfrastructureEx. – Commercial Development Lease in connection with Courthouse Project

Alternative/Offsetting Source of Funds for Public Infrastructure Development

Economic Development Considerations

Developer Lease could be a Component of either International Model or 63-20 Model

Nature of the Entities: Commercial Development vs. Public Infrastructure Development

Risks Associated with Commercial Development

Cost of Capital

7

Comparison Summary

Project Component 63-20 Corp Hybrid P3

Construction Risk TransferSchedule ü ? üPrice ü ? ü

O&M Risk Transfer Over Term

Operating Cost 3-5 Years Max 15 Years ? ü

Performance & Availability *  ? ü

Replacement Costs *  ? ü

Handback Condition *  ? ü

FinancingCost (ranked) 1 3 2Appropriation Risk  ü ? ü

Funding &/or Payment Guarantees Client Client / Users Client