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Comparison of International P3 Model, 63-20 Corp and Hybrid Lease
The Great Debate:
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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
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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
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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
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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
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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
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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