Partnerships Leon Corbett Project Finance Manager Southern - - PowerPoint PPT Presentation

Florida’s Public-Private Partnerships

Leon Corbett

Project Finance Manager

Southern Legislative Conference Webinar

December 16, 2014

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Florida P3 Legal Framework

Early Adoption of Strong Legal Framework Ensures Creditworthiness

• Authority for availability payment deals introduced in 2007 statutes
• 15% of federal and state funding cap, cost effectiveness analysis
• Availability payments are prioritized ahead of new capacity

projects

• Further controls introduced in 2012
• Approval by Governor following Legislature review
• Inclusion in State Transportation Trust Fund debt assessment
• Additionally, portions of P3 payments are included in the Division
• f Bond Finance annual Debt Affordability Report

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BF – Build Finance DBF – Design Build Finance DBFOM – Design Build Finance Operate Maintain

*construction portion

4

COMPLETED I-95 at Pineda - $200M (DBF) COMPLETED US 1/SR 5 - $114M (DBF) COMPLETED I-75 (IROX) - $458M (DBF) COMPLETED I-95 Express Lanes - $139M (DBF) COMPLETED Palmetto Section 2 - $192M (DBF) UNDER CONSTRUCTION US 19 - $119M (BF) UNDER CONSTRUCTION SR 79 - $99M (DBF) UNDER CONSTRUCTION SR 9B - $95M (DBF) UNDER CONSTRUCTION I-95 - $126M (DBF) UNDER CONSTRUCTION Palmetto Section 5 - $566M (DBF) UNDER CONSTRUCTION I-75 N of SR 80 to S of SR78 - $72M (DBF)

Florida P3s

Florida’s Use of P3s Ongoing Since 2007

IN OPERATIONS Port of Miami Tunnel - $663M* (DBFOM) IN OPERATIONS I-595 - $1.2B* (DBFOM) UNDER CONSTRUCTION I-4 Ultimate - $2.3B* (DBFOM) COMPLETED I-4 Connector - $428M (BF)

Florida P3 Track Record

Project Type Contract Executed Substantial Completion Estimated Years Advanced Design and Construction Cost

I-595 DBFOM March 2009 March 2014 15 years $1.2B Port of Miami Tunnel DBFOM October 2009 August 2014 Undetermined $663M I-4 Ultimate DBFOM September 2014 December 2020 20+ years $2.3B Other Projects 10 – DBF 2 – BF From 2007 to 2013 5 completed 1 to 5 years $2.6B

P3 Structure an Important Financial Tool in Tool Box

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Florida P3 Value Proposition

DBFOM P3 Seeks to Achieve 5 Primary Goals

• Transfer Risk
• Reduce Cost
• Accelerate Project Timetable
• Secure Additional Financing
• Leverage Private Sector Innovation

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7

I-4 Ultimate Project Scope

$2.3B Project Brings Innovation to Relieve Congestion

• 21 Miles from west of Kirkman Road to east of State Road 434
• Increases capacity by adding 4 tolled Express Lanes
• 6 General Use Lanes + 2 Auxiliary Lanes
• Reconstructs 15 major interchanges
• Widens 13 bridges, adds 53 new bridges and replaces 74 bridges

3 General Use Lanes plus Aux Lanes 3 General Use Lanes plus Aux Lanes

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I-4 Ultimate P3

This Project Is a Game Changer for Central Florida

• FHWA estimates - every $1.0B spent on highway and bridge construction

supports 28,000 jobs

• Reconstructs aging infrastructure originally built in the 1960s
• Reduces congestion by increasing capacity by adding 4 Express Lanes
• P3 procurement allows the full project to be built earlier than the

traditional method (estimated at 26 years)

• P3 procurement delivers high priority projects without deferring other

projects throughout the state

• Newer design provides a safer interstate reducing crashes and subsequent

delays

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I-4 Mobility Partners Taking On Key Project Risks

• FDOT entered into a 40-year concession agreement that transfers key project

risks and “locks-in” costs for design, construction, operations, maintenance, renewal and replacement

• Key project risks undertaken by I-4 Mobility Partners:
• Design and construction (over 500 designers working in peak)
• Coordination with utility owners (1,000 utility conflicts with the project)
• FHWA re-evaluation for additional scope items
• Changes in costs (I-4 Mobility Partners had the lowest design and

construction cost bid, with the highest bid being about a billion more)

Procurement Overview

P3 Lessons Learned

• Each project is unique
• A properly structured deal can be financed, even in the

toughest of markets (flexibility is key)

• Evaluate cost effectiveness or value for money early in the

process

• Secure government and community stakeholders’ support
• Secure outside experts with P3 experience, build internal

expertise across projects

• Be transparent, have an interactive process

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Public-Private Partnerships Deliver Value to Florida

• P3s allow project advancement by years or decades while still

delivering other high priority projects throughout the state

• P3s relieve congestion in heavily populated areas in Florida
• Additional incentives in P3s to deliver on time/on budget
• I-4 concessionaire will be able to deliver additional value to

FDOT

• Concessionaire, FDOT and federal partners work together to

deliver transportation infrastructure solution in efficient, cost effective manner

Conclusion

Contact Information

Leon Corbett Project Finance Manager Florida Department of Transportation Leon.Corbett@dot.state.fl.us FDOT’s P3 website:

http://www.dot.state.fl.us/officeofcomptroller/PFO/p3.shtm

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F = MA : CSG SLC WEBINAR DECEMBER 16, 2014

• J. Douglas Koelemay, Director

VIRGINIA LEADERSHIP IN PUBLIC-PRIVATE PARTNERSHIPS

• PPTA enabling legislation

adopted 1995; PPEA followed

• PPTA implementation guidelines

from project to project

• Creation of VAP3 office 2010,

new industry practices, need for more public engagement drove significant process changes

• 2014 – Updated PPTA

Implementation Manual & Guidelines

• Goal is to build strategic program,

extend VAP3 leadership

VIRGINIA P3 LESSONS LEARNED

• Permanent office acts as champion, catalyst,

guide

• P3 leaders and program managers have vision,

discipline & imagination; are pragmatic & collaborative by nature

• Consistent, detailed guidelines facilitate

closure, realization of public benefits

• Continuous reviews of assumptions and

conclusions improve project decisions

• Effective P3 communications focus on benefits

produced, broad policy goals advanced

• Steady flows of information to agencies,
• fficials, planners, media build understanding and trust
• Other states, provinces, countries have good ideas; competition is growing

I-95 EXPRESS LANES PROJECT

• Comprehensive agreement with

Transurban/Fluor executed July 2012

• Express lanes opened December 14
• Transurban 80-year concession period
• Virginia contribution of $71 million

leveraged $925 million project

• Adds to managed lanes (HOT) system

that includes I-495 Express Lanes

• Over 100 million users of I-495 Express

Lanes in first two years

• Virginia’s contribution of $409 million

leveraged a $1.7 billion I-495 project

• Transurban increased its equity

investment in 2014 to bring debt service requirement more in line with revenues

ELIZABETH RIVER TUNNEL PROJECT

• Two-lane tunnel connects

Hampton and Portsmouth

• Parallels existing Midtown Tunnel

under Elizabeth River

• Includes maintenance, safety improvements for existing Midtown &

Downtown Tunnels, extension of MLK Boulevard

• VDOT maintains ownership and oversight
• Private concessionaire ERC will finance and build facilities, operate and

maintain for 58-year period

I-66 MULTIMODAL PROJECT NEXT

• Brief oversight board

(Commonwealth Transportation Board), issue Request for Qualifications (RFQ) early 2015

• Announce short-listed teams

mid-2015

• Develop, issue Request for

Proposals (RFP) late 2015

• CTB approve selected alternative

2015

• Complete NEPA end of 2015
• Commercial close end of 2016
• Begin construction by 2017
• Tier 2 EA, preliminary engineering design, data collection underway
• Coordination with local stakeholders, agencies ongoing

I-66 MULTIMODAL PROJECT

Two Express Lanes (convert existing HOV lane and add one lane)

• HOV-3 and buses travel free
• Non-HOV tolled
• Congestion-based tolls
• Convert HOV-2 to HOV-3 by 2020,consistent

with region’s Constrained Long Range Plan Three General Lanes

• Open to all traffic
• No tolls
• Ramp-to-ramp connections

(auxiliary lanes) Rapid Bus Service

• High frequency of service beyond peak hours
• Travel in express lanes for reliable travel times

2014 PPTA MANUAL & GUIDELINES

Positive suggestions from officials, public, businesses, MPOs, legal teams

• 100+ responses over a 30-day period
• P3 delivery method vital to future transportation projects
• Public and stakeholders wanted to improve transparency, competition and

accountability Results of 2014 initiative to review and revise Guidelines

• Increased CTB (oversight board) involvement
• Increased public engagement
• Enhanced competition
• Increased transparency
• Improved risk assessment and management

HIGHLIGHTS OF NEW GUIDELINES

• Aligns political support at project development stage (P3 Steering Committee

includes oversight board members, representatives of House and Senate, non- Agency state financial expert)

• Gets oversight board commitment before procurement begins and private sector

begins to spend money on proposals (oversight board resolution of approval necessary to advance P3 projects from project development to project procurement)

• Includes regular notifications and briefings to legislature (General Assembly

Appropriations, Finance and Transportation Committees)

• Encourages competition (requires review of RFQ/RFP if project procurement

results in a single response)

• Establishes accountability for P3 decision (Secretary of Transportation signs

Finding of Public Interest document)

• Requires review if material changes in scope, financial terms or risk allocations

ADDRESSING RISK FOR P3 AND D-B

Project Development Comprehensive Agreement (CA) Executed Unsolicited P3 Projects Detail-Level Screening with Recommendations Policy Review with Recommendations Solicited P3 Projects High-Level Screening with Recommendations Project Implementation Design and Construction Project Implementation Operations and Maintenance Project Handback P3 Project Procurement

Part 1: Screening and Identification Phase

Initial Risk Workshop and Discussions

Part 2: Project Development Phase Part 3: Procurement Phase Part 4: Construction Phase Part 5: Operations Phase

Initial Risk Register Initial Risk Management Plan Interim Risk Register Interim Risk Management Plan Interim Risk Workshop Final CA Risk Register Final CA Risk Management Plan Final Risk Workshop Handoff from VAP3 to the Agency

PPTA PROJECT DELIVERY FRAMEWORK

*Parties to be notified and briefed upon

request after the Oversight Board decision: ‒ Chairs of General Assembly committees ‒ MPO’s ‒ Interested members of General Assembly ‒ Special interest groups ‒ Regulatory Agencies ‒ Public Briefing Focus: ‒ RFI results (as appropriate) ‒ Schedule ‒ Refresh on the high points from Project Development ‒ Preliminary Procurement documents ‒ Risk Analysis and Value-for-Money ‒ Estimated project cost ‒ Potential public subsidy ‒ Potential economic benefits ‒ Preliminary Business Points ‒ Initial Finding of Public Interest Briefing Focus: ‒ Detail-Level Screening Report ‒ Desirability as P3 ‒ Feasibility as P3 ‒ HB 2 Prioritization ‒ Duration of P3 development and procurement Briefing Focus: ‒ Major Business Points ‒ Updated Risk Allocation & Management Plan ‒ Statutory Audit results ‒ Final Value-for-Money Analysis ‒ Updated economic benefits ‒ Project bid results ‒ Public subsidy (if required) ‒ Final Finding of Public Interest Draft and Final Contract Documents posted on P3 Website for review & comment Final Contract Documents posted

• n P3 Website

P3 COMMUNICATIONS NEXT STEPS

• Distribute P3 Implementation Manual and

Guidelines

• Require transportation agencies to adopt

Guidelines

• Finalize Public Engagement, Risk

Management and Value for Money Analysis Guides in 2015

• Encourage public engagement via

www.p3virginia.org and social media 24/7

• Brief General Assembly members, media,

business groups, other government agencies, transportation companies

The Commonwealth of Virginia Implementation Manual

for the Public-Private Transportation Act of 1995 (as Amended) 2014

FUTURE OF VIRGINIA P3 PROGRAM

• Program centered on true P3s -
• equity, risk sharing, life-cycle

costs, speedier delivery

• Next project I-66 Multimodal

Improvements will add to managed lanes system

• Hampton Roads bridge and

tunnel project

• Continue the review of P3

process, decision-making and accountability

• Goals are to strengthen

transparency, competition, public engagement, risk assessments and management

NEW CAPITAL PLANNING TOOL

• Can run multiple scenarios to

see the cause and effect of different assumptions

• Can forecast project costs,

revenues and funding availability

• Allows HRTAC to make

informed decisions on project and program delivery

Hampton Roads Transportation Accountability Commission capital planning tool allows regional body to evaluate scenarios of project mix, prioritization, financing and delivery.

HRTAC CAPITAL PLANNING TOOL

• Project prioritization
• Project phasing
• Fund availability
• Construction costs and timelines
• Project revenue potential
• Operating cost
• Inflation
• Tax revenue growth
• Financing opportunities (coverage

ratios, cost of finance, repayment profiles)

• Delivery methods (DB, DBF,

concession)

• Reserve accounts for residual cash

flow

• Securitization (revenue uplift, cost
• f capital, length of securitization)

Assumptions allow HRTAC members to develop a systems view.

HRTAC INITIAL FINANCIAL PLAN

Period start date 1-Jan-14 1-Jan-15 1-Jan-16 1-Jan-17 1-Jan-18 1-Jan-19 1-Jan-20 1-Jan-21 1-Jan-22 Period end date 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 31-Dec-20 31-Dec-21 31-Dec-22 Period Number 1 2 3 4 5 6 7 8 9 $2014 Construction Costs Nominal Sum Project Funding Account

• Funding Sources

Six Year Plan Funding 126,561,000 100,000,000 26,561,000

• Current Regional Revenues Balance

174,535,744 174,535,744

• Total Funding

301,096,744 274,535,744 26,561,000

• Funding Available for Construction

301,096,744 274,535,744 26,561,000

• Previous Cash Balance Carried Forward
• 259,535,744

319,396,708 310,015,852 201,211,413 176,237,853 166,401,191 167,164,808 182,989,582 Total Cash Available for Construction 274,535,744 286,096,744 319,396,708 310,015,852 201,211,413 176,237,853 166,401,191 167,164,808 182,989,582 Construction Drawdowns I-64 / I-264 Interchange (321,140,000) (343,740,998)

• (33,660,000)

(34,329,485) (106,319,354) (83,182,208) (86,249,951)

• Ft. Eustis Interchange

(157,500,000) (180,603,787)

• (8,281,055)

(56,292,890) (57,440,516) (58,589,326) I-64 Widening - Segment 1 (144,000,000) (144,000,000) (15,000,000) (25,700,000) (36,000,000) (67,300,000)

• I-64 Widening - Segment 2

(201,500,000) (213,592,853)

• (6,630,000)

(67,618,683) (68,982,262) (70,361,908)

• I-64 Widening - Segment 3

(274,321,415) (311,303,820)

• (10,824,909)

(60,727,739) (94,266,459) (84,164,710) (61,320,003) Total Construction Costs (1,098,461,415) (1,193,241,459) (15,000,000) (65,990,000) (137,948,167) (242,601,617) (164,369,025) (155,258,745) (150,559,349) (141,605,226) (119,909,329) Development Costs Patriots Crossing - Environmental (5,000,000)

• (5,000,000)
• High-Rise Bridge PE

(20,000,000)

• (20,000,000)
• Total Development Costs

(25,000,000)

• (25,000,000)
• Net Cash Flow After Construction and Development Costs

1,092,688,689 259,535,744 195,106,744 181,448,540 67,414,236 36,842,389 20,979,108 15,841,842 25,559,582 63,080,253 Regional Revenues 2.1% Sales Tax on Fuel 406,910,000

• 38,080,000

39,340,000 41,090,000 42,980,000 45,150,000 47,040,000 49,000,000 51,030,000 0.7% Retail Sales and Use Tax 907,564,967

• 86,209,964

89,227,312 92,707,178 96,415,465 100,272,083 104,282,966 108,430,000 112,770,000 Total Additional Revenues 1,314,474,967

• 124,289,964

128,567,312 133,797,178 139,395,465 145,422,083 151,322,966 157,430,000 163,800,000 Residual Cash Flow 2,407,163,657 259,535,744 319,396,708 310,015,852 201,211,413 176,237,853 166,401,191 167,164,808 182,989,582 226,880,253 Project Account c/f 2,407,163,657 259,535,744 319,396,708 310,015,852 201,211,413 176,237,853 166,401,191 167,164,808 182,989,582 226,880,253 Note: $15.34m in six year plan funding is federally earmarked to Patriots Crossing; however, the above cashflows only represent $5m of the total funding ($10.34m of the earmarked funds remains available for PC)

ADVANTAGES OF PUBLIC-PRIVATE PARTNERSHIPS

Public-private partnerships have the potential to supplement traditional funding (taxes and bond proceeds) and project delivery (Design-Bid-Build) methods.

• Deliver projects more quickly, especially where entities have

limits on traditional tax revenue and bond programs

• Include life-cycle costs, including O&M
• Share risks with private partner
• Attract private financing to supplement & complement public

funding

• Bring private sector financial discipline (investor due diligence,

rating agency scrutiny) to project selection and prioritization

THANK YOU

Force = Mass x Acceleration COUNCIL OF STATE GOVERNMENTS Southern Legislative Conference Webinar December 16, 2014

• J. Douglas Koelemay

Director www.p3.virginia.gov

Texas P3 December 2014

TEXAS PUBLIC-PRIVATE- PARTNERSHIPS RECENT DEVELOPMENTS

Russell L. Zapalac, P.E. TxDOT –Strategic Projects Division Chief Planning and Project Officer

Texas P3 December 2014

Evolution/Development of P3s - Legislative Authority & Limitations



2002 2002- TxDOT DOT began gan procuri uring ng PPP project cts s



$1.3 billion (SH-130 Seg 1-4) toll road



2003 2003 – Legisla slati tion

• n provided

ided TxDOT DOT concession cession author horit ity



2005 – Negotiated SH-130 Segments 5 & 6 Concession



TxDOT DOT's 's present nt author

• rit

ity came e in 2011 with Senate te Bill 1420 and 2013 with h Senate te Bill 1730  Texas

as 2011 11, 82 82nd

nd Legi

gisl slati tive ve Sess ssion: ion:



Primacy Legislation (SB 1420)



Stakeholder committee must concur to deliver via concession

 Texas

as 2013 13, , 83rd

rd Legi

gislative lative Session: ion:



Concession Authority (SB 1730)



Authorized 22 22 specific CDA projects



Termination Formula Required



Concession procurement authorization expires in 2017

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Texas P3 December 2014

• May not include private financing
• Not a prescriptive design
• Innovation by the Developer
• Review at project level as packages

are released

• Coordination with FHWA as needed
• May include optional Maintenance

Agreement

• Limited to 3 projects per fiscal year

approved by Commission

• Construction must be estimated at

$50 million or more

Texas Public Private Partnerships

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• Same as Design-Build (D-B)
• May also include:
• Toll Concession (Revenue Risk)
• Gap Financing (f)
• Maintenance
• Toll Operations
• More risk transfer than D-B
• May include private financing
• Limited to specific projects

identified in Senate Bill 1730 Compreh prehensiv ensive e Development elopment Agreeme eements nts

Design ign-Build Build

33

Texas P3 December 2014

• Texas

xas 2015 2015, , 84th

th Legi

gislative slative Sess ssion ion:

• Anticipate Transportation Funding to be

at the forefront

• Potential Legislation regarding:

 Additional CDA and or DBOM with finance

 Construction Manager at Risk or

Construction Manager/General Contractor

 Innovative Rail Agreements

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Evolution/Development of P3s - Legislative Authority & Limitations

Texas P3 December 2014

$ 10.0 Billion



Concession- Operations & Maintenance

• Total

$4.8B



Concession-Design/Construction

• Total

$4.2B



Concession-Active Procurement

• Total

$0.6B



DB -Operations & Maintenance

• Total $1.3B



DB -Design Construction

• Total

$5.8B



DB- Active Procurement

• Total

$3.0B



Pre-Procurement

• Total

$7.9B

$ 7.9 Billion

PRE-PR PROC OCUR UREMENT ENT

$ 3.6 Billion

PROC OCUREM UREMENT ENT DESIGN GN - CONSTR TRUC UCTI TION ON

$ 6.1 Billion*

OPERA RATI TIONS & MAINTEN TENANCE

TxDOT P3 Program Overview

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Includes SH 130 Seg 1-4, $1.3B

Transp sportation

• rtation Project

jects Program ram Over erview view Tot

• tal

al $27.6B .6B

Texas P3 December 2014

TxDOT P3 Program Overview

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Current Design-Build and Concession Projects Future Design-Build and Concession Projects

Texas P3 December 2014

Past Industry Challenges and Today’s Solutions Keys s to Success ss

 Departmental Paradigm Shift Allowing

Innovation



Internal TxDOT D/B Training



Enterprise Risk Workshops  Partnering (Industry Outreach)



Project Specific



General Industry  Innovative Capture Initiative



Sought input from Private and Public Sector Across the Nation



Capturing lessons learned from innovation in contracting and ATCs  Contract/ATC Reviews



Regular Validation of Technical and Contractual Requirements



Streamlining Submittal Requirements

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Less ssons ns Learned rned

 Ensure Maximum NEPA flexibility  Early Delivery Method Selection  Pre-ATC Submittals/Confidentiality  Pre FHWA Approvals on exceptions  Don’t Over Design  Early Technical Information  Proposal Evaluation Alternatives  Expand ATC Definition  Performance Based Specifications  Post Award Innovation

Texas P3 December 2014

Concession Project Challenges and Today’s Solutions

• Legislative authority and rules mandate an open and

public process

• Detailed and transparent process (TxDOT website)

Transparency and Accountability

• TxDOT retains ownership – lease agreement
• Texas Transportation Commission establishes toll rates
• TxDOT sets performance requirements and audits
• SB 1420 Committees – Local Stakeholder Committees

Loss of Public Control

• TxDOT sets maximum payment curves
• TxDOT sets revenue caps & maximum toll rates
• TxDOT receives shared revenue

Private Profits at Public Expense

• Project reverts to TxDOT at owner’s expense
• TxDOT not liable for private debt payments
• Contract terms protect TxDOT from liability

Risk of Bankruptcy

• TxDOT able to terminate contract and buy-out private

interest

• Price greater of fair market value or outstanding debt

Buy-Out

38

Texas P3 December 2014

Ques esti tions?

• ns?

TxDOT website http://www.txdot.gov/business/partnerships/ cda.htm

39

Russell L. Zapalac, P.E. Chief Planning and Project Officer Texas Department of Transportation Office (512) 305-9562 E-Mail russell.zapalac@txdot.gov

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