Presenting a live 90 ‐ minute webinar with interactive Q&A Public ‐ Private Partnerships for Real Public Private Partnerships for Real Estate Projects: Latest Developments Creating or Restructuring PPPs That Work in Challenging Economic Times TUES DAY, OCTOBER 25, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific T d Today’s faculty features: ’ f l f Tony Canzoneri, Partner, McKenna Long & Aldridge , Los Angeles Dennis S . Roy, Partner, McKenna Long & Aldridge , Los Angeles Allan D. Kotin, Principal, Allan D. Kotin & Associates , Los Angeles The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
Conference Materials If you have not printed the conference materials for this program, please complete the following steps: • Click on the + sign next to “ Conference Materials” in the middle of the left- hand column on your screen hand column on your screen. • Click on the tab labeled “ Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Double click on the PDF and a separate page will open. • Print the slides by clicking on the printer icon.
Continuing Education Credits FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: • Close the notification box • In the chat box, type (1) your company name and (2) the number of attendees at your location • Click the S END button beside the box
Tips for Optimal Quality S S ound Quality d Q lit If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-869-6667 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail sound@ straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Qualit y To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again press the F11 key again.
Overview of Real Estate Development PPP Tony Canzoneri Dennis Roy McKenna Long & Aldridge LLP Allan Kotin Allan D. Kotin & Associates October 25, 2011 Webinar mckennalong.com
C Contact Information t t I f ti Tony Canzoneri tcanzoneri@mckennalong.com 213 687 2103 213.687.2103 Dennis Roy droy@mckennalong.com 213.687.2132 Allan Kotin akotin@adkotin.com 213.623.3841 6
Today s Speakers as a Prototype for Today’s Speakers as a Prototype for Negotiating Team For both sides, public and private • Transaction Attorney • Government Relations / Real Estate/ Land Use Attorney • Financial Advisor (Real Estate Economist) Fi i l Ad i (R l E t t E i t) 7
O Overview i • In Public Private Partnerships – Expect Change in Good and Bad Times • Dramatic changes in capital and real estate markets have highlighted the need for flexibility and deal modification. highlighted the need for flexibility and deal modification • Our prior presentation provided the general framework for p p p g creating public-private partnerships, this one will address planning for and responding to change. 8
O tli Outline of Presentation f P t ti 1. Review Some Key Definitions 2. Strategies for Addressing Change 2. Strategies for Addressing Change 3. Advance Planning to Minimize and Facilitate Workouts 4. Examples 5. Lessons Learned 9
D fi iti Definition of Public Private Joint Ventures f P bli P i t J i t V t A public-private joint venture in real estate is for purposes of this presentation, a transaction which meets three tests: 1. It would not occur without public participation 2. It is a negotiated transaction not merely compliance with some application formula 3. It involves public agency participation through and past completion in both regulatory and contractual roles 10
Th Three Major Categories of PPJV’s M j C t i f PPJV’ 1. REDEVELOPMENT (Policy-Driven) TRANSACTIONS A. Driven by policy considerations; B. For private development that would not occur without public inducement or assistance; C. C Usually associated with economic development, downtown revitalization or affordable U ll i t d ith i d l t d t it li ti ff d bl housing. D. Governmental powers and funding sources 2. 2 ASSET MANAGEMENT TRANSACTIONS ASSET MANAGEMENT TRANSACTIONS A. Involves deployment of publicly owned land for private development; B. Often closely associated with other public activities, e.g., ports, marinas, airports C. Objectives differ in that revenue is the major objective but policy considerations do apply 3. PRIVATE DEVELOPMENT OF PUBLIC FACILITIES A. Currently popular and often referred to as P3 for “ public private partnership ” B. Related to but not same as privatization; C C. Not considered here except in situations requiring joint development of public and private Not considered here except in situations requiring joint development of public and private facilities 11
Th The nature of the challenge t f th h ll 1. MARKET WEAKNESS 2. LOSS OF PUBLIC FUNDING 3. LACK OF PRIVATE FINANCING 4. POLITICAL AND/OR PUBLIC AGENCY FISCAL DYSFUNCTION 5. FINANCIAL DISTRESS/INSOLVENCY OF DEVELOPER OR ITS FINANCIAL PARTNER 6. NEW LEGAL OBSTACLES; LEGISLATION OR LAWSUITS (E.G. CALIFORNIA REDEVELOPMENT) 12
St Strategies for Addressing Change t i f Add i Ch 1. FIND WAY TO POSTPONE PROJECT FOR MARKET/FINANCE RECOVERY A. Preservation of entitlements and political acts B. Preservation of third party commitments; anchor tenants, operators, lenders C. C P Preservation of political/community support ti f liti l/ it t 2. PRESERVE DEVELOPER’S STANDING PER TRANSACTION UNTIL CONDITIONS IMPROVE A. Revise contractual timeline B. B Reduce/eliminate required time payments Reduce/eliminate required time payments C. Modify evidence of financing requirements D. Involve developer in infrastructure planning 3 3. FIND WAY TO SCALE DOWN PROJECT FIND WAY TO SCALE DOWN PROJECT A. Down-size B. Start with less and phase the rest 13
St Strategies for Addressing Change t i f Add i Ch 4. REDEFINE PROJECT A. Adapt to changed market change or add uses such as multifamily or government use B. Value engineering or downscaling price point C C. U Use simpler construction; go from type 2 to type 5 i l t ti f t 2 t t 5 5. IF PROJECT IS CLEARLY “DEAD” AS IS, CAN THE DEVELOPER MAINTAIN SOME PREFERRED POSITION FOR NEXT PROJECT THAT WILL TAKE ADVANTAGE OF THE INVESTMENT HE AND PUBLIC AGENCY HAVE ALREADY MADE? A. Rights of first negotiation B. Right of first refusal C. Shared cost and sweat equity for infrastructure that can be completed and reimbursement of selected developer cost if and when property is ultimately developed 6. IDENTIFY OTHER DEVELOPERS IF A. There is work a developer can do B. Current developer is not willing or able 14
Implementation Mechanisms I l t ti M h i 1. IDENTIFY STAGE OF TRANSACTION A. Prior to ENA; constraints and flexibility in RFQ and RFP B. During ENA period C. After execution of DDA but prior to construction start D. After construction start E. After completion Solicitation Solicitation ENA Preconstr ction Preconstruction Construction Operation 15
Implementation Mechanisms (continued) I l t ti M h i 2. POLITICAL AND STAFF CONTEXT A. Level of staff support and expertise B. Precedent of delegation authority to staff C. Presence, official or unofficial, of other jurisdiction priorities 3. LEGAL ISSUES - Contract modifications: ENA, DDA (see attachments) A. Determine whether or not force majeure or other provisions provide additional time or flexibility needed B B. Utili Utilize AND DOCUMENT built in provisions for administrative modification without AND DOCUMENT b ilt i i i f d i i t ti difi ti ith t public hearing or elected official approval C. Formal amendments when required; remember to follow public procedures 4. 4. LEGAL ISSUES - Amending the agreement LEGAL ISSUES Amending the agreement D. Don’t temporize, if it’s needed deal with it E. Beware of what you are inadvertently tripping (e.g. CEQA, entitlements, etc.) 16
Implementation Mechanisms (continued) I l t ti M h i 5. LEGAL ISSUES - IN ALL CASES, DOCUMENT CHANGE BEFORE TAKING ACTIONS 6. LEGAL ISSUES - BUILD IN EXTENSION RIGHTS A. Money B. Evidence of diligent pursuit C. No other default 7. LEGAL ISSUES – PRESERVATION OF ENTITLEMENT A. Review flexibility and equivalency provisions B. Time and extension provisions already incorporated C. Extend tract map D. D C Consider impact of delay on environmental documents, completed or in process id i t f d l i t l d t l t d i E. Review, modify, or create statutory development agreement for rights to extend 17
Recommend
More recommend
