Public private partnerships p3s
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Public – Private Partnerships (“P3s”) PowerPoint PPT Presentation


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Public – Private Partnerships (“P3s”). FOR PUBLIC TRANSPORTATION FINANCE. John Peracchio. Education: Brown University and Columbia University Law School Practiced Law in New York City CEO of 2 Family-owned Automotive Suppliers Harman International Industries Senior Operating Executive

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Public – Private Partnerships (“P3s”)

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Public private partnerships p3s

Public – Private Partnerships(“P3s”)

FOR

PUBLIC TRANSPORTATION FINANCE


John peracchio

John Peracchio

  • Education: Brown University and Columbia University Law School

  • Practiced Law in New York City

  • CEO of 2 Family-owned Automotive Suppliers

  • Harman International Industries Senior Operating Executive

  • Peracchio & Co.: Consulting Services to Investors/Financial Institutions (Guggenheim Securities) and Intelligent Transportation System Integrators…and The State of Minnesota’s TFAC!

  • Intelligent Transportation Society of America and the World Congress on Intelligent Transport Systems


Examples of p3s in transportation risk management

Examples of P3s in Transportation(Risk Management)

  • “Adopt-a-Highway”

  • Design and Build Projects

  • Transportation and Community Development

  • Concession Arrangements to Operate Publicly-Owned Transportation Infrastructure

  • Privately-Owned or Leased Bridges and Tunnels

  • Privately-Leased Toll Roads


Privately owned or leased bridges and tunnels

Privately-Owned or Leased Bridges and Tunnels

  • Success: Detroit to Windsor Tunnel

    • Owned and Operated by Multiple Investors

    • Consistently Upgraded and Maintained in Excellent Condition

  • Failure: Detroit to Windsor Ambassador Bridge

    • Owned by One Investor

    • Arguably Poorly Maintained and Operated

    • Mired in Political Turmoil


Privately leased toll roads

Privately-Leased Toll Roads

  • Chicago Skyway (99 Year Lease)

  • Indiana Toll Road (75 Year Lease)


One key for success in any ppp deploy intelligent transportation systems its

One Key for Success in Any PPP: Deploy Intelligent Transportation Systems (“ITS”)

  • Reality: Public Opposition to Tolling

  • Selling Point: Privatization Will Provide More Mobility, Safety, and Sustainability Through the Use of Technology

  • Investment in ITS is “Layered-Into” the Transaction Upfront

  • Investors Understand the Benefits, and so, Hopefully will the Public


Another key for success public participation or joint venture ownership

Another Key for Success: Public Participation or Joint Venture Ownership

  • No Matter What Legal Entity Structure is Chosen: the Public Should Participate in any “Upside” Potential

  • Alignment of Public Interests with Investor Interests

  • Transparency for the Public and Investors about Financial and Operating Expectations

  • No “Suicide Pacts”!


Debt v equity

Debt v. Equity

  • Debt

    • Historically Low Interest Rates Permit Lower Cost Financing in Public Debt Markets

    • If Special Purpose Entity is Chosen, Does Not Burden the Balance Sheet of the Higher Level Public Authority

    • Inherently Allows the Public to Participate in “Upside” after Debt Service is Covered on Bonds

  • Equity

    • Typically Higher Rates of Return Demanded by Investors (Net Present Value & Internal Rates of Return on a Discounted Cash Flow Basis)

    • No Burden on the Balance Sheet of the Public Authority

    • Can be Structured to Provide Public with “Sweat Equity”


Conclusion

CONCLUSION

  • Financing Public Transportation Infrastructure

    • Taxation (Income, Sales, Property, Gas, etc.)

    • Private Capital (Debt or Equity)

  • For Private Investment: Any Identifiable and Separable Revenue Stream

  • If Private Investment is Chosen, Public Interest Must be Served

    • Clear Agreement between Investors and the Public

    • Social Equity Issues Must be Examined and Resolved


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