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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

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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