1 / 10

Non-Traditional Approaches for Solving Budgetary Pressure

Non-Traditional Approaches for Solving Budgetary Pressure. The National Association of State Auditors, Comptrollers and Treasurers Annual Conference. August 2011. Joe Seliga Partner 312.701.8818 jseliga@mayerbrown.com. Public-Private Partnerships for Infrastructure Projects.

brinda
Télécharger la présentation

Non-Traditional Approaches for Solving Budgetary Pressure

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Non-Traditional Approaches for Solving Budgetary Pressure The National Association of State Auditors, Comptrollers and Treasurers Annual Conference August 2011 Joe Seliga Partner 312.701.8818 jseliga@mayerbrown.com

  2. Public-Private Partnerships for Infrastructure Projects • Public-private partnerships are being used increasingly by state and local governmental entities for large infrastructure projects. • “Greenfield” projects involve the construction of new infrastructure assets. • Existing asset projects involve the long-term operation and maintenance of existing infrastructure assets.

  3. Greenfield Public-Private Partnerships • Greenfield infrastructure public-private partnerships have been used for the construction of toll road, highway, bridge, tunnel, mass transit and social infrastructure (e.g., courthouse) projects: • Florida Port of Miami Tunnel and I-595 • Virginia Capital Beltway • Texas North Tarrant Expressway and SH 130 • California Presidio Parkway • Denver FasTracks Eagle P3 • Long Beach Courthouse

  4. Greenfield Public-Private Partnerships • Greenfield public-private partnerships take one of two general forms: • Revenue Projects • Private partner takes on revenue risk. • Private partner constructs, operates and maintains the project and obtains revenue from the project up to certain permitted rate of return. • Availability Payment Projects • Public partner retains revenue risk. • Private partner receives payments from the public partner for construction, operation and maintenance to the extent the project is “available” in accordance with terms of contract.

  5. Existing Asset Public-Private Partnerships • Existing asset infrastructure public-private partnerships have been used for the long-term operation and maintenance of toll roads, toll bridges, airports, public parking and maritime ports: • Toll Roads and Toll Bridges: Chicago Skyway; Indiana Toll Road; Northwest Parkway (Colorado); Puerto Rico PR-22/PR-5 Toll Roads • Airports: Chicago Midway International Airport; San Juan Luis MuñozMarín International Airport • Public Parking: Chicago Underground Parking System; Chicago Metered Parking System; Indianapolis Public Parking System • Maritime Ports: Port of Oakland Outer Harbor Terminal; Port of Baltimore Seagirt Terminal; Port of Portland Terminal 6

  6. Existing Asset Public-Private Partnerships • Public partner receives upfront payment and/or ongoing payment and/or revenue share. • Private partner takes on: • Operations risk • Maintenance risk • Construction risk • Revenue risk subject to terms of project agreement that impose legal and regulatory requirements on private partner’s operation of asset.

  7. Existing Asset Public-Private Partnerships • Existing asset PPPs can be used to relieve budgetary pressures. • Should NOT be used to relieve immediate operating budget pressures • Should be used for long-term investment, including to: • Pay off existing debt (e.g., Puerto Rico toll roads and airport) • Create reserve fund (e.g., City of Chicago used $500 million of Chicago Skyway proceeds to create reserve fund that resulted in increase in City’s bond ratings) • Reinvest in infrastructure (e.g., Indiana Toll Road proceeds of $3.8 billion used for State’s 10-year transportation plan; $140 million Seagirt terminal capital reinvestment payment used for other infrastructure in Maryland) • Fund pensions (e.g., Illinois legislation related to Midway Airport transaction requires 90% of proceeds to be used for infrastructure or pensions)

  8. Existing Asset Public-Private Partnerships • Benefits of Existing Asset Public-Private Partnerships • Shift of long-term operation and maintenance to private partner • Efficiencies of private sector operation • Encourages private sector innovation • Future construction to be undertaken by private sector • Shifts revenue (and financing) risk to private sector • Upfront and/or ongoing revenue to public partner • Private partner subject to government regulation under terms of contract (i.e., not a sale, but regulated long-term operation of asset)

  9. Existing Asset Public-Private Partnerships • Policy Issues to be Addressed: • Legal authorization for project • Transparent process for selection of private partner • Incorporating public protections in project contract • Detailed operating standards • Balancing revenue maximization and protection of public interest • Ensuring proper use of project proceeds

  10. Thank You Joe Seliga Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606 312.701.8818 jseliga@mayerbrown.com www.mayerbrown.com

More Related