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Evolution of Public-Private Partnerships: Virginia's Model and Future Opportunities

Explore the evolution of Virginia's PPEA legislation as a model for other states, recent transactions, market reactions, and future opportunities and challenges in infrastructure development. Learn about barriers, support, transactions, and key issues shaping the P3 landscape.

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Evolution of Public-Private Partnerships: Virginia's Model and Future Opportunities

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  1. Changes in the P3 World – Law and Policy Christopher D. LloydNCPPP Annual ConferenceNovember 19, 2009

  2. Virginia in the Vanguard • Virginia PPTA (1995) and PPEA (2002) legislation seen as model statutes • Maryland, Arizona, Georgia, Utah, and others have adopted similar versions • North Carolina, California, Ohio, and others are taking baby steps toward Virginia model • Virginia has done 100+ deals • Range from $1.5 million - $5 billion+ • Provides fast track to design-build, predictable process

  3. Evolution of Virginia’s PPEA • Creation of interim agreement concept • Increased public input and transparency • Development of “best practices criteria” • Creation of legislative oversight panel • Expansion to technology projects and services

  4. Barriers to Public Private Partnerships - 2009 • Stimulus promised diminished public sector appetite for creative approaches • General distrust of Wall Street/corporate America • Lack of public funds • Public sector layoffs create staffing/evaluation challenges

  5. Support for Public Private Partnerships - 2009 • Stimulus “list making” exercise shows need for infrastructure • Lack of funding causing public sector to be more open to creative financing/development opportunities • Construction price declines/increased competition • Appetite for “asset maximization”

  6. Recent Transactions (post-Lehman) • Several major players have exited the market (RBS, Babcock & Brown) • Several major deals faltered (Midway Airport, PA Turnpike) • Despite financial crisis, some deals are being done • Infrastructure funds are still successfully raising money • Era of cheap equity has ended (for now) • Market expects major public participation – risk aversion

  7. I-595 Florida • 10.5 mile, $1.8 billion project • Creates new express lanes, BRT • Financial close March 2009 • ACS Dragados as equity investor with bank consortium • $800 million bank debt, $600 million TIFIA, $232 million FDOT, $200 million equity • First “availability payment” scheme in US - $63.98 million per year for 30 years, FDOT controls toll revenue and rates • Additional information at http://www.i-595.com/default.aspx

  8. SPSA Waste to Energy • Sale of waste-to-energy plant to Wheelabrator/Waste Management • Provides for substantial rehabilitation to neglected facility • $150 million cash infusion lowers SPSA debt/tipping fees • Additional proposals being considered for entire solid waste management program (region of 1.7 million)

  9. Recent Transactions – Market Reaction • Private sector looking for more legal certainty, traffic track record, public financial participation • Public sector looking for stronger parent guarantees, additional sweat equity, assistance in building public support for project • Increased interest in “social” infrastructure projects • Strong interest in energy-related infrastructure

  10. Future Opportunities and Issues • How will SAFETEA-LU reauthorization impact the development of new infrastructure? • Will the availability of new bond vehicles dampen desire for non-traditional financing? • How much flexibility will states/feds have to raise taxes to develop/maintain crumbling infrastructure? • Will governments be able to deliver on funding and matching commitments in a challenging fiscal environment? • Will new environmental/safety/labor requirements restrict infrastructure development?

  11. Infrastructure & Economic Development | Federal Public Affairs | Strategic Communications & Grassroots Mobilization State & Local Government Affairs | Emerging European Markets Atlanta • Charlotte • Charlottesville • Chicago • Columbia • Norfolk • Raleigh Springfield • Tyson’s Corner • Washington, D.C. | Bucharest, Romania www.mcguirewoodsconsulting.com

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