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2011/FMP/CON/008 Session 3
Building Infrastructure: Public-Private Participation
Submitted by: Fluor
Conference on the Framework and Options for Public and Private Financing of
Infrastructure Washington, D.C., United States
22-23 June 2011
Bob PrietoSenior Vice President
FluorFluorJune 22‐23, 2011
Preston Auditorium, The World Bank
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Fluor PPP Experience Road
E‐470, Denver, CO, US Pocahontas Pkwy, Richmond, VA,
US
Rail High Speed Line, NETH Eagle Commuter Rail, Denver, CO,
US State Route 125 (South Bay
Expressway), CA, US Conway Bypass, SC, US State Highway 130, Austin, TX, US
Telecom London Connect, London, UK National Roads Telecomm System,
UK A59 Freeway, Noord Brabant,
NETH A8 Autobahn, Augsberg to
Munich, GDRC i l B l F i f C
Airport JFK International Arrivals
Terminal, NY,US Offshore Wind
Capital Beltway, Fairfax County, VA, US
Windsor‐Essex Parkway, Windsor, ONT, CAN
I 95/I395 HOV/Reversible
Greater Gabbard Wind Farm, Thames Estuary, UK
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I‐95/I395 HOV/Reversible BRT/HOT Lanes, VA,US
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Focus on Key Questions Does political will exist? Does a potential project exist? Will stakeholders support the project? Are there any fatal flaws? Will it make financial sense? Is the regulatory framework well designed? The project “FLIPS”? Can we close it?
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PPP Top 10
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Characteristics of a Successful PPP Provides improved project execution and performance certainty to the public sector.
More efficiently applies available capital or accesses More efficiently applies available capital or accesses additional sources of capital. Scope control Life cycle framework Life cycle framework Real pricing of risks Sculptable finance structures
Effectively allocates life cycle risks Provides attractive return with good performance upside to private sector
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private sector
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Attributes of Good Legislation Clear statement of policy Provision to receive unsolicited proposals – a competition of ideascompetition of ideas
Approval authority delegated to implementing agency Requirement for clear regulations including evaluation Requ e e t o c ea egu at o s c ud g eva uat oof proposals
Involvement of local governmental units defined Clear authority to commit public property Powers of private sector partner delineated Right to toll or charge other user fees explicitly stated
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Right to toll or charge other user fees explicitly stated
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Attributes of Good Legislation Exemption from property and ad valorem taxes Authority and requirements related to pre‐development and
comprehensive development agreements fully delineatedcomprehensive development agreements fully delineated Termination provisions for cause and convenience provided for,
including any remediesd d f d f f d l l l Funding resources identified if federal, state, or local resources
to be included Condemnation authority definedy Enforcement provisions related to tolls and traffic enforcement Waiver of any procurement regulations inconsistent with PPP
delivery model
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delivery model
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Clear Regulatory Objectives Financial viability of PPP Toll rate structure efficiency Fairness of toll rate structure Fairness of toll rate structure Efficiency of delivery and operation Reinvestment efficiency y Recalibration of toll rate structure at periodic refinancing
D l t f l t i t b i l Development of regulatory regime must be simple, transparent, non‐conflictive, justifiable and justified, fair in allocation of risks, and avoid pricing di i i i d i i fl i
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discrimination and excessive price fluctuation
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Tools of the Trade Policy framework Concession period and its linkage to rate of return Toll rate level structure and adjustment mechanisms Toll rate level, structure, and adjustment mechanisms Concession payments Penalties and fines for non‐compliancep Timing of investment and reinvestment Quality standards, including those related to effective
t d ti f th f ilit timanagement and operation of the facility over time Depreciation and amortization rules (tax and accounting policy issues)
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g p y )
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Things to Consider Policy
Model legislation and regulation including alternative dispute resolution process (by World Bank)
Special category of tax free debtSpecial category of tax free debt Pricing as scarce resource allocation mechanism
Managed lanes Congestion in and around urban areas accounts for significant portion of
annual greenhouse gas emission growthannual greenhouse gas emission growth Pocahontas “variant”
Financing tools TIFIA style sub‐debt facility (by World Bank)
f d l Defined rules Sculptable
National level private activity bonds for use by local governments (tax features)
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( ) Monoline type facility
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Things to Consider Technical work
Life‐cycle cost tradeoff models (concrete vs asphalt) O&M cost models and long term performance specs for PPP contracts
Income vs CPI differences for major urban centers Income vs CPI differences for major urban centers Value of time correlations Traffic models that consider:
Changing income demographics (economic link) Peak spreading over long PPP periodsCh i li ti f t l PPP i d
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Changing annualization factors over long PPP periods
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