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-2-© 2007 Jeffrey A. Parker & Associates, Inc.
Intermodal and Public Transit Projects Often Differ From Toll Roads
• Service quality and usage maximization can be more important or applicable goals than revenue maximization
• Public may intend to retain direct rate setting authority
• Leveraging direct revenues may not be a feasible approach for project financing
– Project may not generate direct revenue
– Revenue potential may be limited
– Revenue or traffic volume could be difficult to predict or manage
… but this does not mean that a PPP approach is inappropriate for intermodal projects
-3-© 2007 Jeffrey A. Parker & Associates, Inc.
Examples of “True” PPPs Underway for U.S. Intermodal and Transit Projects
• Port of Miami Tunnel
• BART Oakland Airport Connector
• Miami Streetcar
• Denver RTD?
(PPP = Design-Build-Finance-Operate-Maintain)
-4-© 2007 Jeffrey A. Parker & Associates, Inc.
Port of Miami Tunnel –Cost Capped for 35 Years
MacArthur Cswy
Widening
MacArthur Cswy
Widening
Bored TunnelBored Tunnel
Watson Island
Watson Island
Port of MiamiPort of Miami
Bored TunnelUnder
Main Channel
Bored TunnelUnder
Main Channel
BridgeWidening
BridgeWidening
RoadwayImprovements
RoadwayImprovements
-5-© 2007 Jeffrey A. Parker & Associates, Inc.
Potential Intermodal Project Issues – PPP Option Belongs in the Toolkit
• Desire to deliver projects on accelerated basis
• Difficult to issue debt and/or non-recourse debt
• Need for long-term guaranteed cost structure
– Cap construction and O&M costs (and achieve lifecycle efficiency)
– Enable long-term budget planning
– Multiple funding partners
• Need for schedule adherence, phasing synchronization, etc.
• Requirements for high level of availability and/or service quality
• Unique projects – different from core systems and/or facilities
-6-© 2007 Jeffrey A. Parker & Associates, Inc.
Understanding Risk Transfer and Project Delivery Choices
Concessionaire Lenders
OperatorEPC Contractor
Government
Equity Investors
DB
FO
M
Government Muni Debt
Operator or GovernmentEPC Contractor
Des
ign-
Bui
ld
-7-© 2007 Jeffrey A. Parker & Associates, Inc.
Anticipated Public Expenditures for Traditional Design-Build
1 2 3 4 5 6 7 8 9 10
Years of Inflation Adjusted Dollars
© 2007 Jeffrey A. Parker & Associates, Inc.
35
-8-© 2007 Jeffrey A. Parker & Associates, Inc.
With Overruns?
1 2 3 4 5 6 7 8 9 10
Years of Inflation Adjusted Dollars
35
© 2007 Jeffrey A. Parker & Associates, Inc.
-9-© 2007 Jeffrey A. Parker & Associates, Inc.
Availability Payments
• Include both CAPEX and OPEX
• Cannot be earned until facility opens!
• Must be earned with high service levels (are not debt)
• Capped for contract life based on bid
1 2 3 4 5 6 7 8 9 10
Years of Inflation Adjusted Dollars
35
© 2007 Jeffrey A. Parker & Associates, Inc.
-10-© 2007 Jeffrey A. Parker & Associates, Inc.
Inherent Risk Transferand Alignment of Interests
Concessionaire Lenders
OperatorEPC Contractor
Government
Equity Investors
Availability-Based DBFOM
Ava
ilab
ility
P
aym
ents • Must be earned
• Capped at amount bid• Not debt
For additional information contact:
Michael Parker, Managing Director
1308 Spruce Street
Philadelphia, PA 19107
215.790.8404