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January 27, 2012 RAIL CAPACITY: Can P3 Delivery Pay For It? Phillip E. Russell, PE, JD Senior Vice President Director of Alternative Delivery.

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Presentation on theme: "January 27, 2012 RAIL CAPACITY: Can P3 Delivery Pay For It? Phillip E. Russell, PE, JD Senior Vice President Director of Alternative Delivery."— Presentation transcript:

1 January 27, 2012 RAIL CAPACITY: Can P3 Delivery Pay For It? Phillip E. Russell, PE, JD Senior Vice President Director of Alternative Delivery

2 January 27, 2012 WHAT IS A P3?  Many Forms  Categorized By:  Level of Public and Private Sector Involvement  Degree of Risk Allocation Privatization Buy/Build/Operate Build/Own/Operate Build/Own/ Operate/Transfer Build /Lease/ Operate/Transfer Lease/Develop/Operate Design/Build/Operate Finance Only Operate/Maintain Service/License Design/Build Corporation/Agency Government Degree of Private Sector Involvement Degree of Private Sector Risk

3 January 27, 2012 PLANNING FOR P3s  Identify, Screen, and Analyze Potential Projects  Prioritize Corridors and Segments  Assessing Capital Costs, Potential Available Funds, Environmental Ripeness, and Stakeholder Buy-In  Prioritize for Future Scrutiny and Analysis

4 January 27, 2012 PLANNING FOR P3s  Risk Analysis  Identify All - Financial, Legal, Technical  Proper Risk Allocation to Public and Private Sectors

5 January 27, 2012 The spectrum of combinations of public and private participation, classified according to risk and mode of delivery Complete Government Production and Delivery Traditional Public Procurement PPPs ConcessionsPrivatization Government Risk Private Risk 100% 0% 100% 0%

6 January 27, 2012 RiskTraditionalP3 Team ApprovalsOwnerContractor UtilitiesOwnerContractor/Designer Design ScopeOwner/DesignerDesign WeatherContractor Construction CostOwner/ContractorContractor Additional PropertyOwner/DesignerContractor Design GrowthOwnerDesigner Site ConditionsOwner/ContractorContractor/Designer ScheduleOwner/ContractorContractor/Designer Soil ConditionsOwner/DesignerContractor COST/SCHEDULE RISK ALLOCATION

7 January 27, 2012 COST/SCHEDULE RISK ALLOCATION RiskTraditionalP3 Team Quality OversightOwnerFinancier/Contractor Workplace SafetyContractor MaintenanceOwnerOperator OperationsOwnerOperator InflationOwnerP3 Team RevenueOwnerFinancier FinancingOwnerFinancier Liquidated DamagesOwnerContractor/Designer PermittingOwnerFinancier/Contractor/Operator Development Agreement OwnerAll

8 January 27, 2012 PLANNING FOR P3s  Revenue Streams  State and Federal Funds  Value Capture Opportunities  Loan Programs  Taxation  Economic Development/TODs  Advertising / Naming Rights

9 January 27, 2012 PLANNING FOR P3s  Industry Outreach  Generate Buzz Within the Industry  Elevate Industry Interest  Leads to Innovation  Heightens Pricing Competitiveness

10 January 27, 2012 PLANNING FOR P3s  Procurement  Maximize Value Through Robust and Fair Contract Terms  Transparency vs. Confidentiality  Independent Comparators  Value for Money Analyses

11 January 27, 2012 TXDOT HIGHWAY P3 MODEL  SH130  LBJ  North Tarrant Express

12 January 27, 2012 TxDOT HIGHWAY P3 MODEL- TRANSFERABLE TO RAIL?  Financing and Funding  Existing Unfunded Rail Relocation and Improvement Fund  Value Capture (e.g., Cottonbelt Innovation Financing Initiative)  Legislative Action  Revenue Streams for Payback  Farebox  Other

13 January 27, 2012 CONCLUSION Are P3s a viable option for Rail in Texas? Yes – but……  Ridership – Of Course!  Legislative Attention  Local Support  Innovative Approaches  Level Playing Field with Sound Procurement Approach  Robust Competition

14 January 27, 2012 Questions? 810 Hester's Crossing, Suite 225 | Round Rock, Texas 78681 Office: 512.828.0076 | Mobile: 512.635.6178 prussell@hwlochner.com | www.hwlochner.com Phillip E. Russell, PE, JD Senior Vice President Director of Alternative Delivery


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