Presentation is loading. Please wait.

Presentation is loading. Please wait.

Public – Private Partnerships (“P3s”) FOR PUBLIC TRANSPORTATION FINANCE.

Similar presentations

Presentation on theme: "Public – Private Partnerships (“P3s”) FOR PUBLIC TRANSPORTATION FINANCE."— Presentation transcript:

1 Public – Private Partnerships (“P3s”) FOR PUBLIC TRANSPORTATION FINANCE

2 John Peracchio Education: Brown University and Columbia University Law School Practiced Law in New York City CEO of 2 Family-owned Automotive Suppliers Harman International Industries Senior Operating Executive Peracchio & Co.: Consulting Services to Investors/Financial Institutions (Guggenheim Securities) and Intelligent Transportation System Integrators…and The State of Minnesota’s TFAC! Intelligent Transportation Society of America and the World Congress on Intelligent Transport Systems

3 Examples of P3s in Transportation (Risk Management) “Adopt-a-Highway” Design and Build Projects Transportation and Community Development Concession Arrangements to Operate Publicly- Owned Transportation Infrastructure Privately-Owned or Leased Bridges and Tunnels Privately-Leased Toll Roads

4 Privately-Owned or Leased Bridges and Tunnels Success: Detroit to Windsor Tunnel – Owned and Operated by Multiple Investors – Consistently Upgraded and Maintained in Excellent Condition Failure: Detroit to Windsor Ambassador Bridge – Owned by One Investor – Arguably Poorly Maintained and Operated – Mired in Political Turmoil

5 Privately-Leased Toll Roads Chicago Skyway (99 Year Lease) Indiana Toll Road (75 Year Lease)

6 One Key for Success in Any PPP: Deploy Intelligent Transportation Systems (“ITS”) Reality: Public Opposition to Tolling Selling Point: Privatization Will Provide More Mobility, Safety, and Sustainability Through the Use of Technology Investment in ITS is “Layered-Into” the Transaction Upfront Investors Understand the Benefits, and so, Hopefully will the Public

7 Another Key for Success: Public Participation or Joint Venture Ownership No Matter What Legal Entity Structure is Chosen: the Public Should Participate in any “Upside” Potential Alignment of Public Interests with Investor Interests Transparency for the Public and Investors about Financial and Operating Expectations No “Suicide Pacts”!

8 Debt v. Equity Debt – Historically Low Interest Rates Permit Lower Cost Financing in Public Debt Markets – If Special Purpose Entity is Chosen, Does Not Burden the Balance Sheet of the Higher Level Public Authority – Inherently Allows the Public to Participate in “Upside” after Debt Service is Covered on Bonds Equity – Typically Higher Rates of Return Demanded by Investors (Net Present Value & Internal Rates of Return on a Discounted Cash Flow Basis) – No Burden on the Balance Sheet of the Public Authority – Can be Structured to Provide Public with “Sweat Equity”

9 CONCLUSION Financing Public Transportation Infrastructure – Taxation (Income, Sales, Property, Gas, etc.) – Private Capital (Debt or Equity) For Private Investment: Any Identifiable and Separable Revenue Stream If Private Investment is Chosen, Public Interest Must be Served – Clear Agreement between Investors and the Public – Social Equity Issues Must be Examined and Resolved

Download ppt "Public – Private Partnerships (“P3s”) FOR PUBLIC TRANSPORTATION FINANCE."

Similar presentations

Ads by Google