1. Introduction to P3 Bootcamp Doug Koelemay, Virginia P3 Office Jeremy Becker, JLL Barney Allison, Nossaman LLP

2. Virginia Office of Public-Private Partnerships (VAP3) Adopted Public-Private Transportation Act (PPTA) enabling legislation in 1995 Public-Private Education & Infrastructure Act (PPEA) followed Created VAP3 office in 2010 in response to P3 project experience, new industry practices and growing need for more public engagement drove significant process changes Updated PPTA Manual & Guidelines in 2014 to make process more open, transparent, accountable General Assembly incorporated some changes into law in 2015 Set VAP3 goals as building a strategic program, extending Virginia leadership, expanding to non-transportation projects

3. VAP3 Structure & Resources

4. Virginia PPTA Project Delivery Framework * Parties to be notified and briefed upon request after the Oversight Board decision: ‒ Chairs of General Assembly committees ‒ MPO’s ‒ Interested members of General Assembly ‒ Special interest groups ‒ Regulatory Agencies ‒ Public Briefing Focus: ‒ RFI results (as appropriate) ‒ Schedule ‒ Refresh on the high points from Project Development ‒ Preliminary Procurement documents ‒ Risk Analysis and Value-for-Money ‒ Estimated project cost ‒ Potential public subsidy ‒ Potential economic benefits ‒ Preliminary Business Points ‒ Initial Finding of Public Interest Briefing Focus: ‒ Detail-Level Screening Report ‒ Desirability as P3 ‒ Feasibility as P3 ‒ HB 2 Prioritization ‒ Duration of P3 development and procurement Briefing Focus: ‒ Major Business Points ‒ Updated Risk Allocation & Management Plan ‒ Statutory Audit results ‒ Final Value-for-Money Analysis ‒ Updated economic benefits ‒ Project bid results ‒ Public subsidy (if required) ‒ Final Finding of Public Interest Draft and Final Contract Documents posted on P3 Website for review & comment Final Contract Documents posted on P3 Website

5. Benefits of New Guidelines Aligns political support at project development stage (P3 Advisory Committee includes oversight board members, staff representatives of House and Senate, non-Agency state financial expert) Gets oversight board commitment before procurement begins and private sector begins to spend money on proposals (oversight board resolution of approval necessary to advance P3 projects from project development to project procurement) Includes regular notifications and briefings to legislature (General Assembly Appropriations, Finance and Transportation Committees) Encourages competition (review of RFQ/RFP if project procurement results in a single response) Establishes accountability for P3 decision (Commissioner, SecTrans sign Finding of Public Interest document) Requires review if material changes in scope, financial terms or risk allocations

6. High Level Screening Questions Can Virginia transfer risk? Does Virginia have a need for funding requirement? Can the potential project to raise private capital? Can the Virginia agency effectively leverage private sector innovation and expertise? Is a partnership consistent with Federal requirements? Can Virginia accelerate project development? Can a partnership satisfy the public need? Does the potential project address priorities in state, regional or local plans? Are there project efficiencies possible through a public-private partnership?

7. Detail Level Screening Questions Does the project address the needs outlined in the local, regional and state transportation plans? Will the project enhance the Commonwealth's economic development efforts? What is the extent of support or opposition for the project? Are there any legislative concerns about tolling, user fees or use of public funds? Is the proposed schedule for project completion clearly outlined and feasible? Is the project’s technical approach based on proven technology? Is the project consistent with applicable state and federal statutes and regulations? Is the proposed project consistent with environmental statutes and regulations? Is the project compatible with local land use and comprehensive plans? Are public funds required and clearly stated? Is the preliminary financial plan feasible? Are there any particular risks unique to the project? Is the proposed term of concession consistent with market demand? Does it provide a Best Value solution for the Commonwealth? Is the proposed term optimal for a whole-life approach? Does the project include a process for long-term performance management, inventory and hand back provisions?

8. Addressing Risks for P3 Projects

9. FHWA P3 Toolkit

10. VAP3 Lessons Learned Permanent office acts as champion, catalyst, guide P3 leaders and program managers have vision, discipline & imagination; are pragmatic & collaborative by nature Consistent, detailed guidelines facilitate closure, realization of public benefits Continuous reviews of assumptions and conclusions improve project decisions Effective P3 communications focus on benefits produced, broad policy goals advanced Steady flows of information to agencies, officials, planners, media build understanding and trust Competition is growing as other states, provinces, countries develop great ideas

11. Alternative Finance & Delivery Governance and oversight Performance monitoring Compliance audits Financial audit Contract management: –Variation –Dispute resolution –Renegotiation –Capital costing and controls –Asset transfers Reporting/reporting systems Liability management and budgeting Reporting and public accounting Program and project management Policy & regulatory framework Operating procedures and P3 guidelines Project screening/pipeline development (including prioritization criteria) Asset optimization and monetization assessments Funding and delivery options analyses P3 institutional framework Program risk identification and mitigation strategies Strategic communications & stakeholder outreach P3 program management and monitoring systems Project scoping and structuring Feasibility and business case Scoring / accounting considerations Risk allocation Financial structuring Performance standards Economic regulation Investor targeting Procurement strategy Selection criteria Investor sounding Procurement documents Procurement management Proposal review and selection Award protest management Contract negotiations Commercial and financial close Transition assistance Permits and licensing Employee transfers (when applicable) Design/set-up of governance structures Deal StructureDeal ExecutionDeal Closure P3 Program Management Funding/Financing Options PSC and Value-for-Money Analysis Affordability Analyses Change Management/Stakeholder Outreach Human and Institutional Capacity Development Framework Transaction Partnership 11

12. We know partnerships. NCPPP P3 2015 CONNECT BOOTCAMP July 20, 2015 Barney Allison, Esq.

13. 13 IGNORANCE OF THE LAW IS NO EXCUSE  Before thinking great thoughts, Read the Statute!  Applicability of general contract code provisions to the P3  Prepare a detailed roadmap; always be 2 steps ahead in your planning  No deal is ENTIRELY free from protest

14. 14 TRANSPARENCY VS THE NEED FOR CONFIDENTIALITY  How to deal with State public records act requirements  Bidders expect confidentiality for certain information  What to release, when to release it and to whom  Submissions in writing vs One-on-one Meetings

15. 15 STIPENDS  Stipends paid if: the Agency cancels the procurement; losing bidders submit compliant bid  Demonstrates the Agency’s commitment to the procurement  Not intended to completely cover the bidders’ pursuit costs  Consideration paid for intellectual property  Get authorization to pay before issuance of final RFP

16. 16 Developing the Technical Provisions  Critical part of the RFP and a “contract document” vs reference information  Performance Based (outcomes) vs Prescriptive (means and methods)  Role of the Standard Specs  Avoid the passive voice  Approve vs review and comment

17. 17 P3’S ARE ABOUT INNOVATION  Be Flexible—Focus on goals/outcomes  Give bidders the opportunity to highlight their strengths  The ATC process  Encourage innovation in financing structures

18. 18 TIMING OF THE PROCUREMENT AND THE ENVIRO/PERMITTING PROCESS  Equity/Lenders will RARELY take on environmental approval risk  Pass through of mitigation measures to the private sector  How much is the permit dependent on final design?

19. 19 THE CLOSING IS JUST THE BEGINNING  35 year+ relationship  It’s not your contractor, it’s not your schedule  Where did everyone go?  Complexity of contract administration— claims, CO’s, signoff on milestone payments/availability payments  Noncompliance points