1. A Primer on Virginia’s PPEA
Christopher D. Lloyd
Warrenton Town Council June 3, 2010

2. Presentation Overview
Legislative History of Public Private Partnerships
How the PPEA Works
Implementation of the PPEA
Recent Project Examples
Pitfalls and Lessons Learned

3. PPEA Overview What is it?
- An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer
- Vehicle to use design-build practices
What it is NOT?
- A panacea that resolves all procurement issues
- A way to get something for nothing
- Privatization

4. PPP Legislative History
Built on the successes of the PPTA (895, 288, 28, Coalfields Expressway)
Design-Build Review Board created in 1996, overly cumbersome process
Passed General Assembly in 2002
Model Guidelines issued in October 2002, state guidelines in December
First comprehensive agreement signed July 1, 2003 (Stafford County)
Amendments occur every year since 2002
Growing acceptance by legislature as a valid project delivery tool

5. Why Use PPP Alternative Procurement?
Faster, better, cheaper (sometimes) through achieving benefits of design-build procurement
Single point of responsibility
Shift of risk away from public sector
Distances rate making/price setting decisions from the politics
Lack of faith in the public sector
Easier framework for inter-governmental, multi-jurisdictional collaboration

6. PPEA: Process Governing body adopts PPEA guidelines
Public entity solicits for proposals or accepts unsolicited proposals
Minimum of 45 day open competition period for unsolicited proposals
FOIA protections for confidential information are negotiated
Conceptual proposal outlines team qualifications, proposed cost, proposed scope and public benefits
Public entity may levy a proposal review fee on both solicited (rare) and unsolicited proposals (always) to cover project review costs

7. PPEA: Process
All competing proposals are reviewed, followed by a downselect
Detailed proposals are requested – often relies on recommendations of outside/inside advisors
Detailed proposals start to lock in project scope, costs, schedule
Leads to an interim or comprehensive agreement with one firm
Significant requirements for public notification and hearings

8. Evolution of Virginia’s PPEA
Creation of interim agreement concept
Increased public input and transparency
Development of “best practices criteria”
Creation of legislative oversight panel
Expansion to technology projects and services

9. PPEA Implementation - Finance
Nearly all PPEA projects have relied on traditional municipal finance to cover construction costs
Private financial participation usually takes form of land, tax overlay districts, joint use, and bridge financing
PPEA does not create “new” financing structures but permits combinations of financing tools in a predictable, repeatable process
Current recession is encouraging communities to more closely evaluate alternative financing options

10. PPEA Finance - Alternatives
Use of IDA as conduit
Partnering with other potential users to share costs
Tax overlay and service districts
Bridge loans and contractor financing (3rd party)
Historic tax credits
Leverage federal and state resources

11. PPEA Implementation Over 100 projects statewide
Over 50 jurisdictions have adopted PPEA guidelines
Project sizes from $800,000 to $1.5 billion
Ideal project size no less than $5 million
More frequent use in small-to-mid-sized communities

12. PPEA: Project Examples
Parking – Fredericksburg, Roanoke, Winchester, Fairfax
Public Safety – Winchester, Fredericksburg, Roanoke County, Stafford County, DFS NoVA Forensic Lab
Jails – Virginia DoC, Rappahannock Regional Jail, New River Valley Regional Jail
Schools – Stafford, Chesterfield, Bedford, Northumberland, Cumberland, Fredericksburg
Water and Sewer – Prince William, Bedford, Fredericksburg, HRSD, Caroline, Augusta
Government facilities – Chesapeake CSB
Mental Health – Eastern State Hospital, Western State Hospital

13. PPEA: Pros Many of the same benefits as design-build
PPEA has a certain “cachet” with state regulatory and funding bodies
No state approvals of procurement process necessary
Public entity retains right to reject, modify, expand, or contract proposals at any time
Project costs can be covered by proposers
Staff augmentation and single point responsibility

14. PPEA: Cons
Project scope and cost may not be defined until late in the negotiation process
Learning curve for public officials and public
Suspicions about “competitive negotiations”
Did I get the best possible price?
Negotiations can be lengthy and complex

15. Pitfalls and Lessons Learned
PPEA should not be used as a “fishing expedition”
PPEA should not proceed unless there is both board and staff buy in
Public and other stakeholders must be included in the process
Promises of “free money” never materialize
PPEA is not right for every project

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