The Public Private Education Facilities and Infrastructure Act of 2002 2003 VIRGINIA ENGINEERS CONFERENCE Chris Lloyd Mc. Guire. Woods Consulting October 10, 2003
PPTA Success Stories • VMS - Contract for maintenance of 25% of Virginia’s interstate lane miles • Interstate 895 - $325 million, connecting suburbs to Richmond International Airport • Route 288 - $236 million, 17. 5 mile beltway around Richmond, support Capital One expansion • Route 28 - new interchanges on access road serving Dulles International Airport • Coalfields Expressway - new road for SW Virginia, leverages dedicated federal funds
Public-Private Education Facilities and Infrastructure Act of 2002 What are the components of a successful proposal? • Delivers something in demand • Private sector shares in the risk • Minimizes impact on state/local debt model • Faster, better, and cheaper • Deliver something unique • Broad political support • Open and inclusive process that keeps the public informed • Strong partnership between staff and elected body
Public-Private Education Facilities and Infrastructure Act of 2002 What is it? - An alternative procurement tool that allows public entities to more efficiently develop infrastructure and achieve better value for the taxpayer What it is NOT? - A panacea that resolves all procurement issues - A way to get something for nothing
Public-Private Education Facilities and Infrastructure Act of 2002 - funding Structures Funding/Value • • Traditional government sources (GF/NGF) • User fees • Service contracts • Lease payments • Commercial revenues • Private activity bonds • Depreciation and other tax credits for private entities • Leverage funding streams Design-build-O&M Build-own-operate Build-own-revert Sale-leaseback Lease-purchase Long-term O&M contracts • Various development agreements
Public-Private Education Facilities and Infrastructure Act of 2002 - funding Typical deal structure • • • Team offers “turn-key” project delivery Contractor willing to assume project delivery risk Life-cycle maintenance is included Other revenue-generating activities are suggested Team members provide free services that benefit government entity even if project does not proceed • Achieves cost savings through design-build and financing • Financing vehicles use solely local funds or 63(20) structure
Public-Private Education Facilities and Infrastructure Act of 2002 implementation What is happening across Virginia? • Education facilities in Falls Church and Stafford County - agreements signed • Pending school proposals in Chesterfield, City of Fredericksburg, Manassas Park, and City of Winchester • Longwood University facilities • Public safety facilities in Roanoke and Frederick Counties (others in the works) • Capitol Square redevelopment • Prison construction program • Science Museum of Virginia at Belmont Bay
Public-Private Education Facilities and Infrastructure Act of 2002 implementation Anticipated growth areas • Water and wastewater • Public safety • Colleges and universities with small/unsophisticated endowments • Courthouses and other local government buildings • Local/regional jails • Technology procurement • Performance contracting/energy conservation
Public-Private Education Facilities and Infrastructure Act of 2002 implementation Who are the major players? • • • Northrop Grumman Mission Systems Haskell Company Centex Construction Clark Construction English Construction Moseley Architects Morgan Keegan Lehman Brothers J. P. Morgan Chase GE Capital Lincoln Properties Fluor
Public-Private Education Facilities and Infrastructure Act of 2002 implementation Trends - How Are Local Governments Reacting? • Implementation of PPEA guidelines becoming more widespread • “Smart” firms are actively looking for good projects • “Smart” local governments are seeking maximum leverage • Deals are closing very quickly • Public input is lacking • Creative financing has not been embraced • Board vs. staff debates
Public-Private Education Facilities and Infrastructure Act of 2002 implementation Potential pitfalls • • Too much work goes to out-of-state companies or large conglomerates Cost savings are hard to define Process seems rushed, appearance of inside deals Debt capacity is compromised Voters feel left out of the process Non-performance by a contractor (picked the wrong team) Board vs. staff debates cause long term problems
Public-Private Education Facilities and Infrastructure Act of 2002 implementation How can engineers get more involved? • Assess your capabilities – where have you done projects that have made you a trusted resource • Talk to contractors – they have the lead • Survey government contacts for potential projects • Be willing to put in some sweat equity
Public-Private Education Facilities and Infrastructure Act of 2002 implementation www. mwcllc. com/people/individuals/lloyd_cd. asp
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