One East Broward Blvd., Suite 1800 Broward League of Cities Elected Officials Symposium P3 Workshop April 28, 2017 Lee A. Weintraub, Esq. Becker & Poliakoff, P.A. One East Broward Blvd., Suite 1800 Ft. Lauderdale, FL 33301 954-985-4147 lweintraub@bplegal.com

What are P3’s? A contractual agreement between public and private sector partners for the delivery of public facilities or infrastructure.

What are P3’s? Design Build Finance Operate Maintain

Public Benefits Expedited project completion Project cost savings over life cycle Improved quality Leveraging private expertise Access to new sources of private capital

WHEN YOU HAVE SEEN ONE P3… Each is unique, but they all include: Shared goals Shared resources (money, expertise, people) Shared risks Shared benefits

Key Success Factors Careful early-stage analysis Proper allocation of risk and reward Value for money over project life cycle Protection of public interest Clear and transparent communications among all stakeholders Willingness for each side to adjust to expectations of other party Private sector innovation Long-term partnership

Examples of Funding Sources Revenue generated from facility Tax increment financing Grants Loans Bonds Lease payments Tax savings

Examples of Funding Sources “Toll Road” Model Revenue generating asset Long-term, steady returns to attract equity Fare flexibility Availability-based funding Payments to concessionaire depend upon performance, with penalty system to ensure concessionaire’s proper performance Agency’s ability to pay availability payment is key Taxable cost of capital, but borrowing cost could be reduced

Examples of Funding Sources Hybrid structure Combination of facility-generated revenue and other sources Other revenue sources can come from availability payments, agency tax-exempt debt, tax savings, TIF financing, mixed-use lease payments, land swaps or other sources

P3 STATUTE Section 255.065 applies to any facility or project serving a public purpose

Procurement Procedures Public entity may receive unsolicited proposals or may solicit proposals through traditional procurement methods Public entity may establish a reasonable application fee for unsolicited proposals Fee must be sufficient to pay costs of evaluating the proposal Public entity may hire private consultants to assist in the evaluation, paid for by private entity

Procurement Procedures If the public entity intends to enter into a comprehensive agreement, it must publish notice in the Florida Administrative Register and newspaper of general circulation at least once a week for two weeks

Procurement Procedures Notice must provide that the public entity has received a proposal and will accept other proposals for the same project Time frame for accepting other proposals shall be determined by public entity on project by project basis Based upon complexity of the project and the public benefit to be gained by allowing a longer or shorter period of time for competing proposals Time frame must be at least 21 days, but no more than 120 days, after initial date of publication

Project Approval Requirements Unsolicited proposal must be accompanied by following items, unless waived by public entity: Conceptual design of facility and schedule for construction Description of method by which private entity proposes to secure necessary property interests Description of private entity’s general plans for financing project Includes sources of private entity’s funds and identity of any dedicated revenue source or proposed debt or equity investment on behalf of private entity

CONTENTS OF UNSOLICITED PROPOSAL (CON’T) Proposed user fees, lease payments or other service payments over term of agreement Including methodology for and circumstances that would allow changes to user fees

Project Qualification and Process After competitive bidding period has expired, public entity ranks proposals received in order of preference Public entity may consider professional qualifications, general business terms, innovative design techniques, cost reduction terms, and finance plans Private entity must meet minimum standards contained in public entity’s guidelines for qualifying professional services & contracts for traditional procurement projects

Project Qualification and Process Public entity may then begin negotiating with highest ranked firm If pubic entity is not satisfied with results of negotiations, public entity may terminate negotiations and begin negotiating with second ranked firm Public entity may reject all proposals at any point in process

Interim Agreement May be entered into before or in connection with negotiation for comprehensive agreement Interim agreement does not obligate public entity to enter into comprehensive agreement Interim agreement is discretionary Parties may proceed directly to comprehensive agreement

Interim Agreement Interim Agreement must be limited to provisions that authorize private entity to commence activities for which it may be compensated related to the project Including project planning and development, design, environmental analysis & mitigation, survey, ascertaining availability of financing Establish process & timing for negotiation of comprehensive agreement Such other provisions the parties deem appropriate

Comprehensive Agreement Must provide for: Payment and performance bonds Public entity’s review and approval of project design Does not require private entity to complete the design before executing comprehensive agreement Public liability insurance requirements Public entity’s inspection of construction activities Public entity’s monitoring of maintenance practices by private entity Public entity’s control over project design, costs, and maintenance and operation standards is key

Comprehensive Agreement Periodic financial reporting by private entity pertaining to project Fees, lease payments, or service payments Rights and responsibilities of parties during course of construction and operations Including provisions for termination of agreement & rights and responsibilities upon default by private entity Must provide for circumstances whereby defaulting private entity’s responsibilities and interests may be assumed by either entity participating in funding of project or public entity

GETTING STARTED Identify the Need Understand Why P3 Is Best Delivery Method Clearly Define How Success Will Be Measured Retain Consultants for Financial, Legal and Property Development Issues Determine the Expected Roles and Responsibilities Consider the Procurement Strategy Above all, Identify the Project Champion!

Pitfalls of P3’s Insufficient Understanding of P3s in Public Sector Political Risk Improper Communication May Take a Long Time To Get Project Going Lack of Project Champion Misconceptions That P3’s are Free Money/Private Developer Assumes All Risk