1. P3’s & Lessons Learned
Andrew Chapman
March 27, 2015

3. Project: New-Build A-25 Toll Bridge
1980
Buyer: Regional Water Authority
2012
Concessionaire: Macquarie Fund
Enterprise: New Haven Water Company
Project: PANY NJ: Goethals Bridge Replacement
1996
2013
Concessionaire: Elizabethtown Water Co.
Concessionaire: Multiple Bidders
Enterprise: Edison Township Water Dept.
Enterprise: Midway Airport
1998
Concessionaire: Elizabethtown Water Co.
2014
Buyer: UIL
Enterprise: Elizabeth City Water Dept.
Enterprise: Philadelphia Gas Works
2004
Concessionaire: Macquarie Fund
Project: New-Build A-25 Toll Bridge

4. South Central Connecticut Regional Water Authority

5. Who gets what? Seller Buyer Benefit Cost
Premium price
Risk eliminated
Control over operations, capital, rates and
patronage
Cost
Operating and capital risks shifted to customers
Loss in tax revenues (Federal, State & Local)

6. Elizabethtown Water Company

7. Who gets what? City Concessionaire Benefit Cost
$51 million concession fee
Fixed rate escalator
Operating risk shifted
All employees hired
Competing supplier disadvantaged
20% increase in customers
Low marginal operating cost
Cost
Loss of Control
Operating risk assumed

8. Chris Bollwage

10. Who gets what? Authority Benefit Cost
Concessionaire
Benefit
Eliminate construction & operating risk
10% reduction in life cycle cost
Avoided issuance of new debt
Predictable 35 year return
Cost
Committed to 35 year lease payment subject to availability
Retained traffic risk
Assumed risk to construct & operate
new bridge
Counterparty risk

11. Chicago Midway Airport

12. Who gets what? City Concessionaire Benefit Cost
<$3.0 billion concession fee
Ongoing profit share
Improved traveller experience
Facility upgrade
All employees retained
40+ year return
Cost
Loss of control
Enplanement & revenue risk
Construction risk on terminal upgrades

13. Who gets what? City Concessionaire Benefit Cost
billion concession fee
Ongoing profit share
Improved traveller experience
Facility upgrade
All employees retained
40+ year return
Cost
Loss of control
Enplanement & revenue risk
Construction risk on terminal upgrades

14. Who gets what? Process Failed Public Opposition City Concessionaire
Benefit
billion concession fee
Ongoing profit share
Improved traveller experience
Facility upgrade
All employees retained
40+ year return
Cost
Loss of control
Enplanement & revenue risk
Construction risk on terminal upgrades
Process Failed
Public Opposition

16. Who gets what? City Buyer Benefit Cost $1.8 billion cash
Employment commitments
Pensions fully funded
Bill assistance programs
Main replacement program
Regulated utility investment opportunity
Cost
Loss of control
Rates
Hiring
Contracting
Operations
Operating & capital risk
Rate-setting risk

17. Who gets what? City Buyer Benefit Cost $1.86 billion cash
Employment commitments
Pensions fully funded
Bill assistance programs continued
Operating & Capital risk
Regulated utility investment opportunity
Cost
Loss of control
Rates
Hiring
Contracting
Operations
Operating capital investment risk
Rate-setting risk

18. Who gets what? City Buyer Benefit Cost $1.86 billion cash
Employment commitments
Pensions fully funded
Bill assistance programs continued
Operating & Capital risk
Regulated utility investment opportunity
Cost
Loss of control
Rates
Hiring
Contracting
Operations
Operating capital investment risk
Rate-setting risk

19. Lessons Learned
“Energy cannot be created or destroyed; it can only be changed from one form to another”
“Value & Risk are rarely created or destroyed; often they are shifted from one party to another”

20. Greenfield projects have more success than Brownfield projects
Lessons Learned
Greenfield projects have more success than Brownfield projects

21. Lessons Learned
Smaller concentrated interests have more clout than larger dispersed interests

22. Lessons Learned
Every P3 needs a champion willing & able to use his/her political will to overcome obstacles

23. Line up the stakeholders before commencing the selection process
Lessons Learned
Line up the stakeholders before commencing the selection process

24. To be legitimate, processes must be competitive
Lessons Learned
To be legitimate, processes must be competitive

25. Competitive processes require at least 3 bidders.
Lessons Learned
> 3
Competitive processes require at least 3 bidders.