1. Public Private Partnership Opportunities for Alaska
Associated General Contractors
November 9, 2016

2. Public Private Partnerships (P3 or PPP)
Public sector partners with private sector in delivering, operating and maintaining public infrastructure to gain synergies, expertise, innovation, lifecycle cost management, financing etc.
Many forms of P3s are available and applicable to different situations
Usually a mix of public and private funding - not a panacea for government funding shortfalls – but a means of finance
Contracts are generally long term ( years are typical)
Government retains ownership of infrastructure
Private sector expects to make a profit
Many risks are transferred to private sector in exchange
Typically set up as a Special Purpose Vehicle (SPV) – basic project finance
Public Private Partnerships (P3 or PPP)

3. Examples of public infrastructure where P3 may be used/applicable
Roads and bridges
Buildings (e.g. courthouse, office, prison, school, convention center, etc.)
Sea ports
Airports
Transit (bus, light rail, ferries, and related facilities)
Water, wastewater, desalination and related distribution facilities
Rail
Parks
Rest areas
Examples of public infrastructure where P3 may be used/applicable

4. P3 Procurement methodology
Usually a two step process
RFQ/SOQ leading to shortlist of 2-4 teams
Industry review with shortlisted teams leading to RFP
Shortlisted teams will typically spend $5-$10 million to go through industry review and prepare proposals
Procurement process typically takes 10 months or more
End result is a set of performance based contract documents all shortlisted teams are bidding on
Because of long contract terms, considering everything for years is very complex
Objective is risk sharing/transfer with reliable private sector partner to achieve optimized lifecycle cost/management
P3 Procurement methodology

5. Professional support for public sector owner
Procurement council
Traffic and toll revenue consultants
Bond council
Financial advisor(s)
Technical consultant (engineering firm)
Professional employees of public agency
THESE PROFESSIONALS DO NOT COME CHEAP!
Professional support for public sector owner

6. P3 FUNDING SOURCES – nearly always a combination of public and private
Public Sector owner
Tax exempt bonds
TIFIA
Federal aid/grants
State funds
RRIF
WIFIA
Toll revenue
Private Partner
Private equity
Private activity bonds
TIFIA
State funds
RRIF
WIFIA
Bank credit
Toll revenue
P3 FUNDING SOURCES – nearly always a combination of public and private

7. Indiana sample projects
East End Crossing
$1.3 billion bridge (including financing cost) over 35 year availability payment concession
Connect Louisville Kentucky to Southern Indiana over Ohio River
Indiana Toll Road
75 year revenue risk concession sold for $3.8 billion
Included reconstruction of 156 miles of interstate
Toll Revenue risk concession
Illiana Corridor
Suspended in 2015 due to Illinois budget constraints
Sound familiar?
Indiana sample projects

8. Florida sample projects
I-4 Ultimate Improvement Project
$2.3 billion project
Added 4 toll lanes to I-4
Port of Miami Tunnel
$1 billion project
Twin tunnels under Biscayne Bay connecting Port of Miami to I-595
Took 7,000 trucks per day out of downtown Miami
First availability P3 in USA
I-595 Express Lanes
$1.8 billion project in Fort Lauderdale – 35 year concession
Three reversible managed lanes plus reconstruction of segments of I-595
Florida sample projects

9. California sample projects
Presidio Parkway
$1.1 billion reconstruction of Doyle Drive in San Francisco (south end of golden gate)
Availability payment P3 over 30 years
South Bay Expressway (SR-125)
$843 million San Diego area toll road
Private concessionaire bankrupted at no cost to SANDAG
SANDAG repurchased road in 2011 for pennies on the dollar
Long Beach Courthouse
$500 million courthouse and parking facilities
35 year availability concession
SR-91 Express Lanes
10 miles of express lanes in Orange county California
Eventually repurchased by government
UC Merced
$1.3 billion 39 year concession
California sample projects

10. Virginia sample projects
I-66 Outside The Beltway Project
$2.1 billion congestion relief near Washington DC
I-395 Express Lanes
Another WDC congestion relief project
I-95 Express Lanes
Yet another WDC congestion relief project
Elizabeth River Downtown/Midtown Tunnels
$2.1 Billion project in Portsmouth and Norfolk VA area
VDOT Travel Plazas
Virginia sample projects

11. Texas sample p3 projects
I-635 LBJ Express Managed Lanes Project
$2.7 billion reconstruction of LBJ Freeway and addition of managed lanes
Revenue risk concession
SH-360
$300 million road project with a five year term and two five year extension options
Sh-288
$800 million project under a P3 concession agreement
North Tarrant Expressway (I-35W, I-820, SH 121/183)
$1.6 billion project
Texas sample p3 projects

12. Colorado P3 Projects Eagle P3 RTD Denver Fast Tracks I-70 P3
Hot lanes, intermodal facility, light rail and buses
Ongoing program
I-70 P3
Under procurement
Northern part of Denver
One of largest infrastructure projects in the country
256 unit low income housing project in Colorado Springs
Colorado P3 Projects

13. Alaska examples of P3 Red Dog Mine road and port JBER housing DOD
Alaska Mat-Su Goose Creek Correctional Center
Dena’ina Center
WHAT ELSE CAN WE ACCOMPLISH?
Alaska examples of P3

14. Spectrum of infrastructure delivery methods
Most Public Most Private
DBB DB
DBM
DBOM
DBFOM (AVAILABILITY)
DBFOM (REVENUE RISK)
Design, Bid, Build
Design-Build
Design-Build, Maintain
Design-Build, Operate, Maintain
Design-Build, Finance, Operate, Maintain
Public sector puts out prescriptive RFP specifying design
Public sector puts out performance based RFP but only includes construction and perhaps limited warranty period
Public sector puts out performance based RFP and includes perhaps five year maintenance period with two five year extension options
Public sector puts out performance based RFP and includes perhaps five year maintenance and operations period with two five year extension options
Private sector provides financing and agrees to operate for an extended period of time (typically 35 years) in exchange for periodic payments from the government
Private sector provides financing and agrees to operate for an extended period of time (typically 35 years) and takes revenue risk (e.g. toll revenue)
Spectrum of infrastructure delivery methods

15. Alaska’s P3 potential Port of Anchorage expansion and operations
Watana hydro
Road to Umiat
Road to Ambler mining district
Knik Arm Crossing
Alaska gas line
And many more!
Alaska’s P3 potential

16. Knik arm crossing history
$900+/- million toll bridge and roadway connecting Anchorage and Mat-Su across Knik Arm north of Port of Anchorage and Port MacKenzie
Originally conceived as an availability payment P3 and three teams had been shortlisted under a procurement and contract documents developed with extensive industry review ($$$)
Converted to a publicly financed DB project in 2014 legislative session and P3 in progress cancelled
Project highly developed and in a state ready to build
Administration cancelled project in June 2016 citing state budget woes and low oil prices (even though tolls and Federal funds would pay for project)
Watana and eight other road projects were also cancelled in the same administration action
Knik arm crossing history

17. Knik arm crossing funding plan

18. Knik arm crossing status at cancellation
$85 million of federal and state investment in project development and rights-of-way acquisition
$148 million of $300 million total federal highway funds appropriated
Record of Decision under NEPA secured (December 2010)
Completed investment grade traffic and toll revenue study ($2 million)
Two investment grade ratings opinions secured ($500K)
Nearly secured $365 million TIFIA loan in progress (2.30% interest rate at time)
86% of rights-of-way acquired (14% remaining all government)
Draft procurement and contract documents for design-build and tolling systems nearly completed
Knik arm crossing status at cancellation

19. Some Consequences of cancelling knik arm crossing
Jobs forgone - 1,500 FTEs times 4-5 years of construction
Still only one way in and out of Anchorage to north
Potential repayment of Federal aid highway funds invested
No close proximity resolution to Anchorage land shortage
Increased volumes on Glenn and need for capacity improvements without tolls/financing available to pay
Longer commutes for future population growth settling in Mat-Su
Higher vehicle miles travelled, fuel consumption and emissions translates to higher costs and environmental consequences
Loss of KAC project momentum, institutional knowledge and need to update studies if project resurrected in the future
Some Consequences of cancelling knik arm crossing

20. Closing P3 Thoughts Everybody is doing it because it makes sense
Alaska has lots of potential
Large projects practically dictate P3
Risk transfer/sharing is part of the value proposition
Life cycle cost management is an important part of the equation
We can get large projects done that would otherwise bust the budget
Political support is key to success
If we don’t finish what we started, we lose credibility in the market
Don’t pursue projects that can’t happen
Need to have a revenue source
Closing P3 Thoughts

21. Kevin P. Hemenway C (907) 382-4425 H (907) 345-7366 HemenwayK@aol.com
Thank you!
Kevin P. Hemenway
C (907)
H (907)