1. Financing Public Infrastructure Bonds or Public-Private Partnerships
Gary Weir
Katrielle Machida
Zach Roberts

2. Community Faces a Challenge
Government makes issue a priority
Community Faces a Challenge
Appropriate Interest Rate Assigned Based on CR
Investment used as Capital for project
Investors Purchase Bonds
Bond is made available for investors
Financial institution Creates/Broker Bond
Funds Raised to Pay Investors Back Including Interest
Bond Process Complete
Project Built

5. ALASKA STRENGTHS
Very large cushion against revenue volatility in Constitutional Budget Reserve Fund (CBRF) and other funds
Conservative fiscal practices, highlighted by use of 2008 oil revenue windfall to rebuild CBR
Potential to transition over time to natural gas from oil production as primary revenue source
ALASKA CHALLENGES
Narrow economic base
Political challenges to imposition of other significant revenue streams
Relatively weak pension funding, although funding will be improved by reserve transfers
WHAT COULD MAKE THE ALASKA RATING GO DOWN
Sustained low oil prices relative to prior assumptions
Accelerating decline in petroleum production volume
Prospect that financial reserves will be fully depleted in the near term
Use of non-recurring measures beyond financial reserve expenditures to achieve budget balance
Current Alaska Ratings
Moodys: Aaa
Standard and Poors: AA+ (Downgrade)
Fitch: AAA

6. Bond Pros
Provide communities with resources to develop and make improvements for current public use.
Exempt from federal and state taxes.
If a community has a high credit rating, then they can get a low interest rate.
Bond Cons
Federal government loses revenues from tax exemptions
Burden placed on tax payers (property owners)
Requires consensus from voters.

7. Alaska Municipal Bond Bank Authority
Established in 1975
Independent from the State of Alaska
Sells bonds on the markets
Helps communities get good rates for bonds
In the past 10 years, $112 million has been saved by communities across Alaska
AMBBA is administratively supported by Department of Revenue staff, a board of five directors who determine the Bond Bank’s actions such as setting interest rates and approving loans. The AMBBA is Independent and separate from the State of Alaska, although the governor appoints three private sector board member and the other two board members are the Commissioner of Revenue and the Commissioner of Commerce, Community & Economic Development (or their assigned representatives).

9. The Bond Bank Has funded projects in the following communities:
City of Kaktovik
City & Borough of Yakutat
City of Wrangell
City of Wasilla
City of Kodiak
City of Ketchikan
City of King Cove
City of Sand Point
City of Homer
Haines Borough
City of Petersburg
Kenai Peninsula Borough
City of North Pole
Bristol Bay Borough
City of Dillingham
City of Cordova
Aleutians East Borough
City & Borough of Sitka
City of Adak
City of Bethel
Lake & Peninsula Borough
Municipality of Anchorage
City of Unalaska
City & Borough of Juneau
City of Craig
City of Kenai
City of Nome
Fairbanks North Star Borough
Ketchikan Gateway Borough
City of Galena
City of St. Paul
Inter-Island Ferry Authority
City of Palmer
City of Fairbanks
City of Seward
City of Valdez
Municipality of Skagway
City of Hoonah
Northwest Arctic Borough
Matanuska-Susitna Borough
City of Soldotna
Kodiak Island Borough
2014, the AMBBA had funding projects in 21 cities and Boroughs across Alaska plus the Inter-Island Ferry Authority.

10. TODAYS REALITY
Taxpayers and Municipal budgets are maxed out
Growth in school-aged population creating overburdened facilities
Traditional means of increasing funds is frowned upon
The quality of public schools has a direct effect on the municipality’s desirability as a place to live

14. April 5th 2016 ASD Bond $49.3M Proposed
True Cost of Borrowing - $84.8M
$15,000 – Agency Fees
$154,300 - Bond Issuance Cost
$25.7M - Interest

15. Public-Private Partnership Defined
A method of development that uses private capital, public interest and improvement, and combined risk and responsibility in order to deliver projects that would otherwise be beyond the reach of the public.
Agreements involve a government agency contracting a private company to renovate, construct, etc.
Public agency typically maintains ownership, private agency is given additional decision rights to determine how the project will be completed.

16. The History of PPP’s
1990: UK needed a way to increase public infrastructure without increasing the budget
Have grown rapidly, worldwide since their inception
Successful projects include:
Bridges, dams, roads, power-plants, re- development of downtowns, mixed use- development, public garages, schools, airports, and city halls

17. Pros/Cons PROS CONS No campaign process like a municipal bond
No spending cuts to social programs or tax increase
Significant savings and reduced delivery time
Risk is shared = better quality built
Growing pains are still being learned
Significant investment capital limits the amount of private companies that can bid
Short-term political attractiveness - Cronyism

18. Niagara Falls SD Issue
Two unsustainable high schools – bags collecting rainwater in the hallway from the asbestos filled ceiling
44,000 industrial jobs lost over 35 years
New schools needed – decreasing tax revenue

19. Niagara Falls SD Solution
Developed a 6 entity Public-Private Partnership
Form a SPDC
Assign responsibilities
Sell Certificates of Participation to raise $83M
Author a plan for the SD to take ownership of the new school

20. The New Niagara Falls High School
Community Pride
Houses 2,400 students
Each student issued a laptop
Performing Arts Center
High amp amphitheater
Spacious gymnasium
Olympic size swimming pool
Indoor walking track
Student Pride
Student run educational access television station
Extensive internship program offered to H.S students in hospitals and banks
Student donated over 130 pints of blood to celebrate a librarians birthday
Students organized a fly-over with local ANG units as a commemoration to 9/11

21. Private-Public Partnership at UAF Wood Center

22. Conclusion The Time for Alternative Financing is here
Bonds have their time and place
Benefits of Public-Private Partnerships
Reduced construction time
Newer technology/More Environment friendly
Maximize land potential