Alexandra J. Lauzon July 15, 2016

1. Stretching the limits of p3, Non-traditional applicationsARTBA’s 28th Annual P3s in Transportation Conference Alexandra J. Lauzon July 15, 2016

2. Key Policy Questions The key policy questions facing state agencies and localities are similar across different infrastructure needs and sectors. • How do we respond to growing needs of infrastructure – renewal, repair, development, construction? • What is the optimal level of public sector spending on infrastructure? • What is the relative importance of private sector investment in infrastructure? • Are taxes and tax-exempt bonds as prime financing mechanisms adequate? • Are new roles required for different levels of government?

3. The P3 Delivery Method is a Tool State agencies and localities can consider the P3 delivery method as a tool when tackling key policy questions. • Supplement traditional funding and project delivery methods • Deliver projects quicker, especially when public entities have limits on traditional funding sources (tax revenue or bond programs) • Include lifecycle costs in the P3 scope (operations and maintenance) • Share and transfer risk with a private partner • Attract private financing to supplement public funding • Bring private sector innovation and financial discipline to the project

4. Successful P3 Projects are Alike Highly Motivated Government Sponsor • Champion the project and process • Sustain political support through broad stakeholder outreach and education Appropriate Project Agreement Clearly Defined,High Priority Project • Clearly defined public and private roles and responsibilities • Broadly available through a process that balances transparency and efficiency • Reflecting broad consensus on need and objectives Successful P3 Clearly Defined,Fair Process Project Predictability • Advance preparation including key public and private stakeholders • Clear decision-making roles and timetables, communicated to key stakeholders • Transparent scoring and selection of winning team Economically Viable • Certainty of completion driven by broad public and political awareness and support • Policymakers’ commit predictable revenues • Public understands value received in return for user fees or availability payments

5. VAP3’s Role in Virginia’s P3 Projects • Identify and screen potential P3 projects and concepts within the P3 Pipeline • Act as a resource to agencies and localities interested in a potential P3 project - champion, catalyst, and guide • Facilitate the development of P3 projects - pragmatic and collaborative project managers • Develop consistent and fair P3 procurement and project development processes– guidelines facilitate closure • Evaluate the P3 project technical and financial feasibility - focus on best value and public benefits • Educate and communicate the role of P3’s in program and project development - steady flows of information

6. VAP3’s P3 Project Delivery Framework

7. Solar Energy Development Project • VAP3 is working in collaboration with the Virginia Department of Mines, Minerals, and Energy (DMME) • The project purpose is to: • advance the Governor’s renewable energy goals • identifying opportunities to optimize the use of state-owned assets • diversify Virginia’s energy mix by developing solar energy systems • Current focus is on distributed sites (< 2 MW) where the solar power is consumed by state facilities on site • The Project is progressing in multiple phases: • “Early adopters” - three solar systems for different state agencies bundled together • “Second Generation” - larger number of systems combined into bundle packages

8. Solar Energy Development Project • P3 delivery method • Private partner designs, builds, finances, operates and maintains the solar energy systems • Federal incentives include • Investment Tax Credit for 30% of the total capital cost of solar energy systems • Modified Accelerated Cost-Recovery System accelerating system depreciation over a five-year period • Private partner could take advantage of incentives in its financing structure • DMME Clean Energy Development and Services Program • Repurposed of U.S. Department of Energy American Recovery and Reinvestment Act State Energy Program funding • May be used as public subsidy to offset the cost of the project and ensure the agencies pay no more than what they currently pay for electricity

9. Commerce Road Corridor Redevelopment Project Joint effort to restore economic vitality to the corridor – Port of Virginia, City of Richmond and VAP3 Capitalize on the Port of Virginia’s 40-year lease with the City of Richmond Leverage the benefits of the Richmond Marine Terminal Identify potential redevelopment strategies that effectively leverage public resources to attract private investment

10. Commerce Road Corridor Redevelopment Project • Utilize the P3 Project Delivery Framework to evaluate the project opportunity and develop a roadmap for project development • Facilitate communication and collaboration with the key stakeholders • Coordinate with potential public and private partners to better understand the project potential • Detail-Level Screening executed by the Port of Virginia on July 8, 2016 • Currently, the project is transitioning into development and moving forward with the two key recommendations in the Detail-Level Screening Report: • Formally assembling the Project Team and governance structure; and then • Taking the steps necessary to advance through the development process

11. Air Rights Project • VAP3 is working in collaboration with VDOT and Arlington County • The project purpose is to explore ways to maximize value of existing public assets by making selected Air Rights over I-66 available for development in andaround transportation facilities • Values generated in the form of revenues or benefits could be in the range of $15 to $25 million per site.

12. VDOT Cell Tower Project • Rapid changes underway in telecom, growth in demand for data, and non-traditional players are driving changes in cell tower industry • The project purpose is to: • Capitalize on the opportunity presented by the rapid changes in the telecom industry • Grow the VDOT cell tower program to boost revenue from non-core assets • Harness private sector market understanding for locating, operating and maintaining cell towers • VDOT, with VAP3 assistance, is currently developing an RFI: • The intent is to initiate engagement with private sector to clarify opportunities ahead and suggest changes needed to attract investment, share risks, and increase revenue

13. Current Pipeline of P3 Projects • Candidate P3 Projects: • Hampton Roads Crossing Improvements • Route 460 / 58 Connector • Interstate Lighting • Advertising / Sponsorship Opportunities • New DMV Customer Service Facilities • Toll Credit Program • Regional Airport runway maintenance • Conceptual P3 Projects: • Existing Park Facilities enhancements • New Park & Ride Facilities • Rest Area Truck Enhancements • Biofuel energy development • Availability Payment concept • Crowdfunding concept • Design-Build Finance concept • Broadband within Right of Way

14. THANK YOU Virginia Office of Public-Private Partnerships Alexandra J. Lauzon, Deputy Project Manager alexandra.lauzon@P3.virginia.gov www.p3virginia.org facebook.com/p3virginia twitter.com/p3virginia linkedin.com/virginia-office-of-public-private-partnerships