Broward League of Cities Elected Officials Symposium P3 Workshop April 28, 2017

1. Broward League of Cities Elected Officials SymposiumP3 WorkshopApril 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

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

3. What are P3’s? • Design • Build • Finance • Operate • Maintain

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

5. WHEN YOU HAVE SEEN ONE P3… … You have seen one P3 Each is unique, but they all include: • Shared goals • Shared resources (money, expertise, people) • Shared risks • Shared benefits

6. 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

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

8. 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

9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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!

23. 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