GLOBAL DEVELOPMENT ALLIANCE: MODEL FOR MUNICIPAL DEVELOPMENT THROUGH INFRASTRUCTURE FINANCING

1. GLOBAL DEVELOPMENT ALLIANCE: MODEL FOR MUNICIPAL DEVELOPMENT THROUGH INFRASTRUCTURE FINANCING USAID JASON GIRARD JENE THOMAS ELIZABETH BAUCH USAID EVENSEN DODGE INTERNATIONAL FERNANDO GAMA SENIOR VICEPRESIDENT EVENSEN DODGE MINNEAPOLIS, MN. USA. TEL. 952 210-9795 FAX. 952 471-1196 fgama@evensendodge.com PARIS, FRANCE. DECEMBER 2003

2. INTRODUCTION … • EVENSEN DODGE, FOUNDED IN 1922, WAS THE FIRST PUBLIC-FINANCE ADVISORY FIRM IN THE UNITED STATES. • HAS PARTICIPATED IN DEVELOPING THE SUBNATIONAL FINANCING MODEL IN THE U.S. • ASSISTS MORE THAN 400 SUBNATIONAL ENTITIES TO ACCESS BILLONS OF DOLLARS ANNUALLY • IS WORKING INTERNATIONALLY WITH USAID

3. FINANCIAL ADVISOR COORDINATES FINANCING PROJECT PENSION FUNDS PRIVATE PLACEMENT COMPETITIVE PLACEMENT INSURANCE COMPANIES REVENUE FLOWS CREDIT ENHANCEMENT LEGAL FRAME- WORK PRIVATE FUNDS TAXES NEGOTIATED PLACEMENT RATING AGENCIES PARA- METERS MASTER TRUST FINANCING A SUBNATIONAL FINANCING MODEL FINANCIAL STRUCTURE INVESTORS ISSUE DEBT ` STATES, MUNICIPALITIES & INSTITUTES MASTER TRUST

4. FINANCIAL ADVISOR FINANCIAL PLAN DIAGNOSIS OF MEXICAN DEBT ISSUANCE MODEL (2000) … INVESTORS STATES, MUNICIPALITIES & INSTITUTES DEBT ISSUANCE OVER A PROJECT UNDERWRITERS PENSION FUNDS REVENUE FLOWS INSURANCE COMPANIES LEGAL FRAME- WORK CREDIT ENHANCEMENT FINANCIAL INSTRUMENTS: LONG TERM LOCAL TAXES RATING AGENCIES PRIVATE FUNDS TAX INCENTIVES FEDERAL TAXES TRUSTS TRUSTS FINANCING

5. PHASES …. 1 • PREDIAGNOSIS • DIAGNOSIS 2 • ENABLE INVESTORS • PENSIONS FUNDS • PRIVATE FUNDS • LEGAL FRAMEWORK GLOBAL DEVELOPMENT ALLIANCE: USAID AND EVENSEN DODGE OBJECTIVE CREATE A MODEL FOR MUNICIPAL DEVELOPMENT THROUGH INFRASTRUCTURE FINANCING IN INTERESTED COUNTRIES 3 4 • SECTOR VS MUNICIPAL MODELS • REPLICATE THE MODELS • MORE JURISDICTIONS ACCESSING FINANCING • HABILITAR A LOS EMISORES • ASISITENCIA TÉCNICA • MARCO LEGAL • FINANZAS POR PROYECTO • ENABLE THE ISSUERS • TECHNICAL ASSISTANCE • LEGAL FRAMEWORK • PROJECT FINANCING PLANS 5 • CONSOLIDATE THE MARKET • DEVELOP MORE LOCAL REVENUE SOURCES • DEVELOP CREDIT ENHANCEMENT INSTRUMENTS PHASES TO CONSOLIDATE A NEW SUBNATIONAL FINANCING MARKET IN A GIVEN COUNTRY

6. PHASE 1: FINANCIAL PLANNING & DESIGNING OF FINANCIAL STRUCTURE JURISDIC- TIONS PRIVATE DEVELO- PERS MUNICI- MUNICI- PALITY 1- QUANTI- TATIVE ANALYSIS PALITY 2… - FEES & DUTIES TAXES REVENUE FLOWS TRUSTS INTERCEPT REVENUE FLOWS PRENEGO- TIATION CREDIT RATING - - FINANCIAL EXPLORE FINANCING ALTERNAIVES - STRUCTURE IN PLACE CREDIT ENHANCE- MENT STRESS TESTS • ANALYZE CLIENT FINANCIAL NEEDS, • STUDY LEGAL FRAMEWORK, • DESIGN ADEQUATE FINANCIAL STRUCTURE • POOL FINANCING STRUCTURE • ONE STRUCTURE FOR VARIOS JURISDICTIONS • SMALLER ISSUERS MAY ACCESS FINANCING • COST AND RISK REDUCED REQUEST FINANCING

7. PHASE 1: (CONTINUES) FINANCIAL PLANNING & DESIGNING OF FINANCIAL STRUCTURE POOL FINANCING STRUCTURE PROJECT ADMINISTRATION TRUST PRIVATE DEVELOPER - IRREVOCLABE TRUST TO PAY DEBT OBLIGATION TRUSTEE FINANCING REQUEST FINANCING INVESTORS JURISDICTION PAYS FOR DEBT OBLIGATION PROJECT PROCEEDS PAY FOR DEBT OBLIGATION BUILDS, OPERATES AND TRANSFRS

8. PHASE 2: STATE REVOLVING FUND COMMITTEE CONSTITUTION STATE LAW OF PUBLIC DEBT CONGRESS AUTHORIZATIONS FINANCING OFFICIAL STATEMENTS IRREVOCABLE MANDATE TO FED. GOV’T. OTHER REVENUE FLOWS A B “N” EVALUACIÓN AUTOMATICA DE EXEDENTES TRUST AGREEMENT STATE COMITEE OF PUBLIC DEBT STATE TREASURER IRREVOCABLE MANDATE TO FEDERAL GOVERNMENT TO AFFECT IRREVOCABLY FEDERAL TAX TRANSFERS TO JURISDICTION TO DEVIATE A % OF FEDERAL TAX TRANSFERS TO THE JURIDICTION INTO AN IRREVOLCABLE TRUST IRREVOCABLE INSTRUCTIONES TO TRUST DEFINE CRITERIA TO PAYING DEBT OBLIGATIONS OFFICIAL STATEMENTS FOR BOND ISSUANCE OR BANK CONTRACTS INTERCEPTED FLOWS 1 2 n IRREVOCABLE TRUST COUPON PAYMENTS TO JURISDICTION FUND TO PAY DEBT 1 PAYING AGENT OR BANK 1 JURISDICTION TREASURY FUND TO PAY DEBT 1 PAYING AGENT OR BANK 2 FUND TO PAY DEBT ”n” PAYING AGENT OR BANK “n” EXCESS REVENUE FLOWS GO BACK TO JURISDICTION

9. DIAGRAMA DE REVOLVENCIA FINANCIERA ADMINISTRACIÓN DEL FINANCIAMIENTO RECIBIDO DESARROLLO DE PROYECTOS PAGO DE OBLIGACIONES FUJJOS ORIGINALES PROVENIENTES DE SHCP COMITÉ TÉCNICO DEL FIDEICOMISO DE ADMINISTRACIÓN DE OBRA Y DE SUPERVISIÓN DE AVANCE DE PROYECTOS n POR CADA NUEVO FINANCIAMIENTO HABRÁ UNA NUEVA INSTRUCCIÓN IRREVOCABLE AL FIDUCIARIO DETALLANDO COMO PAGAR ALCONCESIONARIO DE CADA PROYECTO EL COMITÉ: SUPERVISARÁ EL AVANCE DE OBRA DE CADA PROYECO Y OTORGARÁ AUTORIZACIÓN AL FIDUCIARIO PARA REALIZAR PAGOS DE AVANCE DE OBRA AL FRANQUICITARIO DE CADA PROYECTO 1 FIDEICOMISO DE ADMINISTRACIÓN, INVERSIÓN Y PAGO ACREEDORES FIDEICOMISO DE ADMINISTRACIÓN DE OBRA MAS FLUJOS FONDO PAGO CREDITO 1 AUTORIZACIÓN DE PAGO FINANCIAMIENTO FONDO DESARROLLO PROYECTO 1 1 FONDO PAGO CREDITO 2 CONCESIONARIO PROYECTO 1 PAGOS PREVIA AUTORIZACIÓN Y CONTRA ENTREGA DE FACTURA FINANCIAMIENTO FONDO DESARROLLO PROYECTO n n CONCESIONARIO PROYECTO n FLUJOS DE LOS PROYECTOS SON INTERCEPTADOS ACREEDORES FONDO PAGO CREDITO A FINANCIAMIENTO NUEVO UN PORCENTAJE ES PARA CONTRATAR NUEVOS CRÉDITOS FONDO DESARROLLO PROYECTO A CONCESIONARIO PROYECTO A A FONDO PAGO CREDITO B UN PORCENTAJE SE DEVUELVE PARA MANTENIMIENTO, OPERACIÓN Y UTILIDAD DEL FRANQUICIATARIO MAS FINANCIAMIENTOS MAS CREDITOS MAS PROYECTOS EXEDENTES PASAN A LA TESORERÍA

10. PHASE 3: ACCESS FINANCING PRESALE ANALYSIS BOND SALE OFICIAL STATEMENTS CREDIT RATINGS CREDIT ENHACEMENTS UNDERWRITERS FINANCIAL STRUCTURE INFRASTRUCTURE PROJECT FINANCIAL ADVISOR COORDINATES PROJECT BOND COUNSEL POST SALE ANALYSIS REQUEST FINANCING INVESTORS TRUST TRUST FINANCING

11. THANK YOU … USAID & EVENSEN DODGE JASON GIRARD Community Planner USAID Urban Programs Team Washington, DC Tel: 202-712-0254 Fax: 202-216-3174 Email: jgirard@usaid.gov ASSITNG JURISDICTIONS ACCESS FINANCING FERNANDO GAMA SENIOR VICE-PRESIDENT MINNEAPOLIS, MN. TEL. 952-2109795. FAX. 952-471-1196 Email: fgama@evensendodge.com