Public-Sector Decision Making for Public-Private Partnerships (2009)

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51 Glossary of Terms 63-20 Non-Profit Corporations—Corporations established under IRS Revenue Rule 63-20, which permits nonprofit corporations other than solely governmental bodies to issues tax-exempt debt. Availability payments—Periodic typically annual payments made by sponsoring agency to private investors on the basis of the availability of facility capacity or other perfor- mance measures considered important to users, as defined by contract. Brownfield—Concession agreements involving an existing roadway, and may include operations, maintenance and expansion/extension of the facility. Build-Operate-Transfer (BOT)—See Design-Build-Operate- Maintain. Build-Own-Operate (BOO)—A private contractor constructs and operated a facility while retaining ownership. Build-Transfer-Operate (BTO)—See Design-Build- Operate-Maintain. Commercial debt—Any type of loan or credit instrument that is issued by a private investor. Construction Manager @ Risk—A hired construction manager (CM) begins work on the project during the design phase to provide constructability, pricing, and sequencing analysis of the design. The CM becomes the design-build contractor when a guaranteed maximum price is agreed upon by the project sponsor and CM. Design-Bid-Build (DBB)—Traditional project delivery method where design and construction are sequential steps in the project development process, with both activities bid separately. Design-Build (DB)—A procurement or project delivery method whereby a single entity (which can be a consor- tium of various parties, including engineers/architects and contractors, for instance) is responsible for both the design and construction of a project. Design-Build with Warranty—A design-build in which the design-builder guarantees to meet material, workmanship, and/or performance measures for a specified period after the project has been delivered. Design-Build-Operate-Maintain (DBOM)—Also Build- Operate-Transfer (BOT) or Build-Transfer-Operate (BTO). A procurement method in which the selected contractor is responsible for the design, construction, operations, and maintenance of the facility for a specified time. Equivalent single-axle load (ESALs)—Damage per pass to a pavement caused by a specific axle load relative to the damage per pass of a standard 18,000 lb axle load moving on the same pavement. Greenfield—Concession agreements involving the construc- tion of a new facility. High-occupancy toll (HOT) lanes—On HOT lanes, low- occupancy vehicles are charged a toll, while high-occupancy vehicles (HOVs) are allowed to use the lanes for free or at a discounted toll rate. Life-cycle costs—Costs of a project over its entire useful life, from project inception to the end of its design life. Long-term concessions—Publicly financed facilities are leased to private sector concessionaires for specified time periods. The concessionaire may pay an upfront fee to the public agency in return for revenue generated by the facility. The concessionaire must operate and maintain the facility and sometimes make capital improvements. Private Activity Bonds—Tax-exempt bonds issued by states and local governments for project sponsored by a private entity. Public–privatepartnership—Contractual agreement between a public agency and the private sector that allows for greater private sector participation in the delivery of trans- portation projects. Shadow tolls—Per-vehicle amount paid to a facility opera- tor by the facility owner or sponsoring agency. Shadow tolls are not paid by facility users. Special Experimental Project Number 14 (SEP-14)— Program established in 1990 to identify, evaluate, and document innovative contracting practices that have the potential to reduce the life cycle cost of projects while maintaining product quality. Special Experimental Project Number 15 (SEP-15)— SAFETEA-LU enacted program that allows FHWA to experiment in four areas of project delivery: contracting, right-of-way acquisition, project finance and compliance with the National Environmental Policy Act (NEPA) and other environmental requirements. State Infrastructure Bank (SIB)—A state or multi-state revolving fund that provides loans, credit enhancement, and other forms of financial assistance to surface trans- portation projects. Tax-exempt debt—Bonds, issued by a state or local govern- ment, whose interest payments are not subject to federal income tax, and sometimes are also exempt of state or local income tax. Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA)—Federal transportation credit program enacted under TEA-21, and modified by SAFETEA-LU, that provides direct federal loans, lines of credit, or loan guarantees provided through the U.S.DOT to large pro- jects of national significance, under criteria developed by Congress. Unsolicited proposals—A bid by a private company to the government for a project for which bids have not been solicited. Warranty—When used in public–private partnerships for the construction of roads, a clause that guarantees that the roadway will meet certain level of quality or repairs will be made at the private contractor’s expense. GLOSSARY OF TERMS, ABBREVIATIONS, AND ACRONYMS

Weighted Average Cost of Capital (WACC)—The rate that a company is expected to pay to finance its assets. WACC is the minimum return that a company must earn on exist- ing asset base to satisfy its creditors, owners, and other providers of capital. It is calculate by combining the invested equity and debt with their respective rates of return. Abbreviations and Acronyms BOO Build-Own-Operate BOT Build-Operate-Transfer CM@R Construction Manager @ Risk DB Design-Build DBB Design-Bid-Build DBFO Design-Build-Finance-Operate 52 DOT Department of transportation ESAL Equivalent single-axle load GAO Government Accountability Office HOT lanes High-occupancy toll lanes OECD Organisation for Economic Cooperation and Development O&M Operations and Maintenance PAB Private Activity Bonds PPP or P3 Public–Private Partnerships SEP-14 Special Experimental Project Number 14 SEP-15 Special Experimental Project Number 15 SIB State Infrastructure Bank TIFIA Transportation Infrastructure Finance and Innovation Act of 1998 WACC Weighted Average Cost of Capital