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

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53 APPENDIX A State DOT Survey Questionnaire TO: State DOT Executive Directors/CEOs FROM: Jack Basso, Director of Management and Business Development Joung Lee, Senior Analyst for Transportation Finance and Business Development SUBJECT: Request for Participation in 50-State Survey on Public Private Partnerships Experience and Decision Making I am writing to request your participation in a groundbreaking study of state DOT experiences with public-private partnerships (PPPs). By completing a short Web-based survey, the study partners— AASHTO, NCHRP, and FHWA—will be able to compile and analyze data on the use of PPPs, how agencies make decisions about PPP models, and critical professional skills and capabilities in this area. You may recall that AASHTO and FHWA partnered together in 2005 to assess each state’s level of experience with and readiness to undertake various types of partnerships. That survey also identified high-priority topics of interest, skills needed to consider PPPs for transportation projects, and types of technical assistance or professional capacity building resources. This 2008 survey includes many of the same questions that appeared in the 2005 Web-based survey, but adds another important dimension. A new series of questions relate to NCHRP Synthesis Topic 39-06, an examination of Public Decision Making in Public Private Partnerships. Cambridge Systematics, Inc., is preparing the NCHRP synthesis report; the U.S. DOT’s Volpe National Transportation Systems Center conducted the 2005 analysis on behalf of AASHTO and FHWA, and will prepare the 2008 assessment of PPP experience and professional capacity. We request that you complete the survey yourself, or forward this message to the most appropriate person in your agency and ask him or her to complete the survey. If you delegate

54 to someone else, please send me an e-mail with the name and contact information of that person, so that we can follow up with him or her directly. The survey is available as an on-line web-based survey that can be accessed at the following link: http://www.trb.org/ss/wsb.dll/s/1bg3a A copy of the survey in PDF format is being provided to assist you in determining who in your organization should fill it out. The actual survey MUST be filled out on-line. If you have any questions about the survey, you may contact Iris Ortiz at iortiz@camsys.com/617- 354-0167, or Theresa Perrone at Theresa.Perrone@Volpe.DOT.gov/617-494-1344. Please complete the survey by February 15, 2008. Thank you for your time and attention.

55 State DOT Experience with Public-Private Partnerships: Making Decisions and Building Knowledge This survey on Public Private Partnerships (PPPs) is a collaborative effort among AASHTO, NCHRP, and the FHWA, with support from Cambridge Systematics and the U.S. DOT’s Volpe National Transportation Systems Center. The survey has two primary objectives: (a) to assess your state’s level of experience with PPPs and level of interest in technical assistance resources, and (b) to examine how public sector decision-makers in your state have handled the public’s concerns regarding PPPs. The NCHRP Synthesis, Public Decision Making in Public Private Partnerships (Project 20-05, Task 39-06), will examine the information available in the U.S. and internationally that is needed to properly evaluate the benefits and risks associated with allowing the private sector to have financial stakes in transportation infrastructure, and how that information can be used in the decision-making process. It will also investigate the reliability of that information, and how the broader public interest can be protected, and will identify gaps in public sector expertise, experience, and information. In 2005, the FHWA and AASHTO partnered to survey state DOTs’ experience with PPPs for highway projects. That survey allowed state DOTs to characterize their level of readiness to undertake highway- related partnerships, and identified specific topics of interest regarding PPPs. This 2008 survey will provide similar but up-to-date information. The survey should take approximately 15 minutes to complete. If you have any questions about the survey, you may contact Iris Ortiz at iortiz@camsys.com (617-354- 0197), or Theresa Perrone at theresa.perrone@volpe.dot.gov (617-494-1344).

56 1) What types of Public-Private Partnerships (PPPs) have been considered in your agency? Select all that apply: Design-build Build-Operate-Transfer (BOT) Development and long-term concession of a new toll road with transfer of revenue risk Development and long-term concession of a new toll road with availability payments or shadow tolls Long-term asset lease of an existing toll road with transfer of revenue risk Long-term asset lease of an existing toll road with availability payments or shadow tolls Added toll lanes on existing facilities with transfer of revenue risk Added toll lanes on existing facilities with availability payments or shadow tolls Congestion pricing (e.g., cordon tolls) with a PPP element Operations and Maintenance (O&M) Fee Service Contracts Program and Financial Management Fee Service Contracts None Other (please specify) If you selected other please specify: 2) Which one statement below best characterizes your agency’s overall experience with PPPs? We have not yet seriously assessed possibilities for any highway-related PPPs. We have one or more projects that may be candidates for a PPP. We have received one or more proposals (solicited or unsolicited) from potential private partners. We have negotiated (or are negotiating) one or more contracts to enter into a PPP. We have completed at least one project that involved a PPP. 3) Which one statement below best describes your agency’s overall readiness to identify and implement innovative finance methods, such as PPPs? The agency needs to build a basic understanding of PPPs. The agency needs some additional technical expertise to establish a partnership. The agency has experience with design-build, but is not yet involved in any projects financed with private capital. The agency needs minimal training or technical assistance. 4) Please rate the extent to which your agency uses the following methods of financing transportation projects, other than PPPs. Please use the “Additional Comments” box to describe “other” methods. Use Frequently Use Sometimes Use Rarely N/A (do not use) Traditional procurement Public financing Federal financing tools (e.g., TIFIA, GARVEES) Creation of non-profit, quasi-public entities Design-build Others (please describe below):

57 The next few questions pertain to how you (or your agency) make decisions regarding PPPs. If your agency has not yet seriously assessed possibilities for any highway-related PPPs, please click “Next Page” at the bottom of the screen and skip ahead to question #7. 5) What criteria are used to decide whether a PPP approach should be used for project delivery in your agency? Extremely Important Somewhat Important Not Important N/A Project is an urgent transportation need Strong political, public, and institutional support Project acceleration potential Project could generate sufficient revenues to attract private investment Lack of traditional funding High-risk project that could be better managed by private sector Unsolicited proposal Other (specify below): 6) How important have the following measures been in protecting the public’s interest in your state? If your agency has not used a particular measure, please indicate “not applicable” (N/A). Extremely Important Somewhat Important Not Important N/A Comprehensive evaluation of benefits and costs of PPP proposals Public participation and opportunities for input in decision-making process Providing public access to information related to PPP proposals Avoidance of conflict of interests Terms of agreement are developed taking into consideration public concerns Development of construction, maintenance and operations standards that meet or exceed standards for non-PPP projects Continuous project monitoring and evaluation based on performance measures Roles, responsibilities, and risks are both clearly defined and allocated between public and private partners Other (specify): 7) The following tables list some of the public concerns that could be raised throughout the decision-making and negotiation process of PPPs. In your opinion, how important are the following concerns? Please note that questions 7a through 7d are required. 7a. Concerns related to project selection and delivery

58 Very Very Very Very Important Somewhat Important Not Important Unclear/unavailability of criteria for selection of PPPs Considerations of alternative PPP models Consistency with 3C (i.e., continuing, comprehensive, and cooperative) transportation planning process Effect on overall transportation network/system 7b. Concerns related to evaluation of PPP proposals Important Somewhat Important Not Important Availability and consistent application of evaluation tools, such as Value for Money and benefit-cost analysis Risk allocation between public and private sectors Potential excessive rates of return to private investors Relative roles of public and private sector Effect of PPPs on state or local bonding capacity 7c. Concerns related to transparency and public process Important Somewhat Important Not Important Lack of public input opportunities through decision-making process Transparency and efficacy of the PPP process, including confidentiality, conflict of interests, intellectual property. Lack of time for appropriate legislative branch review or no legislative branch review Use of upfront proceeds 7d. Concerns related to terms of PPP agreement Important Somewhat Important Not Important Extent to which terms of agreement protect the public interest Liability, indemnification, insurance provisions Revenue sharing formula Clauses that limit public ability to make competing improvements Unanticipated event provisions Impacts on existing revenues Toll-setting policies (e.g., schedule of rate increases and indexing factors) Safety, enforcement, and national security issues Initial construction warranties and maintenance standards Termination, buyouts, and hand-back provisions Environmental safeguards

59 Labor relations issues Asset control and ownership, including commercial development rights Terms related to condition of asset at end of concession Implications of foreign control of domestic assets and work Opportunity for local contractors/consultants to participate Data privacy and ownership Impact of project on alternative routes Trade agreement implications Length of agreement 7e. In the box below, please list any other concerns, and how important they are to you or your agency. 8) The table below contains a list of technical skills that may be used to support more effective consideration of PPPs. For each one, please indicate whether your agency currently has high, moderate, or low capability in each of these areas. High capability Moderate capability Low capability Non-standard procurement or bidding capabilities Legislative research and analysis Asset planning and evaluation Performance specification Risk assessment Benefit-cost analyses Financial management and analysis Management oversight Contract negotiation and performance-based contracting Other technical skills not listed above (free text box) 9) The table below lists various tools that may be used to select a private partner. Please indicate the degree to which your agency uses any of these tools when considering a PPP proposal. Use Frequently Use Sometimes Use Rarely N/A (do not use) Benefit-cost analyses Internal Rate of Return/Net Present Value analyses Value-for-Money/Public Sector comparators Traffic and Revenue Studies Risk assessment Availability Payment Amount/Net Present Value Independent evaluation from legal and/or financial consultants Other (specify below):

60 The next two questions pertain to information used in making decisions about PPPs. If your agency has not yet seriously assessed possibilities for any highway-related PPPs, please click “Next Page” at the bottom of the screen and skip ahead to question #12. 10) What information on PPP proposals is available to decision makers, and who provides the information? Select all that apply: Project Sponsor (e.g. state DOT, toll authority) Consultants and legal/financial advisors contracted by project sponsor Private Investors bidding on the project Interest groups Media (e.g., newspaper, TV, blogs) This information is not available Terms of agreement Experience/qualification of proposers Risks transferred from and retained by public sector Evaluation of benefits/disbenefits to public sector PPP valuation studies (e.g., benefit-cost analysis, value- for-money analysis/public sector comparators, traffic and revenue studies) provided by in-house staff or consultants Project cost estimates and schedule Amount of upfront payment/revenue sharing (if long-term concession) Assumptions used by private investors to determine project value Technical approach Other (specify in “Additional Comments” box below): 11) In your opinion and based on the outcomes of your PPP project(s), was there some information that you did not have, but that could have been beneficial in the decision- making process? Yes No If you answered “yes,” please explain:

61 The next two questions pertain to training or educational resources related to PPPs. The questions below list various topics related to PPPs. For each of the following topics, please indicate whether you believe staff in your agency would benefit from training or other educational resources. Questions 12a through 12g are required. 12a. Getting Started with PPPs Definitely would benefit Probably would benefit Not likely to benefit The PPP concept, basic types, features, and tradeoffs among them How federal and state law can influence the use of PPPs What skills your agency needs in house, and what it can outsource 12b. Risk Management: Definitely would benefit Probably would benefit Not likely to benefit Diagnosing risks to both partners at each phase of a project Where and when risk is best managed Valuation of different types of risk 12c. Finance Issues: Definitely would benefit Probably would benefit Not likely to benefit How to assess the economic costs and benefits of a given project How to use debt (including private activity bonds) How to utilize private capital Opportunities for in-kind contributions Possible revenue sources and negotiating terms of use Differences in public and private sector financial considerations 12d. Procurement Considerations and Techniques: Definitely would benefit Probably would benefit Not likely to benefit How to write RFPs that incorporate PPP concepts Anticipating and managing private sector concerns with process

62 12e. Contracting: Definitely would benefit Probably would benefit Not likely to benefit How to write a contract that encourages innovation and sharing of risk and rewards Best practices in leveraging private resources Common failures of PPP contracts, and how they are addressed 12f. Managing PPP Projects: Definitely would benefit Probably would benefit Not likely to benefit Unique oversight challenges of PPP projects Techniques for monitoring technical and financial performance 12g. Public Awareness and Stakeholder Consultation: Definitely would benefit Probably would benefit Not likely to benefit Identifying and engaging with key stakeholders Anticipating and managing common public concerns about PPPs 12h. Please list any other topics, and how your agency might benefit from resources on this topic, in the box below. FHWA provides some resources via the PPP Toolkit, partner websites such as the FHWA PPP website, and other relevant sites that can be accessed through the FHWA PPP website, including www.innovativefinance.org. This question contains two parts, and pertains to PPP websites, as well as other types of resources. First, please indicate how likely you or staff in your agency would be to use or participate in each of the following types of educational activities. Then, please indicate if you or staff in your agency has used these kinds of resources within the past two years. Likelihood that Staff Would Benefit Participated Within Past 2 (two) Years? Very likely Somewhat likely Not likely Yes No Scan of 2–3 agencies with significant experience in PPPs (3–4 days, including overnight stay) Classroom training (1–2 days at or near your office) stay) Classroom training (1–2 days, including overnight

63 Interactive workshop (half to full day, at or near your office) Interactive workshop (half to full day, off site, including overnight stay) Peer-to-peer exchange (one day, at or near your office) Peer-to-peer exchange (one day, off site, including overnight stay) On-line training modules (self-paced) Webinar (web- and telephone-assisted seminar) Web-based repository of case studies and effective practices 14) Are there any other public transportation agencies or authorities in your state that have used a PPP model for a project? Yes No If you answered yes, please list the agency and the name of the project below: 15) Please tell us more about the organizational structure of your agency. What is the name of your office? To whom does the lead of that office report? Please provide a title, such as “Director of Finance.” There is no need to provide a specific individual’s name. What is the full-time equivalent (FTE) staffing for the office? How many FTEs are dedicated to innovative financing? What is the annual cost for operating your office? If your organization changed its structure within the past two years in order to expand or accommodate work on innovative finance or public-private partnerships, please use the space below to describe these changes. Thank you for completing this survey. Please take a moment to tell us more about yourself. (Please note that all fields are required.) Your name: Your title: Briefly describe your responsibilities: Your agency:

64 Mailing address: City: State: Zip code: Telephone number: May we contact you by phone or email with some follow up questions? Yes No Do you have any other comments or thoughts you would like to share? Thank you for completing this survey. To learn more about PPPs, visit the FHWA’s PPP website or its PPP Toolkit for Highways.