Public-Sector Decision Making for Public-Private Partnerships (2009) / Chapter Skim
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Appendix D - Other Individuals/Interest Groups Survey Summaries
Appendix D - Other Individuals/Interest Groups Survey Summaries
Pages 101-126
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From page 101... ...
Public Interest Research Group Clary, Lowell Lowell Consulting, LLC DiPietro, Susanne Citizen Diedrich, Roger Sierra Club, Virginia Chapter Enright, Dennis NW Financial Group Epstein, Lois Alaska Transportation Priorities Project Ford, Richard Washington Transportation Commission Holman, Bill Nicholas Institute, Duke University Jacobs, Carl Aeia NB #20 Levenson, Dana RBS Greenwich Securities Mandel, Nick New Mexico Department of Transportation Muchnick, Allen Arlington Coalition for Sensible Transportation Neumann, Dennis BNY Capital Funding Pagano, Anthony University of Illinois at Chicago Parker, Jeffrey Jeffrey A Parker and Associates Pollard, Trip Southern Environmental Law Center Poole, Robert Reason Foundation Redfield, Beth Office of Program Research, Washington State Legislature Richards, Mary Massachusetts Organization of State Engineers and Scientists Staley, Samuel Reason Foundation Toppin, Ted Professional Engineers in California Government Woodland, John New Mexico Department of Transportation *
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From page 102... ...
passed an Act that made it possible to have a regional highway provider PPP Concern 2 PPP Concern Mitigation 2 PPP Concern 3 PPP Concern Mitigation 3 PPP Concern 4 PPP Concern Mitigation 4 PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers State loses control Contract structures/techniques to protect public interests Other perspectives Respondent #2 Type of Organization c. Legislature Top benefits of PPP 1.
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From page 103... ...
PPP Concern 5 Congress might become overly prescriptive on the PPP process and toll roads. PPP Concern Mitigation 5 States must educate their Congressional members that all tools must be provided in today's environment to provide states the flexibility needed to deliver timely transportation improvements.
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From page 104... ...
long-term incentives to maintain facilities PPP Concern 1 Consistent, sustained investment in facilities PPP Concern Mitigation 1 Solved by including performance outcomes in contracts, including pavement standards, LOS goals/targets PPP Concern 2 Financial viability of projects as stand alone facilities PPP Concern Mitigation 2 Solved by supplementing user fees (e.g., tolls) with public funds, altering the length of the lease agreement, or allowing alternative revenues to be raised by private company to supplement user fees PPP Concern 3 Interoperability of technology among facilities PPP Concern Mitigation 3 Solved by ensuring technology is open-ended and RFP specifies the ability to operate with competing technologies PPP Concern 4 PPP Concern Mitigation 4 PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers 1.
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From page 105... ...
Hijacking of up-front benefit by subsequent political regimes PPP Concern Mitigation 1 Public statements and commitments to authorizing bodies about the intended use of the up-front proceeds. PPP Concern 2 Placing the up-front proceeds in an irrevocable trust, to be governed in accordance with the trust agreement for the purposes enumerated by the trust.
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From page 106... ...
PPP Concern 3 Inadequate criteria for selecting candidate projects for P3 implementation PPP Concern Mitigation 3 Better public sector understanding of the trade-offs inherent in P3 -- private sector money is not "free" and P3 is not necessarily the answer when everything else has failed PPP Concern 4 Attempting to apply existing finance, contracting and O&M tools to P3 PPP Concern Mitigation 4 Study commercially-acceptable practice so that the public owner understands the P3 framework and doesn't either give away the store or offer a deal that can't be financed. Seek industry input on project concepts.
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From page 107... ...
To much concern about congestion pricing and simply increasing tolls to the point where governmental bodies can provide for repair and growth. PPP Concern Mitigation 1 Raise the tolls PPP Concern 2 PPP Concern Mitigation 2 PPP Concern 3 PPP Concern Mitigation 3 PPP Concern 4 PPP Concern Mitigation 4 PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers Long-term costs; Control of the asset; Clearly spelled out documents; Ability to reclaim the asset if there is a failure.
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From page 108... ...
PPP Concern Mitigation 3 It must be clearly established that the same upfront borrowing could not be done more cheaply by public entities. The public should not pay a premium for higher private borrowing costs, oversight costs for monitoring private entities, and shareholder profits.
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From page 109... ...
PPP Concern 2 Private sector's interest is not always consistent with the public interest; e.g., toll increases could put more vehicles on non-toll roads and thus increase public costs. PPP Concern Mitigation 2 Increase public interest protections in P3 contracts PPP Concern 3 Greenhouse gas emissions typically are not addressed, since more vehicles mean more profit for the private sector.
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From page 110... ...
111 Respondent #10 Type of Organization Other; Chair Neighborhood Board Transportation Top benefits of PPP HOT PPP Concern 1 Fixed rail costs PPP Concern Mitigation 1 BUS and HOT PPP Concern 2 PPP Concern Mitigation 2 PPP Concern 3 PPP Concern Mitigation 3 PPP Concern 4 PPP Concern Mitigation 4 PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decision makers Tax reduction Contract structures/techniques to protect public interests Other perspectives See my [newspaper] Letters to the Editor 23 JAN.
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From page 111... ...
Ability to price transportation services at market rates rather than political prices PPP Concern 1 PPP may seek to avoid compliance with local, state, and national land use and environmental policies PPP Concern Mitigation 1 State and federal laws that require compliance with all land use and environmental laws PPP Concern 2 PPP may seek to avoid innovations such as congestion pricing PPP Concern Mitigation 2 Require congestion pricing for all new PPP or toll facilities PPP Concern 3 PPP may oppose investments in transit and other alternatives to highways PPP Concern Mitigation 3 Strict ethics and disclosure rules PPP Concern 4 PPP may undermine comprehensive transportation planning and work of MPOs PPP Concern Mitigation 4 Require PPP projects to be consistent with state, local and MPO transportation plans. PPP projects need to be part of plans not separate from them.
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From page 112... ...
PPP Concern Mitigation 1 1. Enact statutes and/or administrative regulations that prohibit all PPP agreements prior to the completion of the NEPA process, including the issuance of a Record of Decision.
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From page 113... ...
Contract structures/techniques to protect public interests 1. Enact statutes and/or administrative regulations that prohibit all PPP agreements prior to the completion of the NEPA process, including the issuance of a Record of Decision; 2.
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From page 114... ...
The private entity will take its equity out at the front end, leaving government to cover any deficits. PPP Concern Mitigation 1 Prohibit private entities from accessing government financing for these projects, or insist on a minimum percentage of private funds PPP Concern 2 Government loses control over the asset.
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From page 115... ...
PPP Concern 4 PPP Concern Mitigation 4 PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers Competitive procurements; Tailoring the deal structure to the specifics of each project; Full disclosure/transparency; Prudent limits on "non-compete" provisions Contract structures/techniques to protect public interests Long-term concessions offer the greatest set of benefits. But to take maximum advantage, it's important to include availability payments as well as real tolls -- and in some cases, combinations of these [e.g., (project)
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From page 116... ...
Tend to circumvent normal planning processes PPP Concern Mitigation 1 Limit or prohibit unsolicited bids; require bids go through normal planning process PPP Concern 2 Circumvent and/or undermine environmental reviews PPP Concern Mitigation 2 As condition of signing agreement, require NEPA process completed or substantially complete; provide clarity what can be negotiated with proponent before NEPA process complete PPP Concern 3 Has not tended to attract private risk sector capital proponents promised. PPP Concern Mitigation 3 Require proposer invest a certain amount of equity PPP Concern 4 Non-compete clauses limit investments that are in public interest PPP Concern Mitigation 4 Prohibit non-compete clauses PPP Concern 5 Failure to adequately account for public costs and potential taxpayer liability, and environmental costs (including sprawl promote)
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From page 117... ...
Reduced project costs PPP Concern 1 Public accountability PPP Concern Mitigation 1 The private entity needs to be held to the same standard of access to documents and information as a state DOT would be and implement full, effective public engagement methods PPP Concern 2 Stewardship of public assets PPP Concern Mitigation 2 Public assets, like highway right of way, are held for the benefit of the citizens of the state. The public interest in those public assets must be protected -- citizens must be confident that private entities aren't "profiting" on public resources PPP Concern 3 Risk allocation -- what is the proper allocation of risk for project's moving forward?
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From page 118... ...
PPP Concern Mitigation 1 PPP Concern 2 Cost factor and the use of public funds for services providing essential public services to the private sector. PPP Concern Mitigation 2 PPP Concern 3 What entity will have final oversight and decision-making authority on these PPP, particularly as it may involve public safety, homeland security, and other interest of national priorities.
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From page 119... ...
PPP Concern 4 Public Access to Private Company documents. PPP Concern Mitigation 4 Contract must clearly state that any and all documents relating to a particular project are accessible to the "public" under FOIA or other state regulations.
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From page 120... ...
Respondent #19 Type of Organization m. Financial Advisor Top benefits of PPP up front cash faster design/build PPP Concern 1 Underpricing PPP Concern Mitigation 1 Regulate investment returns when met return road to public PPP Concern 2 excessive toll regime PPP Concern Mitigation 2 limit to cpi PPP Concern 3 term beyond 30 years PPP Concern Mitigation 3 limit term PPP Concern 4 protection of public interest PPP Concern Mitigation 4 Full transparency of procurement process, no shields regarding vendor proposals before award PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers Will they actually achieve economic benefit, could the same result be achieved by a public entity, why pay for 12%+ in equity returns?
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From page 121... ...
PPP Concern 1 Lack of private entity transparency and accountability in regard to records and information. PPP Concern Mitigation 1 Build transparency into the contract.
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From page 122... ...
Contract structures/techniques to protect public interests In the contract, deliverables should include freedom of information requirements, breach of contract definitions, liquidated damage provisions, and special oversight provisions that require audits and quality control actions by public entity on the documents, products, and actions of the private entity. Other perspectives PPPs for transportation seem to be moving toward the privatization of all transportation services and assets.
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From page 123... ...
PPP Concern 2 Because a private corporation is most interested in the most profitable project, and not the one that is most needed, they may force the public agency to entertain construction of projects that are not a priority for the public -- but of course the public will pay. PPP Concern Mitigation 2 Only allow projects that are the top priority for consideration.
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From page 124... ...
PPP Concern 2 Public sector workers need to be treated fairly. PPP Concern Mitigation 2 Early retirement; Buyouts; Private sector hiring public sector workers; Worker retraining.
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From page 125... ...
PPP Concern Mitigation 1 Agreement might provide for public subsidy to meet public policy objectives PPP Concern 2 Default by "private entity" PPP Concern Mitigation 2 Could be complex if it involves critical public facility. Financially surety or insurance could be costly but might deal with this possibility.
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From page 126... ...
PPP Concern 3 Toll roads take money out of our transportation system by moving revenues/profits PPP Concern Mitigation 3 Toll revenues should be reinvested into our transportation system and not siphoned off to multi-national companies that don't remove the revenue from the system but often take it out of the country PPP Concern 4 Non-compete clauses and cash payments prevent improvements to competing public roads and actually increase congestion PPP Concern Mitigation 4 Prohibit non-compete clauses and cash payoffs -- they just confirm the notion that toll roads aren't about reducing congestion -- they are about increasing it to the point toll roads are viable profit centers. PPP Concern 5 PPP Concern Mitigation 5 Factors to consider by decisionmakers See above Contract structures/techniques to protect public interests Require competitive bidding, public oversight, design, and inspection Other perspectives The only differences in a traditional toll road and a 3P, is that under the 3P model you pay up to 35% more for financing and another 20% or so must be paid out (by contract)
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