Association of Metropolitan Planning Organizations

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Association of Metropolitan Planning Organizations
MPOs and the Private Sector Public Private Partne
rships and Private Development Initiatives
Scott Lane, AICP, Moderator Nikhil Bhandari, Publ
ic Private Partnerships Dean Hatfield, PE, Conven
tional Private Sector Participation
October 3, 2007 The Louis Berger Group, Inc.
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MPOs and Private Sector Involvement

• Public Private Partnerships
• Private Sector Development Initiatives
• Issues and Opportunities for MPOs
• Current Regulations Require Involvement from
  Private Transit Providers, and Freight Planning
  Requires the Involvement of Private Shippers and
  Distributors, but What About Private Development
  Contributions for
• Roads,
• Bridges,
• Transit Centers,
• Signals / ITS Components, and
• Bicycle and Pedestrian Connections.

• What Youll Learn
• PPP Flavors
• Integrating Private Development Interests with
  MPO
  
• Roles of MPOs and DOTs, and Where They Can Be
  Improved
  
• Then Your Questions

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About the Presenters

• Nikhil Bhandari
• Advisor to Public and Private Sector Clients in
  Several Countries
  
• Demand/Revenue Forecasting, Economic and
  Financial Impacts
  
• Defines Risk, Uncertainty, and Cost and
  Implementation Schedules
  
• Dean Hatfield, PE
• Director of Engineering, N.C. Operations
• 25 Years of Experience
• Six Public-Private Sector Roadway Design
  Assignments
  
• Scott Lane, AICP, GISP
• Former Director of 3 MPOs and Traveler Demand
  Modeler
  
• Directs a MPO Program Management Assignment
• Director of Planning, N.C. Operations
• Numerous MPO Projects

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Public Private Partnerships

• Many definitions of PPPs exist most stress on
  the following common elements
  
• A partnership between governments and private
  sector entities
  
• To provide public infrastructure, facilities
  and/or services
  
• Through a sharing of risks, responsibilities and
  rewards

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Public Private Partnership Challenges and
Opportunities

• Challenges
• Public nature of projects protection of
  repayment schedule
  
• Projects are typically long-term, so long-term
  risks must be taken into account
  
• Decentralized nature of Infrastructure Financing
• Need to protect credit repayments when revenues
  from the project cannot cover all of the
  repayments
  
• Smaller MPOs or cities will not have the
  financial resources - or demand - to support on
  their own a municipal bond market
  
• Political risk management, also conflicts between
  central government and local governments
  
• Opportunities
• Large public good component
• Earlier financing of large and small projects

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Designing PPP Agreements

• PPPs are one way of increasing the efficiency of
  public services through competitive bids,
  negotiation or a combination of the two
  
• MPOs should understand that PPPs are a business,
  and like any other business there is a likelihood
  of failure
  
• Private sector will only invest when they see a
  sufficient return for the level of risk that they
  take
  
• Success or Failure comes from the details of the
  agreement, but we have identified six principles
  that can help guide the process

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Six Critical Principles for Successful PPPs

• Political Leadership
• A successful partnership can result only if there
  is commitment from "the top"
  
• Public Sector Involvement
• Public-sector must remain actively involved in
  the project or program. On-going monitoring of
  the performance of the partnership is important
  in assuring its success
• A Well Thought-Out Plan
• Each party should know what it expects of the
  partnership beforehand
  
• Clear allocation of risks, responsibilities and
  rewards essential parts of the plan

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Six Critical Principles for Successful PPPs
(contd)

• A Dedicated Income Stream
• While the private partner may provide the initial
  funding for capital improvements, there must be a
  means of repayment of this investment over the
  long term of the partnership
• Communications with Stakeholders
• More people will be affected by a partnership
  than just the public officials and the
  private-sector partner
  
• Miscommunications can significantly increase
  political risk
  
• Selecting the Right Partner
• The "lowest bid" is not always the best choice
  for selecting a partner. The "best value" in a
  partner is critical in a long-term relationship
  that is central to a successful partnership

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Options for PPP Arrangements
Public Private Partnerships
Works Services Contracts
Management Maintenance Contracts
Operation Maintenance Concessions
Build Operate Transfer Concessions
Full Privatization
Low
High
Extent of Private Sector Participation
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Allocation of Risks
High
Maintenance Contracts
Management Contracts
Operation Maintenance Concessions
RISK TO PUBLIC SECTOR
BOT
Decreasing Public Risks, Increasing Private Risks
BOO
Low
High
RISK TO PRIVATE SECTOR
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BOT Type Concessions

• The private developer obtains exclusive franchise
  to finance, build, operate, maintain, manage and
  collect user fees for a fixed period to amortize
  investment. At the end of the franchise, title
  reverts to a public authority
• Variants
• BOT Build, Operate, Transfer
• BOO Build, Own, Operate
• BOOT Build, Own, Operate, Transfer
• Examples
• Dulles Greenway, Virginia
• SR-125 San Diego Expressway
• Chicago Skyway
• Indiana Toll Road

Dulles Greenway
Source www.dullesgreenway.com/cgi-bin/dgfacts.cfm
?homedg
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Dulles Greenway, Virginia

• First privately financed highway in Virginia
  since 1816
  
• The 14-mile Dulles Greenway provides an important
  alternative to patrons in the extremely congested
  Northern Virginia highway network
  
• Project sponsors financed the construction
  through equity and bank financing
  
• Project faced significant problems as initial
  traffic volumes did not meet the projections
  
• New ownership took over the Project in
  late-1990s
  
• Issued new bonds
• Revised toll structure to encourage traffic
  growth
  
• Refinanced bonds to take advantage of favorable
  credit markets

Even though the Project was not a success
initially, the PPP structure provided the
flexibility to change ownership, toll structure
and financing to accommodate market conditions
while the Greenway continued to be operated and
maintained per the performance requirements
established in the Agreement
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Private Development Initiatives

• Private Development often implements small
  portions of a roadway, transit, or bike/ped
  program
  
• Roadway or Roadway Widening
• Transit Stop
• Sidewalks and Greenways
• What Happens When a Large Private Development
  wants to Tackle a More Ambitious Program of
  Improvements?
  
• More and More Likely as Economics Shift Away from
  Massive Federal Programs
  
• Is the Project on the TIP? On the LRTP? Neither
  One?
  
• Negotiating a Multi-Partner Process

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Wendell Falls Parkway Interchange

• Private Development in Wendell, NC Eastern Wake
  County
  
• 1,400 acres 4,000 homes
• Retail Commercial Space
• Amenities Center
• Sites reserved for WakeMed Hospital Wake County
  Schools
  
• Interchange and Roadway
• Originally part of US64 Bypass Design-Build
  Project
  
• Removed from the project for budget reasons
• Roadway Features
• Multiuse Path Sidewalks
• Widened Outer Lanes for
• Shared Vehicle Bicycle Use
• 40 Grassed Median for
• Widening to the Inside

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Wendell Falls Process

• Long-Range Transportation Plan
• Had to reconcile Parkways alignment with the
  LRTP and the Capital Area Metropolitan Planning
  Organization (CAMPO)
  
• Thoroughfare from US64 Interchange to be part of
  Southern Wendell Bypass as part of the LRTP
  Wendell Falls alignment differed from LRTP
  alignment
• Worked with CAMPO to quantify differences of the
  alignments
  
• Series of committee meetings, public
• comment period, and public meetings
• Wendell Falls Parkways alignment
• was adopted and the LRTP was revised

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Wendell Falls Process

• Public Agency Involvement
• NCDOT
• In order to turn over the Interchange and the
  Parkway
  
• Designed and built to NCDOT Standards
• NCDOT approval of construction plans
• Traffic capacity/Lane Configuration
• Transfer of Mitigation Credits for environmental
  impacts
  
• US64 Bypass had been permitted for NCDOT with the
  interchangebut not built
  
• Environmental Permitting Process
• Combined permit with site development
• Incorporated already constructed
• elements from US64 Bypass
• reconciled differences from the
• previous permit

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Roadblocks

• Project Difficulties Challenges
• Guinea Pig Effect
• First project of this scale
• NCDOT review times for design submittals
• Marks Creek Bridge
• Originally designed permitted as 4 lanes
• Required by NCDOT to be 7 lanes (NCDOT desired 8
  lanes)
  
• Enhancement area constraints
• Stakeholder coordination
• Berger, Site Development, Firm, NCDOT, DWQ/DENR,
  local residents, Town of Wendell officials, etc.
  
• Permitting Issues
• Stream Crossings

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Metropolitan Planning Organizations

• Challenges
• MPOs are Perceived, Often Correctly, as an
  Impediment
  
• MPOs Often Perceive Private Sector Interests as
  the Opposition
  
• Private Sector Operates on Different, Irregular
  Schedules
  
• MPOs Not Focused On Implementation
• MPOs Arent Specifically Required to Engage
  Private Developers
  
• Opportunities

• Include in the Public Participation Plan
• Ensure Site Review has MPO Triggers
• Reacting Faster
• Get Out More Get Involved with Business
• Work On Private Sector Protocol
• Smaller, Short-Range Projects to Keep Private
  Sector Engaged

• Contributes to Revenue Stream, IF Proof of
  Life
  
• Establish Elasticities on Toll Facilities
• Create Feasibility Study, NEPA work
• Work to Support Legislation to Permit Public
  Goods to be Tolled by Private Sector Entity (50
  of States)
  
• Manage Process or Hire Someone to Do It

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Contact Us
Nikhil Bhandari 2445 M St., NW Washington DC 200
37
Ph. 202.331.7775 nbhandari_at_louisberger.com

• Dean Hatfield, PE or Scott Lane, AICP
• 1001 Wade Avenue, Suite 400
• Raleigh, North Carolina  27605
• Ph. 919.866.4400
• dhatfield_at_louisberger.com
• slane_at_louisberger.com