tools for facilitating p3s – and - gaining political consensus david s. zelenok, pe f ormerly...
TRANSCRIPT
Tools for Facilitating P3s – and - Gaining Political Consensus
David S. Zelenok, PE Formerly Public Works Director
Interim City Manager Chief Innovation Officer
Simply Put – A Public/Private Partnership (P3) =
Risk Sharing
Service Level Analysis
Centennial, ColoradoDecision to Comprehensively review Public Works Services• “Best Value” - $100M Contract / In HouseQuantified Pre-existing Levels of Service
– Snow Routes - # Plows, # Lane Miles– Miles of Street Sweeping– Tons of Pothole Patching– Signs Replaced– Citizen Requests – Call Volumes– Emergency Response Ability
“Managed Competition…”Public vs Private Sector Bidding
“Value for Money…”Find best method to provide service
Step 1: Learn the “Lingo”
Selection Process - Results
Largest Public-to-Private Conversion of its Kind in the Nation
Snow Removal Unique
Only 33 Pages (+28 pp exhibits)
Success, but…No Plan Survives Execution
“Value Exchange”
5=30?
Flexible Service Account
6
Year FSA Annual Funding
Maximum with Rollover
2013 $500,000 N/A
2014 - 2018 $400,000 $500,000
• Flexible Services Account (FSA) used for…– Snow removal services beyond 3,100 CDL Hours– Ice removal on unplowed streets – Damage and repairs– Technology innovations– Minor nuisance issues
Summary – P3 Benefits
• Partnership• Risk• Level of Service • Performance Measures• Technical Standards • Responsiveness • Flexibility • Innovation • Compensation
7
ProvenReducedExpandedEnhancedUpdatedIncreasedImprovedAcceleratedReduced
In House vs Contract (?)
•Colorado Springs – Asphalt Paving Companies Complained and alleged – Contractors can do it cheaper•Result: City Auditor Independently Investigated•Not only should city employees continue to pave streets...•They should consider following the Denver model
• Buy an asphalt plant!
The source selectors’ accountants’ Assumptions are crucial
Key Problem in Public Sector:Fully Load Cost Comparisons – “apples to apples”
NCPPP Termed - Public Cost Comparator
Public Cost Comparator -
Major Elements of a PCC1. Start-up Costs2. Operating Costs3. Personnel Costs4. Equipment Costs 5. Facility Costs
Other considerations – Crucial to winning6. Salvage value7. Depreciation8. Capital reserve
Toll Road FinancingSource: Randy Salzman, ThinkingHighways.com Vol 9, No 3 North American edition Fall 2014
No toll operators remain in business 15+ years post-construction in US
Private sector capital carries very little riskVirtually all the risk is carried publically in one way or another
No American toll companies are meeting their traffic projections Most traffic and revenue estimates are about 109% overly optimistic
P3’s are consuming much of the limited public funds Think: State DOT general fund dollars – priorities to P3’s
Reliance on Exclusivity – Improvements usually prohibited on parallel facilities
~1/2 Penny on a dollar in the adjacent retail
> <
Lesson Learned – accountants will tax surcharge
Innovative Financing
Park Meadows Mall
20 Year Bonds Issued ~ 1¢Defeased in ~ 7 years TABOR-Proof (fee vs tax)Opportunity?
Lessons Learned
• Companies don’t enjoy gov’t immunity – • Liability is unlimited
• Minor Amendments – Make them easy!– Reimburseables – Pass throughs– Offsets– Plus-ups– Recompete for similar work?– Exclusive - or can the city go out for other contractors?
Fact:Agencies don’t know exactly WHAT they want. Opportunity or Fatal Flaw (?)
Get some professional help Up-front
+Build in
QA/QC during
FUTURE P3OPPORTUNITIES
Traffic Mgt
Telecom
P3 ‘s & Private Capital
Questions???
More info: Dave [email protected]