Frequently Asked Questions

Public Private Partnerships have been utilized by the Public sector since before the Revolutionary War, however, many government leaders are still unfamiliar with how and when a Public Private Partnership can be created to benefit their community.

 

Please read below for Frequently Asked Questions regarding P3s and how you can implement a P3 Connection Solution in your community.

 

If your question is not addressed below, please CONTACT US directly for more information.

"I did then what I knew how to do.

Now that I know better, I do better"

                            Maya Angelou

General

What is a Public Private Partnership?

There is no one widely accepted definition of public-private partnerships.   According to The National Council for Public-Private Partnerships, “A Public-Private Partnership (P3) is a contractual arrangement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility.”

Who Uses Public-Private Partnerships?

Federal agencies like the EPA, DOD and VA all use partnerships.  On a lower level, the number of state and local governments using P3s is growing.  The U.S. Conference of Mayors is currently working with the private sector to discuss ways to make partnerships more effective.

Why Should I Consider a Public-Private Partnership?

The most popular reason:  They are considered an essential tool in challenging economic times.  During periods of slow growth, government revenues are frequently not sufficient to meet spending demands, necessitating painful spending cuts or tax increases. Partnerships can provide a continued or improved level of service, at reduced costs.  Partnerships can also provide the capital needed for construction of major facilities. By developing partnerships with private-sector entities, governments can maintain quality services despite budget limitations.

Will Public-Private Partnerships Decrease as the Economy Rebounds?

The general consensus is “No” because P3s are not simply a result of budgetary issues.  Governments are turning to partnerships because they see that merging the resources of the public and private sectors makes it possible to improve the quality of services they provide, many times without a large impact on their budgets.

How do Public Private Partnerships compare with municipal bonds?

                                                Public Private Partnership                   Municipal Bonds

 

Legal Fees                                                   Typically Lower                                             Typically Higher

Closing Time                                               Typically Shorter                                           Typically Longer

Bond Referendum                                     Typically Not Required                                Typically Required

Shares in Risks                                            Typically - Yes                                               No

Private Sector Technology                    Yes                                                                  No

Better access to capital                    Typically - Yes                                               Sometimes

Better cost control                                     Typically - Yes                                              Sometimes

Retain Government Employees        Typically - Yes                                               Yes

 

 

Financing

What are the minimum and maximum transaction sizes?

The minimum transaction size is $10 Million.

Smaller transaction sizes may be available on select deals.

It is also possible to combine more than one project or purchase to achieve the minimum.

It is also possible for more than one city/county or state to join forces with another community to develop a project.

 

There is no overall maximum transaction size for our P3 Solutions, however, each community and deal will be evaluated individually to determine the financial stability of the community.  For example, a community with a population of 200,00 and a credit rating of AAA+ would qualify for a larger transaction size than a community with a population of 20,000 and a credit rating of A-.

What interest rate is used to determine our payments?

Interest rates will vary based upon the credit of the government partner but are sometimes slightly higher than Municipal Bond financing, especially in communities with low credit ratings.  The repayment terms (up to 30 years, deferred payments, escalating payments, etc) and other benefits (revenue-generating components, accounting advantages, private sector technology & experience, etc) should all be considered when making a decision regarding any financing.

How and when do we make payments?

Payments can be made monthly, quarterly or annually.  If payments are deferred during the construction phase or after the installation of energy-saving devices, funds will be escrowed to ensure that interest payments can be made during that time frame.

What are the terms of the lease?

Each transaction is different, however, a P3 Connection Solution typically offers lease terms up to 30 years. 

 

Additionally, you will typically have the ability to defer payments or escalate payments during construction to accommodate any budget constraints.

What if my project or purchase is less than $10 Million?

The minimum transaction size is typically $10 Million, however, a smaller transaction may be possible on select deals. 

Also, it is possible to combine more than one project or purchase into one transaction to achieve the $10 Million minimum.

P3 Connection Solutions

How can P3 Connection help my community?

P3 Connection has the ability to offer a solution that includes 100% of the capital required for most government projects and the experience to provide the quality your community deserves.  

 

P3 Connection  recently formed a strategic alliance with a private investor who has funded 200+ government projects over the last 20 years.  That partnership brought P3 Connection the experience and ability to offer a variety of solutions, including 100% of the capital required for most government projects.  We are also able to offer Architectural and Design services for many government projects. 

Why should we choose a P3 Connection Solution over other Public Private Partnerships?

  • A P3 Connection Solution provides 100% of the capital upfront so the Government Partner doesn't have to utilize their funds for construction or purchases.

  • When possible, a P3 Connection Solution includes a revenue-sharing component for the Government Partner.

  • Most transactions allow the Government Partner the option of purchasing the asset for $1.00 at the end of the lease term.

  • The bonding capacity of the Government Partner is not impacted.

  • The credit rating of the Government Partner is not impacted.

  • Voter approval may not be required.

  • The Private Partner offers terms up to 30 years.

  • The Private Partner offers deferred or escalating payments during construction.

  • The Private Partner offers deferred payments after the installation of energy-saving devices to allow the Government Partner time to make payments through the savings generated by the installation.

  • The funding mechanism used by the Private Partner may provide accounting advantages for the Government Partner.

  • Transactions are normally completed with 30 - 90 days (60 day average).

  • Funds can be used to Refinance existing municipal bonds.

What types of Public Private Partnership solutions do you offer?

Every community is different, therefore, every P3 Connection solution is unique.  The first step is to determine your current needs and proceed from there. 

 

When possible, we like to include a “revenue sharing” component for our government partner.  This provides additional revenue for your community while also providing a much needed facility or service for your citizens. 

 

A detailed list of solutions can be found on our SOLUTIONS page, however, we also have the flexibility to customize those solutions to meet your current and future needs.

 

Below is a summary of the current solutions:

 

  • Design/Build/Finance

  • Build to Suit

  • Sale Leaseback

  • Equipment Purchase

  • Lease Guarantee

  • Renewable Energy

  • Energy Saving Installations

  • Affordable Housing

  • Infrastructure

What criteria is used to determine if a community qualifies for a P3 Connection Solution?

CREDIT RATING: 

Your credit rating must be A- or better as evidenced on Standard & Poors and/or Moody's. 

(Credit ratings below A- may be considered if the overall debt is low.)

 

POPULATION: 

Minimum population requirements are used to determine eligibility.

City:  20,000 or more

County:  50,000 or more

(Populations below the minimum may be considered if the overall debt is low and credit rating is A- or better.)

Can you describe the financing structure for a Build to Suit transaction?

In all P3 Connection transactions, The Private Partner will provide 100% of the capital required to Construct the project.

 

The Government Partner will provide a list of specs for a building or facility to be built and the Private Parter will engage their Architectural firm to Design and Engineer the project.  (OR the Government Partner can provide their own plans.)

 

The Private Partner will engage their Construction team to build the project. (OR the Government Partner can choose their own construction team and the Private Partner will engage a Project Manager to oversee the construction.)

 

The Private Partner will own the project and lease the project to the Government Partner for a period up to 30 years.

 

The Government Partner has the option to purchase the project from the Private Investor at the end of the lease term for $1.00.

 

This program is also available for a Government building that requires Renovations. 

Who constructs or renovates the building or facility for a Build to Suit project?

P3 Connection has Strategic Partners who can Design/Engineer and Construct a project or facility for you. 

 

If you prefer to use another company for these services, that may be possible as well.  The Private Partner will typically hire a Project Manager to oversee the Project in that instance.

How long will the whole process take?

Every project or transaction is tailored specifically for your community, so the time frame may vary based upon the complexity of the deal structure. 

 

Once an agreement has been reached between the partners, the transaction can typically close within 30 - 90 days.  The average time frame is 60 days.

 

** Please note, Design & Engineering services will add extra time to the process.

How does a Sale/Leaseback work?

The Private Partner purchases a government-owned building from their Government Partner for "fair market value".

 

The Private Partner leases the building back to the Government Partner for a period up to 30 years.

 

***The Government Partner retains occupancy and full use of the building at all times.***

 

The Government Partner has the option of purchasing the building from the Private Partner at the end of the lease for $1.00.

Why would we sell one of our buildings and lease it back?

Foremost to Remember:  You will  Retain Occupancy and Full Use of the Facility at all times.

 

Additionally, the major benefit sited by most participants is the one–time CASH INFUSION derived from the sale of the building or facility.  - Many communities are struggling to maintain services due to reduced budgets.  This option allows you to unlock trapped equity in an asset that you currently own and utilize those funds for your immediate needs.

 

The Sale Leaseback transaction also provides a cost-effective solution for the Renovation of older facilities.   The costs associated with renovations and potential short-term relocation can all be rolled into the lease payments…..and those payments can be made over a 20 - 30 year time frame. 

What happens at the end of our lease?

Each deal is tailored specifically for your community so the terms may be different on each transaction, however, the Government Partner typically has the option of purchasing the project, facility or equipment for $1.00 at the end of the lease term.

How can we purchase equipment through a Public Private Partnership?

The Private Partner will purchase the equipment and lease it to the Government Partner for a period up to 30 years.

 

At the end of the lease term, the Government Partner has the option of purchasing the equipment for $1.00.

How do we get started?

CALL or EMAIL US to discuss your current needs.  One of our representatives will contact you to review your objectives and a solution will be tailored specifically for your community.

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