Jose Ometeotl, Willdan Financial
Transcription
Jose Ometeotl, Willdan Financial
Nontraditional Development Finance and the Rise of Public Private Partnerships November 16, 2015 1 Objectives ● Nontraditional Development Finance ❖New Markets Tax Credit ❖Public Private Partnerships ❖Social Impact Bonds How NMTC program works A world of acronyms ● LIC “Low Income Communities” ● QALICB “Qualified Active Low Income Community Business” ● CDE “Community Development Entity” ● CDFI Fund “Community Development Financial Institution” Fund of the US Department of Treasury ● QEI “Qualified Equity Investment” ● QLICI “Qualified Low Income Community Investment” How the NMTC Works ● Credits are earned on a “Qualified Equity Investment” (QEI) in a “Community Development Entity” (CDE) which subsequently uses substantially all of the QEI proceeds to make “Qualified Low-Income Community Investments” (QLICIs) in “qualified Active Low-Income Community Businesses” (QALICBs) located in Low-Income Communities (LICs) ● Everybody got that? CHS ELEVATOR PROJECT FINANCIAL FORECAST ENTITY FLOW CHART AT CLOSE Bridge Loan (CHS Parcels) FCEDA/ City Cash CHS Cash $3,000,000 $4,859,000 $1,500,000 Loan Loan Equity $4,641,000 NMTC Equity Loan 100.00% Member NMTC Investor Interest Rate $9,359,000 1.0000% TBD Investment Fund, LLC $5,460,000NMTC $ 14,000,000 QEI FCEDA 99.99% Member $1,000Equity 0.01%Member Interest Rate CDE TBD, LLC Loan A 1.0000% Loan B 1.0000% Total Amount 9,359,000 4,641,000 $14,000,000 $146,000 Capitalization Acquisition Cost Construction Costs CDE Fees Closing Costs Reserves Total 12,500,000 1,050,000 486,000 110,000 $14,146,000 $0 Glacier Rail Park LLC - QALICB CHS Kalispell - Tenant Lease and Lease Payments 146,000 17 Role of a QALCIB ❖ Making interest payments ❖ Monitoring tenant obligations ❖ Collecting rent from tenant ❖ Maintaining accurate books and records ❖ Conducting annual audit ❖ Submitting compliance documents to Investor and CDE Issues ● Getting comfortable with the collateral ● Complicated deal structure ● Seven-year lockout ● Potential for recapture Public Private Partnerships (PPP) ● Public private partnerships (PPPs) are agreements between government and the private sector for the purpose of providing public infrastructure, community facilities and related services. ● The private sector enter into a contract with government for the design, delivery, and operation of the facility or infrastructure and the services provided. ● The private sector finance the capital investment and recover the investment over the course of the contract. ● The asset transfers back to the public sector at the end of the contract Public Private Partnerships (PPP) Output based specification Long-term contractual arrangements Value for money Transfer of risk Market competition Whole life costing • Contracting Authority defines the service required • Design of the works to deliver that service lies with the private sector •The contract can be for 25/30 years plus • Cost measured against conventional procurement. • Whole life costs and quality are combined to gauge FMV • Transfer of design and construction risk • Risk of ownership transferred to the private sector • Competition will drive best value • Gives public sector access to innovation • Long term responsibility for building operation and maintenance • Focus on reducing cost Why use PPP? What makes a successful PPP? ● Political will ● Government commitment ● PPP Champion ● Clear output specification ● Appropriate risk sharing ● Value for money ● Performance management What are Social Impact Bonds? ● Social impact bonds are a subset of payment by results ● They provide upfront investment to finance working capital or development projects Why might you want to do this? ● All the advantages of payment by results ● New up-front money available for projects/programs Social Impact Bonds Thank You! Jose Ometeotl Willdan Financial Services (o) 951.587.3552 (c) 951.219.3022 (e) [email protected]