2. WHAT ARE WE GOING TO DISCUSS?
• Some history of P3s in Arizona
• Current shifting landscape
• Potential future of P3s in Arizona
P3s
3. A BRIEF HISTORICAL LOOK
• Although the 202 Connect project
has garnered a lot of attention, it
is not the first Public/Private
Partnership in Arizona
• A project may be a P3 even if it is
not formally titled a “P3” or even
doesn’t require private financing
4. WHAT IS A P3?
• A Public-Private Partnership is a
contractual agreement between a
public agency (federal, state or local)
and a private sector entity.
• Through this agreement, the skills
and assets of each sector 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
potential risks and rewards in the
delivery of the service and/or
facility.
o Source: www.ncppp.org
Public Sector
Private Sector
Partnership
5. RANGE OF DELIVERY MODELS
The Scale of Public-Private Partnerships:
Risk Transfer & Private Sector Involvement
Privatization
DegreeofPrivateSectorRisk
Design-Build-Finance-Maintain-Operate (Full Concession)
Design-Build-Finance-Maintain-Operate (Availability Payment)
Design-Build-Finance-Maintain
Design-Build-Operate-Maintain
Design-Build-Finance
PDA
PPPModels
Design Build
Design-Build
Degree of Private Sector Involvement
6. CENTRAL ARIZONA PROJECT
• In 1946, the Central Arizona Project Association was formed to
educate Arizonans about the need for CAP and to lobby
Congress.
• It took approximately 22 years to accomplish this, when in
1968 President Johnson approved construction of the CAP.
• The Central Arizona Water Conservation District was created
to manage the CAP and as a means to repay the reimbursable
costs of construction.
7. GM DESERT PROVING GROUND
o Structured as an enhanced use lease
o Joint venture with the US Army and
GM
o GM provided the facilities
o Army provided the land
o Win/win as now both have a 2,400
acre hot weather test complex that
neither could have built on their own
8. CRESCENT MOON
• Crescent Moon/Red Rock
Crossing Recreation Area in
Sedona, AZ
o RRM has operated this area since 1994
under a private maintenance and
operations agreement with the US
Forest Service
o Study conducted in 2011 compared
RRM’s operations of the Recreation Area
with nearby Arizona State Park
o Crescent Moon returns $45,000 a year
to the US Forest Service while state park
costs Arizona $234,000 a year
9. LAKE PLEASANT WATER TREATMENT
PLANT
• Water Treatment Facility – Built with a capacity of 80 million gallons per
day (mgd), but expandable up to 320 mgd
• Built as a Design-Build-Operate
• At the time was the largest Design-Build-Operate in North America
• Project began two months ahead of schedule, saving the City of Phoenix
approximately $30 million
• Project was completed with zero lost-time accidents
10. CURRENT SHIFTING LANDSCAPE IN
ARIZONA
• Although P3s have been used in Arizona over the years,
they have not been capitalized on here as much as they
have in other states or globally.
• Why is that?:
o A lack of clear enabling legislation?
o A lack of understanding on the public/private sector side?
o Access to affordable financing options?
o A lack of need for this delivery method?
• It is unclear why, but it is clear that there is a growing
interest in Arizona.
11. LEGISLATION
• Significant changes in public procurement laws in
the 2000 session have allowed for government
agencies to utilize alternative project delivery
methods.
• The passage of clear enabling legislation in 2009
for ADOT to use P3s has resulted in ADOT
exploring them for a number of opportunities.
• Depending on the size of potential P3, additional P3
legislation is required to encourage P3 use in
Arizona.
12. UNDERSTANDING
• Until the past couple of years, there have been pockets of
discussion on P3s, but no clear groundswell.
• Recently a P3 Stakeholder group was formed with members
of the public and private sector to discuss potential projects
to use P3s, enabling legislation and other P3 issues
• In the past four months, there have been two meetings
hosted by the Arizona Commerce Authority, in conjunction
with leaders from Canada to discuss growth and use of P3s
in Arizona.
o These meetings have drawn out between 70 and 100 attendees each meeting
o Leaders from contracting companies and governmental leaders at all levels
• Personal experience – an increased level of consults
13. NEED
• To utilize a P3, there needs to be an infrastructure
need.
• Estimated costs of Arizona infrastructure needs in
the areas of transportation, telecommunications
water and wastewater, and energy are at least $417
billion over the next 25 years.
• Arizona’s political landscape makes it very unlikely
for the government to raise that money on its own.
14. POTENTIAL P3S IN ARIZONA
• ADOT related:
o Freeway lighting upgrade
• Replace all high pressure sodium lights in Phoenix Maintenance District
including lights in the Deck Park Tunnel
• Plan, design, supply, operate and maintain
15. POTENTIAL P3S IN ARIZONA
• ADOT related:
o I-11 corridor
• The concept of an access controlled, high-capacity transportation facility
connecting Phoenix and Las Vegas
16. CONCLUSIONS
• P3s are not simply about financing, but
rather providing a performance guaranty
to public sector partners
• Staying aware of the growing interest in
P3s may result in you being competitive in
some fantastic business opportunities.
