Virginia Identifies Varied P3 Opportunities
DALLAS -- Virginia's Office of Public-Private Partnerships has identified seven potential projects that could be candidates for financing as P3s and eight conceptual projects that could be advanced as P3s once the scope of each has been established.
The seven viable projects in the draft 2015 Virginia P3 Project Pipeline Report are all transportation related, but the conceptual concepts include availability payments and crowdsource financing that could be used for a variety of projects, said J. Douglas Koelemay, executive director of the state agency.
The report, which is updated every 18 to 24 months, is part of the state's effort to have a number of projects progressing through the process of review, assessment, and resolution, Koelemay said. It includes completed P3 projects as well as current work and ones still on the horizon.
"We are trying to build up the commonwealth's P3 program and hope to have multiple projects in various stages," he said. "Hopefully this is a signal to the market and sparks some interest by partners."
The seven projects identified as potential P3 candidates include two road projects in the Hampton Roads area, a proposal to replace the 36,000 lights along interstate highways with energy-efficient LEDs, and advertising on state-owned buildings, vehicles, and facilities.
Projects currently under consideration as P3s include the installation of fiber-optic cables and cellphone towers in state highway right-of-way.
Proposals that are no longer being considered for P3 financing include tolls on existing lanes of Interstate 95 and a high-speed ferry operation on the Potomac River between the District of Columbia and Alexandria, Va.
The final report will be published in late December after a period of public review.
The agency was created in 2010 as the Office of Transportation Public-Private Partnerships as a separate group within the state transportation department to administer Virginia's transportation P3 law enacted in 1995. It now operates as the Office of Public-Private Partnerships or VAP3.
"We quietly dropped 'Transportation' to show that we can be a resource to other state agencies and even metropolitan and regional planning groups," Koelemay said. "The same analytical steps we take with a transportation P3 project would be suitable for other sorts of efforts."
The report recommends that the state investigate the use of multiyear availability payments to make a P3 more attractive to a private partner than would a split of toll or other operational revenue.
"Right now there are a number of state laws that don't allow availability payments," Koelemay said.
"We have to pay a contractor in within 12 months of a project's completion, and that doesn't work well with the availability payment model," he said.
The state is investigating whether a pledge of P3 availability payments over several decades would be considered as long-term, state-supported debt, he said.
A crowdsourcing system will also be studied that would allow smaller partners such as community banks or pension funds to participate in the financing of a P3 project, Koelemay said.
"Maybe a blended financial plan could help lower the cost of equity," he said. "Crowdsourcing and availability payments could be opportunities in the future."