Purple Line Public-Private Partnership (P3)

January 27, 2014

Partnership = Shared Risk/Reward

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Outsourcing P3 Privatization

Asset ownership Public ownership Public ownership Transfer of asset ownership

Public sector responsibility

Public sector remains responsible for provision of asset and services

Set policy, service levels, and rates Regulation

Level of service Public responsibility Mechanism for shared service decisions

Authorities withdraw from service decisions

Risk/Reward No transfer Shared All transferred

Mode Service contract Partnership Self-interest

North American P3 Projects

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Puerto Rico

Ontario

Québec

British Columbia

Rev. AP

Toll Roads/Highways

Airports

Parking

Transit

Ports & Marine

North American P3 Projects Toll Roads/ Highways AL Foley Beach Expressway, Brownfield Concession/Toll CA Presidio Parkway, DBFOM/Availability I-10 / I-110 Express Lanes, DBOM SR 125, DBFOM/Toll SR 91 Express Lanes, DBFOM/Toll CO Jefferson Parkway, DBFOM/Toll Northwest Parkway, Brownfield Concession/Toll FL Port of Miami Tunnel, DBFOM/Availability I-4 Connector, DBF I-595 Corridor Roadway Improvements,

DBFOM/Availability Alligator Alley, Brownfield Concession/Toll Poinciana Parkway, DBFOM / Toll IN Indiana Toll Road, Brownfield Concession/Toll Ohio River Bridges - East End Crossing,

DBFOM/Availability US 31 MS Jackson Airport Parkway, DBFOM/Toll NY Goethals Bridge Replacement, DBFM/Availability NC I-77 HOT Lane Conversion, DBFOM/Toll Mid-Currituck Bridge, DBFOM/Toll TX H 121, DBFOM /Toll DFW Connector, DBM Dallas Horseshoe Project (I-30/I-35E bridges), DBM VA Dulles Greenway, Brownfield Concession/Toll Midtown Tunnel/Elizabeth River Crossing, DBFOM/Toll I-495 Capital Beltway HOT Lanes, DBFOM/Toll I-95 Express Lanes, DBFOM/Toll QC Autoroute 25 (Québec), Toll road DBFOM / Availability QC Autoroute 30 (Québec), Toll Road DBFOM / Availability ON Highway 407 ETR Extension (Ontario), Brownfield

Concession/Toll PR PR-22 and PR-5, Brownfield Concession/Toll

Airports ON Billy Bishop Toronto City Airport (Ontario), DBFM PR Luis Munoz Marin International Airport, Brownfield

Concession Ports & Marine NJ Maher Terminals (BC-CAN and NJ-USA) CA Port of Oakland Outer Harbor Concession MD Seagirt Marine Terminal NY OTPP/Global Container Terminals Inc. (British Columbia

and NY/NJ) VA Port of Virginia Parking OH Ohio State University, Brownfield Concession Transit CO Denver RTD Eagle, DBFOM/Availability MD MTA Purple Line, DBFOM/Availability NC Red Line Commuter Rail NJ Hudson-Bergen Light Rail Transit NY Port Authority of New York and New Jersey JFK AirTrain,

DBOM WA Sound Transit Operation and Maintenance Facilities BC Canada Line (British Columbia), DBFO/ Availability ON Waterloo Light Rail Transit (Ontario), DBFOM/ Availability ON Confederation Line (Ontario), DBFM/ Availability ON Eglinton Crosstown & Scarborough Lines (Ontario),

DBFM/TBD

4 *Availability Payment Procurements

Issue Presolicitation Report on August 5, 2013

Complete P3 screening process and analyses in July 2013

MDOT P3 Regulations in July 2013

Industry Forum on May 15, 2013

RFI responses received May 8, 2013

Release of Request for Information (RFI) to the P3 market in April 2013

Conduct series of internal project delivery workshops in winter 2012/2013

Develop Value for Money analysis in late 2012

Preliminary analyses and industry outreach during 2011- 2012

Determining P3 Potential for the Purple Line

Key Reasons for Using a P3 • Operational factors

– The Purple Line is a natural stand-alone asset and the P3 approach will also increase the likelihood of consistently excellent, highly responsive service.

• Risk transfer efficiencies – P3 will integrate various project elements into a single agreement that clearly outlines the

optimal allocation of project risk between the public and private partners. • Whole life-cycle planning and cost optimization

– P3 will provide greater incentive to make investment decisions that are optimized over the life of the asset.

• Schedule discipline – P3 agreement structure focused on asset availability will provide strong incentives for the

concessionaire to maintain schedule discipline during asset delivery. • Enhanced opportunities for innovation

– P3 will provide the private sector with opportunities and incentives to propose enhancements to the asset design and delivery approach that could benefit long-term operating and maintenance performance.

• Potential financial value – Due to the operational benefits, risk transfer efficiencies, life-cycle planning, scheduling

discipline, and innovation opportunities of the P3 approach, there is potential for long-term financial savings relative to a traditional project delivery approach.

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Builder

Purple Line Concessionaire

Operator

MDOT/MTA

Creditors Equity Investors

Debt Equity

Funding •State funds •Federal grants •Local contributions

Payments •Milestone •Availability Payments

P3 Agreement

Concession Structure

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P3 Capital Funding Sources

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Milestone / Construction Progress Payments to

Concessionaire

Concessionaire Borrowed Funds

Concessionaire Equity

State-Retained Responsibilities

Private Funding (e.g., TIFIA Loan,

Private Activity Bonds)

Public Funding (e.g., FTA New Starts,

State Funds, Local Funds)

Not to Scale

P3 Availability Payments (APs) • APs are performance payments based on the

concessionaire meeting established performance requirements

• AP amount is tied to the concessionaire’s performance

– MDOT/MTA has the right to not pay or make deductions if the concessionaire doesn’t perform as agreed

• Payments cover O&M; rehabilitation & replacement; and repayment of private borrowed funds

• Average annual APs for the Purple Line expected to be in the range of $100 million - $200 million, but this will be subject to change based on final agreement terms, risk allocation, financial structure, and market conditions

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Rehabilitation & Replacement

Operations and Maintenance

(O&M)

AP Components

Not to Scale

State-Retained Responsibilities

Repayment of Private Borrowed Funds

Selected Draft P3 Agreement Key Terms*

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P3 Agreement Agreement will be a set of integrated contract documents that will include, at a minimum, a concession agreement setting forth legal and business terms under which the concessionaire will design, construct, supply light rail vehicles, finance, operate, maintain, rehabilitate the facility, as well as technical provisions that include the project scope, design-build, operations, maintenance, rehabilitation, and other related requirements. The concessionaire will not have a leasehold or other real property interest in the project.

Term

Term of the P3 Agreement will be 35 years, assuming 5 years of construction and 30 years of operating and maintenance responsibility.

Federal Requirements

Concessionaire will be required to comply with applicable federal laws and other requirements.

Indemnity Concessionaire will indemnify, defend, protect and hold harmless MDOT/MTA against certain claims or losses resulting from the concessionaire’s responsibilities and liabilities under the P3 Agreement.

Third Party Commitments

Agreement will specify the responsibilities of the concessionaire for implementation of commitments to third-parties as part of the project.

Financing Concessionaire will be responsible for financing a part of the project, and a comprehensive description of the financing plan will be incorporated into the P3 Agreement.

Taxes Concessionaire will be responsible for payment of all applicable taxes and assumes the risk of future changes in tax laws.

Fare Policy MDOT/MTA will retain responsibility for fare policy.

Renewal Work and Handback Requirements

Concessionaire will be required to maintain and rehabilitate the facility so that, at the end of the term, it will be handed back to the MDOT/MTA in an acceptable condition with defined remaining useful life parameters, as specified in the agreement. MDOT/MTA and the concessionaire will begin five years prior to the end of the Term to identify the schedule for completion of such work.

*Subject to future development of the P3 Agreement and negotiations.

Evaluation Structure

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Key Solicitation Milestones

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Request for Qualifications Issued November 2013

Statements of Qualifications Submitted by Proposers December 2013

Shortlist of Qualified Proposers Determined January 2014

Draft Request for Proposals Issued to Shortlisted Proposers January 2014

Federal Funding Recommendation March 2014

Review Meetings with Shortlisted Proposers Spring 2014

Final Request for Proposals Issued to Shortlisted Proposers Summer 2014

Final Proposals Due Fall 2014

Selected Proposer Announced and P3 Agreement Finalized Winter 2014-2015

Final P3 Agreement Submitted to Comptroller, Treasurer, Budget Committees, DLS Winter 2014-2015

Final P3 Agreement Recommended to BPW Winter 2014-2015

Financial Close Spring 2015