Council Project Finance Advisors

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A working group to lobby for the creation of a federal best practices center for Public Private Partnerships

A working group to lobby for the creation of a federal best practices center for Public Private Partnerships

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  • 1. Albany New York Atlanta Philadelphia Brussels San Diego 1900 K St, NW, Washington, DC 20006 Denver Tel: 202.496.7500 ·Fax: 202.496.7756 San Francisco www.mckennalong.com Los Angeles Washington, DC FOR IMMEDIATE RELEASE Contact: Michael Burbach (202) 496-7683 Former Governor Howard Dean and Former Mayor Stephen Goldsmith Launch Council of Project Finance Advisors (CPFA) Working Group, CPFA Seeks to Establish Best Practices Center on Public-Private Partnerships WASHINGTON, D.C., June 3, 2009 -- Former Governor Howard Dean and former Mayor Stephen Goldsmith announced today the launch of the Council of Project Finance Advisors (CPFA), a working group designed to provide recommendations and advocate for a center of excellence on public-private partnerships (P3). CPFA will raise the awareness of various P3 business models and connect the government (federal, state and local) and private sector with the goal of finding innovative ways to meet the P3 needs of a wide-range of sectors, including transportation, finance, energy, water/wastewater, education, environment, utilities, real estate, information technology and health care. In addition to Governor Dean and Mayor Goldsmith, the working group will team with Marcia Hale, former Director of Intergovernmental Affairs during the Clinton administration, and Frank M. Rapoport, chair of the Global Infrastructure and Public-Private Partnerships practice at McKenna Long & Aldridge LLP. It will also include engineering and construction firms, private equity and pension funds, labor unions, financial institutions and banks, trade associations, academic leaders, developers, consultants and former senior government officials. “State and local governments are faced with making difficult and costly decisions on funding their infrastructure needs, particularly in light of the current economic crisis,” said Governor Dean. “When public-private partnerships are utilized effectively, they provide the public with assets and services that would not be realized otherwise. The vision behind CPFA is to create a level playing field for both the public and private sectors.” Members of CPFA will be at the forefront of the effort to improve public trust in the P3 sector, and to identify and address public sector challenges. The council will promote sound market concepts and accountability for the public and private sectors that reduce costs and address national needs by standardizing bid practices, contracts and other project specific documentation.
  • 2. “Providing public officials with an independent source of best practices and lessons learned on public-private partnerships is essential,” said Mayor Goldsmith. “This model is relatively new in the United States, yet numerous successful case studies exist both here and abroad. We need to engage in P3s in order to rebuild our aging infrastructure and sustain our competitive advantage.” Mayor Goldsmith is now the Daniel Paul Professor of Government and the Director of the Innovations in American Government Program at Harvard's Kennedy School of Government. He has written extensively on the subject of P3s in addition to conducting more than 80 public- private competitions, which resulted in savings of more than $400 million and investment in infrastructure of more than $1 billion as mayor of Indianapolis. “There is tangible corporate value in being part of the solution rather than the problem, and the CPFA working group members will have an opportunity to assist both the public and private sectors by providing greater transparency and credibility to public private partnerships,” said Rapoport. McKenna Long & Aldridge LLP is an international law firm with 475 attorneys and public policy advisors. The firm provides business solutions in the areas of environmental regulation, international law, public policy and regulatory affairs, corporate law, government contracts, intellectual property and technology, complex litigation, real estate, energy, and finance. To learn more about the firm and its services, log on to http://www.mckennalong.com
  • 3. For further information, please contact Frank Rapoport at (202) 496-7406 Working Group Vision The American Society of Civil Engineers estimates that $2.2 trillion is needed in the United States over a five-year period to repair the nation's crumbling infrastructure. These demands will hit just as cities and states face huge budget pressures from pensions and health care and related budget strains. This presents a “perfect storm” for bringing the public and private sectors together. Public-private partnerships (P3) involving project finance and service delivery teams are needed more than ever to jumpstart our economy and rebuild our infrastructure. To address obstacles, including lack of P3 experience in the public sector, to forming P3s in the US, we are organizing a working group that will tackle barriers which have discouraged the public and private sectors from joining forces. Though there is a broad understanding of the importance of P3, the exact definition of the alliance and the approach to the business model is very sophisticated, and requires education. Governors, mayors and their supporting agencies and government employees have little or no experience with the use of private funding. As a result, the P3 approach becomes intimidating, and government officials in the U.S. tend to resist financial structures that are used in other countries to rebuild and innovate P3 transportation systems, communication networks, energy grids, education programs, etc. As other countries continue to attract private capital and expertise to utilize P3s to enhance infrastructure that supports their vital national interests and the quality of life of their citizens, the US will begin to lose its competitive advantage in a wide range of different industries and business sectors. In addition, it is easier for the financial sector to invest overseas, because our market is decentralized and inefficient, with 50 state laws and thousands of local government units presenting hurdles that have to be overcome to reach a mutually beneficial P3 program--this fragmentation leads to ineffective business models and high transaction costs, as well as lack of best practices and leveraging of resources. Attracting private investment into our infrastructure is a crucial key to our future, and the mission of the CPFA working group is to raise the awareness of various P3 business models and to identify how both groups can work together in a cost effective way, providing Americans with top quality products, services and infrastructure. The CPFA will serve as a center of excellence by connecting the government (federal, state and local) and private sectors in finding innovative ways to partner. Council advisors will provide guidelines on partnering approaches that augment traditional funding sources for improving large-scale infrastructure projects. By standardizing bid practices, contracts and other project specific documentation, the council will also promote sound
  • 4. market concepts and accountability for the public and private sectors that reduce costs and address national needs. CPFA’s Benefits The CPFA will provide consistent criteria to use in evaluating and selecting projects that are best suited for P3 business models. Furthermore, the council will develop a repository of best practice guidance and templates on financing options, operation management, teaming opportunities, and service and project identification. The benefits the CPFA will offer to the private and public sectors also include: · Provide an avenue for the private sector to reach out to public authorities for open discussions, and an ability to better foster new ideas for project flow; · Assist with feasibility studies and pilot projects; · Build more effective accountability and compliance standards over infrastructure spending; · Counsel government and industry to evaluate deliverability options, identify project opportunities and rate ROI; · Assess the level of risk that should and could be outsourced as well as help to set standards and scoring for cost assumptions and risk transfers; · Establish standard contract conditions, including tender documents and other documentation that would reduce legal fees and other costs for both the public and private sectors; · Install and maintain a document management system that would offer template guidance on, everything from RFIs, RFPs, to contracts; · Provide training and professional development services both for government and private sectors, with a focus on small businesses and job creation; and · Serve as a clearinghouse for P3 projects, helping private participants identify the appropriate public partners and projects. CPFA Structure Providing guidance for CPFA’s formation will be part of this working group’s mission, however -- at this time, we recommend that it should be an independent government entity, representing a variety of industries: transportation, finance, energy, water/wastewater, education, environment, utilities, real estate, information technology and health care. Council’s staff should include advisors -- seasoned private sector officials and executives, public sector professionals (including retired governors, mayors, academic directors/deans, etc.) -- and individuals who have experience with public private partnership projects as well as a small dedicated staff for day to day operations. Led by a chairman and senior advisors, the council will draw upon evidence-based research to provide the US President and his administration, as well as governors and mayors, with thorough project level economic analysis and methodology of structuring transactions as well as identify all the possible risks and benefits of public private partnerships. The council could be housed under several departments/agencies; the working group will need to further evaluate the pros/cons of each. As of right now, potential government affiliations include: For further information, please contact Frank Rapoport at (202) 496-7406 4
  • 5. Department of Commerce, championed by U.S. Commerce Secretary Gary Locke White House - Chief of Staff as a champion, or Vice President’s Office Department of Transportation - championed by Secretary of Transportation, Ray LaHood State Councils - under Governors’ Offices -- a CPFA office in every state, or split into regions to offer support to State and Local agencies Funding CPFA would be financed through federal budgets and programs. The working group will make recommendations on how much will be needed, and what the source of funding should be, and will provide and advocate on the Hill for funding sources. Political Outreach Options for Discussion with the Working Group White House Strategy - Outreach Targets Joseph R. Biden, Jr. - Vice President Christina Romer - Chair - Council of Economic Advisers Rahm I. Emanuel - White House Chief of Staff Congress Strategy - Outreach Targets Joe L. Barton (TX - 6th - R) Ranking Member - Energy and Commerce Jeff Bingaman (NM - D) Chairman - Energy and Natural Resources Committee; Finance Committee; Chairman - Subcommittee on Energy, Natural Resources, and Infrastructure; Health, Education, Labor, and Pensions Committee Peter DeFazio (OR - 4th - D) Transportation and Infrastructure Committee; Chairman of the Highways and Transit Subcommittee; Homeland Security Committee; Natural Resources Committee Kay Bailey Hutchison (TX - R) Ranking Member - Commerce, Science, and Transportation Committee; Committee on Appropriations; Banking, Housing, and Urban Affairs Committee; Rules and Administration Committee John L. Mica (FL - 7th - R) Ranking Member - Transportation and Infrastructure Committee; Oversight and Government Reform Committee Lisa Murkowski (AK - R) Ranking Member - Energy & Natural Resources Committee; Health, Education, Labor & Pensions Committee; Appropriations Committee Jerrold Nadler (NY - 8th - D) Transportation and Infrastructure Committee; Judiciary Committee; Chairman of the Constitution, Civil Rights, and Civil Liberties Subcommittee James L. Oberstar (MN - 8th - D) Chairman - Transportation and Infrastructure Committee Solomon P. Ortiz (TX - 27th - D) Transportation and Infrastructure Committee; Armed Services Committee; Chairman of the Readiness Subcommittee Nick J. Rahall II -(WV - 3rd - D) Chairman - Natural Resources Committee; Transportation and Infrastructure Committee John D. (Jay) Rockefeller IV (WV - D) Chairman - Commerce, Science, and Transportation Committee; Finance Committee; Veterans' Affairs Committee For further information, please contact Frank Rapoport at (202) 496-7406 5
  • 6. Bill Shuster (PA - 9th - R) Transportation and Infrastructure Committee; Ranking Member - Subcommittee on Railroads, Pipelines, and Hazardous Materials; Armed Services Committee Ellen Tauscher (CA - 10th - D) Transportation and Infrastructure Committee; Armed Services Committee Mark R. Warner (VA - D) Commerce, Science, and Transportation Committee; Banking, Housing & Urban Affairs Committee; Budget Committee; Rules & Administration Committee Henry A. Waxman (CA-30th - D) Chairman - Energy and Commerce Committee Governors - Outreach Targets Janice K. Brewer (Arizona - R) Jon S. Corzine (New Jersey - D) Charles J. "Charlie" Crist, Jr. (Florida - R) Christine "Chris" Gregoire (Washington State - D) Piyush "Bobby" Jindal (Louisiana - R) Timothy M. "Tim" Kaine (Virginia - D) David A. Paterson (New York - D) Beverly E. "Bev" Perdue (North Carolina - D) George E. "Sonny" Perdue III (Georgia - R) James R. "Rick" Perry (Texas - R) Patrick J. Quinn III (Illinois - D) William B. "Bill" Richardson III (New Mexico - D) Arnold A. Schwarzenegger (California - R) US Department of Commerce Gary Locke - Secretary - we can also work with his office and through the Economic Development Regional Offices to place a CPFA Advisor in each region. · Work with Economic Development Administration and their regional offices: · Atlanta Regional Office - (Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee) - H. Philip Paradice, Jr, Regional Director · Denver Regional Office - (Colorado, Iowa, Kansas, Missouri, Montana, North Dakota, Nebraska, South Dakota, Utah, Wyoming) - Robert E. Olson, Regional Director · Austin Regional Office - (Arkansas, Louisiana, New Mexico, Oklahoma, Texas) - Pedro R. Garza, Regional Director · Philadelphia Regional Office - (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Puerto Rico, Virgin Islands) - Willie C. Taylor, Regional Director · Chicago Regional Office - (Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin) - C. Robert Sawyer, Regional Director For further information, please contact Frank Rapoport at (202) 496-7406 6
  • 7. · Seattle Regional Office - (Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Washington, American Samoa, Northern Mariana Islands, Guam, Federated States of Micronesia, Rep. of Marshall Islands, Rep. of Palau) - A. Leonard Smith, Regional Director Government, Business and Trade Groups · National Governors Association · Democratic Governors Association · Republican Governors Association · U.S. Conference of Mayors · National Conference of State Legislatures · Building America’s Future Coalition · National Council on Public Private Partnerships · US Chamber of Commerce · Several labor unions and think-tanks, working group will identify Working Group Member Benefits There is tangible corporate value in being part of the solution rather than the problem. CPFA working group members will have an opportunity to assist both public and private sectors by providing greater transparency and credibility to public private partnerships. Group members will be at the forefront of the effort to improve public trust in the P3 sector, and to identify and address public sector challenges. Members will develop, manage and drive an effective legal and public policy strategy that will support the business strategy of this complex sector that spans various industries. Members who are invited to participate in this effort will consist of top executives from various industries and from different sides of P3 deals and projects. The goal is to organize a diverse group of individuals who would participate in this very important effort. CPFA’s working group will be exclusively funded by members, and organized and managed by McKenna Long & Aldridge LLP (MLA). MLA will organize and coordinate the group’s activities, as well as lead the advocacy/education efforts that the group decides on. This effort will provide members with a focused and knowledgeable forum for effectively driving legal and public policy solutions to the P3 dilemma through forming CPFA. Members will unite to offer an informed, experienced, organized and effective voice to policy makers, the press, and other influencers on the complex and challenging questions facing the P3 sector. In addition, members will receive the following benefits: · Participate in developing a proactive strategy to drive the organization and future of the CPFA; · Participate in focused and outcome-driven CPFA discussions between industry and government policy makers; · Receive vital updates on pending legislation, rules, regulations and other developments through timely alerts and publications; · Opportunity to participate in developing an organized and effective industry advocacy strategy and a cohesive “voice” for the P3 industry; For further information, please contact Frank Rapoport at (202) 496-7406 7
  • 8. · Contribute to improving communication with governments, and expanding government use of P3s in a manner that promotes, rather than hinders, adoption of the business/financing model; and · Contribute to the formation and development of the center of excellence, including its document library, best practices and case studies. Members will make the final decisions about priorities, direction, and positions of the effort and will be responsible for the organizational structure of the council. CPFA Working Group Advisors Governor Howard Dean, former Chairman of the US Democratic National Committee (DNC), presidential candidate and six term Governor of Vermont is a Senior Strategic Advisor and Independent Consultant to the working group. Respected for his fiscally moderate policies as Governor, Governor Dean understands first-hand the severe budget constraints that are challenging state and municipal governments. With an extensive set of contacts nationally, Governor Dean is uniquely positioned to develop partnerships between industry stakeholders and local governments. Mayor Stephen Goldsmith who served two terms as mayor of Indianapolis, where he earned a reputation as one of the country's leaders in public-private partnerships, competition, and privatization, is a Senior Strategic Advisor and Independent Consultant to the working group. As mayor he conducted more than eighty public-private competitions, which resulted in savings of more than $400 million, investment in infrastructure of more than $1 billion, and a transformation of downtown Indianapolis that has been singled out as a national model. The Wall Street Journal has called Mayor Goldsmith a "pioneering privatizer of city services." Additionally, Mayor Goldsmith serves as the Daniel Paul Professor of Government and the Director of the Innovations in American Government Program at Harvard's Kennedy School of Government and has authored Governing by Network: the New Shape of the Public Sector; Putting Faith in Neighborhoods: Making Cities Work through Grassroots Citizenship; and The Twenty-First Century City: Resurrecting Urban America. He is also the Chair of the Corporation for National and Community Service. Marcia Hale is the Political Strategic Advisor to the working group. An experienced public policy strategist with an extensive career in the public and private sectors, Ms. Hale focuses her work on providing strategic guidance to companies on federal and state issues. Previously, she served in various public affairs positions with the Monsanto Corporation including Director of Public Affairs, U.K. and Director of State Government Affairs, directing Monsanto’s efforts with state and local governments. During the Clinton administration, Ms. Hale served as Assistant to the President and Director of Intergovernmental Affairs at the White House, a position she held for four years. Frank M. Rapoport is a Senior Advisor to the working group. Mr. Rapoport is a Partner at McKenna Long & Aldridge LLP, and the Chair of the firm’s Global Infrastructure and For further information, please contact Frank Rapoport at (202) 496-7406 8
  • 9. Public-Private Partnerships practice. He is widely regarded for his ability to strategize and implement profitable business initiatives for clients in the transportation, real estate development, construction, design and engineering, defense and aerospace, security, life sciences, healthcare and IT, and government services industries. His team at McKenna Long & Aldridge includes specialists in international government contracting and government affairs (at all levels), and seasoned business and economic advisors with years of transportation, infrastructure and privatization experiences, both domestic and internationally. Mr. Rapoport recently advised a real estate developer from project inception to achieve a $2B inventory in the military housing privatization initiative. Mr. Rapoport’s business acumen is sharpened by his many years of “big ticket” litigation, in which he represented contractors in all phases of large government-funded infrastructure projects. Alina Gorokhovsky, working group Director, is Chief Strategy Officer at McKenna Long & Aldridge LLP. Ms. Gorokhovsky has over 20 years of experience in international business and public policy, working extensively with governments and the corporate sector in a wide range of practice areas, including: public-private partnerships, energy, biodefense, risk management, government contracts, and government relations. She has helped clients strategize and implement public-private partnership initiatives in transportation, life sciences, construction, design and engineering, defense, technology and government services. Charles Spies is a Government Affairs Advisor to the working group. As Chief Financial Officer and Counsel for Governor Mitt Romney’s Presidential campaign, Mr. Spies developed and managed the campaign’s $105 million budget as well as systems for the campaign's legal compliance with Federal Election Commission, IRS and various state regulations, as well as record-keeping and accounting. During the 2005 and 2006 election cycles, Mr. Spies served as General Counsel and Chief Financial Officer for the Republican Governors Association. His tenure at the RNC began with the Bush- Cheney administration in 2001, and continued under four Chairmen. For further information, please contact Frank Rapoport at (202) 496-7406 9