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Listen to Webinar
IPD Academy Web-Based Course
Presented by
Jennifer Ahlin
Public-Private Partnership Program Manager
Office of Innovative Program Delivery
FHWA
Slide 1 - Introduction to Public-Private Partnerships (P3s)
Slide 2 - Course Outline
Slide 3 - Course Objectives
Slide 4 - OIPD- Role in Transportation P3s
Lesson 1: Definitions
Slide 6 - Did You Know?
Slide 7 - What is a P3?
Slide 8 - Project Procurement and Delivery
Slide 9 - P3's Are Not...
Slide 10 - Definitions- Terminology
Slide 11 - Definitions- Terminology
Slide 12 - Definitions- Terminology
Slide 13 - Why P3s Now?
Slide 14 - Why Undertake a Project as a P3?
Slide 15 - Questions
Lesson 2: Benefits and Challenges
Slide 17 - P3 Benefits to Public Sector
Slide 18 - P3 Benefits to Public Sector
Slide 19 - P3 Benefits to Public Sector
Slide 20 - Challenges of Using P3s
Slide 21 - Challenges of Using P3s
Slide 22 - Summary: Key Questions for Considering a P3 Approach
Slide 23 - Questions
Lesson 3: Examples and Types of P3s
Slide 25 - Types of P3s
Slide 26 - Risks Associated with P3s
Slide 27 - Greenfield (New Build) Facilities: Build, Own, Operate, Transfer
Slide 28 - Brownfield (Existing Facilities): Build, Own, Operate, Transfer
Slide 29 - Hybrid: Operate-Maintain-Develop
Slide 30 - Questions
Lesson 4: Financing Tools
Slide 32 - USDOT Financing Tools Supporting P3s
Slide 33 - I-595 Corridor Roadway Improvements
Slide 34 - I-595 Corridor Roadway Improvements
Slide 35 - I-595 - Project Financing
Slide 36 - Route 495 HOT Lanes in Virginia Project (Capital Beltway HOT Lanes)
Slide 37 - Route 495 - Project Financing
Slide 38 - Questions
Course Summary
Slide 40 - Questions
Slide 41 - For More Information
Slide 42 - Upcoming IPD Academy Webinars
Slide 43 - Contact Information
Slide 44 - Questions
Michael Kay - On behalf of the Federal Highway Administration's Office of Innovative Program Delivery, I'd like to welcome everyone in today's IPD Academy webinar, Introduction to Public-Private Partnerships or P3s. My name is Michael Kay, I'm with the U.S. DOT Volpe Center in Cambridge, Massachusetts, and I will be moderating today's webinar along with my colleague, Michael Clark, as well as facilitating our question-and-answer periods and helping to address any technical problems.
Our presenter for today is Jennifer Ahlin. Jennifer works in the Office of Innovative Program Delivery as a public-private partnership program manager as well as managing the tolling and pricing activities. She started with FHWA back in January. Before working with FHWA, she was with the Virginia DOT for over six years and managed a group which oversaw the financing of VDOT's P3 projects. Her team administered the financing of the P3 projects, from the development of the project, to the procurement stage as well as negotiating the deal, and finally the ongoing monitoring of the project cash flows and financial performance such as annual review of financial models.
Before we begin, I would like to just point out a couple of key features of our webinar room. First, in the top left corner you will find the audio call-in information in case you should get disconnected. Below that is the list of attendees where you can see who else is participating. On the bottom left is a chat box that you can use to submit questions to Jennifer throughout the webinar. You may also ask questions to Jennifer by pressing *1 on your telephone. A little bit later we'll get more clarification from Katherine regarding telephone questions. If you are having any technical difficulties please use the chat box to send a private chat message to myself, Michael Kay.
Our webinar will run until roughly 3:00 Eastern time today. The course is divided into five sections. We will cue any questions for Jennifer at the end of each section, and we also anticipate having about 15 minutes at the end of the course for additional Q&A. I want to mention there are many people who are unable to take part in today's webinar and therefore we are recording the session so they can listen at a later date. Before turning the webinar over to Jennifer, we have three quick poll questions we would like to pose to you.
The first is to get a sense of your affiliation, whether you're with a Federal Highway division office, Federal Highway outside of a division office, other federal DOT, other federal agency, state agency, MPO, or other. We will leave that up for another 10 or 15 seconds or so.
And we will broadcast those results and close that out. Thank you for your participation. The second poll question is just to help us gauge how many people are actually participating today, whether you are alone, or whether you are participating in a group. And we will leave that up for another 10 seconds or so. It seems like we have a pretty strong response rate. And I will go ahead and close that out. Thank you very much.
Finally, we have a question simply inquiring about your level of knowledge with public-private partnerships. This will help Jennifer to tailor her comments accordingly. We are curious to know whether you have no prior knowledge, a basic understanding, some knowledge, a lot of direct knowledge, or whether you're already an expert and just want a refresher course.
We will leave that up for another 10 seconds as well. Thank you very much for your responses. I will go ahead and close that out now. And with that, I would like to turn the webinar over to Jennifer, who describe the course objectives and outline and will begin the first section of the course on definitions. Jennifer, the floor is all yours.
Jennifer Ahlin - Thank you, Michael. Good afternoon everyone. As Michael mentioned my name is Jennifer Ahlin and I'm excited to be here with you. Let's go ahead and get started.
The presentation is broken down in four separate lessons. In lesson one, we will be discussing the definition of Public-Private Partnerships or P3s as well as common terminology used. In lesson two, we will go over the benefits of P3s, what challenges you may face, and how to mitigate the challenges. Lesson three, we will be exploring the different types of P3, as well as examples. Finally in lesson four, we will discuss the financing tools utilized in P3 projects by demonstrating the use in current projects.
As Michael mentioned, at the end of each lesson, we will stop for any questions.
The course objectives are to first learn about P3s and how they can be used as a tool in delivering highway projects. I will explain some of the benefits and challenges of using P3s, along with explaining ways to mitigate some of the challenges. We will review several projects and how the P3 delivery strategy was used. Finally, we will discuss innovative strategies that have worked in conjunction with P3s.
What is the Office of Innovative Program Delivery's role in P3s? Our role is to provide our FHWA division office's with technical assistance, educational opportunities, and from time to time facilitate necessary resources.
In technical assistance, we hope to offer our FHWA division office's a knowledge base to support their endeavors with their state DOT partners which includes any questions or issues concerning P3s and innovative strategies. We want to help equip States to decide what is reasonable and achievable.
In our educational efforts, we hope by providing webinars, workshops, and other tools such as our website to our division offices, it will help promote capacity building in an effort to expand state and local government knowledge on how to implement alternative strategies for funding and financing transportation infrastructure. We encourage feedback from our division office partners on their resource needs, such as best practices and lessons learned.
As requested by our division office and state DOT partners, our office will facilitate the necessary resources to assist in the P3 project delivery process.
We are here as a resource for you and want to assist you through the process of delivering these challenging and exciting projects.
In this lesson, I will go over what is a P3 procurement and delivery along with common terms used.
To give you a little history, the role of the private sector in public transportation dates back to the beginning of road construction in the United States. Many of the earliest major roadways in the U.S. were private toll roads. In early years, the importance of highways for westward expansion and trade was recognized and an era of road building began. This period was marked by the development of private turnpike companies to construct essential highways that would be operated as toll roads.
So what is a P3? As simply stated in the above slide, it is a contractual agreement between a public agency and a private entity that allows for greater private participation in the delivery and financing of projects. What does this mean exactly? Based on the definition, what is the difference between the traditional delivery and a P3? Let's take a look at the traditional delivery approach versus a P3.
The public sector has used design-bid-build and pay-as-you-go financing as the traditional method of delivering projects in the U.S. With this method, the public sector takes the time to accrue the funding necessary to pay for the different stages of the project. The design-bid-build method is lengthy and costly. Accruing funds for a public sector project can take years. The increased cost of materials and labor, inflation, additional maintenance needs of existing infrastructure, and decline in gas tax receipts can add to the length as well.
Due to congestion, aging infrastructure and constrained budgets, P3s have been used as an alternative to the design-bid-build approach. As stated previously, in a P3, the public sector is allowed to partner with the private sector to develop a project. Both the public sector and the private sector retain the risk best suited for them. The public sector is able to enhance public mobility while the private sector receives a return on their investment.
The key element of a P3 contractual agreement that distinguishes it from a traditional delivery arrangement is the transfer of risk from the public sector to the private sector. In a traditional approach, the public sector is burdened with all of the risks; however, the advantage of a P3 is the ability to structure a contract that optimizes the risk allocation. Each party can assume the risk to which it is most suited, such as the public sector will take the risk of environmental approvals, while the private sector takes on risks such as construction delays and revenue risk.
Unlike a design-bid-build where there are multiple phases to a project, the P3 streamlines the delivery process and allows for design work, acquisition of right-of-way, and construction activities to run concurrently.
Under the traditional approach, the public sector may have to accrue the funds for years before a project can be delivered. In certain P3s, the private sector will finance the project with upfront funding and in turn accelerate project delivery. Also, when the private sector finances a P3 project, it allows the public sector to reallocate their funding resources on the P3 project to other priority projects. Again, the private sector in turn for financing the project will expect a return on their investment.
In a design-bid-build, the normal practice is to choose the lowest bidder. In a P3 procurement, the public sector is able to partner with a private partner that has experience working on large complex projects and may bring innovative approaches to the design, finance, or building of the project. The private sector partner may not necessarily be the lowest bidder.
If the private sector partner is required to operate and maintain a facility, a P3 project will normally have certain performance standards that will require the private partner to maintain the facility at a similar standard if not a higher standard than facilities maintained by the public sector. While the public sector may defer their maintenance activities until later, the private sector will have to follow the standards stated in the P3 agreement or be penalized.
The private sector can bring business discipline to a project and create efficiencies that the public sector is not necessarily structured to handle, such as the ability to be flexible and innovative. Some actions on the public sector side may require legislation.
We will discuss types of P3s later in the presentation; however, for our purposes here and for simplicity we consider a design-build project to be a P3 procurement. In a design-build project, the private sector is taking on the risk of project cost increases and schedule overruns.
Innovative Program Delivery's focus is on those P3s where the private sector has taken on the financing risks.
Now that we have discussed what P3s are, let's be clear about what P3s are not. P3s are not the easy answer or easy money. The transactions are quite complex. The projects are not cookie cutter projects and different projects in the same state may need to be handled differently. P3s are not privatization of public infrastructure. P3s are not the solution for every issue. As stated previously, P3s are another project delivery approach available to the public sector.
I will now give an overview of some of the common terminology that is used when discussing P3s. The first one is concession, which is a contract or agreement granting a private entity, or a concessionaire, the right to operate a highway facility for a specified period of time. The agreed to concession periods in the U.S. have varied with the longest set at 99 years.
The next term is Special Purpose Vehicle, SPV, or Special Purpose Entity, SPE. This is a legal entity created to fulfill narrow specified tasks and isolates the financial risks of the parent company or companies. In the P3 arena, the entity is usually created as the concessionaire or private sector partner that usually has the ultimate responsibility to design, build, finance, operate, and/or maintain the facility for the public sector partner. The SPV may have one parent company or multiple parent companies.
Another term you may hear is leveraging, which means the degree to which funding is borrowed or the amount of debt versus cash. So, if a project is leveraged at 70/30 it means 70% of the funding is debt and 30% is equity or cash equivalent.
Another term, debt, is a loan or a bond issuance in which an entity is required to pay principal and interest over time.
Equity is the private capital invested in the project which represents an ownership interest in the project. The owner or the investor is only paid if funds are available after repaying debt. The rate of return required on the funding is higher than debt sourced funding due to the riskiness of the investment. The total equity investment can be lost in certain circumstances.
Internal Rate of Return is the return on the investment. You will need to keep in mind the internal rate of return on a project is the weighted average cost of capital, or WACC, which takes into account the cost of debt and equity. The cost of debt and equity is again the return required by the investors on the instruments. The internal rate of return on equity is higher than debt and during negotiations will need to be considered on a pre-tax and after-tax basis.
Some other terms you'll hear. A greenfield project is a new facility. A brownfield project is an existing facility. A hybrid project is building new structures on an existing facility.
Also, you'll hear terms such as availability payments are payments made by the public sector partner to the private sector partner based on particular milestones or facility performance standards. Shadow tolls are normally based on ridership of a facility.
It's important to note that availability payments and shadow tolls don't always apply to a tolled facility. The Presidio Parkway is a project that will have availability payments and the project as currently envisioned will not be tolled.
As I mentioned there are several reasons why the states in the U.S. are venturing into the P3 delivery method. One of the reasons is growing congestion. Based on FHWA's Highway statistics, the number of miles driven increased 39% from 1990 to 2008, while the increase was 56% on urban roads. Based on the Texas Transportation Institute or TTI, the average urban commuter in 2009 was delayed 34 hours annually as compared to 15 hours in 1982. The TTI collects data for 439 urban communities of different sizes across the nation. The TTI 2010 Urban Mobility Report estimates drivers experience 4.8 billion hours of delay and wasted approximately 3.9 billion gallons of fuel in 2009. The total congestion cost in 2009 based on wasted time and fuel for these areas was $115 billion.
Another reason is our aging highways. Based on AASHTO's 2009 report entitled Rough Roads, only half of the nation's roads are rated in good condition. One in four urban roads are in poor condition. For the average driver, rough roads adds $335 annually to typical vehicle operating costs and in urban areas with high concentrations of rough roads, the additional vehicle operating cost can be as high as $746 annually.
Also, another reason is the substantial investment requirement. AASHTO's report states that every mile of interstate highway on average sees 10,500 trucks/day; 80% of US freight is moved by truck driving on a 50 year old interstate system. Investment requirements according to AASHTO's report estimates that the average requirement for all capital investments in highway and bridges must be $166 billion annually through 2015; however, the investment from existing revenue sources is $68 billion per year in 2006 dollars. Another report in 2009 requested by AASHTO and completed by Cambridge Systematics, The Bottom Line, discusses the massive investment backlog in the highway system was $430 billion in 2006 and was estimated as of 2009 as $488 billion in 2006 dollars.
So after those sobering statistics, let's move onto why a project should be developed as a P3.
The public sector would undertake a project as a P3 once it has assessed whether the project has value. Value can be defined as many things such as lowered construction and/or operating costs, time savings, and the benefit of cutting edge technology or expertise that can be introduced via the private sector.
The public sector's responsibility is to qualify and quantify that value and explain it to the public. The public sector will use several tools to assess the value which may include a value for money analysis which includes a public sector comparator analysis, an independent traffic and revenue study and an independent cost estimate which includes both construction and operating costs.
That brings us to the end of the first lesson and Michael I will turn it back over to you.
Michael Kay - Great, thank you Jennifer. We will now move to our first of several question and answer periods. This is an opportunity for people to ask questions of Jennifer on this topic or any aforementioned topics throughout and we will have several of these. You can feel free to submit your questions via the chat box or by pressing *1 on your phone and at this point I'll ask our operator, Katherine, do you want to provide some additional instructions?
Verizon Operator - Absolutely. Once again that is *1 on your touch tone telephone. If you're on a speakerphone please pick up the handset and make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is *1 and we can pause for a moment.
Michael Kay - Great, thanks so much Katherine. You'll notice I changed our view slightly to expand upon our chat box so we can see questions that are coming in. I see one has come in. We will wait a couple minutes to wait for others and Jennifer to catch her breath. She's dutifully moderating today despite getting over a cold and we want to make sure to give her the proper opportunity to rest in between.
We do have a couple questions now. The first one, Jennifer. Is it possible to have P3 projects using FRA or FTA funds?
Jennifer Ahlin - That's a great question. My experience is really with highway projects. I think there are P3 projects out there with FTA funds, but we can research that and get back to you. On what projects there are that may be using those funds now.
Michael Kay - Absolutely. And I think T-REX in Colorado is one example that I believe I had some P3 elements which was a highway project combined with the extension of the light rail so we could check to see it there FTA funds involved or people can chime in as well if you have answers to that question for us. The next question. Are there any 63-20 SPVs currently in use, where, and what kinds of projects?
Jennifer Ahlin - Another great question. Yes, I think there's one in actually South Carolina right now. I can't remember the name off the top of my head, but we can get back to you on that one. I don't know how many 63-20s right now we have out there. I know that Pocahontas Parkway, the first transaction used on that was to a 63-20. It's a longer through a 63-20, it is actually went through a second transaction where VDOT partnered with Transurban.
Michael Kay - Great, thanks. I will mention when people register for these webinars we do capture some of your e-mail addresses. However, we want to do a better job of contacting you if we are unable to answer your question fully. Those who have submitted questions already that we have been unable to answer fully, if you want to provide us your e-mail address, ideally in a private chat box to myself that's great, or if you'd rather submit that via the regular chat box, that's fine as well.
I'll return to a couple questions in a minute. I just wanted to note some comments on the FTA P3s. The Eagle P3 project, also in Colorado, is one that Paula pointed out. Anyone who's been to Denver of late, if you walk behind Union Station it looks like they're building something the size of Penn Station. It is quite massive, the commuter rail expansion there. Thay Bishop, who works for the Office of Innovative Program Delivery, identified the Southern Connector in South Carolina. And Sam Shelton points out that FTA does have a similar division for P3s for such things as transit centers and heavy rail.
Moving on to our next question above from Samir. Construction bids are coming in lower now these days. Where are you saying that costs for building are going up?
Jennifer Ahlin - I'm not sure I understand the question.
Michael Kay - Okay, Samir if you can provide clarification we'd appreciate it and perhaps we can answer that question in our next Q&A. The next question I see comes from Paula. Leveraging sometimes defined as using other people's money to the extent does have grant funds too. Are you excluding this from your definition as leverage as you use the term?
Jennifer Ahlin - The way that I'm using the term is based on when we're looking at the debt and equity, or cash equivalent. Leveraging can mean a lot of things to a lot of different people. Obviously, grant funds could be included in that definition as well. I think that when I was working on 495, can't remember off the top of my head, I think it was a 60-40 and I don't think we included the grant funds on that at that time. We were looking at 60% debt for the concessionaire and 40% equity from the concessionaire and not including VDOT grant contributions.
Michael Kay - Great, thanks Jennifer. I'm going back to Sam Shelton's question and my colleague Mike Clark pointed out that it wasn't a comment rather a question as to whether FTA does have a similar division for P3s. And I don't know the answer to that. I don't know if you do, Jennifer, but we can certainly see if anybody in the audience knows the answer to that, and we can possibly provide a link to their P3 office or group.
Jennifer Ahlin - Right. I do have a contact at FTA, but let me talk to him.
Michael Kay - That sounds good. We will take another question or two right now and then Jennifer while you are speaking during the next section, I will review back the chat box and repost what questions are coming in because we're getting a lot of great comments and questions and it is hard to decipher at this point.
Let's take one more question regarding TIFIA loans. Are P3 projects possible with TIFIA loans?
Jennifer Ahlin - That's a great question. Actually, most of the P3 highway deals that have been done could not have been done without TIFIA credit assistance. I think since pretty much 2007, pretty much every P3 that has been done has been done with TIFIA credit assistance. So yes.
Michael Kay - What we will do now in the interest of time is move on to the next section of the course on the subject of benefits and challenges. While this lesson is ongoing I will review the questions that have come in and consolidate them and we can tackle them at the next Q&A. Let's move on, thanks Jennifer.
Jennifer Ahlin - Again in lesson two we will discuss the benefit and challenges faced with P3 procurement.
We will go through the benefits, first starting with the benefits to the public sector. A P3 can assist in accelerating a project. A P3 allows the public sector to share or avoid some of the risks.
Due to budget constraints, the public sector may have to defer maintenance on a facility. As stated previously on a P3 project, the agreement may call for the concessionaire to maintain the facility. The contract will typically specify certain standards that must be met or else the concessionaire will incur some sort of penalty. Often this results in the facility being maintained in better condition than if publicly maintained.
P3 Investment can assist in freeing up federal, state and local resources from one project to be used on other projects.
Within a P3 project delivery that involves construction, there will typically be a design build contract as a component. In a design-build, the private sector takes on any increases in material costs, as well as schedule delays.
Each partner brings certain expertise to the table. For example, the public sector can provide expertise as it pertains to the environmental work or permitting, and the private sector can provide the investment expertise as well as technological innovations such as tolling infrastructure or enhanced construction methods.
The public sector doesn't necessarily need to issue debt for a P3 project. If the concessionaire finances the P3 project, a regionally significant project can be delivered without consuming the public sector debt capacity. However, realistically the public sector will need to assist in funding the project whether by intellectual resources, such as oversight, donating right-of-way, or public funds.
We have discussed the benefits from the public sector. What are the benefits from the private sector standpoint? Sometimes the concessionaire investors' are managing funds such as pension plans and thus have a very long-term investment orientation. There is nothing wrong with a private sector profit as long as adequate controls and protections for the public sector are provided.
There are several challenges with using P3s and some of those challenges include the lack of state P3 enabling legislation. As of March of this year, only 31 states and Puerto Rico have P3 legislation and some of the legislation available to particular states is project specific.
The public sector must invest resources. Ensuring dedicated staff is there from the implementation of the project until the concession term ends is a must. A strong commitment to provide an appropriate level of long term oversight is necessary in P3 agreements.
The United States has an established municipal bond market which allows states to borrow at a lower rate of interest depending on the credit rating of the state. The capital cost on a P3 project is much higher. The private sector has limited access to lower cost financing such as private activity bonds and TIFIA.
P3s are made viable by having a source or sources of revenue to repay debt and equity investments that can come from tolls or some other sources of federal, state or local revenue receipts. Currently for tolling, where federal aid has been or will be involved, only certain federal exemptions are given in order to toll a facility. A state will also need to ensure it has the appropriate state legislation in place to toll facilities as well.
Another challenge is that investment grade traffic and revenue forecasts are used to project the revenues on the facility and are the basis for financing the project. Traffic and revenue studies are more of an art and not a science. Early P3 projects saw actual traffic was much lower than the projections in the studies. Project sponsors and Lenders have become more diligent in their efforts to balance the projections. It should be noted that states should ensure they have conducted an independent traffic and revenue study in order to compare against their private partners.
The public sector must ensure to undertake risk workshops and identify and evaluate all risks or at least be aware of potential risks with an eye toward quantifying the potential cost of the risks. Due to the long term nature of P3 agreements, several concerns are raised such as revenue loss to the public sector, or the asset being undervalued, or predicting the future needs of the public. The returns realized by the project is uncertain due to the length of the concession periods. The public sector has to ensure to protect itself from super profits. Common practice is to ensure a revenue sharing clause is included in the concession agreement.
For loss of control and performance issues, usually in P3 agreements, a clause is included requiring public sector involvement and increased monitoring if the private sector fails to perform appropriately.
Again the key element in a P3 is risk sharing and ensuring proper risk allocation. The risks need to be allocated according to the party best suited to handle the risk.
When considering a P3 procurement for a project several questions should be considered. Does the state have the necessary legal structure and organizational resources available? Is the project consistent with the state and local transportation plans? Is the project necessary? Is the project revenue generating? Does the project have a dedicated revenue stream? Does delivery of the project as a P3 represent a value proposition for the public sector?
That brings us to the conclusion of lesson two and Michael I will turn it back over to you.
Michael Kay - Great, thanks a lot Jennifer. What I'll do is change our layout back to our Q&A layout and I will encourage people if you have a question to submit them by the chat box or by pressing *1 on your phone to submit a question through audio. I will first ask our operator Katherine if we have any questions through the phone?
Verizon Operator - No questions at this time.
Michael Kay - Great, thanks. Looking back at what we had previously it seems we've covered most of the questions from section one. One question was regarding resources and which resources are available. Does IPD have a guidebook on implementing P3s? And our capacity building and outreach coordinator Thay Bishop provided a link to the P3 section of IPD's website. Jennifer, is there anything in particular on the website that people should look out for in terms of a guidebook. I noticed there's a lot of resources there.
Jennifer Ahlin - There are a lot of resources and actually, we are working on some additional tools this year, but I can't point to just one section right now. Later on in the presentation I will actually give my contact information so if anybody has any questions I'd be happy to help them.
Michael Kay - That sounds great. I'm going to repost right now a question that came in previously just so we can get back to it. This is a clarification from earlier. You were saying that one of the reasons for using P3s is that costs are going up. But in the last year or two bids have been coming in way below engineers estimates. So is that just a matter the last couple years of the landscape changing? Or is that still the case that costs are going up?
Jennifer Ahlin - It was moreso not that the costs are going up. It was that when you're accruing the funds in the traditional method, the costs traditionally have gone up. That's really been what we've seen. Doing it in a phased approach versus having the P3 streamline the process, where you can do all phases at one time, it seems like it can be more cost effective. Again, P3s are not the solution for every project.
Michael Kay - That makes sense. The next question is from Joe. Is it possible for a private entity to provide financing at a lower cost than can be obtained by the state through traditional TE financing such as and including PAB and TIFIA?
Jennifer Ahlin - That's a good question. Again, what I was discussing before which is having to try to accrue funds for a very costly project or large complex projects through the state process, it can end up costing more. It just depends again on the project. I don't know that I actually have a good example to give you.
Michael Kay - The questions are coming in fast and furious. A question about an update to the P3 toolkit that IPD is doing. I know that IPD has in the work certain initiatives and is starting several new ones. Jennifer, did you want to say anything about what IPD is doing on P3s in general looking forward?
Jennifer Ahlin - We have several initiatives going on and I think Nadine brings up a good one which is the P3 toolkit. We are still in the process of developing how we are going to approach the P3 toolkit. We have several other documents that we are working on. But we will keep everybody posted on our endeavors. There's a lot of activities that we have going on. Recently we had the P3 workshop that we had with the National Conference of State Legislature as well as the National Governors Association and working with AASHTO as well for the new legislators that are coming to office as well as with the people with P3 experience. We have workshops going on as well as tools that are being developed.
Michael Kay - As we have a bunch of webinars scheduled over the next few months I think what we may try to do is provide for you links and actual documents of things that IPD is releasing. I should mention this presentation itself will be available for download at the conclusion of today's webinar. The next question we have is through Gene. Is there benefit to doing a P3 for fully funded project?
Jennifer Ahlin - Again, another good question. How to answer that? It just depends. That is something that the state would have to look at. They would need to undergo some analysis to see whether it is of benefit to use their funding for a project that is fully funded, or to go through the P3 route because a P3 procurement may allow for them to have additional things to be added such as an extension to the project or something to that effect. But it depends on the state and depends upon the project.
Michael Kay - Let's take two or three more and then we will move on and we can return. We are planning to have a more lengthy Q&A at the end of today's webinar.
Let's take a couple more. The next one from Elsa. Who would typically decide whether a P3 is beneficial for a project? Is that done at the MPO level? At the state level? Federal level?
Jennifer Ahlin - Again, it really is between a state and I'm sure working in conjunction with the MPO. It also depends on the state and who makes that decision on whether that project has value or not. Again, another question where you can't give a full answer because it's state-specific.
Michael Kay - If we build a project using federal highway funds, can we use a P3 later to maintain the project?
Jennifer Ahlin - That is a good question. I'm trying to think of an example right now, but I would say yes you can. There's several examples of that such as the Pocahontas Parkway in Richmond, Virginia. There were federal funds used on that project to begin with. Again, when it first started it was a P3 project. I'm trying to think of a project where, let me give some thought to that and we can come back to that question. But yes. The answer is yes but I'm trying to think of a specific example to give to you.
Michael Kay - That sounds good and I want to provide a reminder to people who have submitted questions. We have some of your e-mail addresses but not all and we can certainly dig for them. But if we are unable to answer a question of yours specifically and you want us to be in touch, please send me a private chat with your e-mail address and we will make sure to get back to you individually.
Let's see if we can bang out a couple more questions. I don't think they'll take too long. Do you have an example of shadow tolls? I know that's been done in Europe. I'm not familiar of any in the U.S. yet. Are you familiar, Jennifer?
Jennifer Ahlin - I was getting ready to talk later on in the presentation about a shadow toll clause that is in the Route 495 HOT lanes project. The project itself is not a shadow toll project, but there's an actual clause within the agreement that says, based on high occupancy vehicle usage in the high occupancy toll lanes, VDOT will help supplement the revenues of the HOV traffic until there is an actual certain return on investment reached by the private sector partner. Shadow tolls are based on usage of the facility.
Michael Kay - That's great, thanks a lot, Jennifer. The last question I can tackle from Christine. Where will these slides and the ones from previous webinars be located? For Federal Highway staff we do post all of the records and the archives of the courses on the Federal Highway Staffnet website. I can provide the link through which Federal Highway and other DOT employees can gain access to this webinar and archives, we must be up to 30 or 40 now and they're all on that site. I will provide a link to that in the next section.
We will hold off on the last two questions until the end of the next section. With that, I will move back to the presentation layout. I will have Jennifer move on. We're moving on to lesson three on examples and types of P3s.
Okay, thanks Michael. In this lesson we will be discussing examples of different types of P3s to help you understand how different P3 arrangements may be used in different situations.
This slide shows the difference in risk allocation between the public sector and private sector for different types of P3 projects. As shown with the design-build project, the public sector maintains a majority of the project risk such as financing, operating and maintaining the facility once it is built, whereas the private sector may have construction cost and completion risks. In design, build, finance, operate and maintain P3 arrangement, the private sector maintains the majority of the risk.
As we discussed previously, the key element in a P3 is risk sharing. This slide shows some of the risks to be aware of such as financing the project when there are limited resources available and political risk where the public will not support the project.
Now let's discuss different types of P3s. This particular slide goes into the build, own, operate, transfer approach. The responsibilities are similar to the design, build, finance, operate, maintain approach; however, the ownership of the facility is actually with the private sector partner and then transferred to the public sector after a specified amount of time.
The Dulles Greenway is a 14-mile, limited-access highway extending from the state-owned Dulles Toll Road, which carries traffic between Washington's Capital Beltway and Dulles Airport to Leesburg. The Greenway was privately financed and constructed from 1993 to 1995 and had an initial agreement to have operational responsibilities revert to the Commonwealth of Virginia in 2036. To finance the Greenway, the limited private partnership, TRIP II, put up $40 million in equity, and secured $310 million in privately placed taxable debt.
When the Greenway opened to traffic in September 1995, traffic fell short of projected levels, and tolls were reduced. Users, but not revenues, increased. Then tolls were increased in July 1997.
Still facing financial challenges, TRIP II restructured its debt in 1999 and agreed to an extension of the project. In 2001 the Virginia State Corporation Commission extended TRIP II's concession period for an additional 20 years to 2056. In September 2004 variable peak and discounted off-peak point-to-point rates were introduced to better manage peak period congestion. In 2005 Macquarie Infrastructure Group agreed to purchase TRIP II for approximately $617 million.
The next example is a long-term lease or brownfield facility, which involves the long term lease of existing, publicly-financed toll facility to a private sector concessionaire for a prescribed concession period during which they have the right to collect tolls on the facility. In exchange, the private partner must operate and maintain the facility.
In November 2007, the Northwest Parkway LLC, the concessionaire, entered into an agreement with the Northwest Parking Public Highways Authority to operate and maintain the Northwest Parkway. The concession term is for 99 years and the concessionaire will give a payment of $543 million over the life of the concession. Northwest Parkway LLC has an option to contribute $60 million to extend the parkway in later years. For now the project is considered a brownfield and not a hybrid.
Under the operate, maintain ,and develop scenario, or hybrid, the private party agrees to invest in facility improvements and can recover the investment plus a return over the term of the concession.
The Virginia Department of Transportation signed a 99 year agreement with Transurban in June 2006 to operate and maintain the existing facility, the Pocahontas Expressway as well as develop the Richmond Airport Connector portion of the project. The Richmond Airport Connector completed a 1.6 mile extension of the project to the Richmond Airport.
Transurban defeased the existing debt. Defease means that they paid off the existing bond issuance along with any breakage cost required by lenders. In order to make these payments, Transurban sold bonds in order to pay off the existing debt along with an equity contribution, and they received a $150 million TIFIA loan.
That brings us to the end of lesson three. Michael?
Michael Kay - Great, sounds good Jennifer. Let me get caught up with our questions. The latest question now from Dennis. Is there a good template available to develop a P3 between a local agency and a private entity?
Jennifer Ahlin - That's a great question. Actually, what I could suggest is not saying that there is a "good template", but there are templates out there. The Virginia Department of Transportation actually has a website where they provide guidelines on P3s. We could actually send you that link to their website as well as links to others such as Texas Department of Transportation as well as Florida.
Michael Kay - And before forget I want to ask our operator Katherine if we have any questions in the phone queue?
Verizon Operator - No sir, no questions.
Michael Kay - Thank you. The next question is from Elsa. Is it true to say that design-build projects will typically have P3 funds programmed?
Jennifer Ahlin - I'm not exactly sure what P3 funds is meant by that. Typically in a design-build project, it is been my experience with VDOT that the funding, the state Department of Transportation will fully fund a design-build project. Unless the design-build project is part of a bigger P3 which is a design, build, finance, operate, and maintain structure.
Michael Kay - A question came in from Janice also related to FTA and maybe we should ultimately refer her to Tom Yedinak if we can't answer this. Can you use a P3 as a match to operate an FTA funded demand response trend program?
Jennifer Ahlin - That's a great question and I think that we should refer her to Tom. That's definitely out of my element.
Michael Kay - Someone provided Tom's been earlier and I presume his e-mail address would be just Tom.Yedinak@dot.gov, but we can confirm that. Next, Thay Bishop provided a link to "The P3 Primer: An Update on the Burgeoning Private Sector Role in U.S. High and Transit Infrastructure". So you can all go to that link and access tat document.
Next question. Is there a minimum cost limit for a project to be qualified as P3 funding?
Jennifer Ahlin - These are really great questions. It just depends. Again, it depends on how the state structures their P3 program. Normally, when we looked at the Virginia Department of Transportation, I don't think that we undertook a P3 less than $50 million to $100 million. I can't recall of one that was less than that.
Michael Kay - And I hope this isn't putting you on the spot too much Jen, but a question came in from Paula. Given that both Dulles and Pocahontas failed and had to be restructured, just how well do P3s work?
Jennifer Ahlin - That's a really loaded question and I don't know that I would say that they failed. It's just that they were restructured and another private entity was able to step in and purchase a lease agreement on those projects. It just depends on your definition of successful. I guess the way that I look at some of these projects such as the Pocahontas Parkway, the second transaction on Pocahontas Parkway allowed for the debt to be restructured and for another private entity to come in and actually help build the extension that was definitely needed on the project.
Michael Kay - Great, thanks a lot Jennifer. Do you know of any risk models for P3 projects?
Jennifer Ahlin - I guess I would like to know what he means by risk models. There's some guidance that I think we could send to him that are linked to some of the U.K. information. Australia also has some really good information on risk modeling. But again, some of the states are developing their own guidelines. I'm trying to figure out when he says risk model if he's talking about risk matrices, or how to think through the risk allocation, or is he talking about truly financial models?
Michael Kay - Great. Majed, if you want to provide any clarification we can certainly provide that. I have received e-mail addresses through private chat and I appreciate that. We will be back in touch with you directly. For those of you who want clarification, we will be in touch if we have your e-mail address, but if you do not provide it when you registered then please do send that to me in private chat and we will be sure to be back in touch. We will now take the last question for this section. It appears that P3 funding becomes more expensive to the taxpayers. Is it the jury still out on that?
Jennifer Ahlin - Again, I hate to answer it this way but I guess it just depends on the project. You would have to look at the project itself to see if you took this large complex project and actually accrued those funds versus taking the project and actually having that funding upfront, whether the benefit outweighs the cost or whether the cost is truly more expensive to the taxpayers.
Michael Kay - Great and thank you to Rick for pointing out that the Fredericton-Moncton Highway in New Brunswick, Canada may also be using shadow tolls.
Jennifer Ahlin - I'm not familiar with that particular project. I do know that the U.K., has like you said previously, used shadow tolls and we can send some examples of that as well.
Michael Kay - Thank you and we can look more into the examples in Canada and any others that exist. With that, let's move onto the next section we can circle back to address any questions later on. I will change our layout quickly. And we are going to move on to lesson four on financing tools.
Jennifer Ahlin - Thank you Michael. This the final lesson discussing different innovative financing tools and how innovative financing tools and techniques have been used on P3 projects.
As I mentioned previously, FHWA plays a role by facilitating in lower financing costs with financing tools such as the Transportation Infrastructure Finance and Innovation Act, or TIFIA, credit assistance program, which is a credit assistance program that allows direct loans, loan guarantees, and lines of credit. The assistance allowance is up to 33% of eligible project costs.
Private Activity Bonds are tax-exempt bonds to be issued by a conduit issuer. SAFETEA-LU allowed the USDOT Secretary to allocate $15 billion to qualifying highway facilities or freight transfer facilities. Other innovative financing tools are State Infrastructure Banks, or SIBs, Section 129 Loans, and Grant Anticipation Revenue Vehicles, or GARVEEs.
Today will we discuss the I-595 Express Corridor Improvements Project in Florida as well as the Route 495 HOT Lanes in Virginia Project, or the Capital Beltway. The I-595 Express Corridor Improvement Project is a 10.5 mile managed lane project that will provide 3 reversible express toll lanes.
The purpose of the project is to relieve congestion. The project is the first availability payment structure in the U.S. The Florida's Turnpike Enterprise retained the right to set the toll rates and collect the tolls on the project. The private sector partner, I-595 Express LLC, will design, build, finance, operate, and maintain the facility. In return they will receive a series of lump-sum payments and annual availability payments over the 35 year term.
Some of the innovative techniques applied to the 595 project are availability payments, a TIFIA loan, a SEP-15 process in which shortlisted bidder was allowed to obtain a preliminary loan commitment from TIFIA to include in their plan of finance. The actual terms of the TIFIA loan were negotiated after a preferred bidder was selected.
Another thing to keep in mind was FDOT's final acceptance payments of $686 million and availability payments of $65.9 million in 2009 dollars were made from federal aid receipts, state motor fuel tax receipts, and toll receipts
The Route 495 HOT Lanes in Virginia Project, or the Capital Beltway, which is very near and dear to my heart, is a 14 mile segment in Virginia that will provide 2 new HOV/HOT lanes in each direction. The purpose of the project is to relieve congestion. The Capital Beltway is one of the most congested highways in the US. The project is being tolled under Section 166 - HOV Facilities and requires congestion pricing on the project in order to maintain the free-flow of traffic. The cost of the project is $1.9 billion. The Commonwealth of Virginia retained ownership of the actual facility.
This project is important to note because it was an unsolicited proposal. It combines TIFIA and PAB funding and is the first PAB issuance on a transportation facility. The private sector placed almost $350 million in private equity towards the project. The original state plan would have necessitated impacts to 350 properties, while the P3 plan cuts that down to 8. Another innovative financing technique that was used was a shadow toll clause. The concession agreement requires the state to pay a certain amount of the toll revenue for a specified percentage of HOV users on the facility. The shadow toll stops after a certain internal rate of return is met.
That brings us to the end of lesson four and Michael, I'll turn it back over to you.
Michael Kay - Thank you Jennifer. I will change our layout. We have clarification, Majed was inquiring about risk analysis and allocation and as you mentioned Jennifer, there are some international examples for sure, in the U.K., Australia, and perhaps elsewhere. We can provide some information to you directly. The next question is from Gene. What adjustments can be made if the financial picture changes such as interest rates, funding availability, revenues, etc.?
Jennifer Ahlin - I'm not sure exactly, if you can clarify more, I'm not exactly sure how to answer that.
Michael Kay - Sure, Gene if you want to submit via chat box that would be great or if you want to clarify over the phone you can press *1 and while I have a moment I will ask Katherine if we have any questions in the phone queue?
Verizon Operator - No sir, still no questions.
Michael Kay - Thank you. The next question is from Nick. Any idea when the next round of TIFIA will be announced?
Jennifer Ahlin - Great question, Nick. I'm not exactly sure when that is. I'm thinking that it's going to be later this year. But we can find out exactly when that's going to be.
Michael Kay - Next question from Jim. Does IPD have any plans to offer a workshop or webinar on the topic of using P3 as a tool for managing risk? The types of risk, who bears the risk, and techniques or considerations for assessing when and how to shift?
Jennifer Ahlin - Great question, Jim. There's actually another webinar that's coming up on risk allocation and I'm not exactly sure when it is. I'm thinking it may be next year.
Michael Kay - Yes, for those of you who may have participated in some of our workshops this year may have seen our P3s and Risk Allocation presentation that was delivered there. I think on your suggestion Jim we will make sure to slot that it in for a webinar early next year. We will see if we can make that happen. As Thay mentioned, we are offering P3 and risk location in future webinars so stay tuned for future registration and information.
Next question is from Nick. Development costs like NEPA and traffic and revenue studies are quite expensive and can hinder the ability of state DOT is to get P3s off the ground. Can you suggest a way to help raise the funds for these studies?
Jennifer Ahlin - Great question. My goodness. Normally what we would have to do is use some of our federal aid funds on some projects and some other projects we had an account called the toll facility revolving account at VDOT that we would be able to use. They would loan us money from the toll facilities revolving account and we would pay it back at another time. It just depends again on the funding sources that are available for the state.
Michael Kay - Excellent. Next question is from Sam. Given the apparent complexity of P3s, he imagines government agencies contract out for consultant assistance to develop P3s and do such things as value analysis, benefit costs, IRR, balancing risk, etc. What skills would you recommend to be included in an RFP or RFQ for such services? Such as finance, negotiations, project management, etc.?
Jennifer Ahlin - Another great question. There's actually on VDOT's external website, there is I think a copy of their RFP/RFQ for their staff augmentation. We actually did augment our staff with consultant expertise especially from the financial side. We can send you that link again so you have access to that RFP.
Michael Kay - As Thay points out, a lot of these questions today will require some nuance and we do intend to respond in detail. Perhaps I will give a plug for what will be a forthcoming document that really starts to take a look at the questions and answers we received not only on today's webinar, but from prior webinars as well and start to turn that into an FAQ document. That should be coming in the next weeks and months and be on the lookout for that.
What I think we will do now is we'll move to the course summary and then we can return back to Q&A. We are ahead of schedule which is great; we certainly scheduled these for two hours but we are happy to end early if that's the case. Not a problem at all. But why don't we proceed with the course summary and then Jennifer is going to provide a little more information about the IPD office.
Jennifer Ahlin - As we just reviewed, P3s are complex and are not the fix for everything. FHWA's role is to facilitate by removing barriers, not to decide if a P3 is the right model for a state or project.
Teaming with the states is important in the P3 process. It is important for the state to include their federal partners in the early stages of the P3 planning process. These projects are complex and require dedicated resources. The FHWA division offices will need to provide the staff to assist in managing the project for FHWA's purposes.
FHWA needs to encourage and educate the states. FHWA must assist the states through the federal requirements and explain the requirements upfront. We need to provide the guidance on the necessary items to address and when it is necessary to address the items based on the state's project timeline.
Finally, please remember that the Office of Innovative Program Delivery is here to assist you in these endeavors. If you're with the state DOT we request that you work through your FHWA division office so all partners are informed. In this slide a few websites have been included as a reference as well. We discussed several case studies today, however our website includes more case studies if you're interested.
This next slide actually details some of the other webinars that are coming up. I don't actually see the P3 risk allocation on there.
The final slide actually includes my contact information. If you have any questions that you didn't think about through this webinar, please feel free to give me a call or send me an e-mail.
Back over to you, Michael.
Michael Kay - Thank you so much Jennifer for everything. We will now move to our final Q&A and we will leave this up and available for as long as it takes to answer your questions. I also wanted to mention that while Jennifer is answering one of the questions I will provide the link to the NHI web conferencing calendar. That's the page at which you can register for our upcoming webinar. I think we have registration set up for our November and December webinars, not sure yet about January or February, but that should be available soon.
So let me see where we are in terms of questions. It looks like the next one comes from Gene. Once a P3 agreement is in place, if revenues change, in other words if they increase or decrease or if the loan interest rate changes, does the agreement also change?
Jennifer Ahlin - That's a good question and as I mentioned previously, normally you will see in a P3 agreement some protections for the public sector. So say that to protect from runaway profits, at which you want to do is the public sector will share in the revenues once it hits a certain benchmark or internal rate of return. If revenues decreased, it depends on the agreement and whether the state wants to share in any decrease in revenues. Same with the loan interest rate changes.
Michael Kay - Great. The next question is actually a comment. We, meaning him at the Illinois DOT, had what he thinks is a successful RFP for assistance with P3 and he'd be happy to put anyone in touch with their lead engineer who also handled that. So anyone interested in that can contact Jim directly.
Do you recommend or advise that a state agency needs to have a P3 office and a dedicated staff to handle P3 projects?
Jennifer Ahlin - Great question. Again, I think that just depends on the state. Right now we do see some of the leaders looking towards having dedicated P3 offices. In particular, VDOT has a P3 office that is truly dedicated and opened actually in June. Again, it is up to the state to decide how best to handle the P3 projects.
Michael Kay - The next submission I think is more of a comment. We will see if there's a question there but I will read it out for everybody. It is important the audience recognizes or understands the assets always belong to the state or government entity and are never relinquished to the developer. Also, the general public will always have the access facilities regardless of the financial status of the developer. Through the history of P3 projects the state or government never paid more than the original cost to take back the facilities. I'm not sure if there's anything to say on that Jennifer, but we can certainly move on and you can respond to that if you'd like.
Chris's question is regarding the 495 HOT lanes project. Do you know if there any restrictions imposed on improvements to general use lanes?
Jennifer Ahlin - It is been a while since I've actually been involved with that project and I cannot remember off the top of my head. I don't think there is, but we can look it up and get back to you.
Michael Kay - That sounds good. We will wait a few more minutes to see if people have questions. I do want to mention that we do ask you stick around at the conclusion of our webinar for a couple of reasons. First, we have a short evaluation we'd like you to fill out and it helps us to better understand if this course was worthwhile and what your future interests are. But also that is the page where you can download a copy of today's presentation. We will move there in the next few moments. I do want to make sure to ask our operator Katherine if we did ever get any more questions via the phone?
Verizon Operator - No sir, we did not.
Jennifer Ahlin - Michael, may I backup to one of the questions? One of the questions was if the facility is built with FHWA funds, can it be a P3? I want to go back to say that yes, it can. I'm thinking of projects such as the 495. Sorry, I should've been able to answer that right off the top of my head, not just the 495, but you can look at 595. I'm trying to think of an example where it was built just recently, but we can come back to that and send it out to all participants.
Michael Kay - That sounds good. I do see a question just came in. It was a response to the Capital Beltway HOT lanes. Joe says he'd be surprised if there was not a prohibition on adding new capacity to the general use lanes. That provides a little more insight, not stating a fact, but just a statement and we can certainly investigate it further and provide more information on exactly what the provisions are for general use lanes once the Beltway HOT lanes open. I think they are expecting next year.
Jennifer Ahlin - Actually, it is actually in the agreement, Michael. I can go back and look at the agreement and get back to Chris. If I remember correctly, again, the way the provision I think it works is that the concessionaire actually has the right to build a HOT lane first and if they refuse then VDOT may be able to build a general purpose lane, but I want to look at the specific agreement and then we can give them the specifics on it.
Michael Kay - Great. I did just receive a link from Rick regarding that New Brunswick project has a shadow toll so I will provide the link momentarily. A couple other questions have come in in the meantime. Do you have a sense Jennifer of the total number of active P3s?
Jennifer Ahlin - That's a great question. I want to say it is not more than really 20. But again, that also depends on the definition of P3s. If you're thinking about a design, build, finance, operate, and maintain, I think it is no more than 20. But we can look into that and get back.
Michael Kay - Great. Question from Chris. What about ITS operations related improvements? I think the question is are those eligible to be done as P3 projects?
Jennifer Ahlin - Normally those are included in a P3. I'm thinking if it is a tolled project where thinking about the gantries as well as from an operations standpoint with the HOT lane, maintaining the free flow of traffic. I don't know if that's what they're talking about or if Chris is relating back to the 495 project.
Michael Kay - We can see Chris has an clarification for us on that. He may have been referring to 495. Next question is from Gene. What is FHWA's role in P3 projects that use federal aid funds?
Jennifer Ahlin - We went through some of that in the presentation itself. If the project is using federal funds you normally will go through the normal process with NEPA and depending upon how the project is structured, FHWA will play a role in NEPA as well as having some sort of oversight responsibility. If it's a toll project then also our office gets involved with expressions of interest and also will, as with any P3 project, if you need the necessary resources we will be there to help you.
Michael Kay - Great. Thay provided a link to certain P3 project profiles listed on the IPD website. Chris did clarify his question was related to the Capital Beltway project so when we do respond about the P3 agreement there we will look into what kind of ITS and operations related improvements or provisions were provided there.
Another question has come in from Gary. On availability payments, is a version of a P3 and under such there would be a cost of money factor the contractor would expect to be reimbursed for. Is that cost of money eligible for federal reimbursement and if not, why is it allowed under the GARVEE program?
Jennifer Ahlin - That's a good question. I'm not sure that I truly understand. I think this is something we need to look into and get back to him on. We may have to get back to him on clarifying the question.
Michael Kay - Sure, Gary if you want to provide clarification you have Jennifer's direct e-mail address or if you want to clarify here that's fine. You can also use the phone line. I will ask perhaps for the last time of our operator Katherine if we have any questions in the phone queue?
Verizon Operator - No, still no questions.
Michael Kay - Press *1 if you have questions there. Is any P3 project considered a "high-profile" project?
Jennifer Ahlin - Most P3 projects are considered a high-profile project.
Michael Kay - Excellent. I do see no other questions at this time. I did want to leave a moment or two to make sure that anybody who has any last-minute questions is able to submit. What we can do is we can switch over to our evaluation layout which still does have on the bottom left of our screen the same chat box so we will see if questions come in there.
I want to move toward the evaluation and point out a couple things. First on the middle left of your screen is a file download box you can use to download today's presentation. There are instructions provided, you click on the file name, click save to my computer, and it will bring up a web browser and you can download it to your local computer. On the right side is our evaluation and we ask that you please stick around for a few minutes to answer. It's short, it's 10 questions.
I see that no other questions have come in by chat. So Jennifer, I'm wondering if you have any parting words for today and then maybe we can conclude?
Jennifer Ahlin - I don't have anything else to add.
Michael Kay - Okay. Again, thank you everybody for your questions. We will be in touch to provide some clarification and I think we will conclude at this point and hope everyone has a pleasant afternoon.
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