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Microsoft PowerPoint - Toll Finance 101 Presentation

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Page 1: Microsoft PowerPoint - Toll Finance 101 Presentation

Toll Revenue

Financing 101

Public Financial Management, Inc.

300 South Orange Avenue

Suite 1170

Orlando, Florida 32801

407-648-2208

407-648-1323 fax

Page 2: Microsoft PowerPoint - Toll Finance 101 Presentation

2

Revenue

Study

Operations

& Maintenance

Private Project

Developer/Equity

Project

Revenue Debt

Financial Plan

and

Overview of Elements

Public

InvestmentCapital

Costs

Page 3: Microsoft PowerPoint - Toll Finance 101 Presentation

3

Socio-

Economic

Need

Construction

Issues

Risk

Management

Plan

Revenue Study &

Net Revenues

Economically

Justified

Public Support &

Public Interests

Elements

of

Credit

Page 4: Microsoft PowerPoint - Toll Finance 101 Presentation

4

Elements of Credit

•Socio-Economic Need

--Safety

--Environment

--Economic Development

•Economically Justified

--Efficient Transportation

--Generates Revenue

--Connecting Key Business/

Tourism/Trade Regions

•Revenue Study

--Should include Analysis of, or

reference to Socio-Economic Need

and Economic Justification

--Independent and Credible

--Bond Offering Disclosure

•Construction & Operating Issues

--Construction and O&M Cost Risks

--Lump Sum/Fixed Price Contracts

--Financial Strength/Performance of

Construction Team

•Risk Management Plan

--Environmental Mitigation

--Construction Completion

--Force Majuere/Builder’s Risk

-- Toll Collection Risks, especially with ORT

•Public Support & Public Interest

--State and Local Political Support

--Federal Agencies

--Public Equity/Funding for EIS, Design

and Engineering

Page 5: Microsoft PowerPoint - Toll Finance 101 Presentation

5

Competition/

Choice

Travel Cost

Comparison

Diverted

Ridership

Induced &

Generated Ridership

Base

Economy

Market

Segmentation

Revenue

Study

Elements

Page 6: Microsoft PowerPoint - Toll Finance 101 Presentation

6

Revenue Study Elements

•Competition/Choice

--Modal Analysis

--Competing Routes

-- Origin and Destination Studies

•Base Economy

--Industries

--Economic Growth

--Demographic Trends

•Travel Cost Comparison

--Value of Time

--Time Comparison

-- Stated Preference Surveys

-- Cost per Mile Travelled

•Market Diversification

--Tourism/Leisure vs Commuter

--Local vs. Non-Local

--Commercial

•Diverted Traffic

--Justified by Savings/Cost Comparison

--Methodology for Projections

--Examples

•Induced & Generated Traffic

--Credit Sensitive

--Induced by Mitigation of Inconvenience

--Generated by Economic Development

Page 7: Microsoft PowerPoint - Toll Finance 101 Presentation

7

Revenue

Sources

Security

Requirements

Issuance

Timing

Credit

Enhancement

Lien

Structure

Private Sector

Enhancements

Project

Revenue Debt

Structuring

Elements

Page 8: Microsoft PowerPoint - Toll Finance 101 Presentation

8

Project Revenue Bonds

•Security Sources

--Net Operating Revenues

--State and Local Taxes

--Value Capture

•Bond Lien Structure

--Senior & Subordinate Debt

--Diversification of Product

--Short-Term/Long-Term Mix

•Security Requirements

--Capitalized Interest

--Coverage Ratios

--Reserve Funds

•Issuance Timing

--Interim Construction Financing

--Use Public Equity First

--Bond Best Credit First

•Credit Enhancement

--Federal Programs - TIFIA

--Special Tax Supplemental Pledge

--Bond Insurance/Letter of Credit

•Private Sector Enhancements

--Deferred Compensation

--Vendor Concessions/Parking

--Private Equity

Page 9: Microsoft PowerPoint - Toll Finance 101 Presentation

9

Issuer

Decides to

Finance

Working

Group

Selected

Preliminary

Plan of

Finance

Determined

Documents

Drafted

Credit

Enhancer

Solicitation

Managing the Financing Process

Pricing

and

Post Sale

Marketing

Finalize

Documents

and Finance

Plan

Rating Agency

Presentation

Issuer

Decides to

Finance

Working

Group

Selected

Preliminary

Plan of

Finance

Determined

Documents

Drafted

Credit

Enhancer

Solicitation

Managing the Financing Process

Pricing

and

Post Sale

Marketing

Finalize

Documents

and Finance

Plan

Rating Agency

Presentation

Managing the Financing Process