Fluor Executes Public-Private Partnerships (P3) on Major Transportation Projects in the U.S. and Internationally

Fluor has a proven track record of delivering P3 projects. The benefits of a P3 approach include: faster schedules, lower life-cycle costs and considerably less risk to the public sector. Fluor provides a strong balance sheet and long record of financial stability that provide owners and capital markets with confidence that projects will be completed successfully.

Public-private partnerships provide governments and local authorities an alternative method of financing and implementing major transportation projects. Beyond assessing the optimal sources of funding needed to meet a project's capital requirements, the commercial structure adopted by the private and public sector partners plays a pivotal role. When a public agency needs to reach beyond its funding resources or seeks to shift project execution and/or operating risks to third parties, a P3 solution may prove advantageous. As a project developer, execution partner, financial arranger and investor, Fluor offers a broad range of financing and commercial options to meet the requirements of P3 procurement.

Public-private partnerships provide governments and local authorities an alternative method of financing and implementing major transportation projects.

 

Structures that Fluor has used on infrastructure projects include:

Tolls or User Fees

  • Project funding is directly supported by vehicle or passenger tolls.
  • Tolls can be directly assessed on users or payable to the concessionaire by the public sector based on usage (Shadow Tolls) .
  • The public agency sponsor benefits by the private concessionaire bearing the revenue risks.
  • Variations of this structure where both the private concessionaire and public agency share the financial upside of any toll revenue surplus, can be used.

Availability Payments

  • This structure is most advantageous when a toll or user fee is not assessed or if the public agency is willing to assume volume risk.
  • Payments are pre-determined prior to construction and are often tied to a dedicated stream of sales or other tax revenue receivable by the public agency.
  • The private concessionaire assumes construction and performance risk of the asset, while the public sector maintains volume risk.
  • Availability payment appropriation risk may or may not be borne by the private sector.

63-20 Tax-Exempt Structures

  • IRS Ruling 63-20 authorizes public agencies, in association with a private concessionaire, to establish non-profit entities (63-20 Corporations), which may issue tax-exempt bonds on behalf of qualifying infrastructure projects.
  • This structure transfers project risk to the private sector while the public agency maintains ownership of the asset.
  • The 63-20 Corporation benefits the private sector by providing access to the tax-exempt debt.