Slide #1.

Financing Public Infrastructure Bonds or Public-Private Partnerships Gary Weir Katrielle Machida
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Slide #2.

Community Faces a Challenge Investment used as Capital for project Project Built Government makes issue a priority Appropriate Interest Rate Assigned Based on CR Investors Purchase Bonds Funds Raised to Pay Investors Back Including Interest Bond is made available for investors Bond Process Complete Financial institution Creates/Broker Bond
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Slide #5.

ALASKA STRENGTHS ALASKA CHALLENGES Very large cushion against revenue volatility Narrow economic base in Constitutional Budget Reserve Fund Political challenges to imposition of other (CBRF) and other funds significant revenue streams Conservative fiscal practices, highlighted by Relatively weak pension funding, although use of 2008 oil revenue windfall to rebuild funding will be improved by reserve CBR transfers Potential to transition over time to natural gas from oil production as primary revenue WHAT COULD MAKE THE ALASKA RATING GO source DOWN Sustained low oil prices relative to prior assumptions Accelerating decline in petroleum production volume Prospect that financial reserves will be fully depleted in the near term Use of non-recurring measures beyond financial reserve expenditures to achieve budget balance           Current Alaska Ratings Moodys: Aaa Standard and Poors: AA+ (Downgrade) Fitch: AAA   
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Slide #6.

 Bond Pros  Provide communities with resources to develop and make improvements for current public use. Bond Cons ⬜ ⬜ ⬜  Exempt from federal and state taxes.  If a community has a high credit rating, then they can get a low interest rate. Federal government loses revenues from tax exemptions Burden placed on tax payers (property owners) Requires consensus from voters.
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Slide #7.

Alaska Municipal Bond Bank Authority ⬜ ⬜ ⬜ ⬜ ⬜ Established in 1975 Independent from the State of Alaska Sells bonds on the markets Helps communities get good rates for bonds In the past 10 years, $112 million has been saved by communities across Alaska
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Slide #9.

The Bond Bank Has funded projects in the following communities: City of Kaktovik City of Wasilla City of King Cove Haines Borough City of North Pole City of Cordova City of Adak Municipality of Anchorage City of Craig Fairbanks North Star Borough Inter-Island Ferry Authority City of Valdez City of Hoonah Matanuska-Susitna Borough
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Slide #10.

TODAYS REALITY ⬜ Taxpayers and Municipal budgets are maxed out ⬜ Growth in school-aged population creating overburdened facilities ⬜ Traditional means of increasing funds is frowned upon ⬜ The quality of public schools has a direct effect on the municipality’s desirability as a place to live
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Slide #14.

April 5th 2016 ASD Bond ⬜ $49.3M Proposed ◼True Cost of Borrowing - $84.8M ▫$15,000 – Agency Fees ▫$154,300 - Bond Issuance Cost ▫$25.7M - Interest
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Slide #15.

Public-Private Partnership Defined ⬜ ⬜ ⬜ A method of development that uses private capital, public interest and improvement, and combined risk and responsibility in order to deliver projects that would otherwise be beyond the reach of the public. Agreements involve a government agency contracting a private company to renovate, construct, etc. Public agency typically maintains ownership, private agency is given additional decision rights to determine how the project will be completed.
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Slide #16.

The History of PPP’s ⬜ 1990: UK needed a way to increase public infrastructure without increasing the budget ⬜ Have grown rapidly, worldwide since their inception ⬜ Successful projects include: ◼ Bridges, dams, roads, power-plants, redevelopment of downtowns, mixed usedevelopment, public garages, schools, airports, and city halls
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Slide #17.

Pros/Cons PROS ⬜ ⬜ ⬜ ⬜ No campaign process like a municipal bond No spending cuts to social programs or tax increase Significant savings and reduced delivery time Risk is shared = better quality built CONS ⬜ ⬜ ⬜ Growing pains are still being learned Significant investment capital limits the amount of private companies that can bid Short-term political attractiveness Cronyism
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Slide #18.

Niagara Falls SD Issue ⬜ Two unsustainable high schools – bags collecting rainwater in the hallway from the asbestos filled ceiling ⬜ 44,000 industrial jobs lost over 35 years ⬜ New schools needed – decreasing tax revenue
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Slide #19.

Niagara Falls SD Solution ⬜ Developed a 6 entity Public-Private Partnership ⬜ Form a SPDC ⬜ Assign responsibilities ⬜ Sell Certificates of Participation to raise $83M ⬜ Author a plan for the SD to take ownership of the new school
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Slide #20.

The New Niagara Falls High School Community Pride - Houses 2,400 students - Each student issued a laptop - Performing Arts Center - High amp amphitheater - Spacious gymnasium - Olympic size swimming pool - Indoor walking track Student Pride - Student run educational access television station - Extensive internship program offered to H.S students in hospitals and banks - Student donated over 130 pints of blood to celebrate a librarians
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Slide #21.

PrivatePublic Partnership at UAF Wood Center
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Slide #22.

Conclusion ⬜ The Time for Alternative Financing is here ⬜ Bonds have their time and place ⬜ Benefits of Public-Private Partnerships Reduced construction time ◼ Newer technology/More Environment friendly ◼ Maximize land potential ◼
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