CASE STUDY– WIFIA FINANCING OF A
P3 LIKE INFRASTRUCTURE PROJECT
Aurel Arndt
Chief Executive Officer
Lehigh County Authority
P-3 Connect:
Defining the Future
of P3 in the US
July 29, 2014
LEHIGH COUNTY AUTHORITY / CITY OF ALLENTOWN
CONCESSION LEASE
• A Public to Public Partnership (P2P)
LEHIGH COUNTY AUTHORITY / CITY OF ALLENTOWN
CONCESSION LEASE
What is it?
• A 50-year lease of the Allentown
Water and Wastewater systems
LEHIGH COUNTY AUTHORITY / CITY OF ALLENTOWN
CONCESSION LEASE
$211.8 Million
System Lease
CITY OF ALLENTOWN
Nominal Owner WATER & SEWER
SYSTEMS
Operations,
Maintenance,
Capital
Improvements
Compliance
Office
City Water & Sewer
System Revenues
City Oversight
LEHIGH COUNTY AUTHORITY
CONCESSION FINANCING
Sources and Uses of Funds
SOURCES:
TOTAL
2013 Bonds (Net of OID)
$ 296,760,141
USES:
Up front Lease Payment
$ 211,332,217
Capital Improvement Fund
$
31,850,565
Debt Service Reserve Fund
$
28,090,273
Capitalization Interest Account
$
3,450,000
Operations and Maintenance Reserve Fund
$
9,199,515
Major Maintenance Reserve Fund
$
7,500,000
Cost of Issuance
$
5,337,569
TOTAL: $ 296,760,141
CONCESSION FINANCING
Overview – Bonds sold July 31, 2013
Three Series - $307,684,000
$ 245,590,000 – 2013 A Bonds – Fixed Rate Bonds
$ 43,359,000 – 2013 B Bonds – Capital Appreciation Bonds
$ 18,735,000 – 2013 C Bonds – Taxable Bonds
Series A & B Summary only
Average Life – 28.7 years
Yield – 5.4486%
CONCESSION FINANCING
Series 2013A - $245,590,000
MATURITY
PRINCIPAL AMOUNT
YIELD %
2038
$ 14,265,000
5.180
2043
$132,335,000
5.280
2047
$ 98,990,000
5.450
Series 2013C - $ 18,735,000
MATURITY
PRINCIPAL AMOUNT
YIELD %
2018
$ 18,735,000
3.440
Series 2013B - $ 43,359,000
MATURITY
PRINCIPAL AMOUNT
YIELD %
2019-2038
$368,001-$3,454,285
3.21-6.21
CONCESSION FINANCING
Other Market Rates (July 31, 2013)
30-yr Treasury Bond – 3.64%
HYPOTEHTICAL WIFIA FINANCING
Finance Immediate Capital Improvements $ 31,850,000
Assume 30-year life (or longer)
WIFIA Annual Interest Costs:
49% of $ 31,850,000 at 3.64% = $ 568,077
Replacing
2013 A Bonds Annual Interest Cost
49% of $ 31,850,000 at 5.28% = $ 824,023
Annual Savings $ 255,946 (31%)
HYPOTEHTICAL WIFIA FINANCING
Other WIFIA Possibilities
a. Replace 2013B Series Bonds 2038 Maturity - 6.21%
• Annual Savings $27,644 (61%)
b. Include Portion (10.35%) of Debt Service Revenue Fund
• Annual Savings $23,363 (31%)
c. Increase WIFIA Funding of Capital Improvement Cost to 80%
• Annual Savings $161,925 (31%)
d. Include portion (10.35%) of Issuance Costs
• Annual Savings $4,439 (31%)
Total Enhanced Annual Savings: $ 217,371 (35%)
THANK YOU
• Questions…