PUBLIC-PRIVATE PARTNERSHIPS: DESCRIPTION

Practice Overview

McKenna Long & Aldridge LLP’s (MLA) Public Private Partnerships (PPP) team consists of 20 attorneys and five government affairs/policy managing directors each with unique backgrounds. Their profiles include involvement with some of the largest government contracts and project finance projects as well as the knowledge of professionals who have held senior level positions in the executive and legislative branches of federal, state and local government. Among our number is also one of the founders of the National Council for Public-Private Partnerships and chairs of public contract finance and privatizations committees for the Public Contract Law Section of the American Bar Association. This blend of experience offers our clients a unique perspective that is often critical in forming PPP relationships and resolving issues involving the government.

MLA utilizes a wide range of legal, political, government, finance and business planning capabilities to offer our clients the benefits of our firm’s daily contact with political leaders, agency managers, financial institutions and corporate leaders who are spearheading the United States’ efforts to implement public-private partnerships, enhanced use leasing and privatization programs.

Government Affairs and Business Solutions

We provide counsel, due diligence reviews, and strategic government affairs and business solutions to investors and entities considering participation in the growing public-private partnerships sector. Our team employs a full and multidisciplinary range of business planning, finance and government relations tools to successfully create PPP opportunities and profitable partnerships for our diverse client-base consisting of developers, lenders, technology companies, environmental/engineering firms, consultants, construction companies and traditional government contractors.

Creative, Visionary and Cost-Effective Advice

MLA’s technology experience includes work with, CA, Inc., an international, Fortune 500 company, on how to effectively manage their government affairs procurement program and the strategists they employ. We provide counsel, facilitate ongoing monitoring of strategist activities and serve as a liaison between the company and the strategists, ensuring that personnel understand the key corporate initiatives, have adequate marketing materials for CA’s products and can assist in national relationship building with state and local partners. MLA provides guidance and alignment with respect to intergovernmental affairs groups (i.e. the Republican Governor’s Association, the Democratic Governors Association, and the National Governor’s Association), and works to maximize company involvement. Additionally, MLA assists in identifying other organizations where membership would support CA's overall goals and strategy. For areas in which CA does not currently have a strategist, MLA identifies potential new team members and assists in the interviewing and hiring process. MLA works with the company to coordinate an annual training session for all strategists which enables them to interact with senior company officials, ensures they are up to date on products, provides an understanding of company priorities and makes certain they are focused on efforts to enhance company sales efforts to state and local government.

MLA represents GMH Military Housing LLC in a series of transactions involving the acquisition, redevelopment, management, construction and renovation of privatized housing at military installations around the country. These specific type of PPP transactions require negotiations with branches of the U.S. armed services, third-party construction, engineering and design firms and private sources of capital. Financing has included construction loans, investment rated bonds and private equity investments. In the aggregate, these transactions are valued at more than $1 billion, encompass more than 10,000 housing units, and include or have included the following examples:

Privatization of military family housing at Fort Gordon, where they obtained financing to acquire and renovate the existing housing and construct new housing. GMH also obtained a 50-year ground lease from the Army.
Formation of a joint venture with the Army at Fort Carlisle and Fort Picatinny involving the acquisition, development, management and construction of the military family housing.
Acquisition, development, management and construction of the military family housing at eight Navy installations in five northeastern states. The transaction involved creation of a unique joint venture with the United States Navy; negotiation of a single, 50-year ground lease from the Navy on 44 parcels of property; negotiation of construction, design/build, architectural and engineering agreements; the issuance of $500 million of S&P-rated, taxable revenue bonds underwritten by Raymond James & Associates; and securing PILOT (Payment In Lieu of Taxes) agreements with 11 local jurisdictions.
Privatization of the military family housing at Fort Stewart and Hunter Army Airfield, Georgia, which involved a joint venture with the United States Army; a 50-year ground lease from the Army; separate management, construction, development, renovation and architectural/engineering agreements; and nearly $250 million in construction loan financing from GMAC Commercial Holding Corp.
Privatization of military family housing at Fort Bliss in Texas and White Sands Missile Range in New Mexico with GMAC Construction and permanent loan financing of $351 million.
The acquisition out of bankruptcy of the military housing projects initially developed by J.A. Jones, Inc., which included negotiating with secured creditors, government agencies and private sources of equity.
Privatization of the military family housing at Fort Hamilton in Brooklyn, New York, in a $52 million transaction involving issuance by the Housing Development Corporation of New York of S&P–rated, taxable revenue bonds underwritten by Lehman Brothers.
Privatization of the military family housing at Walter Reed Army Medical Center in Washington, DC, and Montgomery County, Maryland, and at Fort Detrick in Frederick, Maryland. This involved an $83 million construction loan from GMAC Commercial Holding Corp. and negotiations with local officials in three jurisdictions, in addition to the Army and the U.S. Army Corps of Engineers.
The acquisition, development, management and construction of the military family housing at Forts Eustis and Story in Virginia, through the issuance of $130 million of S&P-rated, taxable revenue bonds underwritten by Raymond James & Associates.

Our ability to look beyond conventional measures by supporting our clients’ business objectives and governments’ needs coupled with our team’s diverse institutional knowledge-base and experience, allows us to deliver creative, visionary and cost-effective solutions to projects of all types, from the small technology and services projects to large highly customized transportation/infrastructure deals.

Maximizing Public-Private Partnership Relationships

Our team has assisted clients in the PPP sector with:

Clarifying the priorities and goals of federal, state and local governments.
Identifying business solutions and PPP projects as well as the interested public stakeholder constituencies-- and to understand the interests and concerns of those constituencies.
Considering the scope and purpose of various projects and whether those projects will and can be used as a potential catalyst to expand into other areas or larger developments.
Understanding the financial alternatives available to build and maintain a suitable development and the risks associated with such alternatives.
Exploring opportunities for regional cooperation in the public sector with the goal of sharing both the burdens and the benefits with the private sector teams.
Developing and negotiating creative state- and local-focused strategies for public-private partnerships.
Establishing and executing community strategies to enhance public acceptance and additional support for PPP projects.
Providing procurement advice, legal support and political insight on infrastructure and other projects of interest.
Focusing on procurement advocacy and teaming arrangements.
Structuring a wide-range of PPP deals - including infrastructure, health care, defense, transportation, energy, services and management, and technology projects.

As part of MLA’s PPP team, our Government Contracts and Project Finance attorneys provide clients with turnkey solutions for pursuing government projects through creative private finance and privatization opportunities in the rapidly growing and changing public private partnerships market segment. Whether you are private sector company seeking to do business with the government, or a lender or investor interested in providing financing in connection with such a transaction, our experience in this area will provide you with the necessary platform to compete and to structure the best possible deal. Our attorneys have expertise in all areas of government contracting, finance, and privatization, including:

Traditional government acquisition and appropriations--total system development and production.
Government contract finance.
"Life cycle contracting," in which the contractor is obligated to provide maintenance and field support of a system.
"Turnkey project contracting," in which the contractor is obligated to maintain, support, and operate the system.
Government lease financing, in which government agencies enter into long-term leases of assets as an alternative to the typical government appropriations model.
"Wet leasing," involving the leasing of equipment with additional obligations to maintain and/or operate the equipment.
"Facilitization," in which the leasing party is obligated to design and construct the facility to house leased equipment.
Privatization of existing governmental plants and facilities, including utility, housing, and similar systems.
Outsourcing of government services.

Representative Matters:

Prison Privatization - Served as primary consultant to the District of Columbia in the privatization of a 1,000 bed correctional treatment facility. We helped the City frame the competition to privatize the facility and through a sales lease back, netted the city $50 million. We also helped the City enter into a long-term operating contract for 20 years which was cheaper than the current burn rate of running the facility.
Parking Meter Privatization - Served as lead advisor in privatization of parking meters and enforcement in the District of Columbia. We ran the competition and decided upon electronic meters. The deal was structured as lease purchase, so the District of Columbia took possession of the electronic meters seven years later resulting in a significant increase of revenue for the city without an capital outlay.
Clinic Privatization - Ran competition with hospitals identified to possibly take over a free medical care clinic serving policemen and firemen that had fallen into disrepair. We worked the deal so that a major hospital paid $10 million up front to design, build and operate the clinic.
Juvenile Detention Facility Privatization - Implemented a public-private partnership to secure third party capital used to improve the information technology structure of the facility on a lease purchase basis. The private sector issued the initial payment and the government paid the money back over time.
Shipping - Structured on behalf of major United States defense contractor, “build/lease” and related contracts with the United States Navy, Military Sealift Command for five military prepositioning ships. The ships were “roll-on, roll-off” vessels, constructed by the contractor, privately owned and financed, and then chartered to the Military Sealift Command for 25 years. Credit for the financing included the government’s 25-year contractual commitment to charter the vessels.
Aviation – Represented a major United States defense contractor in structuring government contracts to allow private financing of approximately $1 billion for the manufacture and sale of fighter aircraft to two foreign governments. The sales were part of the United States Government’s Foreign Military Sales program. Created deferred payment documents that were sold to a major financial institution and repaid through later contract payments.
Co-Generation Facility Privatization at Army Base – Represented limited partnership and its primary partner in obtaining financing for the construction of a co-generation facility on the U.S. Army base at Fort Drum, New York. The limited partnership arranged for private financing and then operated the co-gen facility. The Army entered into a 25-year contract to purchase steam heat from the facility. Also, litigated to a successful conclusion a judgment against the U.S. Government of approximately $90 million in favor of the limited partnership for actions by the Army under the contract.
Biorepository and Related Facilities –Helped structure lease of privately-owned biorepository at Fort Detrick, Maryland. Facility required to support activities of the National Cancer Institute through its Federally Funded Research and Development Contractor (“FFRDC”) at Fort Detrick. Counseled on additional facility development through such vehicles as enhanced use leases.