Recently in Asset Sale/Lease Category

Source: By Caitlin Devitt, Bond Buyer, Wednesday, September 1, 2010

A month after winning city and county approval to sell its water and sewer system, Indianapolis stands poised to enter into a 50-year lease of its parking meters in exchange for cash and a piece of the annual parking revenue.

It's the latest effort by Mayor Greg Ballard to raise money for infrastructure projects without raising property taxes.

Source: By ALGIS J. LAUKAITIS, Lincoln Journal Star (NE) Friday, August 13, 2010 1

The Lancaster County Board closed the deal Friday and sold Lancaster Manor to a Nebraska company established by Hunter Management of Evanston, Ill., for $9.5 million. The buyer is Lancaster Manor Real Estate, which now owns the land and assets of the nursing home at 1001 South St. Financing was arranged by American National Bank of Nebraska.

..... Kaspar and the American Federation of State, County and Municipal Employees Local 2468, and a grass-roots opposition group called Save the Manor Coalition, brought to light a litany of problems at nursing homes owned by the Rothner family in Illinois and other states.

Source: South Pittsburgh Reporter, August 2010

 

Last week, Mayor Luke Ravenstahl announced the city had released the final request for proposals (RFP) for seven pre-qualified investors to submit a final proposal on the monetizing the city's parking assets.

Following a public process, including several neighborhood public meetings, the mayor proposed changes from the draft that addresses some of the public's concerns and ensures the city still receives a significant upfront payment that will prevent a state takeover of its pension fund.

Source: By IANTHE JEANNE DUGAN, Wall Street Journal, AUGUST 23, 2010

Cities and states across the nation are selling and leasing everything from airports to zoos--a fire sale that could help plug budget holes now but worsen their financial woes over the long run..

 ....... About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland's RBS Global Banking & Markets. Those assets have a market value of about $45 billion--more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.

Source:  Bond Buyer, Thursday, July 8, 2010 By Patrick Temple-West

Investors and the state of South Carolina are haggling over who will get a bigger share of revenue from a bankrupt bond-funded toll road.

Owners of $200 million of senior and subordinate bonds issued in 1998 by the Connector 2000 Association Inc. for the toll road outside Greenville say they should have precedence. But the state Department of Transportation says it wants more of the cash to help pay for maintenance of the road.

.... Under the license agreement, the state is obligated to maintain the highway but revenues have not been sufficient to reimburse the DOT. Those upkeep costs have put the state at odds with bondholders, who claim to be owed $369 million, including accreted interest, according to bankruptcy documents.

Source: Judy Keen, USA TODAY, April 20, 2010

 

City Manager Denny Kief has advice for communities that are tempted to sell their water systems to ease budget woes: "Be very cautious." Pekin, a city of 34,000, doesn't own its water system. If it did, Kief believes, rates would be lower and extending water lines to an expansion of Pekin's industrial park and along a new bypass would be less complicated.

Most important, he says, owning such a crucial part of its infrastructure would mean Pekin could "control our own destiny." Kief's monthly bill at home is about $42, including about $12 in sewer fees that goes to the city.

.... American Water CEO Don Correll says rates also are rising for city-owned systems. As systems age and costs rise, he says, cities weigh benefits of ownership against the need to pay teachers and police and fix roads.

Source: Ellen Dannin, The Pennsylvania State University Dickinson School of Law, July 10, 2009. Penn State Legal Studies Research Paper No. 19-2009

Abstract:     
For all but those who have an ideological commitment to privatization, the issue driving privatization is how to fund public infrastructure. Thus, arguments for privatizing infrastructure are (1) to provide money so cash-strapped governments can fix crumbling infrastructure and (2) to shift future financial risk to the private contractor, as well as, of course, the financial rewards.

The reality, though, is far different. Provisions commonly found in infrastructure privatization contracts actually make the public the insurer of private contractors' return on investment. Indeed, were it not for the lengthy provisions that protect contractors from diminution of their expected returns, the contracts would not run on for so many pages.

Of greater importance, infrastructure privatization contracts give private contractors a quasi-governmental status, with power over new laws, judicial decisions, propositions voted on by the public, and other government actions that a contractor claims will affect toll roads and revenues.

Source:  LESLIE WAYNE, New York Times, June 5, 2009

 

It was hailed as a win-win for Main Street and Wall Street -- a way for states and cities, along with financiers, to make some money.  But now privatization, the selling of public airports, bridges, roads and the like to private investors, looks like a boom that wasn't. Deals are collapsing. Airy hopes of quick profits are vanishing. And what was celebrated as a new wave in finance is, for the moment, barely making a ripple. 

What happened? The financial crisis, for starters. The easy money that Wall Street was counting on to finance its purchases has largely disappeared. Then the Obama administration unintentionally damped interest with its $787 billion economic stimulus package, a windfall that local governments are now racing to spend.

Source: New York Governor, June 1, 2009



Governor David A. Paterson today accepted the final report from the New York State Commission on Asset Maximization. The Commission was charged with broadly examining whether asset maximization can benefit the State, as well as whether any specific New York assets are suitable candidates for Public-Private Partnerships (PPPs). The final report contains 27 major recommendations to help create jobs, generate economic activity and benefit colleges and universities across New York State. Some of the key recommendations include: school construction and renovation in Syracuse and Yonkers; 300 bridge renovations in all corners of the State; wind power on the Great Lakes; and high speed rail.

Source: By Dan Egan and Larry Sandler, Journal Sentinel (WI), May. 24, 2009

 

 .... Now the city could indeed be on the path to become a major-league laboratory for the way that freshwater is delivered, but perhaps not in the way Barrett and regional business and academic leaders hoped for.  Scrambling for cash simply to fund basic city services - and less than a year after the passage of the Great Lakes compact designed to protect the world's largest freshwater system from being drained by profiteers - Milwaukee is looking into turning its state-of-the-art water treatment system over to a for-profit company.

Cities such as Buffalo, Indianapolis and Atlanta have dipped their toes into the water-for-profit business by signing deals with private companies to run their systems for periods ranging from five to 20 years, with varying degrees of success - and failure.  ...  Milwaukee is pondering a 75- to 99-year lease.