Professional Documents
Culture Documents
and
Affordable Housing
Review of PPP as a £60 billion, $90 billion industry
and its application to Affordable Housing
Presentation prepared by
David Hoicka
12
Cost
PPP Project Expenses
10
8
Prepare
6
Build
4
Maintain & Earn
"The Long Tail"
2
0
1 2 3 4 5 6 7 8 9 10 11 Years
12
UK Stanhope PFI
Copyright © David Hoicka 2007
Contents
5
Public Private Partnerships and Affordable Housing, by David Hoicka
How PPP Works
12
Cost
PPP Project Expenses
10 Public Private
8
Prepare Partnership (PPP)
6
Build finances building and
Maintain & Earn
4
"The Long Tail"
long-term maintenance
2
with private
0
1 2 3 4 5 6 7 8 9 10 11 Years
12
contractors
12
Cost Compare: Some
Non-Maintenance Project Expenses
10 procurements are
Prepare
8 one-time purchase,
Build
6
with use or sale.
Use Up or Sell
4
"Maintenance Not Included" Maintenance is not
2
included.
0 6 Public Private Partnerships and
1 2 3 4 5 6 7 8 9 10 11 Years
12
Affordable Housing, by David Hoicka
Why PPP?
PPP satisfies a need for off-budget finance
Need:
Government Minister wants to build schools & hospitals
Schools & hospitals are built, then maintained for years
no budget available, cannot borrow
Response:
PPP Off Budget Finance – lower government public debt, usually does
not affect government bond rating
“Rent to Own” – similarities to equipment lease
“Buy Now, Pay Later” – future years & governments pay
Use private skills and efficiencies, usually higher price
Transfer some Risks to Private Companies for a fee
(but Government retains ultimate risk)
7 Public Private Partnerships and Affordable Housing, by David Hoicka
PPP Examples
12
Cost
PPP Project Expenses
10
8
Prepare
6
Build
4
Maintain & Earn
"The Long Tail"
2
0
1 2 3 4 5 6 7 8 9 10 11 Years
12
£60 Billion
$90 Billion
PPP in the UK – a History
Margaret • Privatization
Thatcher
• Private Finance Initiative
John Major (PFI)
Rentals
Home
95%
Ownership
5%
50
28
Public Private Partnerships and Affordable Housing, by David Hoicka
PPP Participants and Advisors