TERMS RELATED TO PUBLIC-PRIVATE PARTNERSHIPS
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The below terms were extracted from
"Public-Private Partnerships: Terms Related to Building and Facility
Partnerships", Government Accounting Office, April 1999. The National
Council for Public-Private Partnerships was a resource used in developing
the GAO report.
Air Rights Air rights provide the right to use, control, or occupy
the space above a designated property. Air rights can be often leased, sold,
or donated to another party.
Anchor Tenant An anchor tenant is the major tenant that attracts or generates traffic within a commercial operation. Anchor tenants are strategically placed to maximize business for all tenants. The type of anchor tenant depends on the type of commercial activity.
Asset Sale An asset sale is the transfer of ownership of government assets to the private sector. Usually legislation or an Executive Order defines the transfer price distribution and recoupment priorities. In general, the government has no role in the financial support, management, or oversight of the asset after it is sold. However, if the asset is sold to a company in an industry with monopolistic characteristics, the government may regulate certain aspects of the business, such as utility rates.
Capital Lease A capital lease is a lease that must be reflected on a company's balance sheet as an asset and corresponding liability. Generally, this applies to leases where the lessee acquires essentially all of the economic benefits and risks of the leased property.
Cash Flow Cash flow is cash receipts minus cash disbursements from a given operation or asset for a given period. A cash flow statement shows all sources and uses of cash reflected in the balance sheet cash account from one period to the next.
Concession Benefits Concession benefits are rights to receive revenues or other benefits for a fixed period of time.
Cooperative Agreements A cooperative agreement as set forth in 31 USC 6305 is the legal instrument an executive agency uses to reflect a relationship between the U.S. government and a state, a local government, or other recipient when (1) the principal purpose of the relationship is to transfer a thing of value to the state, local government, or other recipient to carry out a public purpose of support or stimulation authorized by U.S. law, and (2) substantial involvement is expected between the executive agency and the state, local government, or the recipient in carrying out the activity contemplated in the agreement.
Equity Equity is the difference between fair market value of the property and the amount still owed on its mortgage.
Fee Simple A fee simple is an absolute and unqualified estate providing the owner with all incidence of ownership, including the unconditional power of disposition.
Franchising Under the franchising of external services, the government grants a concession or privilege to a private-sector entity to conduct business in a particular market or geographical area--for example, operating concession stands, hotels, and other services provided in certain national parks. The government may regulate the service level or price, but users of the service pay the provider directly.
Ground Lease A ground lease is a lease for the use and occupancy of land only, usually for a long period of time. It is also called a land lease.
Lease A lease is a written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and amount of rent.
Leasehold Estate A leasehold estate is an estate in real property held by a lessee/tenant under a lease.
Leveraged Leasing In leveraged leasing arrangements, the owner of a capital facility obtains the tax benefits of ownership of an asset by arranging debt financing and leasing the facility to a party who pays rent from revenues generated by the facility.
Operating Lease An operating lease is a type of lease, normally involving equipment, whereby the contract is written for considerably less than the life of the equipment and the lessor handles all maintenance and servicing. Also called service leases, operating leases are the opposite of capital leases, whereby the lessee acquires essentially all the economic benefits and risks of ownership.
Partnership A partnership is a legal relationship existing between two entities contractually associated as joint principals in a business.
Public-Private Partnership Under a public-private partnership, sometimes referred to as a public-private venture, a contractual arrangement is formed between public and private sector partners. These arrangements typically involve a government agency contracting with a private partner to renovate, construct, operate, maintain, and/or manage a facility or system, in whole or in part, that provides a public service. Under these arrangements, the agency may retain ownership of the public facility or system, but the private party generally invests its own capital to design and develop the properties. Typically, each partner shares in income resulting from the partnership. Such a venture, although a contractual arrangement, differs from typical service contracting in that the private-sector partner usually makes a substantial cash, at-risk, equity investment in the project, and the public sector gains access to new revenue or service delivery capacity without having to pay the private-sector partner. Public Purpose Debt Public purpose debt is debt used to finance a project intended to be of value to the general public. Such debt can include ordinary government securities, such as general obligation bonds or revenue bonds, as well as qualified private activity bonds.
Request for Proposals (RFP) An RFP is an announcement, often by the government agency, of a willingness to consider proposals for the performance of a specified project or program component. A request for proposals is often issued when proposals for a specific research project are being sought.
Request for Qualifications (RFQ) An RFQ is a procurement tool routinely used by state and local governments and the private sector to select partners in major systems acquisitions, mainly those involving real estate development transactions. This approach differs from the traditional request for proposals approach in that it places greater emphasis on the actual qualifications of the potential contractor--his or her track record--rather than how well the potential contractor responds to detailed project specifications and requirements.
Revenue Bonds Revenue bonds are bonds (instruments and indebtedness) issued by the public sector to finance a facility or equipment purchase, which, unlike general obligation bonds, are not backed by the full faith and credit of the government. Instead, their revenues are generated from the facility or equipment that they finance. Because they are state or local government bonds, their interest earnings are tax exempt under the Internal Revenue Code.
Revolving Funds Revolving funds are accounts authorized to be credited with collections that are earmarked to finance a continuing cycle of business-type operations without fiscal year limitation. For intragovernmental revolving funds, collections primarily come from other government agencies and accounts. A revolving fund can be used to finance an initial revenue-producing infrastructure project, and as revenues are generated by the completed facility and returned to replenish the fund, they can be used to finance subsequent rounds of project development. Revolving funds can help agencies accumulate the resources needed to make capital acquisitions over time, but should only be established when agencies have a record of sound financial management and when fund purchases are small and routine enough to warrant reduced scrutiny by Congress and OMB. Risk Unbundling Risk unbundling is a means of facilitating the development of public-private partnerships for the development of capital improvement projects. It calls for the segregation of private and public risks, with the private sector preferring to assume those risks that are of a commercial nature and can be appraised and controlled, leaving the residual risks to governmental entities.
Sublease A sublease is an arrangement whereby a lessee leases the property to a different end user while the lessor maintains ownership. Under such an agreement, the lessee retains all of its obligations under the lease. |
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