In addition to the construction of new facilities, project owners can also use the concession approach to lease existing toll facilities to a private partner. Known as long-term lease concessions, these arrangements involve the lease of existing, publicly financed toll facilities to a private sector concessionaire for a prescribed concession period in exchange for an upfront lease payment (i.e., a concession fee). The private partner then has the right to collect tolls on the facility for a specified concession period. The private partner must operate and maintain the facility over the life of the concession period and in some cases make improvements to it. Much like the financing structure of DBFOM transactions, private investors raise financing for these sizeable concession fees by leveraging future toll proceeds generated by the leased facilities.
Long-term leases are procured on a competitive basis, with awards going to the qualified bidder making the most attractive offer to the sponsoring agency. The most important criterion for the award of a long-term lease concession generally is the amount of the concession fee. Other criteria may include the length of the concession period and the credit worthiness and professional qualifications of the bidders.