4.4  Long-Term Lease Concessions

A total of five long-term lease concessions have reached financial close in the U.S. beginning with the Chicago Skyway, in 2005. In the following three years, three additional long-term lease transactions took place. Since 2008 only once lease transaction has occurred: the PR-22/PR-5 toll roads in Puerto Rico in 2011. While other project owners have considered leasing toll facilities, no other lease concessions have occurred in the ensuing time.

Long-term lease concession can take several forms. These include:

  Debt transfer lease transactions where a fee paid by the private concessionaire is used to defease the toll facility's underlying publicly-held debt, with no additional funds available to the public sponsor. Such transactions require the private concessionaire to maintain the road to specified standards throughout the concession period and may also require the private investors to make additional capital repairs to address safety and condition issues.

  Hybrid debt transfer and new construction lease transactions where the private investor pays a fee that is used to defease the underlying publicly-held debt on the facility and agrees to complete new center-line construction extending the existing toll facility. With this model additional payments in excess of the debt underlying the existing road are not made. In some cases, new construction may only be required at a future point in time if certain predetermined performance levels are achieved.

  Value extraction lease transactions where a fee paid by the private investor is used to defease any underlying public debt associated with the toll road and provide the public sponsor leasing the facility with a sizeable infusion of additional funds that it can use for other needs. These transactions require the private investors to maintain the road to specified standards throughout the concession period and may also require the private investors to make additional capital repairs to address safety and condition issues.