Texas Municipal Financing Alternatives
Structure
INTEGRATED APPROACH
LEGAL Facilities Financing
Provides financing through sourcing debt and/or equity investment Utilizes $250 mm balance sheet of firm to secure low cost and high leverage loan Takes completion guarantee of new project Willing to provide equity investment from internal capital when needed
Acts as General Contractor
Founded in 1924 3,000 employees 3 offices in Texas (Dallas, Houston, Austin) Nation’s 16th largest government builder and 13th largest domestic builder overall1
1. Source: 2019 Engineering News-Record (ENR Rankings) for JE Dunn Construction
2
Government Experience
100+
government projects last 10 years
$1.37B
delivered using Alternative Financing Methods
$23.8M
| 78K
SF
Avg govt project size
8.4M
SF delivered for public entities last 10 years
4.2M+
$2.6B
government contracts last 10 years
SF delivered using Alternative Financing Methods
3
Sample Projects
4
OVERVIEW OF JE DUNN ALTERNATIVE DELIVERY
1. 2. 3. 4. 5. 6.
Risk Matrix Our Platform Traditional Model of Delivery Benefits of Alternative Financing Savings in Costs Approaches to Financing
5
Risk Matrix
6
Our Platform
• JE Dunn Capital Partners (“JEDCP”) offers an integrated Design/Build/Finance platform to work with municipal entities on financing vertical construction projects • Government • Healthcare • Educational • Justice • Public Facilities • Public-Private Mixed Use 7
Traditional Model of Delivery • Municipal entities have traditionally used a procurement process with separating the construction and financing of projects • Financing arm borrows money either before or after construction process complete • Typically, majority of funds borrowed in the tax-exempt public bond market • Historically very low cost of capital • However, structure typically does not allow for funds to be drawn down over time, increasing carry cost 8
Alternative Financing Benefits • Under Same Contract – Assume Risk Utilize synergies in design process Save on project schedule timing- estimated 15% savings in overall cost • Avoid Public Fatigue • Ability to begin construction quicker • Match cashflows of re-payment to create savings 9
Savings in Cost
10
Approaches to Financing • Tax-Exempt and Taxable Debt • Availability Payments Transactions with creditworthy public and private parties Higher loan to cost ratio (up to 90%) with minimal equity Bond or bank financed and15 to 30-year term • Build to Suit Bank/Institutional Debt Credit Tenant Lease (CTL) Bond Financing Equity Investment 11
TYPES OF ALTERNATIVE PROJECT DELIVERY
1. Lease-Back 2. Design-Build-Finance Transfer at Opening 3. Design-Building-Finance Transfer Over Time
12
LEASE-BACK
• JEDCP owns the building and leases it to governmental entity as opposed to buying it outright to save money • Lease capitalized and negotiated • Can be a set term with an option to purchase after 10/15 years
13
DESIGN-BUILDFINANCE TRANSFER AT OPENING
• JEDCP owns the building through opening • At opening, municipal entity buys the building and takes ownership • Payment not needed until construction complete but payable in lump sum
14
DESIGN-BUILDFINANCE TRANSFER OVER TIME
• JEDCP owns the building through opening • However, municipal entity pays for building over time in installments • Reduces carry cost and resulting in savings • Payments can be matched with revenue coming into pay for project 15
Contact Information
JOHN WILLIFORD
Finance Director JE Dunn Capital Partners LLC Located in Dallas, TX office john.williford@jedunn.com O: (469) 324-4938 M: (704) 576-2086
• 10 years of experience in public finance • Served as a municipal advisor and investment banker in his career • Worked on high grade and high yield financings for traditional government entities and for 501c(3) entities • Structured 100% tax-exempt financings and unique project finance solutions with equity, subordinate debt, bank debt, and tax-exempt bonds • Closed over $3.5 billion in bond financings 16