Mechanisms of realization of rental housing projects based on Public-Private Partnership in Russian Federation NATIONAL AGENCY OF RENTAL HOUSING
May 09, 2015
Mechanisms of realization of rental housing projects based on Public-Private Partnership in
Russian Federation
NATIONAL AGENCY
OF RENTAL HOUSING
О НАС / ABOUT US
• Pattern of ownership- Joint-Stock Society
• Full name –NATIONAL AGENCY OF SOCIAL AND
COMMERCIAL RENTAL HOUSING STOCK DEVELOPMENT
• Shortened name –
NATIONAL AGENCY OF RENTAL HOUSING
• Share capital– 30 000 000 rubles
• Number of established companies – 6
(St. Petersburg, Saratov, Perm, Yekaterinburg,
Irkutsk, Tver)
PPP Subject in Rental Housing Domain
• Includes the relations during interaction between public and private sector concerning construction (also reconstruction and modernization) of rental accommodations, operation and managing of infrastructure units.
Economical phases of PPP
• First phase - “cost phase” during which the private and
public sides invest finances in rental housing units (and
other infrastructural units that are connected with public sector
functions);
• Second phase - “income phase” during which services
are provided via the units and return on investments occurs.
Objective of using PPP in rental housing
Key Components
To speed up the rate of socio-economic development of the region at the cost of extra investments in residential construction, drawn from off-budget sources, as well as at the cost of improving the service quality of the public sector;
Objective of using PPP in rental housing
Key Components
To save budget funds in the short run by allocating the financing in the long run;
Objective of using PPP in rental housing
Key Components
To increase efficiency of budget funds’ use via involvement of the private sector
Risk Division
Risk Division
is an
indispensable
condition of PPP
relations
The Difficulty of applying this policy is as follows
On one hand, the private investor seeks to increase income and thus is inclined to underestimate the risks of the PPP project (direct relation “risk – income”);On the other hand, the public body tends to reduce responsibility and thus is inclined to maximize the risks that are passed on the private sector (inverse relation “risk – income / responsibility).
Contractual and legal forms of PPP in Rental Housing
Concession agreements in
accordance with Law on
concessions.
Agreements on Public-Private
Partnership within the bounds of PPP
legislation.ГЧП.
1 2
Non-concession contract forms, stipulated by Civil Code of Russian Federation, adjusted for
required standards of applicable federal legislation.
3
Advantages of concession agreement
1
2
3
Clarity of legal regime in view of availability of a separate federal law, which regulates the
order of concluding and implementation of PPP agreements
Availability of certain practice in realization of concession projects, including those of a
regional level.
Possibility to apply separate mechanisms of state support and PPP instruments,
including investment involvement by means of publishing concession bonds.
Base models of PPP, stipulated by regional laws on PPP
Construction - Ownership - Exploitation - Transfer COET
Construction - Ownership - Exploitation COE
Construction - Exploitation -Transfer CET
Forms of Private associate’s Participation in PPP projects
Designing
Modernization
Maintenance Financing
Exploitation
Construction
Advantages of contractual and legal form of PPP
Flexibility in structuring of the project, implemented on PPP agreement bases.
1
Possibility to use other forms in case of inapplicability for specific conditions of the deal, including restrictions by Law of concessions, which influence securing the financial attractiveness of the project and complying with project creditors’ interests.
2
Occurrence of successful experience in realization of PPP projects within the bounds of this form (in other domains).
3
Non-concession legal and contractual forms of PPP
• Investment contracts between public and private partners determined by article 421 of Civil Code of Russian Federation and Investing Activity Law
• Operator agreement can also be counted as a contractual form of PPP; it is used as a contractual form in order to realize infrastructural investment projects.
• Lease contract with investment conditions. These conditions assume investments into development (reconstruction) of the leasehold by the leaseholder at the cost of personal means or loans (including housing and communal economy sphere)
• (Regulations of corresponding regulatory framework and development of court practice impose restrictions on financial instruments available for use )
Public Policy documents of Rental Housing development in the region in PPP form
Order document on rental housing PPP development on superior government body level of
subject of the Russian Federation
1
Model plan of development and creation of Rental Housing stock by using PPP
2
Socio-economic development strategy of subject of the Russian Federation, including regulations on
Rental Housing development by using PPP
3
Long run goal-oriented programs of subject of the Russian Federation, including affirmed PPP Rental
Housing projects.
4
Financing Structure of Rental Housing Projects
Capital Costs Financing Instruments in PPP Rental Housing Projects
Long-run Financing– Bond interest,
including retirement fund means, drawn
by issuing mortgage, corporate
and concession bonds; Financial institution loans (ВЭБ, ЕБРР, IFC
and others.)
Grants by international
financial institutions
Shared Sponsorship,
Including personal funds of
the private investor as well as those of National
Welfare Fund
Monitoring and control of implementation of PPP
agreements Compliance of liabilities by both parties of PPP agreement, including – Continuity of delivering and high quality of infrastructure services of the property; – Timely payment pattern by both parties of PPP agreement.
1
- Risk Management of Public and Private Parties; -Organization of responsible authority work; -Project modifying activity;- Environmental changes response, in accordance to threats and new opportunities for the project.
2
Transfer of assets and other transaction control upon completion of the project
3
ЭФФЕКТИВНОСТЬ РЕАЛИЗАЦИИ ПРОЕКТОВ СТРОИТЕЛЬСТВА АРЕНДНОГО ЖИЛЬЯ ПО СХЕМЕ
ГЧП1.1
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38-1 Obraztsov Str.,Moscow, Russia(495) 689 – [email protected]
Mikhail Grin – General Director
Thank you for your attention!
NATIONAL AGENCY
OF RENTAL HOUSING