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Privately Funded EnhancementsTo Public Projects

A Legal Model For Mixed Funding

Of Public Construction

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Public Requirements

• Onerous financing requirements

• Public bidding required

• Lowest responsible bidder builds project

• Performance and payment bonds

• Public ownership and management on completion

• Municipal control of construction quality and schedule

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Private Advantages

• Donor control over enhancement design• Value engineering to control donor cost• Closed end donor financial exposure• Single source trade contracts• Flexible financing and tax advantages• Naming rights

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Uses For Legal Model

• Park facilities• Sports facilities• Service memorials• Public art installations• Theaters• Civic centers

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Legal Elements

• Donors form LLC or other legal entity• Donor entity contracts design services• Municipality approves final design• Municipality provides standard construction contract terms

– Performance and payment bond

– Acknowledgment contract will be assigned to municipality

– Identification of municipal personnel in charge of construction

• Donor entity negotiates fixed price construction contract• Donor entity arranges funding of construction• Donor entity donates funding and contract to municipality• Municipality accepts assignment and administers contract

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Typical Documents

• Donor entity organization documents

• Donor entity design services contract

• Donor entity construction contract including municipal requirements

• Donor entity document conveying funding to municipality

• Donor entity assignment of construction contract to municipality

• Municipal acceptance of financial gift

• Municipal acceptance of construction contract assignment

• Remaining typical construction document package

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Advantages Over Traditional Methods

• Donor selection of designer• Donor selection of builder• Flexible financing methods• Minimum municipal staff commitment• Municipal control of schedule and quality

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