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

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38-1 Obraztsov Str.,Moscow, Russia(495) 689 – 93-74gosnaim@ya.ru

Mikhail Grin – General Director

Thank you for your attention!

NATIONAL AGENCY

OF RENTAL HOUSING