P3 GROUP FUNDS $12MILLION IN 117 DAYS FOR WEST MEMPHIS, AR

The  city  of  West  Memphis,  AR  entered  into  a  development  agreement  with  The  P3  Group  Inc..  to  design ,  build,  finance  (2)  new  fire  stations,  (1)  police  substation,  and  (1)  new  municipal  courthouse.  The  city  of  West  Memphis  had not  constructed  any  new  municipal  facilities  since  1974.  The  city had  just  procured  a  general  contractor  for  a  new  library  under  a  design,  bid,  build  methodology.  The  project  came  in  $2,000,000  above  budget.  Also,  in  the  state  of  Arkansas  municipalities  that  finance  projects backed  by  the  full  faith  and  credit  of  the  city  was  limited  to  a maximum five  year  term  on  the  indebtedness.  At  the  time  that  The  P3  Group  was  engaged  by  the  city  it  was  considering  borrowing  $12,000,000  secured  by  its  own  cash  on  hand  at  a  local  bank.  The  note  was  going  to  be  for  a  term  of  5  years  at  an  interest  rate  of  3.5%.  The  city  was  interested  in  securing  financing  with  a  longer  amortization  period,  lower  interest  rate,  and  wanted  to  design  a  project  that  would  be  constructed  in  budget.  

The city of West Memphis entered into a development agreement with The P3 Group, Inc. to design, build, finance the new municipal facilities via a public private partnership. The P3 Group executed the project using an alternative delivery method consisting  of a design-build project delivery system and an integrated project delivery method. The integrated project delivery method allowed The P3 Group’s team, consisting of CHASM Architecture and CORE Construction, to engage in programming sessions with all of the city‘s stakeholders. The programming sessions allowed The P3 Group to work collaboratively with the design-build team and city stakeholders to establish firm program and budget for the projects.  The  design-build  team  then  worked  collaboratively  to  design  the  project  to  the approved  budget.  Also,  since  The  P3  Group  sell  its  leases  in the  capital  markets  as  municipal  bonds,  we  were  able  to  create  a  structure  that  did  not  require  a  pledge  of  the  full  faith  and  credit  of  the  city.  

The  P3  Group’s  design-build  team  was  able  to  design  the  facilities  to  the  programming  standards  set  during  the  various  programming  sessions.  Our general  contractor  was  able  to  provide  a  Gross  Maximum  Price  (GMP),  guaranteed  by  a  payment  and  performance  bond,    that  was  within  the  budget  established. The  P3  Group  was  able  to  deliver  $12  Million  of  capital, a  GMP,  and  started  construction  of  the  projects  within  117  days  from  the  date  that  the  development  agreement  was  executed.  The  lease  purchase  agreement  is  for  20  years  at  3.35%  interest  with  zero  closing  costs  paid  by  the  city  with  a  $1  buyout  at  the  end  of  the  lease.  This  project  is  a  great  example  of  what  can  be accomplished  when  the  public  sector  leverages  private  resources.