Page 60 - U4SSC Compendium of practices on innovative financing for smart sustainable cities projects

Financial information

Since the Ogal programme consists of a series of sub-projects, the financing mechanisms vary:

Iwate Prefecture Shiwa Town Energy Ogal Hoikuen
Sub projects Ogal Plaza Ogal Base Ogal Centre
Football Centre Hall Station (Childcare)
Shiwa
Iwate Prefecture Ogal Plaza Co., Ogal Centre Co.
Project Football Ltd. (SPV-Public Ogal Co., Ltd. Shiwa Town Green Ltd (SPV-Public Kyojokai Social
Owner (SPV) Energy Welfare Corp.
Association and Private jv) and Private jv)
Co., Ltd.
Shiwa Town (with
Project Ogal Shiwa Co. Ogal Shiwa Co. – Shiwa City Hall – – –
Partner Ltd. Co. Ltd (SPV)
Ltd.)
Public land Public land Public land
utilization PFI (BTO) Sole utilization
Methods PPP-Agent PPP-Agent utilization (non-
(private 15 years source (private
business) business) profit business)
Soccer ground Library, cultural Hotel, Public District Paediatrics, Childcare
(artificial turf) centre, childcare, volleyball administration heating nursery, offices, (Capacity: 150)
Facility farmer’s market, court, office (town retail, restaurant,
restaurants, restaurant, hall, Ogal gym, children's
shops, clinic, convenience Plaza and centre, lodging
office store houses)
Cost <Public S10.7M $3.1M $3.3M
financial $175M <S8.1M incl. $7.2M $33.8M $5M ($0.4M as equity <subsidy $2.2M
burden/ <subsidy $0.6M> $0.7M equity <$33.8M> investment to mostly by central
subsidy> investment> Ogal Centre Co.) government>
Financed by Private project
Financing Iwate Football Project finance Private project finance (15 N/A Private project Corporate finance
finance
(10 years)
finance
Association years)
Completed April 2011 June 2012 July 2014 May 2015 July 2014 December 2016 April 2017
Land usage Lease Fixed-term lease – Fixed-term lease
Landowner Shiwa Town
In the above, two of the sub-projects are highlighted:

• Ogal Plaza - consists of a public library, cultural centre and farmers market. It was developed
by a sub-company (Ogal Plaza Co.) set up to serve the project by Ogal Shiwa Co. (public-
private joint venture). Its financing came from Ogal Shiwa Co., Urban Redevelopment Promotion
Organization and commercial banks through equity investment, public funds and a loan (term of
10 years at a 2.125 per cent interest rate). The shareholder ratio of Ogal Plaza is: 46.67 per cent
by the town; 40 per cent by the Urban Redevelopment Promotion Organization; and 13.33 per
cent by Ogal Shiwa Co. (the town together with 9 companies). The library and adjunct public
facility were financed by the town (USD 8.1 million or about 73 per cent of the CapEx). It was
a one-off payment upon completion of the construction. The town operates the library, while
hard facility management is taken care of by the sub-company (Ogal Plaza Co.). The interior
and equipment of the farmers market was partially financed by the membership fees (around
USD 500) of the farmers who established it.

• The town hall (municipal administrative office) reconstruction was financed through a
government-pay PPP or the private finance initiative (PFI) model. In this case, it was initially
financed solely by the private SPV - Shiwa City Hall Co. About 60 per cent of the money came as
a syndicated loan from banks and the rest was equity investment from sponsors — PFI consortium

48 Compendium of practices on innovative financing for SSC projects | January 2023