Page 61 - U4SSC Compendium of practices on innovative financing for smart sustainable cities projects

members (9 companies). Upon completion of the construction and transfer of facility ownership
to the town, the town pays to the SPV using its budget over the contract term (15 years). Since
this is a town hall, it does not generate any revenue; thus, it is repaid for with taxpayer money.
That is, it was initially financed 100 per cent by the private party and the town will repay 100
per cent of that amount over 15 years (unitary payments over the contract term).

Ogal Shiwa Co. is a development corporation originally set up by the town of Shiwa to execute
the “Shiwa town PPP plan” through design, procurement, finance, finding tenants and operations.
It started as a 100 per cent publicly financed project management company and concluded
a comprehensive agreement with Shiwa town. For the first year of operation, Ogal Shiwa Co.
conducted market research and interviews to find potential tenants and investors. After one year,
the company gained capital from the private sector and became a project implementation company.
All the capital investors were local companies within Shiwa or nearby cities.

Since the town of Shiwa remains the landowner, the town receives land lease fees for 32 years
(design and construction for two years and operations and maintenance for 30 years). Today the
land generates enough tax revenue to cover operation and maintenance costs of the public facilities
built within the project area as well as investment in other parts of the town.

Figure 12: The scheme of relationships between the Shiwa town and project companies for sub-
projects

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