Government Contracts

A Miles & Stockbridge team was involved in an innovative and award-winning public finance project that not only will help revitalize and protect Annapolis’ historic district but also could serve as a model for other jurisdictions looking to make climate-resistance improvements.

John A. Stalfort and Christopher F. Sennett served as bond counsel for the Maryland Economic Development Corp. (MEDCO) on the public-private partnership (P3). MEDCO, the City of Annapolis and Amber Infrastructure redeveloped the Noah Hillman Garage, the only large parking structure near downtown Annapolis, while also raising funds to perform flood-mitigation/resilience building improvements at nearby City Dock, which connects the city’s waterfront with the Chesapeake Bay.

The project received “Highly Commended” recognition Oct. 26 at the 2023 P3 Awards, which honors excellence in the public-private partnership industry around the world, after being named to the shortlist for “Best Financial Structure Project.” The awards are judged by an international panel of government officials, civil engineers, investors and consultants with decades of experience in P3 projects.

The judges, in recognizing the Annapolis project, praised it for “showing how P3s can be done on a smaller scale and for addressing strong and clear environmental, social and governance needs.”

“Annapolis’ waterfront, including City Dock, is vital to its economy, culture, history and way of life,” said Stalfort. “We are gratified that the plan to address much-needed improvements while maintaining the character of the waterfront has been a success so far.”

“We are honored that the Annapolis Mobility and Climate Resilience Project has been recognized by the P3 Awards,” added J. Thomas Sadowski, executive director of MEDCO. “Working with Miles & Stockbridge, the City of Annapolis and Amber Infrastructure on this plan has been gratifying because not only are we contributing to improving downtown Annapolis, the historic heart of an historic city, but we are developing a model for P3 transactions that hopefully can be used by other jurisdictions to address vital infrastructure and sustainability needs.”

The city’s historic district, which includes City Dock, suffers from regular sunny-day flooding caused by rising sea levels. Studies predict that, without implementing corrective measures, City Dock could flood daily by 2040. The city-owned garage, meanwhile, had only undergone patchwork repairs until it was demolished in 2022 after 50 years in existence.

Annapolis officials saw a chance to address the parking needs downtown and monetize revenues to be generated by the new garage to fund a significant portion of the necessary flood-mitigation/resilience-building improvements at City Dock. In a typical P3, the city would contract with a private party, which uses its own funds and raises others to construct the garage and then maintains and operates it for a specified period, recouping its investment during that time.

Several requirements by the city and the proposed plan of finance created competing consequences, however. The city wanted to maintain ownership of the garage and avail itself of the lower cost of tax-exempt bonds to fund the costs of the new garage and the City Dock resiliency project. A typical P3 model with a private party serving as the concessionaire would not accommodate both requests, Stalfort said.

To solve the dilemma, MEDCO, a quasi-governmental entity, agreed to become the concessionaire as well as issue the tax-exempt bonds. MEDCO then contracted with a private party to construct, operate and maintain the new garage, subject to IRS-mandated requirements.

“This would allow the city to continue to own the garage and make the private party the developer/manager of the property,” said Sennett.

The P3 Awards judges, in citing the project, said they “welcomed its ability to include tax-exempt financing while also retaining the involvement of a concessionaire as agent.”

A $70 million agreement to revitalize the garage and City Dock was approved in September 2022. The Hillman garage, demolished in May 2022, reopened in June 2023, more than a month ahead of schedule. It features 150 more parking spaces than the old garage, gateless entry and exit and electric vehicle charging stations, plus special-event space on its roof.

The city received a one-time payment of $25 million in exchange for the garage to be operated by Annapolis Resilience and Mobility Partners (AMRP), a subsidiary of Amber Infrastructure, for at least 30 years. AMRP will collect parking revenue, and the city will receive about $1 million annually. Construction on the $54 million overhaul of City Dock is scheduled to begin next year.

MEDCO’s role as concessionaire could be replicated by other municipalities in Maryland that want to develop their own publicly owned infrastructure projects, said Sennett, adding public or quasi-governmental agencies in other states could also serve as concessionaires if allowed by law. Taxable bonds, he added, also give governments “greater flexibility” to partner with the private sector for climate-related projects.

“We hope,” said Stalfort, “this model for funding urban climate-resilience improvements will serve as a promising prototype for future P3 transactions.”

About Miles & Stockbridge's Public Finance Practice

Miles & Stockbridge is home to one of the leading public finance practices in the entire mid-Atlantic region.

For more than 45 years, the firm has been included in The Bond Buyer's Municipal Marketplace as a firm whose opinions are generally accepted in the field of municipal finance, and we have represented the state of Maryland, its various agencies, political subdivisions and municipalities for more than 45 years. We have also handled bond transactions in Washington, D.C., Virginia, Delaware, Pennsylvania and beyond.

Our focus is closing the deal and solving problems with innovation and flexibility, while staying within complex applicable tax laws and state law restrictions. We skillfully structure and restructure transactions that enhance value for the borrower and reduce lender risk and taxes. One of our greatest strengths is coordinating multifaceted transactions within tight time-frames—concluding in an efficient, organized closing. 

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