Project Summary:
Background
The District of San Borja, a vibrant center for commercial activity in Lima, Peru, suffered a high deficit of public parking. To help alleviate this problem, the District elected to pursue a PPP to deliver much-needed underground parking.
Project Structure
The project emerged from an unsolicited proposal that would be self-financed by the private partner, meaning the project was expected to generate its own revenue sufficient to recover costs and provide a suitable rate of return without any public financing or guarantees. The proposed contract covers a period of 32 years and the project has an estimated investment value of USD 13,479,600.
Under the project agreement, the private partner would undertake to design, finance, build, operate, maintain, and transfer a facility comprising 14,320 square meters of underground space that would function as a three-story parking and service center. The space is located below a public park and the completed facility would include 353 parking spaces (9160 m3) and commercial enterprises such as banks and pharmacies (5180 m3). It is estimated that 2800 vehicles would use the parking center on a daily basis. It is also estimated that the construction phase will create 600 to 800 jobs and that, thereafter, the project operations will produce about 40 permanent jobs.
The proposed contract would entitle the municipality to an 8 percent share of the gross income, before sales tax, from the parking fees and rental income from commercial space. The private party would have the exclusive right to set and negotiate prices on both the parking and commercial rental operations.
Lessons Learned
Two concession agreements concerning the construction of the parking and service center and concerning the usufruct and surface rights were approved by the municipal parliament for signature on 18 December 2018, but the contract signing is yet to be confirmed.94 Nonetheless, this project highlights the possibility of optimizing limited space in dense, urban areas by considering underground development projects.
