Preliminary market consultations are searching for the strategic partner and economic model of the Smart District Špitálka

Throughout the summer months have been ongoing another phase of the second round of preliminary market consultations. After the group consultation, that took place in the June this year, the municipality have focused on the individual discussions with the potential strategic partners of the project. The aim was to enhance the connections, discuss the mutual conditions and limits, and draw the more specific contours of the possible future cooperation.

The representatives of the potential strategic partners have brought their insights into the roles of the city and the developer in the project, division of the contingencies, and setting the right programmatic mix with appropriate rent to make the project viable. The foreign experiences of the developers with the innovative projects with similar ambitions have brought some valuable information and ideas.

The economic model for the Smart district Špitálka is now under consideration in two variations – Public Private Partnership (PPP), or Join Venture (JV). With the PPP project, the municipality searches for the external strategic partner – concessionaire, usually composed of the whole group of the partners (investor, construction and engineering company, facility manager, financing institutions etc.). This ensemble will project, construct and finance the complex, remaining in the municipal ownership, and collect the rent for the municipality. In return, the city will annually pay back the set amount of money – concession, during the agreed time.

Regarding the second option, the municipality would establish a new company together with the investor, that will be the majority shareholder, with clear discretions and duties towards the municipality. This “Join Venture” will project, construct and finance the complex in the ownership of the venture. The municipality will keep the “curating” role of selecting the programme and setting the rent amount, which will be guaranteed to the investor by the “guarantee of the minimal income” paid by the city – therefore, the risk of the occupancy of the buildings and viability of the programme goes to the municipality. After the agreed time, the share of the investor will be obtained by the city.

The next steps in the process are the preliminary market consultations for the English speaking investors and partners, which will take place on 13th October. The preparation of the project will progress in the first half of the next year with the feasibility study, that will question the public demand and refine the proposed programme, evaluate the 2 proposed forms of partnership with the investor, and choose the one. Until then, the upcoming third round of the preliminary market consultations will help to define the parameters of the final selection procedure for the strategic partner.