Concession Agreement Landlord

The port authority may or may not hold a financial stake in the complementary entity created by the concessionaire (depending on legal restrictions). If the port authority decides not to participate financially in the supplementary award of the development of port facilities under a concession contract, its role as an independent and impartial public body does not change significantly. The only real change is the transfer of responsibility for investments from the port authority to the concessionaire. Full concession contracts (including BOT agreements) and leases generally provide that fixed assets are reimbursed to the Port Authority at the end of the lease. The transfer can be made with or without compensation, mainly depending on the duration of the contract and the investment value of the fixed assets. It is not uncommon for a port authority to pay the concessionaire or lessee the depreciated value of the assets at the end of the concession period. If the operator does not comply with its obligations, a port authority usually has the possibility to terminate the contract. Dismissal for inexplicable reasons is very serious, especially for the parties to the financing, and should be avoided as much as possible. The operator should be given a reasonable period of time to demonstrate compliance with the contractual conditions and to remedy the infringements.

However, an operator may, for example, be in a difficult financial situation and may not be able to pay the concession fee. In this case, the port authority cannot directly denounce the agreement, but take into account the seriousness and likely duration of the problem. Where it is established that it is a temporary regime, the port authority may, possibly in consultation with the operator`s lenders, enter into an agreement with the operator (e.g. B a payment deferral scheme) which avoids terminating the agreement (see Box 48). BOATS. It is also possible that the legal title of the country is acquired directly by the concessionaire. Under a BOOT model, the parties agree to own all assets that will be transferred to the government at the end of the concession. For many large terminal operators, the BOOT model is a preferred option. But some concessions can be difficult to remove.

For example, you may have offered the tenant free parking for their first year, and you want the tenant to pay after the initial rental period for the place. Your tenant might be upset about having to pay for something that was free and might be looking for another apartment. If the concessionaire obtains the right to construct essential elements of the operating facilities and operational port infrastructure (mainly wharves and operating works), a concession could be combined with a BOT agreement. In the case of legislation that qualifies part of the infrastructure as public, the concession may be considered a public licence. However, the part of the concession that constitutes a public licence is generally not negotiable. The public authority issuing the licence generally reserves the right to unilaterally amend the conditions of licence. Major BOT agreements combine many variations of long-term leasing with investment commitments made in advance. In port reform, the most used models are BOT, BOOT (build-own-operate-transfer), BTO (build-transfer-operate) and WBOT (wraparound BOT).