A fee structure often used in public private partnerships ( www.practicallaw.com/9-501-4894) in which the public agency makes payments under the relevant agreement to the private sector party once the project or facility is made available for use (subject to compliance with the agreed performance criteria and standards). Examples of a relevant agreement include:
Concession ( www.practicallaw.com/7-383-2171) agreements.
The public agency bears the demand and collection risks under this structure because the amount it must pay to the private sector party does not change even if the project is not used as anticipated. As a result, this fee structure relies, and can impose significant pressure, on the public agency's budget. However, making availability payments over the life of the project may be preferable to making the capital investment necessary to build the project. Availability payments are an alternative to end user fees or shadow tolls ( www.practicallaw.com/8-507-2177) .
For more information on availability payments, see Practice Notes, Negotiating Concession Agreements for Public Infrastructure Projects ( www.practicallaw.com/7-506-2112) and Public Private Partnerships: Issues and Considerations ( www.practicallaw.com/3-504-9995) .