Prince George’s County Public Schools Blueprint Schools Phase II Program

Project Overview:

The Prince George’s County Public Schools’ (PGCPS) Blueprint Schools Phase 2 project will see the construction of eight new school facilities grouped into three separate bundles (the Project). Schools selected as part of the Project are located in Prince George’s County in Maryland and have been identified either due to the current condition of the existing school or due to population growth within the surrounding community. The scope of the project includes: - Design and construction of eight schools throughout the County with three staggered completion dates across a four-year construction period. - Demolition of 11 existing school facilities. - Maintenance and rehabilitation for each school throughout the 30-year term. Successful ENA: Upon being announced as the preferred respondent in September 2023 after a three-month Request for Proposals process, the Progressive Education Partners (PEP) team led by Plenary Americas, quickly entered into an Exclusive Negotiation Agreement (ENA) with the express purpose of advancing design development on the new schools beyond levels typically achieved in “hard-bid” P3 procurements. The nine-month ENA period culminated in July 2024 upon the signing of the Project Agreement, and Financial Close was achieved shortly after on August 20, 2024. The ENA period demonstrated PEP’s ability to create innovative solutions to unforeseen challenges. Initially, the Board of Education of Prince George’s County rejected the PGCPS Administrative Team’s request to enter into the ENA for the Project, citing the lack of a Project Labor Agreement (PLA) to adequately represent unions in the construction of the Project. This unforeseen request represented a significant change from the committed costs included in PEP’s proposal, attributable to increased labor costs. MCN, PEP’s Design-Builder, expertly navigated this process with the full support of the developer team and reached an agreement with PGCPS to commit to enter a PLA to build the Project. This agreement included an adjustment to the hard construction costs submitted during the RFP phase. As the ENA period progressed, the tightened interest rate environment between June 2023 and May 2024 significantly disciplined PEP’s design, construction and financing efforts, leading to many cost efficiency proposals and the eventual restructuring of the milestone payment regime. Plenary Americas, as Lead Developer and Financial Advisor (alongside PGCPS’s financial advisors) led PEP’s efforts to restructure the milestone payment mechanism. Ultimately, this resulted in $114.0 million of additional progress payments contributed to the Project that were tied to construction advancement of each of the three bundles of schools. Via PEP’s collaboration with PGCPS, the Project’s ENA period was a resounding success. This project clearly demonstrated the private sector’s ability to customize a P3 solution to a public sector entity’s current needs and growth plans through the advancement of design and financial engineering. Innovative Financing and Community Benefits: Financing for the PGCPS Blueprint Schools Phase II project is the single largest taxable municipal bond issuance in support of a social infrastructure project, ever. While also being designated as Sustainability Bonds per ICMA’s Green and Social Bond Principles, this US$660.8 million bond issuance dramatically reduces the overall financing cost when compared to a taxable, 4(a)2 private placement – traditionally where social infrastructure projects in the US have been financed. As one of the largest taxable municipal financings of 2024, this project financing was marketed to a broad group of investors, including ESG funds as well as international buyers. At pricing, the project financing generated more than $2.8 billion in orders from 57 different investors, representing a roughly 4.3x subscription level. This investor reaction highlights the importance of delivering meaningful social benefits through infrastructure development, serving communities with members below the poverty line, excluded or marginalized groups, people with disabilities, migrants, undereducated and underserved populations. The estimated percentage of students in poverty who will be served ranges from 40 – 67% and the majority of students served will be from diverse backgrounds, with close to 90% of the student population from African American, Latino, or other diverse backgrounds. Unique to this project, and a first of its kind for the P3 market, is the creation of a Community Equity Investment Program. This program provides an opportunity for Prince George’s County residents to invest equity in the project, contributing funds to build schools in their community where their children are educated. Community members who choose to participate in this crowdfunding program will receive economic returns on their investment over the 30-year operating period which match the returns of PEP’s equity members. This Community Equity Investment Program will be delivered through the dedicated infrastructure Reg-CF Platform, InfraShares. Upon financial close, the newly restructured payment mechanism, bond investor demand, and advanced design development resulted in a final availability payment significantly below the affordability threshold set by PGCPS. Design Quality and Environmental Stewardship: The PGCPS is rooted in the approach of sustainable design and environmental responsibility, guided by a commitment to excellence in both performance and educational impact. Sustainable Design Excellence. This project is designed to achieve LEED v4 BD+C: Schools certification, with a minimum target of LEED Silver level, demonstrating a clear commitment to high-performance building standards. Each element of the design contributes to reducing environmental impact while enhancing learning spaces for students. Net Zero Energy Readiness. Sustainability is embedded into the project’s infrastructure through the strategic incorporation of geothermal systems, ensuring buildings are net zero ready. Plans are in place for the future integration of photovoltaic panels, enabling full net zero energy operation in the near future. Climate Change Action Plan. The design directly supports the Prince George’s County Public Schools Climate Change Action Plan, aligning with its comprehensive goals for decarbonization, climate resilience, and educational outreach. Local Community Engagement: The PGCPS Blueprint Schools Phase II project is designed not only to educate but to uplift local residents – creating a lasting socio-economic impact in the communities it serves. In partnership with PGCPS, the project team have launched a comprehensive Community Benefit Program focused on equity, opportunity, and empowerment. This initiative includes targeted support for Community-Based Businesses (CBBs) and Minority Business Enterprises (MBEs), along with investments in workforce development, mentorship, and community wellness. Through a formal mentor-protege program, local firms are being embedded in every phase of the design-build process, building capacity and knowledge that will endure well beyond the project Substantial Completion date. Apprenticeship programs will provide County residents with access to valuable trade skills, while internships for PGCPS students and alumni foster early career exposure and development. The project’s impact stretches beyond construction, forming connections across diverse industries during the services period. The entire PEP team is aligned to ensure the local communities have access to the wealth of opportunities that become available as a result of this the PGCPS Blueprint Schools II project.