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What is Build Own Operate and Transfer?

Build Own Operate and Transfer A Build Own Operate and Transfer (BOOT) agreement is often used in infrastructure projects, allowing a private entity to build and operate infrastructure before transferring it to a public entity.



Sample template:



BUILD OWN OPERATE AND TRANSFER (BOOT) AGREEMENT

For the Development of Liberty Energy Park


1. Parties to the Agreement

This Build Own Operate and Transfer (BOOT) Agreement (the "Agreement") is entered into and made effective as of this [Date], by and between [Private Entity Name], a [State] [Corporation/LLC/Partnership] (the "Developer"), and [Public Counterparty], a public authority organized under the laws of the United States (the "Public Authority") (individually a "Party" and collectively the "Parties").



2. Project Scope

2.1. Project Description


The Liberty Energy Park (the "Project") consists of the design, construction, financing, ownership, operation, and maintenance of an energy generation facility and associated transmission infrastructure. The Project will be located in [Location] and have an installed capacity of [Capacity] megawatts.



2.2. Development Period


The Developer shall complete the design, financing, and construction of the Project within a Development Period commencing on the Effective Date and lasting [Number of Years] years (the "Development Period").



3. Responsibilities of the Developer

3.1. Development and Construction


The Developer shall, at its own expense and risk, design, engineer, finance, construct, test, commission, and complete the Project in compliance with the timeline, specifications, terms, and conditions set forth in the Agreement. The Developer shall obtain, maintain and comply with all permits and licenses required, and adhere to all applicable laws and regulations.



3.2. Operation and Maintenance


The Developer shall operate and maintain the Project in a safe, efficient, and environmentally sound manner, complying with applicable laws, regulations, and industry standards. The Developer shall enter into a maintenance agreement with a qualified maintenance service provider to ensure optimum performance and operational efficiency throughout the Operation Period.



3.3. Insurance Coverage


The Developer shall procure and maintain adequate insurance coverage for the Project, including but not limited to, construction insurance, property damage insurance, commercial general liability insurance, and worker's compensation insurance, with reputable and financially sound insurers.



4. Responsibilities of the Public Authority

4.1. Project Site


The Public Authority shall provide to the Developer access to the Project Site during the Development Period and the Operation Period. The Public Authority shall be responsible for obtaining and maintaining all rights and clearances associated with the Project Site.



4.2. Support


The Public Authority shall cooperate with the Developer in obtaining necessary permits, licenses, and approvals required for the development, construction, and operation of the Project.



4.3. Regulatory Requirements


The Public Authority shall ensure that the Developer is made aware of their obligations under the applicable laws, regulations, and permits pertaining to the Project.



5. Project Financing

The Developer shall be solely responsible for obtaining and arranging the funding required for the development, construction, and operation of the Project. The Public Authority shall not be liable for any debt or financial obligations arising from the Developer's obligations under this Agreement.



6. Revenue-Sharing Arrangements

6.1. Establishment of Revenue-Sharing Mechanism


The Parties shall establish a revenue-sharing mechanism, whereby the Developer shares a percentage of its net revenues generated by the Project with the Public Authority according to the terms and conditions set forth in this Agreement.



6.2. Revenue-Sharing Percentage


The Developer shall pay to the Public Authority a fixed percentage of the net revenues generated by the Project, as agreed between the Parties. The revenue-sharing percentage shall be determined based on a negotiated rate, taking into account the capacity of the Project, the investment costs, and other relevant factors.



6.3. Payment Procedure


Revenue-sharing payments shall be made by the Developer to the Public Authority quarterly, within sixty (60) days after the end of each quarter of each year during the Operation Period. The Developer shall provide the Public Authority with an audited report of the net revenues generated by the Project for the applicable quarter.



7. Transfer Conditions

7.1. Transfer Date


The Project shall be transferred by the Developer to the Public Authority at the end of the Operation Period, which shall commence on the Commercial Operation Date and last [Number of Years] years (the "Operation Period"). The transfer date shall be the last day of the Operation Period (the "Transfer Date").



7.2. Transfer of Ownership


On the Transfer Date, the Developer shall transfer ownership and control of the Project to the Public Authority, free and clear of all liens and encumbrances. The transfer shall include all assets related to the Project, including, without limitation, land, improvements, buildings, equipment, and intellectual property.



7.3. Transfer Preparation


At least twelve (12) months before the Transfer Date, the Parties shall cooperate in preparing the Project for transfer, including but not limited to, preparing and providing operational and maintenance documentation, training personnel, and ensuring the readiness of the Project for continued operations by the Public Authority.



8. Governing Law and Dispute Resolution

8.1. Governing Law


This Agreement shall be governed by and construed in accordance with the laws of the United States without regard to its conflict of law principles.



8.2. Dispute Resolution


In the event of any dispute, claim or controversy between the Parties arising out of or relating to this Agreement, the Parties shall first attempt to settle the dispute through good faith negotiations. If the dispute cannot be resolved through negotiation, the Parties shall submit the dispute to arbitration by a single arbitrator in accordance with the rules of the American Arbitration Association. The arbitration shall be conducted in the English language and shall take place in [Location]. The decision of the arbitrator shall be final and binding on the Parties.



IN WITNESS WHEREOF, the Parties hereto have executed this Build Own Operate and Transfer (BOOT) Agreement as of the day and year first above written.

[Developer Name] [Public Authority]

By: __________________________ By: __________________________
(Authorized Signatory) (Authorized Signatory)
(Name) (Name)
(Title) (Title)

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Sections of a Build Own Operate and Transfer


In this Build Own Operate and Transfer, you will see the following sections:

  1. Parties to the Agreement
  2. Project Scope
  3. Responsibilities of the Developer
  4. Responsibilities of the Public Authority
  5. Project Financing
  6. Revenue-Sharing Arrangements
  7. Transfer Conditions
  8. Governing Law and Dispute Resolution


Going indepth - Analysis of each section:

  1. Parties to the Agreement : This section introduces the two parties involved in the agreement: the Developer (a private entity) and the Public Authority. It also states the date when the agreement becomes effective.

  2. Project Scope : This section describes the project, including its location, capacity, and the development period. It's like describing the blueprint and timeline of a house being built.

  3. Responsibilities of the Developer : This section outlines the Developer's duties, such as designing, financing, constructing, operating, and maintaining the project. It also covers the Developer's responsibility to obtain necessary permits and insurance coverage. Think of it as the Developer's "to-do list" for the project.

  4. Responsibilities of the Public Authority : This section details the Public Authority's obligations, such as providing access to the project site, assisting the Developer in obtaining permits, and ensuring the Developer is aware of their legal obligations. It's like the support system for the Developer to complete the project.

  5. Project Financing : This section states that the Developer is solely responsible for securing the funds needed for the project. The Public Authority is not liable for any financial obligations arising from the Developer's duties under the agreement. It's like saying the Developer has to pay for the house they're building without any financial help from the Public Authority.

  6. Revenue-Sharing Arrangements : This section establishes a mechanism for sharing the project's net revenues between the Developer and the Public Authority. It outlines the percentage of revenue to be shared, as well as the payment procedure. It's like agreeing on how the profits from renting the house will be split between the two parties.

  7. Transfer Conditions : This section sets the conditions for transferring the project from the Developer to the Public Authority at the end of the Operation Period. It includes the transfer date, ownership transfer, and preparation for the transfer. It's like handing over the keys to the house after the agreed-upon time has passed.

  8. Governing Law and Dispute Resolution : This section specifies that the agreement is governed by the laws of the United States and outlines the process for resolving disputes between the parties. It's like agreeing on the rulebook and referee for any disagreements that may arise during the project.

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