For Private Entities Interested in the Realization of the Project in a Public-Private

Survey for private entities interested in the realization of the Project in a public-private partnership (PPP) model.

Management of tourism potential of Grudziądz by the realization of a complex of facilities consisting of: a natural therapy centre, a recreational thermal pools complex, and hotels.

Grudziądz, September 2013

Grudziądz, 16th September 2013 Dear Ladies and Gentlemen,

Geotermia Grudziądz Sp. z o.o. kindly invites all interested entities to the cooperation at the execution of the Project named ”Management of tourism potential of Grudziądz by the realization of a complex of facilities consisting of: a natural therapy centre, a recreational thermal pools complex, and hotels” in a public-private partnership (PPP) mode. For the above mentioned investment, pre-execution analyses were worked out within a public procurement by the counseling company called Investment Support.

The main objective of the planned Project is to facilitate the economic development of Grudziądz by changing the economic structure of the City, resulting from the growth of the services sector, based on the City’s assets, including the development of balneotherapy- related services, medical tourism, as well as excursion and business tourism. The Project execution is aimed at providing the citizens of Grudziądz and tourists with the access to modern treatment, rehabilitation and recreation infrastructure functioning according to the highest European standards, including private facilities.

The scope of analytical works conducted by Investment Support also includes searching of investors’ market based on the Information Memorandum, the purpose of which is to present to potential private partners the main assumptions of the Project – surrounding and location of the Project together with considered legal-financial models, as well as the initially proposed functional profile of the investment. Please familiarize with the enclosed Information Memorandum presenting the main assumptions and fill in the survey, the purpose of which to get your opinion on the optimal functional scope of the Project, acceptable models for its implementation and management, as well as planned works schedule.

Your suggestions and remarks shall be crucial for the proper preparation of the Project and contribute to working out of most advantageous solutions taking into account advantages for the private side as well as gaining the public aim. Please read the Memorandum and send the Survey back to the address of the counselor of Geotermia Grudziądz Sp. z o.o. We hope for your interest in the planned Project and participation in the research. We welcome you to cooperate with us on this Project.

2 Research of the interested entities’ market

This survey is a tool for the realization of the first stage of the research (market test) of the market of entities interested in the realization of the Project. The purpose of the market research is to check your interest in the considered PPP models and functional scopes of the Project. In the course of the test we would like to determine the model that is preferred by the companies’ owners, as well as the expected functional scope. We would also like to get familiar with your expectations concerning the assumptions of particular models, expected own contribution, remuneration for the private partner, and the scope of duties of the parties of the agreement concerning PPP. Within the investors’ market research there are planned the following actions to the participation in which you are invited: - postal opinion survey; - working meeting with the participation of the representatives of the interested entities and a counselor; - working meeting with the participation of the representatives of the City and Geotermia Grudziądz, in Grudziądz. Getting the opinion based on this survey constitutes the first stage of research, during which, if you are interested, it will be possible to organize working meetings. The proceeding and selection of a private partner will take place in the next stage of the implementation of the Project, in compliance with the Act on public-private partnership of 19th December 2008 (Jo of laws of 2009 No 19, item100, as amended). Your answers are not treated as the final attitude of your company, but as confidential commercial information that will be used exclusively for the purpose of the implementation and realization of this Project. Therefore, we invite all entities interested in the participation in the Project to express their opinion on the assumptions of the Project realization, as well as to select the most advantageous proposition of cooperation, in form of an answer to our survey. Your answers shall be used for specifying the structure of the Project realized with the participation of a private investor. Geotermia Grudziądz Sp. z o.o. is open to propositions and ready for discussion on both the scope and realization form of the Project. Answers to this survey do not give an investor any priority right during a tender procedure concerning the selection of an investor, nor any other privileges. For sending the answers an investor is not entitled to any claims against Geotermia Grudziądz Sp. z o.o. To the answers to the survey, please enclose a statement that the entity got familiar with the above terms and files no objections to them. Please send the answers to the following address: [email protected]

3 Contact person for the Project and the survey:

Kacper Kozłowski Investment Project Manager Investment Support ul. Srebrna 16, lok. 202, 00-810 Warszawa Tel. (+48) 22 699 70 01 Fax. (+48) 22 699 70 04 E-mail: [email protected]

4 SURVEY

1. To which degree are you interested in the participation in the realization of PPP projects in Poland?

Very interested Interested Averagely Rather interested Not interested Other answer interested

2. To which degree are you interested in the participation in the realization of PPP projects on a concession basis?

3. To which degree are you interested in the participation in the realization of PPP projects that provide for the own contribution of the Public entity, by sale, of a part of real property on which it is possible to provide services on commercial bases?

4. Would you be interested in the realization of the Project presented in the Memorandum, which is planned for realization in Grudziądz?

5 5. Which of the following factors have influence on your interest and possible engagement in the Project? (you can tick a few answers)

Scope of the Project Potential of Assumptions of Payments of the Location and Investment Market of Other – functions and local market PPP model Public Entity surrounding costs balneological services answer facilities in Poland

Please explain ……………………………………………………………………………………………… ..……………………….…………………….. ………………………..…………………………………………………………………………………………………………………. ……………………..… 6. In which of the models presented in the Memorandum would you be interested in realizing the planned Project?

Model 1 Model 3 Model 2 PPP in PPL (Public Procurement Law) – the PPP in a concession mode – mixed model, PPP in a concession mode - contribution of public entity is a community partnership e.g. contribution of developed real property by the undeveloped real property by the Public Entity Geotermia Grudziądz Public Entity

Please explain. ……………………………………………………………………………………………… ..……………………….…………………….. ………………………..…………………………………………………………………………………………………………………. ……………………..………………………..……………………………………………………………………...…………………….. ………………………..………………………………………………………………………………….…………………….. ………………………..……………………………………

6 7. If the Project was realized in model 1, for which issues in the operation stage should the Private Partner be responsible for: (you can tick a few answers)

a) For technical maintenance – overhauls, repairs, maintenance, service;

b) For maintenance including tasks from pt. a., as well as utilities contracting and delivery;

c) For ensuring an operator providing recruitment services, the Public Entity’s personnel training, as well as for consulting in the scope of commercial management and commercial starting of the Project;

d) Apart from tasks from pt b. – for providing services in the scope of commercial management on behalf of and for the sake of the Public Entity for remuneration, where the revenues from the facility should constitute the revenues of the Public Entity, from which the Private Partner’s remuneration shall be covered.

e) Apart from tasks from pt b. – for commercial management of the Project. The Private Partner’s remuneration would be covered first of all from revenues gained from the Project. In case of no revenues covering costs pointed out in the offer (including costs of: designing, building, financing, maintenance – equal to the fee for accessibility – and costs of commercial management), the Public Entity would cover the difference resulting from the level of actual revenues and costs presented in the offer, at the assumption that the expected quality standards of services and attendance pointed out in the offer are met. Revenues excess over the Project cost level pointed out in the offer would be assigned to the Public Entity.

f) Apart from tasks from pt b. – for commercial management of the Project. The Private Partner’s remuneration would be covered first of all from revenues gained from the Project. In case of no revenues covering costs pointed out in the offer (including costs of: designing, building, financing, maintenance – equal to the fee for accessibility – and costs of commercial management), the Public Entity would cover the difference resulting from the level of revenues pointed in the offer and costs presented in the offer, at the assumption that the expected quality standards of services and attendance pointed out in the offer are met. Revenues excess over the Project cost level pointed out in the offer would be assigned to the Public Entity.

g) The notice should point out all solutions, while the final one should be determined during a competitive dialogue.

7 8. Which modifications or additional conditions, in relation to information given in the Memorandum, would you introduce to the model pointed by you in point 6? … … … … … … … … … ..……………………………………………………………………...……………………..……………………….. …………………………………………………………………………….……………………..……………………………………….. …………………………………………….……………..………………………………………………………………………………………. ……..……….……………. 9. Would you like to realize the planned Project in any other model than those presented in the Memorandum? If so, which one – describe basic aims of such a solution. … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..…….…. ………………………………………………………………………………………………………………………….…………………….. …………..…………………………………………………………………….…………….. ……………………………………………………………….………….………………………...…………………… 10. Would you consider, in model 1, any other mechanism of giving remuneration to the Private Partner than the one given in question 7 above? If so, describe it? … … … … … … .….…………………………………………………….……………………….. ……………………………………………………………………….….…………………………………………………….……………………….. ……………………………………………………………………….….…………………………………………………….……………………….. ……………………………………………………… 11. Do you provide, in model 1, for the possibility that the contractual penalties for inaccessibility of the Complex would lower the remuneration of the Private Partner to zero till the obstacles in access to and using the utilities are removed,? If no, why? ……………………………………………………………………………………………………………………………………………… ..……….. ………………………………………………………………….……………………..……………………………………………….……………… 12. Which obligations on the part of the City (as a shareholder) would you expect in connection with the realization of the Project in common with the Public Partner (if it was a city partnership) in model 1?

8 … … … … … … .….…………………………………………………….……………………….. ……………………………………………………………………………….……………..…………………………………..…………. ……………………………………………………...…………… 13. If the Project was realized in model 2, apart from revenues generated by the Project, which model of payment from the Public Entity would you consider as the appropriate one?:

a) Possibility of payment, by the Public Entity for the benefit of the Private Partner, of a one-time amount determined in the offer, after commissioning of the buildings (in compliance with conditions and amount provided by the Public Entity in the description of needs – resulting from negotiations).

b) Possibility of payment for the benefit of the Private Partner, of an annual amount connected with the standard of maintenance of the recreational part – swimming pools and part of the balneologic centre, as well as the quality of services provided in those parts, presented by the Private Partner in the offer, in compliance with the conditions for concession projects (streams relation);

c) Payment for the benefit of the Private Partner of subsidies to sold tickets to the recreational part – external swimming pools, amounts ( shadow tolling) determined in the offer in compliance with the conditions for concession projects (streams relation) – closing the public part’s result.

d) Payment of an annual amount resulting from the difference between the amount given by the Partner in the offer – covering the calculation of expenses and costs (costs of designing, building, financing, exploitation – including use of utilities as well as the costs of commercial management), for the period of the agreement concerning PPP, and the amount of forecasted or gained inflows in the period of exploitation (with the division into years), in compliance with the conditions for concession projects (streams relation) – „close out amount”, determined in the offer for a given year, not higher than the maximum limit presented in the description of needs. The gained excess shall be shared with the Public Entity.

e) At the assumed profile of the Project, the Public Entity does not have to pay to the Private Partner.

f) At the assumed profile of the Project, the Public Entity does not have to pay to the Private Partner, apart from subsidies/payments for services provided for the users (shadow tolling) covered by social-society programs- e.g. summer in the city, programs supporting seniors, multi-children families using the objects.

9 g) At the assumed profile of the Project, the Public Entity does not have to pay to the Private Partner, apart from subsidies/payments for services provided for the users (shadow tolling) covered by the city card in Grudziądz;

h) Combination of a few (enumerate them):

i) Public Entity pays the amount (compliant with terms and amount determined by the Public Entity) pointed in the Offer to Private Partner in the investment period. The maximum amount of the payment will be determined by the Public Entity during negotiations.

j) The notice should point out all the above, while the final mechanism should be specified during negotiations.

14. Who should gain a BP decision (building permit) and OP decision (occupancy permit) in model 1 and in model 2, the Private Partner or the Public Entity? Please justify your answer. … … … … … … … … … … … … … .……...…………………………….…………………….. ……………………………………………………………………………….…………. ………………………………………………………………………..…………………………...………………… 15. Which risks and tasks of the Public Entity would you focus on in model 2? … … … … … … .….…………………………………………………….……………………….. ……………………………………………………………………………….……………..…………………………………..…………. ……………………………………………………...…………… 16. Would you expect any bonus system in model 2? The system would emerge as additional support for the Private Partner in form of a payment from the Public Entity, the basis of which would be periodical users’ opinion survey. Please propose solution(s) for such a system. … … … … … … .….…………………………………………………….……………………….. ……………………………………………………………………………….……………..…………………………………..…………. ……………………………………………………...……………

10 17. Taking into account the proposed functional scope, do you think it is possible for the Private Partner to pay such a rent that would cover investment costs connected with the realization of the Investment and costs of financing? … … … … … … … … … … … … … … … … … … … … … … … … .…………………….. ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………….. 18. Would you provide, in model 3, for securing the completion of the agreement by the Private Partner for the Public Entity enabling covering the rent in case of earlier termination of the agreement due to causes on the Private Partner side? If so, to which amount? … … … … … … … … … … … … … .……...…………………………….…………………….. ……………………………………………………………………………….…………. ………………………………………………………………………..…………………………...………………… 19. At which stage, according to you, should the conception of the Complex be specified? (you can tick a few answers) a. Detailed FUP (functional-utility program) determined the Public Entity during negotiations with companies and presented with a call for tender. b. The Public Entity, with a call for tender, should present frame FUP – guidelines of the Public Entity. c. Together with their offers, Entities should submit conceptions worked out based on detailed FUP presented by the Public Entity. d. Together with their offers, Entities should submit initial conceptions, which after concluding the agreement concerning PPP, in case of the conception from the Private Partner’s offer, the Private Partner shall precise after carrying out own detailed market research. Project works can start only after working out and agreeing the detailed conception. e. The mode of proceeding connected with specifying the conception should be presented in an exhaustive way in the notice. f. The mode of proceeding connected with specifying the conception should be presented together with a call for tender, but at the same time it should result from a dialogue/ negotiations. g. The final conception should be within the guidelines of the Public Entity, but should not require its acceptance. h. The final conception should be accepted by the Public Entity. 20. Do you think that in the said Project flexibility in the scope of own contributions, in particular, possibility of contribution of real property or its part, should be allowed for? Give short explanation.

11 … … … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..……………………….. …………………………………………………………………………………………………….……………………..……………………….. ……………………………………… 21. Would you be interested, in the said Project, in purchasing some part of or the whole real property? ………………………………………………………………….……………………..………………………..……………………………………… 22. Should be the real properties, which are intended for the realization of hotels, allowed for sale for the benefit of third parties? If yes, when? ………………………………………………………………….……………………..………………………………..……………………………… 23. Tick the relevant (you can tick a few answers):

a) The selection of Partner and implementation of the Project are too distant;

b) The selection of Partner and implementation of the Project are distant, but they should take place when the Public Entity eliminates risks connected with spatial planning and administrative issues, including taking over the real property from the State Forests.

c) The selection of Partner and implementation of the Project should be conducted earlier – after the change of the Study (study of the Conditions and Directions of the Spatial Management of a Commune) and MPZP (local spatial development plan), but before taking over the real property from the State Forests;

a) The selection of Private Partner should be conducted earlier, in parallel with the works of the City connected with the change of the Study, change of MPZP (local spatial development plan), taking over the real property from the State Forests. At this time the Partner can work out detailed market analyses as well as precise the conception, and then implement the Project. The cost of his works at this stage, in case of a failure connected with the works of the Public Entity (administrative issues, spatial planning, procedures), should be covered by the Public Entity. The cost should be determined in the offer of the Partner within limits pointed in a specification by the Public Entity.

b) The selection of Private Partner should be conducted earlier, before starting the works connected with the change of the Study, change of MPZP (local spatial development plan), taking over the real property from the State Forests. The Partner should conduct detailed market analyses in order to precise the conception. Changes in the Study, MPZP (local spatial development plan) should

12 result from the works of the Private Partner. The cost of his works at this stage, in case of a failure connected with the works of the Public Entity (administrative issues, spatial planning, procedures), should be covered by the Public Entity. The cost should be determined in the offer of the Partner within limits pointed in a specification by the Public Entity.

24. Would it be, according to you, advantageous, if the investment realization within the Project was staged? How? What should it depend on? … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..……………………….. ………………………………………………………………………………….……………………..……………………………….. ……………………………… 25. Which crucial risks would you point at in the Project and why? … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..……………………….. ………………………………………………………………………………….……………………..……………………….. ……………………………………… 26. How, according to you, does the planned schedule of the Project implementation influence the possibility of the Project realization? ………………………………………………………………….……………………..………………………………..………………………..... 27. Are the planned scope of the Project and the proposed scope of services of the Complex, according to you, acceptable? ………………………………………………………………….……………………..………………………………..……………………………… 28. Which investments should be, according to you, realized by the city of Grudziądz directly in connection with the Project? ………………………………………………………………….……………………..………………………………..……………………………… 29. Which elements, functions of the Complex, would you resign from and why? … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..……………………….. ………………………………………………………………………………………………………….…………………….. ………………………………..………………………………

13 30. Which additional functions, not mentioned in the profile, would you take into consideration and why? … … … … … … … … … … … … … … … … … … … … … … … … … .……………………..……………………….. ………………………………………………………………………………………………………….…………………….. ………………………………..………………………………