Header graphic for print

Infra Insight Blog

Law & Policy

New Harbor Bridge Set to Launch

Posted in Bridges

On September 28, 2015, the Texas Department of Transportation and Flatiron/Dragados, LLC  (Developer) entered into a comprehensive development agreement (Agreement) for the Harbor Bridge Replacement Project in Corpus Christi (the Project).  The new Corpus Christi Harbor Bridge will allow larger ships to deliver their cargo to the Port of Corpus Christi, serving as an economic catalyst for the region and the State of Texas.  The current bridge was built in the late 1950s. Plans for a replacement bridge to improve safety have been in the works for more than a decade.  The proposed $800 million design-build-finance-maintain project includes construction of a new cable stayed bridge, demolition of the existing Harbor Bridge and the reconstruction of portions of US 181, I-37 and the Crosstown Expressway.  The design proposed by the Developer includes a mainspan of 1655 feet, which, when completed, will be the longest concrete cable-stayed span in North America.  In addition to designing and constructing the new bridge, the Agreement also requires the Developer to maintain the facility for 25 years.

An RFP was issued to shortlisted teams in October 2014 and a Flatiron/Dragados consortium was chosen as the preferred bidder in April 2015.  Flatiron/Dragados LLC was one of four proposers that submitted a Proposal for the Project.  Flatiron/Dragados LLC is a limited liability company consisting of Flatiron Constructors, Inc. and Dragados USA, Inc.  The major non-equity and other team members of the Flatiron/Dragados LLC team include:

Figg Bridge Engineers, Inc.
Iridium Concesiones de Infraestructuras, S.A. (acting through ACS Infrastructure Development, Inc.)
DBI Services, LLC
Austin Bridge & Road, LP
AZTEC Engineering Group, Inc.
Beton Consulting Engineers, LLC
Blanton & Associates, Inc.
The Boundary Layer Wind Tunnel Laboratory (as represented by The University of Western Ontario)
D.H. Griffin of Texas, Inc.
IEA, Inc
Kellogg, Brown & Root Services, Inc.
KCI Technologies, Inc.
M2L Associates Inc.
PaveTex Engineering and Testing, Inc.
Pinnacle Consulting Management Group, Inc.
Professional Service Industries, Inc.
Randy Burkett Lighting Design, Inc.
RJ Rivera Associates, Inc.
Ware & Associates, Inc

The parties anticipate construction to begin in 2016.

Amtrak Panel’s Plan to Fix Chicago Rail Gridlock

Posted in Rail and Transit

An Amtrak Blue Ribbon Panel formed in 2014 that included Nossaman partner Linda Morgan has released a report recommending how to fix the Chicago-freight traincongestion plaguing Chicago’s rail network.  As the hub of the U.S. rail network, the gridlock in Chicago has ripple effects throughout the nation.

As part of its year-long investigation of the causes and potential solutions to Chicago’s gridlock, the panel met with nearly 100 stakeholders and rail experts.  The panel’s report resulting from these efforts includes the following recommendations:

  • Ensure real-time coordination among Chicago’s 10 passenger and freight railroads, including dispatchers from multiple railroads working together at a single location;
  • Continue efforts to improve operating performance and coordination at Chicago Union Station;
  • Provide adequate and sustained public funding for vital projects;
  • Prioritize the CREATE 75th Street Corridor and Grand Crossing projects;
  • Make additional investments on the Porter, Indiana to Chicago Corridor (beyond the current Indiana Gateway Project);
  • Encourage use of innovative financing through reforms to the federal Railroad Rehabilitation and Improvement Financing (RRIF) loan program; and
  • Make the environmental review requirements applicable to rail projects consistent among all transportation modes, enhance interagency coordination on reviews, and prioritize projects of national importance.

Though the panel recognized the cost and effort needed to implement its recommendations, it noted that without additional action, the current gridlock will only worsen.  At the prospect of inaction to address this problem, the panel said the following:

“If aggressive action is not taken now to address what may well be our country’s most significant transportation bottleneck, the adverse national, regional and local impacts on passenger and freight rail transportation, and on the economy, will be enormous.”

The enormity of this impact is underscored by a study commissioned by the panel which estimated that roughly $650-$800 billion of the U.S. annual gross domestic product is dependent upon freight rail service through Chicago.

In addition to Morgan, who previously chaired the U.S. Surface Transportation Board, the panel included Thomas Carper, an Amtrak Board member, Howard Learner, founder of the Environmental Law & Policy Center and former Congressman John Francis “Jack” Quinn, who served as chairman of the Railroads Subcommittee of the House Transportation and Infrastructure Committee.

A copy of the report, a study the panel commissioned and a video regarding the report can be found at http://www.amtrak.com/ChicagoGateway.

Good News for Commuters: Work Completed on Foothill Gold Line Extension to Azusa

Posted in Rail and Transit

Expected to dramatically improve mobility in one of the more highly congested regions in Southern California, the Metro Gold Line Foothill Extension Construction Authority (Authority) completed the Foothill Gold Line from Pasadena to Azusa on September 23, 2015.  After achieving this milestone, the Authority turned the project over to the Los Angeles County Metropolitan Transportation Authority (Metro) to complete testing and training and then operate the project.  Metro expects to announce a start date for passenger service within 30 days of turnover, and anticipates starting passenger service in spring 2016.  For additional information about the meaning of “spring” in the San Gabriel Valley, see Gold Line Foothill Extension to Open in Spring 2016 | Infra Insight Blog.

The five-year project, which came in on time and within budget, extends the Los Angeles-to-Pasadena light-rail line from Pasadena through Arcadia, Monrovia, Duarte, Irwindale and Azusa.  Construction was divided into three contracts.  The first contract, to build a bridge over the 210 Freeway near Santa Anita Avenue, was completed in 2012.  See Metro’s Gold Line Bridge Completed On-Time and On-Budget | Infra Insight Blog.  The parking structures and lots at each station were finished in late August under a second contract.  The final contract, covering the extension to Azusa, included laying 29 miles of light-rail track, a 24-acre operations and maintenance campus in Monrovia, dozens of bridges, 14 street crossings and six stations.

The Authority has already begun work on the next phase, from Azusa to Montclair.  For further information, visit the Authority’s website at http://www.metrogoldline.org/.

The Foothill Gold Line extension is the first project to be completed using 2008’s Measure R sales tax funds.  The farthest point east on the Metro Rail system, the extension gives many more riders the opportunity to travel to various points across Southern California via the Blue, Red, Green, Gold, Purple and Expo lines, as well as the Metro Liner bus rapid transit system and the Metrolink commuter rail network.  For a map of the Metro system, please see: http://media.metro.net/riding_metro/maps/images/rail_map_future.pdf.

Azusa Gold Line

Photo Credit: Foothill Gold Line Construction Authority

LA Metro Pursues Independent P3 Authority: ABX 1-12

Posted in Legislation, PPPs

Los Angeles County Metropolitan Transportation Authority (“LA Metro”) is pursuing new public-private partnership (P3) legislation, Assembly bill ABX 1-12 (“Bill 12”).  Bill 12, introduced and read for the first time on August 26, 2015 at the California extraordinary session on transportation, would give LA Metro greater flexibility and autonomy to procure and finance transportation infrastructure in the LA Metro region.

LA Metro currently has authority under Section 143 of the Streets & Highway Code (“Section 143”) to deliver transportation projects using a P3 model with the use of comprehensive development lease agreements.[1]  This authority will lapse on December 31, 2016, unless this sunset is lifted or extended by the California legislature.[2]  Governor Brown has proposed an extension through 2027.

The authority provided by Section 143 has proven difficult to implement and has not resulted in a steady stream of P3 projects for the delivery of transportation infrastructure.  Rather, various requirements built into Section 143 have proven restrictive and cumbersome, as illustrated by the cancelled ARTI project.[3]

Bill 12 zeroes in on certain key limitations of Section 143.  Bill 12 would provide LA Metro with authority that is in addition to and separate from LA Metro’s existing authority under Section 143.

Broad project scope

Bill 12 would expand the scope of eligible projects to better align with LA Metro’s broad responsibility for transportation infrastructure within Los Angeles County.  It includes rights-of-way, high-occupancy toll lanes, rail lines, monorails, bus lines, stations, terminals, tunnels, parking lots, air rights, land rights, development rights, entrances and exits, and any other facilities together with any physical structures necessary for, incidental to, or convenient for, the access of persons and vehicles to those facilities.[4]  This broad scope of eligible projects can be contrasted with Section 143 which defines “transportation projects” as highway, public street, rail, or related facilities supplemental to existing facilities currently owned and operated by Caltrans or regional transportation agencies.[5]

No California Transportation Commission Approval

Bill 12 would authorize LA Metro to pursue P3 models without seeking approval from the California Transportation Commission (the “CTC”).  Section 143, on the other hand, requires that potential P3 projects be nominated as candidates for review and approval by the CTC based on satisfaction of certain objectives,[6] and further provides that the CTC will establish evaluation criteria for each project.[7]  CTC guidelines and practice require submission of an extensive project proposal report, which consumes considerable time and resources to prepare.  Because LA Metro primarily uses local sales tax revenue to fund capital outlays for its projects, CTC supervision of its decisions to fund P3 projects seems out of place.

Cooperation with Caltrans on state highway projects

For projects on the state highway system, Bill 12 would require that LA Metro (a) cooperate with Caltrans pursuant to an agreement that addresses matters related to design, construction, maintenance, and operation of state highway system facilities in connection with the project; and (b) comply with Caltrans’ standards for state transportation projects.  Bill 12 provides that LA Metro would establish appropriate performance measures for ensuring optimal use of the state highway system within the LA Metro region.[8]  Significantly, Bill 12 would not restrict LA Metro from using its own employees and consultants to perform the full range of project development services.

Section 143, on the other hand, places considerably more control in the hands of Caltrans by (a) designating Caltrans as the responsible agency for providing predevelopment services (including performance specifications, preliminary engineering, pre-bid services, the preparation of project reports and environmental documents, and construction inspection services); and (b) designating Caltrans as the responsible agency for preparing project technical documents setting forth the size, type, and desired design character of the project and including performance specifications covering the quality of materials, equipment, and workmanship, and preliminary plans.[9]  These provisions have caused friction between Caltrans and regional transportation agencies like LA Metro, and engendered litigation by the Professional Engineers in California Government that unsuccessfully challenged the use of Section 143 for the Presidio Parkway project.

Tolling flexibility

Bill 12 would allow LA Metro to impose tolls and user fees for use of a facility constructed pursuant to Bill 12.[10]  Further, Bill 12 would include among eligible projects additional high-occupancy vehicle lanes or the conversion of existing lanes to high-occupancy vehicle lanes, conversion of existing high-occupancy vehicle lanes to high-occupancy toll lanes, additional toll roads, toll lanes, and transit projects.[11]  Section 143 prohibits converting currently non-tolled lanes into tolled lanes, with the exception of HOV to high occupancy toll lane conversions.[12]

Section 143 places additional restrictions on tolling.  For example, Section 143 authorizes tolling by private parties,[13] but does not speak to tolling by Caltrans or regional transportation agencies, with one exception.  After a comprehensive lease agreement expires, the regional transportation agency may continue tolling, but only if continuation is approved by the CTC or regional transportation agency.  Further, those post-expiration tolls may be used only for the improvement, continued operation or maintenance of the tolled facility.[14]  Section 143 also restricts use of excess toll revenues received during the term of the comprehensive lease agreement to improving the tolled project, improving public transportation in and near the project boundaries or returning the revenue to the State Highway Account.[15]

Under Bill 12, LA Metro would have express authority, without need for CTC approval, to toll highway P3 projects constructed pursuant to the bill, with no limitation on tolling after expiration of the P3 transaction.  It would also increase LA Metro’s flexibility in the use of toll revenues during and after the term of the P3 agreement.  Bill 12 would authorize use of toll revenue in excess of that needed for project capital, operating, maintenance and administrative costs for any other purposes allowed under federal law.[16]  Federal law, specifically 23 U.S.C. §129, provides that as long as the tolled facility is adequately maintained, excess toll revenues may be used for any other purpose for which federal funds may be obligated by a state under Title 23. This means that excess toll revenues under Bill 12 could be used for any other LA Metro project eligible for federal aid under Title 23.

Bill 12 would not authorize Caltrans to impose tolls on LA Metro’s state highway P3 projects pursued under Bill 12.  The implication is that the decision to toll such state highways, the toll rate structure and toll ownership would rest entirely with LA Metro.  The ownership and use of tolls from the ARTI project became a contentious issue between Caltrans and LA Metro and contributed to the difficulties that led to its cancellation.

Procurement options

Bill 12 would authorize LA Metro to engage in solicited and unsolicited proposals for P3 projects.[17]  It declares that the procurement rules in the state’s Public Contract Code would not apply,[18] leaving LA Metro free to adopt its own procurement, evaluation and selection procedures.  LA Metro’s existing policy allows sole source negotiation of unsolicited proposals.  In contrast, Section 143, while allowing unsolicited proposals, requires a competitive procurement if the unsolicited proposal is of interest to the public agency, and prohibits award to an unsolicited proposer unless at least one other responsible bid is received.[19]

No sunset

In the spirit of a truly enabling and flexible approach, Bill 12 does not include a sunset clause.

Concluding thoughts

The enactment of Bill 12 would greatly improve LA Metro’s ability to more quickly and efficiently improve transportation infrastructure in LA County through the development of a sustainable P3 program.  Bill 12’s flexible approach to deal structures, asset combinations and use of toll revenues would enable solutions designed by LA Metro to address specific regional transportation issues.  This new legislative tool would also reduce political risk and improve market certainty by eliminating certain approval requirements imposed by Section 143 and by clarifying the respective roles of LA Metro and Caltrans for state highway system projects within the LA Metro region.

[1] Sts. & Hy. Code, § 143, subd. (c)(1).

[2] Sts. & Hy. Code, § 143, subd. (t).

[3] LA Metro and Caltrans’ Accelerated Regional Transportation Improvements (ARTI) project began in 2012.  It was the first project selected for further evaluation under the 2009 improvements to Section 143.  On April 15, 2014, well after the ARTI procurement had begun, Caltrans and LA Metro notified shortlisted proposers that the ARTI procurement was cancelled.

[4] ABX 1-12, subd. (b)(1)(A).

[5] Sts. & Hy. Code, § 143, subd. (a)(6).

[6] Sts. & Hy. Code, § 143, subd. (c)(2).

[7] Sts. & Hy. Code, § 143, subd. (g)(1)(C).

[8] ABX 1-12, subd. (e).

[9] Sts. & Hy. Code, § 143, subd. (g)(1)(C).

[10] ABX 1-12, subd. (f).

[11] ABX 1-12, subd. (b)(1)(a).

[12] Sts. & Hy. Code, § 143, subd. (q).

[13] Sts. & Hy. Code, § 143, subd. (j)(1).

[14] Sts. & Hy. Code, § 143, subd. (j)(3).

[15] Sts. & Hy. Code, § 143, subd. (j)(1).

[16] ABX 1-12, subd. (f).

[17] ABX 1-12, subd. (c)(1).

[18] ABX 1-12, subd. (c)(2).

[19] Sts. & Hy. Code, § 143, subd. (g)(1)(e).

FTA Provides Notice of Expedited Public Transportation Improvement Initiative

Posted in News, Rail and Transit

Federal Transit Administration (“FTA”) grants fund billions of transit-related projects throughout the United States.  In an effort to improve the project delivery process for those projects, the FTA on September 3, 2015, announced the establishment of the Expedited Public Transportation Improvement Initiative (“XPEDITE”) in the Federal Register.  The FTA is soliciting participation in an online dialogue regarding XPEDITE, the goals of which are to facilitate the transit industry’s implementation of the following:

  • Proven technologies to improve service delivery and maintenance for the public transit industry;
  • Proven methods to speed up planning, development, approval, and delivery of FTA supported capital investments; and
  • Innovative financing methods and opportunities for public-private partnerships that support capital investments.

The FTA is soliciting input through the online dialogue related to improving aspects of the project delivery process for projects in all of its grant programs, including not just the discretionary Capital Investment Grant program (New Starts, Small Starts, and Core Capacity), but also the Urbanized Areas, Rural Areas, State of Good Repair, and Bus and Bus Facilities Formula Programs.

Since the passage of the most recent surface transportation authorization bill, Moving Ahead for Progress in the 21st Century (or, “MAP-21”), the FTA has implemented several new procedures to streamline project delivery.  For example, the FTA joined with the Federal Highway Administration (“FHWA”) to undertake a series of rulemakings that expedite compliance with the National Environmental Policy Act (“NEPA”). Specifically, the FTA established sixteen new categorical exclusions that are specific to public transportation projects.  Similarly, the United States Department of Transportation has established a new Build America Transportation Investment Center, serving as a resource for state and local governments, public and private developers, and investors seeking to use innovative financing strategies for transportation infrastructure projects.

XPEDITE is intended to function in a manner similar to the FHWA’s Every Day Counts initiative.  The FTA will consider market readiness, impacts, benefits, and ease of adoption in determining what innovations will be advanced through XPEDITE.  The FTA is particularly interested in information about barriers to the implementation of technological improvements that may exist in the administration of its programs.  In addition, the FTA is seeking ideas regarding all aspects of project delivery, including approval, construction administration, procurement, compliance with NEPA, and right-of-way acquisition, especially barriers to quick implementation of projects both in terms of its internal business processes as well as processes related to the delivery of projects by grantees.  Finally, the FTA is seeking information regarding value capture as part of project financing arrangements, including what mechanisms might be used and how FTA could work to facilitate such arrangements.

The online dialogue will be open on the FTA’s Web site no later than September 8, 2015.

P3 Turns the Lights On in Detroit, Michigan

Posted in PPPs

The first freeway lighting system public-private-partnership (P3) in the U.S. closed on August 24, 2015, with the Michigan Department of Transportation (MDOT) and Freeway Lighting Partners, LLC, (FLP) reaching simultaneous commercial and financial close.  The FLP team consists of Star America Infrastructure and Aldridge Electric, Inc. as equity owners with Aldridge Electric, Inc. also acting as the design-build contractor, Parsons Brinkerhoff, Inc. as the designer, and Cofely Services, Inc. acting as operations and maintenance provider.  The innovative street lighting project will improve the existing systems operability and see approximately 15,000 lights across bridges, tunnels and roadway within the Detroit Metro Region’ Freeway System replaced with newer, more energy efficient LED lights over the next two years.  The annual cost to Michigan taxpayers is anticipated to be lower than the cost that MDOT would incur to upgrade the system and meet the required performance levels.

Some key features of the deal include the following:

  • Financing was provided through a private placement with Allianz Life Insurance of North America (a Blackrock Capital entity) with Star America and Aldridge Electric contributing equity to the deal. The concession and contract term is 15 years, including the two year construction period.
  • FLP will audit and prepare an inventory of the existing lighting system during the first 90 days of the contract to establish the condition of the system and identify defects which have a critical impact on safety.
  • As part of its obligations, FLP will:
    • replace or rehabilitate the freeway lighting system during the two year construction period to ensure the system meets MDOT’s standards for lighting illumination and condition; and
    • operate and maintain the freeway lighting system for the remainder of the two year construction period to ensure further significant defects or outages do not occur (i.e. so as to ensure that the condition of the existing system does no deteriorate).
  • Following the two year construction period and once upgrades are complete, FLP will operate and maintain the improved lighting system over the remaining 13 years of the 15 year contract term.
  • During the construction period, two milestone payments are payable by MDOT to FLP once agreed progress milestones have been achieved.
  • FLP must hand back the lighting system to MDOT at the end of the contract term (unless terminated earlier).  At the time of hand back, each element of the lighting system must have the desired remaining residual life stated in the contract.
  • During the 13 year operating period, MDOT will make service payments to FLP quarterly in exchange for performance of services with a component of such payment subject to FLP’s actual energy consumption being less than MDOT’s theoretical energy consumption.  If FLP is late in achieving completion, then the period during which the service payment is paid will be reduced.
  • All payments made to FLP are subject to deductions where MDOT’s required service levels and reporting requirements are not met.
  • MDOT remains responsible for payment of utilities associated with operating the lighting system.

The project is a great result for Michigan with Governor Rick Snyder saying, “Keeping our busy highways well-lit is vitally important for safety, this innovative arrangement ensures that we have better, more efficient lights, improving the service for the residents and businesses using these roads every day.”

TxDOT Shortlists Five Proposer Teams for the SH 249 Extension Project

Posted in Design-Build, Tollroads/ Turnpikes/ Managed Lanes

Three months after the May 15, 2015 issuance of a Request for Qualifications (RFQ), the SH 249 Extension Project is another step closer to development.  The RFQ solicited qualifications from teams interested in entering into a design-build contract and a comprehensive maintenance agreement for the Project.  Following a two-month process, which included questions and answers from interested industry participants and an industry workshop, TxDOT received Qualification Statements from seven teams on July 17, 2015. Over the next month, the Qualification Statements were evaluated by TxDOT.  On August 27, 2015, TxDOT announced the short list of the teams most qualified to compete for the SH 249 Extension Project contracts. Below is a listing of the shortlisted teams, along with the major equity members, that will be invited to submit detailed proposals.

Name Major Equity Members
  • GTS Constructors
  • Granite and Texas Sterling
  • McCarthy Building Companies, Inc./James Construction Group
  • McCarthy Building Companies, Inc. and James Construction Company, Inc.
  • Webber/Ferrovial Agroman US Corp.
  • Webber LLC and Ferrovial Agroman US Corp.
  • Williams Brothers Construction Co., Inc.
  • Williams Brothers Construction Co., Inc.
  • Zachry
  • Zachry

The proposed State Highway 249 Extension Project will be a 24-mile new tolled facility consisting of up to four new toll lanes from FM 1774 in Pinehurst, Texas (Montgomery County) to SH 105 near Navasota, Texas in Grimes County.  Some of the goals for the project are to provide efficient system linkage and to sustain and enhance economic opportunities in the region by improving mobility and connectivity.The next step will be issuance of a draft Request for Proposals by TxDOT, followed by the final Request for Proposals, with the expectation that the winning proposer will be selected and the contracts awarded in April 2016.

Design and construction costs for the project, including specified options, are estimated to be in the range of approximately $410 million, exclusive of right of way and maintenance costs. The design-build contract and comprehensive maintenance agreement will require the selected bidder to design and build the project and then maintain the project for up to 25 years after completion.

This is one of several active design/build projects being pursued by TxDOT in the region, including the Grand Parkway Segments F-1, F-2 and G Project and the Grand Parkway Segments H, I-1 and I-2 Project.

Gold Line Foothill Extension to Open in Spring 2016

Posted in Rail and Transit

Horse Vanes_Stained Glass CanopyAt the dedication celebration for the Gold Line’s Arcadia Station last weekend, Phil Washington, the CEO of the Los Angeles County Metropolitan Transportation Authority, said he expects passenger service on the Gold Line to begin next spring. The exact date for start of service will be announced after the system is turned over to Metro for testing. Arcadia Mayor Gary Kovacic, who emceed the event, made a point of telling Mr. Washington (who recently moved to Los Angeles from Denver) that spring begins much earlier in Arcadia than in Denver, perhaps as early as December or January.

The newly dedicated station—which includes several “extra” features funded by the City of Arcadia—is located near the Santa Anita Racetrack (see http://www.foothillgoldline.org/cities-stations/arcadia/). The station artwork includes elements highlighting the racetrack and Lucky Baldwin’s peacocks. Check out this video for more information.

I am looking forward to riding the system in the spring.

“DRIVE, He Said[1] ”—But When?? Congress ducks new long term transportation funding bill and adopts a three-month extension of MAP-21 instead

Posted in Legislation

Hopes that the Congress would pass S. 1647, the Developing a Reliable and Innovative Vision for the Economy Act (DRIVE Act),  a six-year, $478 billion transportation funding reauthorization bill before the August recess have, like so many times before, come to naught.  Instead we get a three month extension of the current transportation funding and authorization law, MAP-21, that will provide $8 billion to allow current project funding and implementation to continue.

The three-month extension, H.R. 3236, the Surface Transportation and Veterans Health Care Choice Improvement Act, passed out of the House on Wednesday by a vote of 385-34.  Senate Majority Leader Mitch McConnell, R-Ky, committed to take up the short term funding extension in the Senate before the recess and to continue debate on its long term version of a reauthorization bill with the goal to have a bicameral conference in September to resolve issues. The Senate acted on Thursday afternoon, passing the extension by a vote of 91-4.

In addition to the $8 billion in funding for the Highway Trust Fund — the same amount that had been in the previous five-month extension — the short-term bill also includes more than $3 billion in emergency funding to prevent a shortfall that may have forced several U.S. Department of Veterans Affairs hospitals to shutter temporarily.

The three month extension was necessary to avoid expiration of MAP-21, scheduled to expire unless extended or replaced by this Friday.  The DRIVE Act as proposed by the Senate Environment and Public Works Committee contains an amendment that would reauthorize the Export-Import Bank, whose charter was allowed to expire at the end of June.  However House Majority Leader Kevin McCarthy, R-Calif. has expressed the view that a DRIVE Act bill with such a provision would be DOA in the House.

Funding the DRIVE Act remains an open issue.  Current federal gas tax revenues generate about $35 billion a year for the Trust Fund, about $10 billion a year shy of the amount needed to fund the long term bill.  Among options being considered is a package of offsets totaling $47 billion or so that would augment the fund for at least three years. Some of the proposed offsets, such as a proposal to sell off 100 million barrels of oil in the Strategic Petroleum Reserve, have already met with opposition, however.

The Senate, prior to voting on the extension bill, also approved its version of   the DRIVE Act bill on Thursday by a vote of 65-34.  The House is expected to craft its own version of the long term bill after the recess, which will be harmonized, we hope, with the Senate’s version through the conference process.

[1] (1971). Directed by Jack Nicholson, starring William Tepper, Karen Black, Michael Margotta.

Presidio Parkway Opens in San Francisco

Posted in Bridges, Design-Build, Social Infrastructure, Tollroads/ Turnpikes/ Managed Lanes, Tunnels

The long-awaited Presidio Parkway opened for the first time to Bay Area motorists on July 12th, ahead of schedule and to local and national praises.

The $1.1 billion Presidio Parkway replaces Doyle Drive – an outdated and seismically deficient viaduct – as San Francisco’s main connection to the Golden Gate Bridge.  The new 1.6-mile, six-lane roadway tucks elegantly into the natural contours of the historic Presidio of San Francisco, and enhances transit, pedestrian and bicycle access within the national park area.  The Presidio Parkway has received numerous honors, including awards for design, public outreach, historical renovation and innovative project delivery.

The Presidio Parkway is important in California because it is the only project delivered under the state’s revived public-private partnership (P3) law, which in 2009 authorized Caltrans and regional transportation agencies (under Streets & Highways Code Section 143) to enter into an unlimited number of P3 projects without certain restrictions that previous laws had imposed.

The Presidio Parkway was procured jointly by Caltrans and the San Francisco County Transportation Authority using California’s first availability payment contract for a transportation project.  Under the contract, between Caltrans and Golden Link Concessionaire (GLC), GLC is responsible for delivering and operating the project using the design, build, finance, operate and maintain (DBFOM) model.  In exchange for providing these services, GLC receives a construction milestone payment (payable shortly after the project opens to traffic) and a 30-year stream of availability payments to cover its costs to finance, operate and maintain the project plus a reasonable return on equity.

Availability payment P3s gained traction in the U.S. over recent years, as cash-strapped government entities searched for innovative ways to deliver much needed infrastructure to their constituents.  These deals are attractive because they can offer significant advantages over traditional project delivery methods, including freeing up public funds for use on other projects, achieving expedited delivery schedules, and shifting to the private sector the risks of financing, design, construction, operation and long term maintenance.

Despite California’s multi-year multi-billion dollar shortfalls in highway transportation funding, however, the state has been slow to use its broad P3 authority for highway projects.  Some market observers attribute this to the effects of the last financial crisis and considerable in-state political opposition to P3s, which contributed to the lapse in 2003 of the state’s previous P3 statutory authority.

The Presidio Parkway is currently used as a case study by the USDOT’s Build America Transportation Investment Center (BATIC), which serves as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects.  P3 proponents are hopeful that a Presidio Parkway success story will reinvigorate California’s appetite for highway P3s, before the existing statutory authority expires at the end of 2016.

For more information on the Presidio Parkway and other US transportation P3 projects, visit BATIC’s website at http://www.transportation.gov/buildamerica.