Infra Insight Blog : written by Nossaman LLP Infrastructure attorneys, covers infrastructure project delivery, including Public-Private Partnerships, Operations & Management Agreements, policy, and news.

The White House’s Council on Environmental Quality has issued two draft guidance memos regarding important NEPA compliance issues that may add another regulatory layer to infrastructure project development.

The draft guidelines on greenhouse gas (GHG) emissions, issued on February 18, 2010, require that environmental impact evaluations by federal agencies address GHG.  Among other things, federal agencies are required to quantify and describe expected direct and indirect GHG emissions, to discuss measures to reduce GHG emissions, and to qualitatively discuss the link between the proposed action's GHG emissions and climate change.  By adding to the list of matters an environmental impact statement or environmental assessment must address, the new guidelines not only are likely to increase the cost and time necessary to prepare NEPA documents, but also may provide additional avenues through which project opponents could challenge projects. 

Draft guidelines on NEPA mitigation and monitoring requirements are intended to require federal agencies to adopt (1) binding commitments to implement mitigation measures, (2) monitoring programs to "ensure" the mitigation is implemented, and (3) reporting systems so that the public knows if and how the mitigation measures are implemented.  The guidelines "are intended to reinforce existing requirements and responsibilities", but nevertheless could increase the impact of mitigation requirements on projects, in terms of both cost and time. 

The draft guidelines are open for comment for a 90-day period. 

Nossaman has issued an E-Alert providing a more detailed analysis of these new guidelines.

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USDOT Announces $1.5 Billion in TIGER Grants – $60M in TIFIA Allocations

On February 17, the one year anniversary of the landmark American Recovery and Reinvestment Act, USDOT announced the final list of TIGER grant recipients. Grants range in size from $3.15M for a roadway rehabilitation/reconstruction in Burlington, VT to a $105M grant for construction of two new intermodal facilities in Memphis, TN and Birmingham, AL to support freight rail service from the Gulf Coast to the Mid-Atlantic.  

When combined with state and private funds, the TIGER funds will support approximately $4 billion in transportation investment, according to AASHTO, which estimates that States have already started or completed 12,250 recovery projects worth $26.4 billion.  

Shortly after releasing the final list of grantees, USDOT released a statement outlining key areas for investment, which included:

• Freight Rail: 11 national freight projects to help get freight off America’s highways and onto rail.

• Road and Bridge Repair: 13 highway infrastructure projects to make critical repairs to roads and bridges that are in dire condition.

• Community Livability: 22 livability projects aimed at giving Americans more choices about how they travel and improving access to economic and housing opportunities in their communities.

These investments may be signaling a shift in federal policy, and build upon the HUD-EPA-DOT partnership to promote livability and sustainability which the Obama Administration announced last June. Each project was evaluated for its ability to help achieve the following goals:

• A state of good repair for our existing transportation facilities;
• Enhanced economic competitiveness;
• Safer streets and communities;
• Environmental sustainability; and
• Enhanced community livability.

The Administration seems to be applying these principles to other discretionary programs as well, notably the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which received $60M in new funding under the TIGER grant program, nearly half of the $122M annual apportionment it had been receiving under SAFETEA-LU. 

Five grantees will be eligible for the TIGER TIFIA Payment program, which allows grantees to pay the subsidy and administrative costs of the TIFIA credit assistance program using TIGER grant funds. 

The TIFIA TIGER payments will be leveraged with state and other funds to support several larger projects. The largest of these grants – $20M allocated to the North Texas Toll Authority for improvements to a high-growth corridor near Dallas-Ft. Worth – could support a federal loan of approximately $300-$400M. 

The TIGER TIFIA allocation fell short of the statutory cap, which would have allowed USDOT to apply up to $200M of the TIGER funds to federal credit assistance. In the past year, competition for TIFIA funds has intensified and USDOT has reinstated the competitive application process it abandoned in 2002. 

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On February 11, 2010, the Georgia Department of Transportation (GDOT) posted a Notice of Intent to Issue a Request for Qualifications for the West by Northwest Project.  The notice of intent marks the initiation of GDOT's first P3 project under its new P3 program.  The notice of intent, is available on online at http://ssl.doas.state.ga.us/PRSapp/PublicBidNotice?bid_op=1048400NOI-484-050310P3.  GDOT intends to award a concession to design, construct, finance, operate and maintain a 29-mile segment  of managed lanes along I-75  and I-575, as well as enter into a pre-development agreement for an additional 27-mile segment  of managed lanes along I-285 West and I-20 West.
 
The Georgia General Assembly adopted Senate Bill 200 in 2009 which authorizes GDOT to establish and implement a new public-private partnership (P3) program, focusing on solicited proposals.  Under the new legislation, GDOT has been successfully developing a comprehensive framework for selecting and prioritizing potential P3 projects. 

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Yesterday the California Department of Transportation, in cooperation with the San Francisco County Transportation Authority, issued a Request for Qualifications for a public-private partnership for the Presidio Parkway project (also known as the Doyle Drive replacement project) in San Francisco.  The RFQ is available at: http://www.bidsync.com/DPX?ac=view&auc=610389

This is the first procurement initiated under the new public-private partnership law in California, SB4, codified at Section 143 of the Streets and Highways Code.
 
Under Section 143, the project must be approved as a P3 by the California Transportation Commission.  Caltrans and SFCTA plan on seeking CTC approval before an RFP is issued for the project.  In the meantime, statements of qualification are due from interested parties by March 1, 2010.
 
If the CTC gives its approval, Caltrans and SFCTA contemplate procuring an availability payment P3, with a construction period of about three years and an operating period of about 30 years.

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“It was the best of times, it was the worst of times…”  Dickens could have been describing 2009, as the P3 market continued to look strong, notwithstanding the economic downturn. Last year three significant P3 deals reached financial close in the United States: in March the I-595 in Florida, in October the Port of Miami Tunnel also in Florida, and mid-December the North Tarrant Express in Texas. All were remarkable in their own right, and cumulatively earned Nossaman the top spot in Infrastructure Journal’s league tables in the North American Transport P3 legal advisor category. 

We take a look back at what made the deals remarkable and what 2010 might bring…

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For the 89^th year, January brings new ideas in transportation. The 89^th Transportation Research Board Annual Meeting will be held in Washington D.C., January 10-14. 

Reflecting the theme of “Investing in Our Transportation Future – BOLD Ideas to Meet BIG Challenges,” Nossaman Partner Geoffrey Yarema will give a presentation titled "P3 Successes and Lessons Learned" on January 10. Nossaman Partner Nancy Smith will give a presentation titled "Public-Private Partnership Update" on January 11. Nossaman Partner Edward Kussy will be the presiding officer for the "Ethics for Transportation Professionals" and "American Recovery and Reinvestment Act: What Have We Learned?" panel discussions on January 12.

We look forward to discussing and learning with others.

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Ahead of schedule, NTE Mobility Partners has announced that the Texas Department of Transportation’s North Tarrant Express Managed Lanes project has reached financial close. Under the PPP deal, NTE Mobility - a Cintra-led consortium - will build, finance, maintain and operate a 13-mile corridor in the congested Dallas-Fort Worth area. The $2.02 billion project includes funding from $400 million worth of private activity bonds (PABs), $650 million in TIFIA credits, $573 million in investment from TxDOT, and $427 million in equity from NTE Mobility. The project reached commercial close in June 2009.

Last week’s unwrapped bond offering was oversubscribed 2.4 times, highlighting the market confidence in PPP deals. The Dallas Police and Fire Pension System is a 10% equity partner in NTE Mobility, the first pension fund to invest directly in infrastructure development.

Additional segments of the North Tarrant Express will be developed under a pre-development agreement with an affiliated developer, upon successful completion of negotiations. The North Tarrant Express projects, coupled with the IH-635 PPP deal and the Dallas Fort-Worth Connector design-build project highlight the role of the DFW Metroplex as a national laboratory for developing innovative approaches to solving transportation problems.

The North Tarrant Express project is the third PPP deal to reach financial close in 2009, after the I-595 Managed Lanes Project and the Port of Miami Tunnel Project, both in Florida. 

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The Utah Department of Transportation has announced its selection of the Provo River Constructors team to deliver the Utah County I-15 Corridor Expansion (I-15 CORE). Provo River Constructors is comprised of Flour Enterprises, Inc., Ames Construction, Inc., Ralph L. Wadsworth Construction Company, Inc. and Wadsworth Brothers Construction Company, Inc. The group will expand the I-15 freeway by two lanes in both directions from Lehi Main Street to Spanish Fork Main, extend the express lane from University Parkway in Orem to Spanish Fork, rebuild and reconfigure 10 freeway interchanges, replace and restore 55 bridges, and provide additional improvements without decreasing the number of lanes during the majority of construction. 

The Department used an innovative procurement methodology, selecting the proposer who offered to deliver the improvements that provided the best value to the Department for a fixed price set by the Department.  Best value was determined with reference to the ability of specified proposal elements to meet or exceed the project’s goals, values and requirements, as set forth in the procurement documents.

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USDOT has published new program guidance for the TIFIA Program which clarifies project selection criteria and processes. The new guidance is the product of long deliberation at USDOT, which withdrew an earlier proposal last spring. [See USDOT Withdraws Proposed Changes to the TIFIA Program.]

The notice:

• Announces a change in TIFIA selection criteria and processes going forward – rather than the current first come, first served basis for project submission, the new process would pool all letters of interest and apply weighting criteria to choose the “best” projects.

• Requests comments on a potential pilot program that would allow the borrower to pay the government’s subsidy cost for the project.

• Announces funding availability for 2010 (beyond what has been reserved for projects already pending approval).

New selection criteria would weigh projects according to projected impacts on safety, livability, sustainability, economic competitiveness and state of good repair. The new process will implement application deadlines to allow staff time to evaluate projects according to the clarified criteria, prior to submission to the Credit Council for final selection.  For consideration in the FY 2010 funding cycle, Letters of Interest must be submitted by December 31, 2009, using the revised form on the TIFIA website. 

The proposed pilot program could greatly expand the reach of the TIFIA program.   By allowing borrowers the option to pay the full subsidy cost of TIFIA assistance, USDOT hopes to extend credit to qualified projects that would otherwise be denied assistance solely due to funding constraints. Comments regarding the potential pilot program must be submitted by December 31, 2009.

Nossaman will provide a detailed analysis of the notice, which will be available via E-Alert or on the firm’s website.  

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