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Infra Insight Blog

Law & Policy

Lower Fuel Prices Take a Toll on California’s Transportation Funding

Posted in Policy

Lower gas prices and decreased revenue from California’s Price Based Excise Tax (PBET) on gasoline are taking their toll on the state’s transportation funding.  California Transportation Commission (CTC) staff recently recommended enormous decreases in the upcoming five-year State Transportation Improvement Program (STIP).  The CTC Commission will consider the staff’s recommendations and is expected to make a final decision at its meeting on May 18 and 19.

The staff’s recommendations include no new transportation projects in the next five years, as well as cancelling already programmed projects and delaying many other projects.  Due to insufficient funds, not all projects programmed in fiscal year 2015-16 could receive allocations. To fully allocate funding to fiscal year 2015-16 projects, the staff recommendations include the delay of projects programmed in fiscal year 2016-17 of at least one year.

The 2016 Amended STIP Fund Estimate for the upcoming five-year term estimates a total statewide new programming capacity of negative $754 million.  This shortfall is largely caused by a decline in revenue from the PBET on gasoline, which is the primary source of funding for the STIP.  The PBET is adjusted annually by the Board of Equalization based on the price of gasoline.  Because gas prices have remained relatively low, the revenue from the PBET has remained low as well.

The PBET was first implemented in 2010 to replace a state sales tax on fuel.  At the time, it was set at 17.3 cents per gallon.  Since then, the level has dropped precipitously and will fall to less than 10 cents per gallon on July 1 of this year.   In addition to a decrease in revenue per gallon, the funding crisis has been exacerbated by an increase in the fuel efficiency of cars on the road.

According to Will Kempton, Executive Director of Transportation California, “The action pending before the California Transportation Commission constitutes the worst cuts in the State Transportation Improvement Program since the creation of the STIP funding structure nearly 20 years ago.”  Mr. Kempton went on to explain that without additional new revenue, California’s crumbling transportation infrastructure will get much worse and the costs to fix it will grow much higher.

Several members of California’s legislature have proposed legislation to provide additional resources for the program.  State Senator Jim Beall, a Democrat and Chair of the Senate Transportation and Housing Committee, introduced amendments to his bill (SB X 1-1) that include new revenues in support of transportation.  Several Republican legislators have proposed measures to shift existing revenue to transportation work.  Despite these efforts from both sides of the aisle, there is no agreement yet.

Without additional funding for the STIP, the budget shortfalls outlined in the Commission staff’s recommendations will only continue, with no relief for California residents and those businesses and other entities that rely on the state’s transportation infrastructure.

The Commission Staff Recommendations can be found here.

InfraAmericas and PBBC P3 Awards Gala Call for Nominations is Open

Posted in News, PPPs

Voting and registration are officially open for the P3 Awards Gala hosted by InfraAmericas and The Performance Based Building Coalition (PBBC) which takes place on Monday, June 13 in New York City prior to the annual US P3 Forum held on June 15-16. The US P3 Forum is the P3 industry’s premier gathering of infrastructure professionals including infrastructure developers, investors, financiers, state and federal public officials and regional transportation authorities.

Voting

This industry awards dinner recognizes imanhattan-336708_1280ndividual achievement in advancing P3 projects. The nominated individuals will be recognized in the following five areas:

  • Public Sector Champion
  • Best Transaction Advisor
  • Social Infrastructure Lawyer of the Year
  • Overall P3 Champion Award
  • Best Private Sector Innovator

To make your nominations, fill out the form here prior to May 6.

To purchase your ticket to the awards gala, please click here. To register for the P3 Forum, click here.

PBBC Golf Outing

In addition to the awards dinner, PBBC is hosting its Second Annual Golf Outing on June 13 at the Trump Golf Links at Ferry Point, Bronx, NY attended by senior leaders from the PPP industry. To learn more about the venue, schedule of events, or to buy a ticket, please click here.

Automated People Mover at LAX – Submittal Instructions Issued for Operating System Suppliers

Posted in Design-Build, PPPs

On April 18, 2016, Los Angeles World Airports (LAWA) reached an initial milestone in its Landside Access Modernization Program (LAMP) by issuing instructions for how automated people mover operating system suppliers can request a determination of their eligibility to participate in an upcoming procurement.

As part of an overall modernization program at Los Angeles International Airport (LAX), LAWA is undertaking LAMP to alleviate congestion and provide better landside passenger movement around LAX.  The major elements of LAMP include a consolidated rental car center (CONRAC), intermodal transportation facilities, parking garages, and an automated people mover system.

The automated people mover system, which will be approximately 2.25 miles long, features an elevated dual lane guideway, six passenger stations and an off-line maintenance and storage facility. Three stations will be located within the central terminal area at LAX and the off-airport stations will be located adjacent to a west and east intermodal transportation facility and the CONRAC.  In addition to CONRAC passengers, the automated people mover will also transport passengers going to/from LAX via other modes of traffic.

The submittal instructions issued by LAWA set forth the process for automated people mover operating system suppliers to become “eligible” to participate in an anticipated procurement for the design, build, finance, operations and maintenance of the automated people mover.  Operating system suppliers deemed “eligible” by LAWA will team with shortlisted proposers determined pursuant to a separate request for qualifications process.

More information is available on the Los Angeles Business Assistance Virtual Network.

Go Big Red-y for Design-Build! Nebraska Enables and Funds Innovative Highway and Bridge Procurements

Posted in Design-Build, Legislation

Governor Pete Rickets followed through on a promise to rethink infrastructure delivery in Nebraska.  Signing LB 960, the “Transportation Innovation Act,” into law, Nebraska is poised to clear its backlog of highway development in the state.  The new law passed unanimously in mid-April.Nebraska_in_United_States

The Transportation Innovation Act reserved $50 million of Nebraska’s cash reserve and allocated approximately $400 million of gas tax revenue to the end of completing a 132-mile portion of an envisioned 600 mile expressway system within the State by 2033.  New tools available to the Nebraska Department of Roads (NDOR), and its new director, Kyle Schneweis, include an infrastructure bank (as a source of funds), a bridge-oriented funds matching program, earmarked community engagement monies and most notably, construction manager/general contractor (CMGC) and design-build authority.  A progress report from NDOR on program development and implementation is due to the Nebraska legislature by the first of December.

Senator Jim Smith, LB 960’s champion, called April 18 a “big day for commerce in our state.”  Director Schneweis remarked of the new law, “The cutting-edge concepts included in the Transportation Innovation Act will help Nebraska build on its reputation as a national leader in roads. The infrastructure bank fund in this bill targets investment in key infrastructure priorities with the help of the new design-build process, which will cut red tape and help accelerate our state’s most complex infrastructure project.”

California Gets Serious About Pilot Program to Replace State Gas Tax

Posted in Bridges, Legislation, Policy, Rail and Transit, Tollroads/ Turnpikes/ Managed Lanes

For years, policymakers and economists around the country have been well aware that the federal gas tax is dying.

In its report to Congress, the National Surface Transportation Infrastructure Financing Commission, on which I was honored to serve, made clear that we must replace the 18.4 cent federal gas tax with other means of funding transportation in order to maintain and improve our highways, bridges and transit systems in the United States.

The commission recommended a “road user charge” as the most effective approach to solving this problem.

“[If] we fail to address the immediate funding crisis and longer-term investment challenge facing our surface transportation system, we will suffer grim consequences in the future,” the Commission wrote in its 2009 report.

Now, California is rolling out a pilot program to study the exact same concept – giving its residents a chance to pioneer what could become a long-term funding solution to fix the state’s crumbling infrastructure. The pilot, created by SB 1077, authored by Sen. Mark DeSaulnier, D-Concord, will examine the feasibility of assessing motorists a fee based on mileage driven on the state’s roads. Gov. Jerry Brown signed the bill in September 2014.

The state is looking to this strategy because its 18 cent gas tax, which California has historically relied on to fund the bulk of repairs to its transportation network, has not increased in decades despite inflation. More people are putting pressure on our highways than ever before, but fewer people are buying gas due to improved fuel efficiency – shrinking the amount of money available for projects.

The California Department of Transportation (Caltrans) is currently seeking 5,000 state drivers to volunteer to take part in the road user charge model and help the Legislature decide whether to adopt it permanently. Caltrans expects to choose its group in mid-May of this year, representing a range of the state’s different regions, demographics, income levels and vehicle types to participate in the 9-month pilot scheduled to begin in July.

It costs nothing to enroll and participate in the program; those chosen to test the concept will select from several mileage reporting techniques and simulated payment methods, but no money will be exchanged. Those interested in signing up should act quickly by visiting: Sign Up | California Road Charge Pilot Program.

Helping to fuel the road user charge concept across the country, President Obama in December 2015 signed the Fixing America’s Surface Transportation (FAST) Act, which included money supporting the research and development of similar state pilot programs. Shant Boyajian, who recently joined Nossaman’s Infrastructure Practice Group, served as senior counsel to the U.S. Senate Committee on Environment and Public Works, and assisted with the bill, which provides long-term funding certainty for the nation’s surface transportation system.

As the federal and state governments continue to grapple with the difficult subject of sustainable infrastructure funding, the road user charge could replace the gas tax with a reliable means of funding a safe, well-maintained network of highways, bridges and transit systems to serve many generations to come.

UPDATE: A New Color to be Added to Mid-Atlantic Transit: The Maryland Purple Line

Posted in PPPs, Rail and Transit

On April 6, 2016, the Maryland Board of Public Works unanimously approved the public-private partnership (“P3”) agreement for the Maryland Purple Line light-rail transit project, concluding the 30-day review period described in our previous blog.  The contract documents previously signed by the concessionaire have now been signed by the Maryland Department of Transportation’s (MDOT) Secretary Pete Rahn and the Maryland Transit Administration’s (MTA) Administrator, Paul Comfort.

At the Board of Public Works hearing, Comptroller Peter Franchot praised both the Governor and the project, stating that millennials will “flock” to live in the state because of this “national recognized project.”  Treasurer Nancy Kopp voted for the project based on assurances from MDOT regarding the nature of Maryland’s availability payment obligations under the P3 Agreement.  Governor Hogan – the third member of the Board – called the Purple Line Project a “giant step forward” for the State of Maryland.

The focus of attention now shifts to the concessionaire, Purple Line Transit Partners (PLTP), which is obligated to provide financing for the $5.6 billion project.  PLTP has scheduled financial close for early June, 2016.  PLTP’s financing plan includes a combination of equity commitments from PLTP, construction “progress” payments from MDOT and MTA sources, a loan from the U.S. Department of Transportation’s “TIFIA” program and proceeds of private activity bonds to be issued by the Maryland Economic Development Corporation (or “MEDCO”).  More information about the concessionaire team and sources of funding can be found in our previous blog.

The Purple Line is a 16.2 mile, 21 station light rail line providing connections to WMATA Rail stations as well as MARC commuter rail connections.  More information about the routing and interface with WMATA, MARC and Amtrak facilities can be found in our previous blog.

Two Florida P3 Bills Signed into Law

Posted in Bridges, PPPs, Rail and Transit, Social Infrastructure

On Wednesday, March 30, 2016, Florida’s Governor Rick Scott signed two bills that further advance the state’s existing public-private partnership (P3) framework and provide additional guidance for implementing P3s. The two new laws will go into effect on July 1, 2016.

SB 124 amends the 2013 law that authorizes counties, municipalities, school boards, and other political subdivisions to use P3s for a wide range of facilities, including education facilities, transportation facilities, water/wastewater facilities, roads, highways and bridges, healthcare facilities, and sporting or cultural facilities.

SB 124 includes many of the recommendations submitted by the Partnership for Public Facilities and Infrastructure Act Guidelines Task Force, a task force that was established by statute to study P3 laws around the world and recommend guidelines for the Florida Legislature to consider in developing its own uniform P3 process.

Task force recommendations that were incorporated in the bill include:

  • Authorizing school districts and special districts to use P3s;
  • Allowing a responsible public entity to alter the statutory timeframe for accepting proposals under certain circumstances;
  • Removing the requirements for a responsible public entity to provide additional notice to affected local jurisdictions when procuring a P3 project; and
  • Requiring the responsible public entity to own the project upon expiration of the comprehensive agreement.

SB 126, which also includes task force recommendations, exempts unsolicited proposals for P3 projects from public record and public meeting requirements for 180 days after receipt, if the public entity does not issue a competitive solicitation, or until the end of any competitive solicitation or promptly reissued competitive solicitation.

These temporary exemptions are intended to protect the P3 process by “encouraging private entities to submit such proposals, which will facilitate the timely development and operation of a qualifying project.”

OCTA Releases Final RFP for the I-405 Improvement Project

Posted in Tollroads/ Turnpikes/ Managed Lanes

Drivers of the I-405 in Orange County California are one step closer to an improved facility.  Today the Orange County Transportation Authority (OCTA) authorized release of a final request for proposals to design and construct the I-405 Improvement Project, the largest highway project in Southern California.  The project includes upgrading 16 miles of the I-405 between SR-73 in Costa Mesa and I-605 near the Los Angeles County line, adding a general purpose lane in each direction.  A new lane will also be added next to the current HOV lane between SR-73 and SR-22, and both lanes, in each direction, will be operated as the 405 Express Lanes.  These tolled express lanes will vary in price based on the volume of traffic on the mainlane to optimize travel.  Single occupancy vehicles will pay the full toll while carpools may pay reduced rates or travel for free.

The general purpose lanes will be funded by local, state and federal funds.  The 405 Express Lanes will be funded primarily through the tolls collected from drivers choosing to use the new express lanes.  OCTA has submitted a letter of interest for a TIFIA loan to finance the express lanes.

Three shortlisted teams are being invited to submit proposals: Skanska-Flatiron JV, Shimmick/Tutor-Perini, JV, and OC 405 Partners, a joint venture of OHL/Astaldi.   Proposals are due August 31, 2016.

Illinois Bill Looks to Significantly Expand Use of P3s

Posted in Legislation, PPPs

The Illinois Senate is currently reviewing a bill that would greatly expand the authority of public agencies in Illinois to enter into public-private partnership (P3) agreements.  To date, such authority has been limited to the Illinois DOT, the State Toll Highway Authority and, in limited circumstances, local governments.

Democratic Senator Heather Steans introduced the bill on February 19th.  Shortly thereafter, in a show a bi-partisan support, Republican Senator Karen McConnaughay became a chief co-sponsor of the bill.

The bill, known as the Public-Private Partnerships Act, would grant P3 authority to all public agencies in Illinois, including municipalities, local governments, school districts, universities, public building commissions and state agencies.  Potential projects under the bill include social infrastructure projects (schools, hospitals and other buildings), transportation facilities of all varieties, water and wastewater facilities, energy facilities, and other public assets and services.

The grant of P3 authority for social infrastructure projects is consistent with the emergence of social infrastructure projects in the United States, such as the Long Beach Courthouse, Long Beach Civic Center and UC Merced projects in California.

In addition to expanding P3 authority, the bill would create the Office of Public-Private Partnerships within the State’s executive branch.  The Office would promote the use of P3s, provide assistance to both public agencies and private entities interested in P3s, develop a database of potential P3 projects and promote uniform P3 practices.  More importantly, to pursue a particular project as a P3, the bill would require public agencies to obtain approval from the Office of Public-Private Partnerships to pursue a P3 project under the Act.  The only exception to the approval requirement is for P3 projects pursued by the Illinois DOT and the State Toll Highway Authority under the Public-Private Partnerships for Transportation Act.

A copy of the bill is available here.

New Mexico Expands Design-Build Authority to Highway and Road Projects

Posted in Design-Build

New Mexico will now allow certain highway and projects funded in whole or in part by federal funds to use the design-build delivery method.  On the last day (March 9, 2016) to sign bills from the most recent legislative session, Governor Susana Martinez signed HB 206 , which permits the Department of Transportation to use the design-build delivery method for road and highway projects above $50 million.   Previously, road and highway projects were specifically prohibited from using design-build delivery unless part of a very limited number of demonstration projects.  Opening road and highway projects to design-build will provide New Mexico with the opportunity to reap the well-established benefits of this alternative delivery system.