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

 Earlier this week USDOT Secretary LaHood announced the winners of the highly competitive TIGER II grant application cycle. Forty-two capital construction projects and 33 planning projects in 40 states will share nearly $600 million in grant funds.

According to the announcement, USDOT received nearly 1,000 construction grant applications for more than $19 billion from all 50 states, U.S. territories and the District of Columbia.  Roughly 29 percent of TIGER II money goes for road projects, 26 percent for transit, 20 percent for rail projects, 16 percent for ports, four percent for bicycle and pedestrian projects and five percent for planning projects. Grants sizes ranged from $1M for a small road extension project in Franklin County, Washington to $47.7M for Georgia’s Atlanta Streetcar project.  

“These are innovative, 21st century projects that will change the U.S. transportation landscape by strengthening the economy and creating jobs, reducing gridlock and providing safe, affordable and environmentally sustainable transportation choices,” said Secretary LaHood.  “Many of these projects could not have been funded without this program.”

The most significant project (in dollar terms) to receive funding is the Los Angeles County Metropolitan Transportation Authority’s (LA Metro) $1.7B Crenshaw/LAX Light Rail Line Project. LA Metro received a $20 million TIGER II TIFIA Payment, which is anticipated to support a $546 million TIFIA loan, covering nearly a third of project costs. This groundbreaking project is a key piece of Mayor Antonio Villaraigosa’s 30/10 initiative, an effort to accelerate 12 major transit projects in just 10 years, rather than 30 years, using innovative financing backed by the voter approved Measure R sales tax.  

The new 8.5-mile light rail line will provide a critical north-south link in Los Angeles, with six to eight stops connecting the South Bay Region and LAX Airport with major employment centers located in the Westside Region and the downtown area.   LA Metro expects to complete the environmental process in the spring of next year, and construction could begin in late 2011 and be complete between 2016 and 2018. 

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A short six months after shortlisting proposers, the California Department of Transportation and the San Francisco County Transportation Authority selected Golden Link Partners, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America, as the Preferred Proposer for Presidio Parkway Project.  Golden Link Partners submitted an annual availability payment of $28,549,189, well within the $35 million limit authorized by the California Transportation Commission in April 2010.  This significant event in the procurement follows closely on the announcement that the project funding was appropriated as part of the recently passed California budget.  Commercial close for the project is slated for December 2010.

The Presidio Parkway Project in San Francisco is the first project to reach the preferred proposer stage under California's new public-private partnership statute, Streets and Highways Code section 143. For more about the Presidio Parkway Project and Section 143, see Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.
 

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The Federal Railroad Administration (“FRA”) recently published a progress report (PDF) presenting its ambitious vision for the congressionally-mandated National Rail Plan (“NRP”).  The NRP is being developed as part of the Passenger Rail Investment and Improvement Act of 2008.  The progress report builds upon the Preliminary National Rail Plan (PDF) submitted to Congress last year.  When completed, the NRP is expected to present a framework for improving our transportation network for future generations.

The progress report emphasizes the importance of efficient and effective rail infrastructure to the nation’s economy and then details the need to build a nation-wide system of high-speed and intercity passenger rail while preserving the nation’s freight rail network.  FRA’s plans include a tiered network of passenger rail corridors, with each tier tailored to the size and needs of the various areas serviced by the system.  These tiers would include Core Express Corridors, which would consist of high-speed rail service on a dedicated track and connect large urban areas separated by distances of up to 500 miles.  The middle tier, Regional Corridors would use a mix of dedicated and shared track to provide service ranging in speed from 90-125 mph and link mid-size urban areas as well as smaller communities in between.  Finally, Emerging/Feeder routes would use shared track and provide smaller or more distant areas with service speeds of up to 90 mph.  FRA’s goal for each of these tiers is to provide connections with communities, and integrate passenger rail with other modes of public transportation. 

The FRA also uses the report to address its plan for High Performance Freight Rail and the need to improve the nation’s freight rail network to accommodate long-term capacity needs.  The report emphasizes that freight system performance can also be improved by enhancing the connections between individual modes of transportation in order to make the best use of the inherent efficiencies of each mode, including pipelines, airfreight, waterways, and trucking.  Such improvements to corridors and connections will, in turn, enhance the nation’s economic competitiveness. 

Success will require a long-term commitment to passenger rail at the Federal, State, and local levels, similar to the dedication shown to the interstate highway network in the latter half of the 20th century.”

The next steps in the development of the NRP may prove to be the most critical in terms of garnering the political support necessary for an endeavor whose significance and breadth the FRA compares to the development of the interstate highway system in the 1950s.  USDOT and FRA are currently developing criteria to identify regions of the country where Core Express, Regional and Emerging/Feeder corridors could be feasible, analyzing the costs and benefits of high speed and intercity rail and High Performance Rail, and continuing extensive public outreach to identify and aid in the resolution of challenges associated with the initiative.  When issued, the final NRP is expected to include a comprehensive strategy for implementation, including legislative, policy and administrative recommendations.  The ultimate strategy will need to anticipate and overcome the numerous financial and political challenges to such an ambitious undertaking.

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Last week the National Governors Association strongly urged key Senators to stand with them against new restrictions on public private partnerships and tolling in the House T&I Committee’s draft surface transportation bill. In their letter to chairs and ranking members of the Senate Environment and Public Works, Finance, and Banking, Housing and Urban Affairs, the NGA highlighted the efforts of state and local governments to pursue innovative financing options to complement traditional sources, and asked the Senate to omit the proposals from the Senate’s reauthorization bill. 

The proposed restrictions would be in addition to the measures already included in State P3 authorizing statutes, which commonly include strict oversight of performance standards, toll policies, labor protections, revenue sharing, risk allocation, use of toll proceeds, transparency, public participation, length of concession, and bidding procedures, as detailed in FHWA’s recent report:  Public Policy Considerations in Public-Private Partnership Arrangements.

If enacted, the new law would (i) repeal current law that enables states to toll and place new limits on tolled facilities (§1301); (ii) impose new requirements and mandate certain public-private partnership contract provisions (§1504 ); and (iii) create a new federal office to review and approve all toll rate schedules and public-private partnership agreements (§§1204 - 1205). 

These changes would have far-reaching consequences, chill private investment in infrastructure projects, and increase costs associated with oversight and litigation risk for those projects already in the pipeline.  NGA opposes these changes, and wants state and local governments to retain the flexibility to determine the appropriate level of private sector participation in their surface transportation programs. 

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The Port of Long Beach, one of the largest and busiest Ports in the world and a major inter-modal center for the cargo movement throughout the Western United States and beyond, has reached a major milestone in the approximately $1B plan to replace the Gerald Desmond Bridge on a design-build basis using the authority granted by California’s design-build demonstration program. As the first cable-stayed bridge ever built in California, the project is expected to be a landmark structure for the Port and surrounding communities.

On September 30, the Long Beach City Council approved the environmental impact report (EIR) for the project. The federal environmental approval for the Project is imminent, awaiting only a final signature. The Port expects to issue a request for qualifications as early as the first week in November following the anticipated approval of the project under the design-build demonstration program by the California Transportation Commission. There will be a lot of interest in this project among the major global construction and engineering firms. It’s a signature project at one of the most dynamic and forward-thinking port facilities in the world.

Points of Interest:

• $1B design-build project
• Received approval from Long Beach City Council on September 30, 2010
• Innovative procurement under the same California statute as P3s
• Complex construction of first cable stay bridge on this scale in California history
• A vital route for cargo, the bridge carries about 15 percent of the nation’s goods

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The Mineta San José International Airport Terminal Area Improvement Program was selected as the Best Overall Top Project and as the best Transportation Project in Northern California for 2010 by California Construction magazine during its annual statewide competition that recognizes construction and design excellence.  The project represents the first major airport design-build project in California and includes design and construction of a new terminal, access and roadway improvements, parking facilities, tenant relocations, demolition of existing facilities, and improvements to other airport facilities.  Nossaman served as special design-build counsel for the project, assisting the City Attorney’s office in negotiating and administering the design-build contract. 

The winning design-builder, Hensel Phelps Construction Company and Fentress Architects, was awarded the $513 million contract in late 2006.  Innovative design alternatives were implemented to produce a significant cost savings.  The project also used an integrated building information model (BIM) to reduce construction delays and the number of changes during construction. 

The Metro Gold Line Eastside Extension Project was selected as the best Transportation Project in Southern California for 2010.  The project extending from Union Station to East Los Angeles, added 6 miles to Metro’s rail system, including 3 light rail lines, a heavy rail subway line, 2 aerial bridges, and 1.7 miles of tunnel.  Both the design-build and design-bid-build methods were used for the project.  Nossaman assisted in the design-build procurement for the $898 million project.  Nossaman also assisted with the preparation and negotiation of cooperative agreements between Metro and various local agencies, utility owners and Caltrans.

The two projects were selected by an independent jury of industry experts in design and construction out of 135 nominated projects.  Awards were based on specific entry criteria, including project management, client service, safety, design and functionality. 

The winners will be featured in the magazine’s December 2010 issue, honored at an awards breakfast, and entered in the National Best of 2010 competition to be judged against winners from other regions.

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