Six Teams Submit SOQs for UC Merced 2020 P3 Project

The Regents of the University of California (the “Regents”), on behalf of the University of California, Merced (“UC Merced”), announced on August 1, 2014 that it received Statements of Qualifications (SOQs) from six teams in response to a Request for Qualifications for the UC Merced 2020 P3 Project.

The respondents and their equity members are (in alphabetical order):

- Edgemoor Plenary EdR Partners (EP2):  Edgemoor Infrastructure & Real Estate LLC, Plenary Group USA Ltd., and Education Realty Trust, Inc.
- E3 2020:  Balfour Beatty Investments, Inc.
- Gateway2Learn:  HOCHTIEF PPP Solutions North America and Meridiam Gateway2Learn, LLC
- Innovation Partners:  Hunt Development Group LLC and Shikun & Binui, Ltd.
- Merced Campus Collaborative:  Lend Lease (US) Investments, Inc., Macquarie Capital Group Limited and American Campus Communities, Inc.
- Merced 2020 Partners:  Skanska Infrastructure Development Inc. and Fengate Capital Management Ltd.

The complete list of respondent team members may be found at the UC Merced 2020 Project website.

The Project represents the second phase of campus development under UC Merced’s Long Range Development Plan and involves a significant campus expansion to support projected enrollment growth from 6,200 current students to 10,000 students by the year 2020. 

The project consists of the comprehensive development, design, construction, and financing of academic, administrative, research, recreational, student residence and student services buildings, together with utilities and infrastructure, outdoor recreation and open space areas, and associated roadways, parking and landscaping.  The project will also include operations and maintenance of some or all of these facilities.  The Regents intend to make shortlist decisions in November, 2014. 

Tae Yeon Do co-authored this post.
 

EPA Won't Require Formal Rulemaking for WIFIA Program

During the “Use of WIFIA” breakout session at the NCPPP P3 Connect conference this week in Denver, Elizabeth Corr, Associate Division Director for the EPA, confirmed that the agency will not need to complete the formal federal rulemaking process to implement the Water Infrastructure Finance and Innovation Act.  The Act, or WIFIA, was recently enacted by Congress to make low cost loans and loan guarantees available to public and private sponsors of water projects and is based on the highly successful TIFIA program for transportation projects.  Ms. Corr mentioned that EPA conducted its first listening session and plans several others around the country to hear from interested parties about how to best implement the program.  EPA has also setup a website, wifia@epa.gov, to provide information about the program.  Jordan Dorfman, Attorney-Advisor for EPA, acknowledged that there were unique challenges to implementing the program, including the prohibition on the use of tax exempt financing in conjunction with WIFIA assistance and the need to deal with the so-called “springing lien” provision.
 

National Conference for Public-Private Partnerships Concludes P3 Connect Summit

After a re-boot, the National Conference for Public-Private Partnerships (NCPPP) concluded a three day summit July 30 in Denver, Colorado on all things P3.

NCPPP’s “P3 Connect” annual meeting held programs addressing P3 project delivery in the water/waste water, federal and state disaster recovery, U.S. Department of Defense/U.S. General Service Administration (GSA) and emerging “social infrastructure” spaces, in addition to the more traditional transportation/transit spaces that has seen recent sustained growth in the United States.

Nossaman’s Barney Allison facilitated a panel of state transportation officials discussing the value proposition of the P3 strategy.  Panel members included Dale Witmer, Special Assistant for Finance and Innovation at the Pennsylvania DOT, Doug Koelemay, Executive Director for the Virginia Office of Transportation Public-Private Partnerships and Michael Cheroutes, Director of Colorado’s High Performance Transportation Enterprise (“HPTE”).  Mr. Cheroutes was also awarded NCPPP’s 2014 National P3 Leadership Award for both his work and his colleagues’ work in integrating P3 solutions to Colorado DOT’s booming transportation infrastructure demands.

Several panels and presentations focused on P3 strategies to address the need to update federal and public buildings.  Dan Tangherlini, recent appointee as Administrator of the GSA presented to a general session of attendees on GSA’s successes in Washington D.C. in “swap” arrangements, which he viewed as successful precursors to more fulsome P3 arrangements across the country.  NCPPP recognized the 200 Eye Street SE project - a social infrastructure project - with its “Infrastructure Project Award.” 

Since NCPPP’s relaunch earlier in 2014, the organization has sought to balance state interests and projects with federal interests, projects and policy advocacy, and has expanded beyond transportation infrastructure focus.  Overall, NCPPP exists to educate stakeholders and interested parties in the utility of P3 project delivery solutions.

Arizona DOT Announces Procurement Decision for South Mountain Freeway Project

The Arizona Department of Transportation announced today its decision to deliver the $1.9 billion South Mountain Freeway Project under a single design-build-maintain public-private partnership.  While there will be a long-term maintenance component, ADOT, in collaboration with the Maricopa Association of Governments and the Arizona Division of the Federal Highway Administration, has decided to use available public funds together with public financing to pay for the project.
 
ADOT received an unsolicited proposal for the project more than a year ago.  Under its P3 regulations, it proceeded with a detailed analysis of the unsolicited proposal, concluding that the proposed acceleration of the project through a single contract had merit.  ADOT, with the assistance of its consultants HDR, PFM and Nossaman, then undertook a risk-adjusted cost assessment and value for money analysis, examining and comparing six different project delivery methods ranging from traditional design-bid-build with delivery of the project in separate segments, to a design-build-finance-maintain availability payment approach.  The quantitative results of the value for money analysis were tightly grouped and non-quantitative considerations received considerable discussion and analysis.

Prior to making its decision, ADOT and its partner agencies sought industry input.  ADOT issued a request for information and held an industry forum in February 2014 to garner industry views on a range of pertinent questions.  Weighing this input together with the quantitative and qualitative considerations in the value for money analysis, ADOT and its partner agencies determined that the DBM alternative will provide the best value for Arizona taxpayers, will provide effective mitigation of risk and will be the most efficient delivery option.
 
The environmental work on the South Mountain Freeway Project is ongoing, and the Final Environmental Impact Statement (FEIS) is expected in mid to late September.  ADOT’s announcement makes clear that a Request for Qualifications will only be released if a build alternative is recommended under the FEIS.  If it issues a RFQ, ADOT expects to provide a six-week period to respond, with shortlisting within four weeks after it receives statements of qualifications.

Contact projects@azdot.gov for inquiries about the project and the procurement process.

The Maryland "Purple Line" Transit Project Releases its Final Request for Proposals

On July 28, 2014, the Maryland Transit Administration (MTA) and Maryland Department of Transportation (MDOT) issued the final request for proposals for a public-private partnership to design, build, finance, operate and maintain the “Purple Line” light rail transit project using an availability payment approach.  The Purple Line is a 16-mile route extending from New Carrollton in Prince George’s County to Bethesda in Montgomery County, with 21 stations and three links to the Washington DC, Metro and MARC commuter train systems.  The Purple Line has estimated project value of $2.37 billion, with the private sector expected to invest between $500 million and $900 million.  The winning concessionaire will be expected to operate and maintain the project for 30 years after construction (roughly 35 years overall).

Legislative and regulatory efforts to kick off the procurement began in earnest in mid 2013, with release of a request for qualifications issued in November 2013.  Four consortia were shortlisted and initial industry review of the proposal documents and draft contract began in February 2014.

The Purple Line has, as among its champions, Lt. Governor Anthony Brown.  MTA/MDOT also enjoys considerable federal support for the Purple Line, with the Obama Administration allocating $100 million toward construction costs in its March 2014 budget submission to Congress.  A full funding grant agreement is expected from the Federal Transit Administration and the Purple Line is seeking further federal funding support through FTA’s “New Starts Program.”

Proposals are due in January 2015, with the preferred proposer selected as the concessionaire in spring 2015.  Subject to approval by the Maryland Board of Public Works, the concessionaire would likely begin construction by the end of 2015.

More information can be found on MDOT’s website including the primary RFP documents located under “Public-Private Partnerships.”

Simon Santiago and Katherine Bourdon contributed to this post.

Indiana I-69 Section 5 Availability Payment Project Closes Financing

On July 23, 2014, the Indiana Finance Authority closed financing on its second availability payment P3 project, the I-69 Section 5 highway project, a 21-mile reconstruction project located outside of Bloomington Indiana, the home of Indiana University.  The project is a component of the I-69 Corridor Project which will strengthen connectivity between the northern and southern portions of the state.  After signing the public-private agreement in April of this year, Isolux Infrastructure, a major Spanish infrastructure company, brought in Infra-PSP Canada, an affiliate of the Public Pension Investment Board, a Canadian crown corporation, to take 49% of the equity in the project development company, the first time an international public pension player has made a direct investment in a US P3 project during the construction phase of the project.  The total equity commitment is approximately $40.4 million. 
 
Total project capital costs are expected to be approximately $370 million; in addition to the private equity commitment, funding is coming from a $243,845,000 tax-exempt private activity bonds issued by IFA with Citi and Jeffries as the bond underwriters.  IFA has committed $80 million in milestone payment payments towards project costs.  After application of the interest-rate risk sharing provision of the agreement, and with the rally in the muni bond market since Isolux submitted its winning bid in January 2014, the final base maximum annual payment decreased by $1.5 million per year.
 
The PABs are comprised of a single short-term serial bond maturing March 1, 2017 and several term bonds with maturities ranging from September 1, 2027-September 2046.  Yields on the term bonds range from 3.98% to 5%.
 
The source of repayment of the PABs is anticipated to be availability payments made by IFA under the public-private agreement as consideration for the private developer designing, constructing, financing, operating and maintaining the project.  The availability payments, which commence on substantial completion of the project, are subject to quarterly deductions if the private developer fails to meet certain performance requirements relating to the availability of the project and compliance with the technical requirements.
 
The project is scheduled for completion on October 31, 2016, which, coincidentally is the same date the East End Bridge project, IFA’s first availability payment P3 project, is scheduled to be completed.

President Unveils Build America Investment Initiative Today

President Barak Obama today announced the Build America Investment Initiative (the “Initiative”).  According to the Fact Sheet released by the White House in advance of the announcement, the purpose of the Initiative is to “increase infrastructure investment and economic growth by engaging with state and local governments and private sector investors to encourage collaboration, expand the market for public-private partnerships (PPPs) and put federal credit programs to greater use.”

The transportation industry will be the first to benefit from the Initiative.

The Fact Sheet lays out some of the portions of the Initiative, including a “Build America Transportation Investment Center” (the “Center”) to be housed within the United States Department of Transportation (“US DOT”), envisioned to be a “one-stop shop” for both public- and private-sector parties interested in innovative financing and project delivery for transportation projects; a “Build America Interagency Working Group” (the “Working Group”), to be chaired by Secretary of the Treasury Jack Lew and Secretary of Transportation Anthony Foxx (or designees), to address barriers in private investment in industries including water, ports and harbors, communications, and energy; and an “Infrastructure Investment Summit,” to be hosted by the United States Department of the Treasury on September 9, 2014, intended to bring together federal, state, and local officials with project developers and investors to discuss innovative financing approaches for infrastructure.

After the announcement today, the President signed a Presidential Memorandum that uses the President’s executive authority to set policy related to collaboration on infrastructure development and financing, to articulate the requirements for establishing the Center within the US DOT, and to communicate the parameters for the Working Group.

In particular, the Center is subject to the following conditions:

  • The Center must be established within 120 days;
  • The Center must develop and make available tools useful to the establishment of innovatively financed and delivered projects, including case studies, best practices, and analytical tools;
  • The Center must develop a Web site to serve as a source of information for both public- and private-sector entities interested in transportation financing programs; and
  • The Center must coordinate with the Steering Committee on Federal Infrastructure Permitting and Review Process Improvement to provide technical assistance regarding environmental review.
     

Study Finds San Francisco Veterans Administration Medical Center is Prime Candidate for P3 Delivery Method

According to a recently released study by the Bay Area Council Economic Institute, a public-private partnership (P3) may be the most effective method to deliver a proposed expansion of the San Francisco Veterans Administration Medical Center (SFVAMC) – but there are some barriers that need clearing. 

The SFVAMC is a leading Veterans Administration (VA) medical center, having the largest research program in the national VA system, and providing one-third of the clinical education and curriculum for medical students and residents from the medical school at the University of California, San Francisco (UCSF).  The SFVAMC has outgrown its existing, 80-year facility near the Golden Gate Bridge, and is considering building a new state-of-the art building in the city’s Mission Bay district, where it would relocate research and hospital operations and form part of UCSF’s growing health sciences complex there.  

Based on current delays in federal appropriations, the much-needed expansion project faces an estimated wait time of 10 to 15 years if delivered through conventional federal procurement methods.  In contrast, the Economic Institute’s study finds that there is an immediate opportunity for the VA to pilot a P3 to design, build, finance, operate, and maintain the expansion project.   If structured properly as a P3, the project can attract private capital and could result in a significantly accelerated delivery schedule.  When compared to conventional procurement methods, the study concludes that a P3 could achieve capital cost savings of at least 20 %, and life-cycle cost savings (including operations and maintenance) of 10-30 %. 

Moving forward with the P3 alternative, however, will require changes in federal procurement laws. For starters the Economic Institute recommends passing enabling legislation to allow the VA to enter into long-term space lease agreements and lease-leaseback transactions.  For now, the VA is in dialog with US congressional leaders, as well as UCSF and prospective private partners, to move the project to the next step.  

The study was broadly peer reviewed, by Stan Taylor and Patrick Harder of the Firm’s Infrastructure Practice Group.

A copy of the Economic Institute’s study may be found at: http://www.bayareaeconomy.org/publications-list/

Nossaman Develops Model Social Infrastructure P3 Bill

Many federal, state and local government agencies are looking for innovative and cost effective methods to deliver essential social infrastructure such as educational facilities, hospitals and criminal justice facilities and related infrastructure.  As a result, these agencies are increasingly interested in assessing and pursuing the P3 delivery model.  However, these agencies often lack clear statutory authority to use a P3 delivery model for social infrastructure.  Recognizing this gap, Nossaman has developed a model social infrastructure P3 bill, based on its extensive experience in advising US public agencies on the use of innovative delivery methods for other classes of infrastructure.  A copy of the model bill can be viewed here.   

A draft version of the model bill was released for industry comment on April 28, 2014, and was favorably received and generated interest and input from various sectors.  A few minor revisions were made to the bill following the comment period, which closed on June 11, 2014.

The model bill seeks to provide the authorizations that a public sponsor would need to engage in the P3 delivery of social infrastructure projects.  At the same time, the model bill is designed to provide flexibility to a public sponsor to fashion its project and procurement to suit its unique needs and goals.  As such, it avoids setting out detailed, rigid rules that a public sponsor must follow in the execution of a P3 project.

The model bill is not designed to address the specific requirements of every jurisdiction.  Rather, the model bill presents options and issues for consideration by legislators and addresses hurdles to P3 delivery that are common across many jurisdictions.  Every jurisdiction will have its own unique legal and policy restrictions and requirements that would need to be taken into account in the development of its authorizing legislation. 

Nossaman welcomes your comments and suggestions on the model social infrastructure P3 bill.  Please send any comments or inquiries to Yukiko Kojima at ykojima@nossaman.com or to Andrée Blais at ablais@nossaman.com.

Andrée Blais co-authored this entry.

East End Crossing Wins Grand Prize at International P3 Awards Ceremony

Wrapping up the 2013 P3 awards season, East End Crossing won the Projects Grand Prize as well as the Gold Prize for best P3 road project at the Partnerships Bulletin awards ceremony Thursday night at the Park Lane Hotel in London.  The toll bridge availability payment project in southern Indiana, USA, was the top winner among 7 other P3 projects nominated from around the world.  Attended by over 700 of the leading industry participants, the project was recognized for its innovative financing structure and well run procurement process.

Connecting Kentucky and Indiana over the Ohio River, the East End Crossing is part of the two-state, $2.6 billion Ohio River Bridges project, one of the largest transportation undertakings in the United States.  Indiana's East End Crossing involves a new $1.18 billion toll bridge over the Ohio River connecting I-265/KY 841 with S.R. 265. 

A multiple, award winner, the East End Crossing was the first P3 transaction ever named 2013 “Deal of the Year” by The Bond Buyer.  It was also named ARTBA 2013 P3 Project of the Year and “North American Project Bond Deal of the Year” by Project Finance Magazine. The project was also a finalist for the 2013 Infrastructure Journal Transport Deal of the Year. 

We congratulate the Indiana Finance Authority on receiving this extraordinary recognition and wish further success in implementation of what is fast becoming one of the US’s more active P3 programs.
 

Nossaman Posts Draft Model P3 Legislation for Public Buildings and Invites Comments

As demand for government services continues to grow across the United States, federal, state and local government agencies must identify innovative and cost effective methods to deliver essential social infrastructure. While many agencies are interested in pursuing innovative P3 delivery models to procure public buildings, they often lack the clear necessary legislation to authorize P3 deals. 

We offer below, for consideration and comment, a draft model social infrastructure P3 bill.  We developed the draft legislation based on our experience advising US public agencies using innovative delivery methods for other classes of infrastructure. This draft model legislation seeks to provide the authorizations that a public sponsor requires to engage in the P3 delivery of a social infrastructure project.  The draft model legislation is also intended to be a flexible instrument and as such it does not set out rigid rules that a public sponsor must follow in the execution of P3 project.  
 
We invite you to review and consider our draft bill.  We are very interested in receiving your comments and suggestions.  Please send your comments by June 11, 2014 to Yukiko Kojima at ykojima@nossaman.com or to Andrée Blais at ablais@nossaman.com.

Yukiko Kojima co-authored this entry.

FDOT Announces Apparent Best Value Proposer for I-4 Managed Lanes Project

The Florida Department of Transportation (FDOT) announced today that it has selected I-4 Mobility Partners as the apparent best value proposer to design, build, finance, operate and maintain the I-4 Ultimate project.  The I-4 Ultimate project contemplates a 40-year availability payment contract at a total design and construction cost of $2,323,000,000.00 in year of expenditure dollars.  This cost is approximately $860 million less than the highest proposal received by FDOT at $3,180,033,233.90 in year of expenditure dollars.  Commercial and financial close is expected to occur later this summer. 

The members of the I-4 Mobility Partners team include the following:

  • Skanska Infrastructure Development Inc. (Equity Member)
  • John Laing Investments Limited (Equity Member)
  • Construction Joint Venture – Skanska USA Civil Southeast Inc., Granite Construction Company, and the Lane Construction Corporation (Lead Contractor)
  • Design Joint Venture – HDR Engineering, Inc. and Jacobs Engineering Group, Inc. (Lead Engineer)
  • Infrastructure Corporation of America (Lead Operations and Maintenance firm)

The project includes the reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County.  The I-4 Ultimate project adds four tolled express lanes to I-4 while maintaining the existing free general use lanes, providing a choice to motorists.  The express lanes will be operated with variable tolls which will be adjusted to improve traffic flow throughout the corridor.  FDOT will retain the toll revenue and will control the toll rates. 

The FDOT press release can be found on the project website.

Congressional Panel Explores International Experience with Public-Private Partnerships

On Tuesday, April 8th, the House Transportation and Infrastructure Panel on Public-Private Partnerships held a hearing on "The International Experience with Public-Private Partnerships".  The Panel focused in particular on the Canadian experience, observing that over the past two decades Canada has become one of the most advanced and active markets for P3s. The witness list and links to their testimony are as follows:

The Honorable John Delaney, United States Representative, Maryland

Dr. Larry Blain, Chairman of the Board of Directors, Partnerships British Columbia | Written Testimony

Mr. David Morley, Vice President, Business and Government Strategy, Infrastructure Ontario | Written Testimony

Cherian George, Managing Director – Americas, Global Infrastructure & Project Finance, Fitch Ratings | Written Testimony

Dr. Matti Siemiatycki, Associate Professor, Program in Planning, University of Toronto | Written Testimony

Congressman John Delaney began by describing the magnitude of the nation’s infrastructure deficit.  Referring to an estimate made by the American Society for Civil Engineers, he explained that close to $4 trillion needs to be invested to bring infrastructure in the US up to world class standards.  As governments are cash strapped, he advocated that private sector capital be engaged to increase investment in infrastructure to fill the gap, and he noted the importance of smart P3 frameworks to meet this infrastructure challenge.  Congressman Delaney referred to The Partnerships to Build America Act (H.R. 2084), which he introduced to the House on May 2013.  He explained that The Partnerships to Build America Act would provide for the financing of state and local government transportation, energy, communications, water, and education infrastructure projects through the creation of an infrastructure fund.

The Panel did not put questions to Congressman Delaney, leaving that for the House. The Panel did, however, engage in a lively discussion with the remaining witnesses about the Canadian experience with P3s and explored the suitability of the Canadian approach for infrastructure projects in the US.

Witnesses outlined various factors that have resulted in successful P3 projects in Canada.  The creation of specialized provincial agencies staffed with experts skilled with both evaluating projects for P3 delivery and negotiating with the private sector was noted as a significant factor contributing to successful P3 deals. Further, the development by these agencies of consistent and predictable procurement processes and standardized documentation has facilitated the delivery of P3 projects and encouraged the development of the P3 market in Canada.

Mr. George of Fitch Ratings, discussing P3s from a global perspective, pointed out that P3s can provide public value, but these transactions need to be appropriately designed and carefully crafted to address all stakeholder concerns.  He indicated that projects that have a defined scope where performance can be measured are better suited to P3 delivery.  He noted that lessons can be learned from past P3 projects undertaken around the world.  He spoke to a few examples including the 407 toll road in Ontario and Chicago’s Skyway toll concessions, each of which came under considerable criticism and involved legal disputes.

Witnesses pointed out that in Canada P3s are not typically used to raise new money to pay for infrastructure through user fees or tolls.  Instead, P3s are viewed in Canada as a way to finance a project using private capital that is repaid overtime by the government through availability payments.  Congressman Sean Patrick Maloney (D-NY) indicated that while P3s are not viewed as a funding solution in Canada, P3s are being considered for that purpose in the US.

Continue Reading...

Indiana Achieves Commercial Close on its Second Availability Payment P3

Indiana closed its second availability payment-based P3 project, the I-69 Section 5 project.  "Section 5" is the fifth of six planned sections to link Evansville, Indiana with Indianapolis.  The RFQ for Section 5 was published on May 23, 2013 and the Indiana Finance Authority ("IFA") – once again partnering with the Indiana Department of Transportation – never missed a deadline, achieving commercial close on April 8, 2014.

Indiana’s private partner is the I-69 Development Partners, with Isolux Infrastructure Netherlands B.V., a Spanish-Dutch P3 developer (“IIN”) partnering with its affiliate, Corsan-Corviam Construccion, S.A., as its design-builder, and the joint venture of Arizona-based AZTEC Engineering Group, Inc. and Técnica y Proyectos S.A. (or “TYPSA”), as its designer.  Regional and Indiana-based team members Burgess & Niple, Inc., E&B Paving, Inc. and others round out the concessionaire team.  The I-69 Section 5 project involves reconstructing a 21 mile stretch of existing Indiana State Route 37 to interstate standards, a project with both rural and urban design features, underground geological “karst” challenges and located adjacent to the home of Indiana’s flagship state university in Bloomington.

The Section 5 marks IIN’s first stateside P3.  IIN, with three other major international and domestic  developers and regional P3 players, are also shortlisted for Indiana’s next P3 procurement, the Illiana/I65 Project, linking Northwest Indiana with the companion P3 project being procured by the Illinois Department of Transportation, creating alternative entry into the greater Chicago area.

I-69 Development Partners bid an attractive $21.78 million base year “maximum availability payment,” and also achieved a high technical evaluation score.  Four shortlisted teams submitted proposals in response to IFA’s RFP and  were evaluated in late January.  A low bid and a high technical evaluation won IIN the day.  Financial Close is expected in late June 2014.

John Smolen co-authored this entry. 

Florida I-595 Express Lanes Open

On March 26, the Florida Department of Transportation (FDOT) celebrated the grand opening of the $1.2 billion I-595 Express Corridor Improvements Project (Project) in Broward County, Florida.  The Project is the nation’s first Availability Payment public-private partnership and the first public-private highway deal in Florida.

The Project consists of the reconstruction of the I-595 mainline from the I-75/Sawgrass Expressway interchange to the I-595/I-95 interchange on I-595 and from Peters Road to Griffin Road on Florida's Turnpike, for a total project length of 13 miles.  The Project includes three reversible express, variable-toll lanes at grade in the median of the existing highway, from Interstate 95 to Interstate 75, a distance of approximately 10 miles.  

In March of 2009, FDOT signed the concession agreement with ACS Infrastructure Development Inc., a U.S. subsidiary of Group ACS in Spain, to design, build, finance, operate and maintain the I-595 for 35 years.  Construction of the Project began in June 2009 and was completed in less than 5 years and ahead of schedule.
 
Some of the key milestones and achievements highlighted by FDOT are:
  • I-595 improvements completed over 15 years sooner than originally projected
  • Innovative design/build processes allowed for execution of the I-595 Project in record time
  • Less than 0.7% of the construction cost in scope changes
  • No time added to the contract
  • All project milestones achieved
  • Project of the Year Award in 2009 by the American Road & Transportation Builders’ Association (ARTBA) for outstanding contributions to the promotion of public private partnerships that advance transportation infrastructure improvements
  • Award of Excellence in Civil/Public Works in 2010 by Southeast Construction Magazine for partnering with three private golf courses for storm water treatment and saving millions of dollars in right of way acquisitions.
  • 2009 North American Transport Deal of the Year by Project Finance Magazine. 
Nossaman is proud to have served as FDOT’s outside legal advisor on this groundbreaking transaction.
 
For more information about the I-595, visit the project website.

FDOT Receives Financial Proposals from Four Teams for I-4 Ultimate Project

The Florida Department of Transportation (FDOT) announced yesterday that it received four financial proposals in response to a Request for Proposals issued by FDOT on October 11, 2013 for the I-4 Ultimate Project.  On June 5, 2013, FDOT announced a shortlist of four proposers, all of whom submitted financial proposals yesterday and technical proposals on February 12, 2014 seeking the contract to design, build, finance, operate and maintain the project.

The estimated $2 billion project, which will be developed through a public-private partnership concession agreement, includes the reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County.   The project adds four tolled express lanes to I-4 while maintaining the existing free general use lanes, providing a choice to motorists. 

FDOT received financial proposals from the following shortlisted teams (listed in the order received):

  1. Ultimate Mobility Partners (InfraRed Capital Partners Limited; Fluor Enterprises, Inc.; Kiewit Infrastructure South Co.);
  2. I-4 Mobility Partners (Skanska Infrastructure Development Inc.; John Laing Investments Limited);
  3. 4wardPartners (VINCI Concessions S.A.S.; Meridiam Infrastructure I-4 Ultimate, LLC; Walsh Investors, LLC); and
  4. I-4 Development Partners LLC (Macquarie Capital Group Limited; OHL Concesiones.A.; FCC Construccion S.A.).
FDOT is reviewing the financial proposals and technical proposals and expects to make final selection of a best value proposer at a public meeting on April 23, 2014.  
 
For further information, please visit the project website at www.moving-4-ward.com.  A more detailed list of each proposer team can be found under “Project Info/Docs” on the project website.

Indiana Finance Authority Shortlists 4 Proposers for its Indiana Portion of the Illiana Corridor Project & I-65 Added Capacity Project

On February 28, 2014, the Indiana Finance Authority ("IFA"), in coordination with the Indiana Department of Transportation ("INDOT"), shortlisted four teams for its Indiana Portion of the Illiana Corridor Project (the "Indiana Portion") and I-65 Added Capacity Project ("I-65 Project" and collectively with the Indiana Portion, the "Project").  The project website is located at http://www.in.gov/ifa/2763.htm.  

The Illiana Corridor Project is a collaborative effort among the Illinois Department of Transportation (“IDOT”), INDOT, and IFA to construct a highway, approximately 46.8 miles long, which provides an east-west connection between I-65 in Indiana and Interstates 57 and 55 in Illinois.  The Indiana Portion consists of the new construction of an 11.7 mile, four-lane median divided tolled highway, extending from the Illinois/Indiana stateline at the west end and connecting to I-65 north of Lowell, Indiana at the east end.  The I-65 Project involves the construction of additional travel lanes on I-65 and will be located between SR 2 extending north to US 30.  IDOT is pursuing a separate procurement for the portion of the Illiana Corridor located in Illinois; three out of the four teams shortlisted by IFA were also shortlisted by IDOT.

The Project marks the third foray of Indiana into the emerging availability payment structure of public-private partnerships in the United States, having led with the East End Crossing project (part of the Louisville-Southern Indiana Ohio River Bridges Project), successfully financed at the end of March 2013 and the I-69 Section 5 Project, scheduled for commercial close in April 2014.  The Project also marks the third effort of the joint IFA and Indiana Department of Transportation Team in using innovative project delivery approaches to meet growing transportation infrastructure demands in Indiana.  

The shortlisted teams, in alphabetical order, are: 
  • Indiana Corridor Transportation Group (joint venture of ACS Infrastructure Development, Inc. and Fengate Capital Management Ltd.), partnering with Dragados USA, Inc., F.H. Paschen, S.N. Nielsen & Associates LLC and William Charles Construction Company, LLC  as the joint venture lead contractor, Jacobs Engineering Group, Inc. as the lead engineering firm and with others. 
  • Illiana East Mobility Partners (through its sole equity member, Cintra Infraestructuras, S.A.), partnering with Ferrovial Agroman US Corp and White Construction, Inc. as the joint venture lead contractor and Janssen & Spaans Engineering, Inc., as lead design and engineer and with others.
  • Isolux Infrastructure Netherlands B.V. (with Isolux Infrastructure Netherlands B.V. acting as sole equity member) partnering with Corsan-Corviam Construccion, S.A. as lead contractor, a joint venture of AZTEC Engineering Group, Inc. and TYPSA (Tecnica y Projectos S.A.) working together as the lead engineering firm and with others. 
  • WM Indiana- Illiana Partners, LLC  (joint venture of Walsh Investors, L.L.C. and Meridiam Infrastructure Illiana IN, LLC), partnering with Walsh Construction Company II, LLC as the builder, Parsons Transportation Group as the lead engineering firm and with others.
IFA plans to issue a final RFP in July of this year with award and execution of the comprehensive P3 agreement at the end of 2014.
 
The INDOT press release can be found on the project website. 

Indiana Does it Again! IFA Selects Preferred Bidder for I69 Section 5 Availability Payment Project

Following on the success of the East End Crossing P3 project, the Indiana Finance Authority selected a team led by international P3 developer Isolux Infrastructure to design, build, finance, operate and maintain a 21 mile interstate project.  The developer expects to spend $325 million on capital costs for the project and has brought several local contractors on board to assist in the design and construction of the project.  Commercial close is expected in early April, with financial close and the commencement of construction expected this summer.  Substantial completion is anticipated by late fall 2016, several years ahead of schedule.  A major component of the developer’s responsibilities include operation and maintenance of the existing SR 37 highway, a portion of which is located outside of Bloomington, IN, home to Indiana University.

The project is a key component of the new Interstate 69 between Evansville and Indianapolis, a 142 mile corridor that is a major access route for the entire region.

As with the East End Crossing P3 procurement, IFA met every procurement milestone and all 4 shortlisted teams actively participated in the process and submitted compliant bids.  The success of the I69 procurement and the commencement of the P3 procurement for the Illiana/I65 project evidences Indiana’s position as a national leader in leveraging private capital and innovation to deliver transportation infrastructure sooner than expected and at the lower possible cost to taxpayers.  Indiana’s P3 transportation program benefits from the stellar credit ratings conferred on the State attracting low-cost private sector financing using an availability payment form of public-private partnership. 

View a larger version of the map above. 

FDOT Receives Technical Proposals from Four Teams for I-4 Ultimate Project

The Florida Department of Transportation (FDOT) announced yesterday that it has received four Technical Proposals in response to its Request for Proposals for the I-4 Ultimate Project.  On June 5, 2013, FDOT announced a shortlist of four proposers, all of whom submitted proposals seeking the contract to design, build, finance, operate and maintain the project.

The estimated $2 billion project, which will be developed through a public-private partnership concession agreement, includes the reconstruction of 21 miles of I-4 in the metro Orlando area. The project adds four tolled express lanes while maintaining the existing free general use lanes. 

FDOT received proposals from the following shortlisted proposer teams (listed in the order received):

  1. Ultimate Mobility Partners (InfraRed Capital Partners Limited; Fluor Enterprises, Inc.; Kiewit Infrastructure South Co.);
  2. I-4 Mobility Partners (Skanska Infrastructure Development Inc.; John Laing Investments Limited);
  3. 4wardPartners (VINCI Concessions S.A.S.; Meridiam Infrastructure I-4 Ultimate, LLC; Walsh Investors, LLC); and
  4. I-4 Development Partners LLC (Macquarie Capital Group Limited; OHL Concesiones.A.; FCC Construccion S.A.).

Financial Proposals for the project are due on March 13, 2014.  FDOT will review the Technical Proposals and Financial Proposals over the next two and a half months, and expects to make final selection at a public meeting in April 2014.

For further information, please visit the project website at www.moving-4-ward.com.  A more detailed list of each proposer team can be found under “Project Info/Docs” on the project website.

View a larger version of the map above.

Tags:

Arizona DOT Issues RFI for South Mountain Freeway Project

Yesterday the Arizona Department of Transportation issued to the P3 and design-build industry a Request for Information for the South Mountain Freeway project.  ADOT is seeking perspective and feedback from lead developers, design-build contractors, maintenance contractors, and equity investors on a list of questions, and is providing an opportunity for industry input on the overall procurement process for the project.

Responses are requested by February 25.  ADOT will convene and open industry forum on the project at the ADOT auditorium on February 27, and the industry has the opportunity to sign up for one-on-one meetings with ADOT on February 27 and 28.

In planning and development for over 20 years, the project is planned as a 22-mile, eight-lane greenfield freeway in the southwest quadrant of Phoenix.  The environmental review of the project is expected to culminate in a final environmental impact statement in the summer of 2014 and a record of decision a few months later.  Estimated capital costs are in the range of $1.8 billion, including at least $600 million for right of way acquisitions.

Maricopa County has a ½ cent sales tax dedicated to transportation.  A major portion of the sales tax revenue is scheduled for the capital cost of the project.  ADOT originally planned the project for construction via traditional design-bid-build delivery in nine separate segments stretching through 2026, timed to match cash flows from the sales tax.  But ADOT’s recent analysis indicates that there may be benefits from using financing to accelerate delivery of the full project under a single procurement.  The financing, in the range of $400 –800 million, could be arranged as public or private debt, including use of private activity bonds and a TIFIA loan. 

The RFI explains that ADOT is examining three P3 methods:  design-build-finance-maintain using availability payments, design-build-maintain, and “enhanced” design-build.  All of these delivery methods are authorized under ADOT’s public-private partnership authority.  ADOT would use a two-stage competitive procurement, first short-listing proposers based on evaluation of statements of qualifications and then using a best value evaluation of proposals to select the winner.

If ADOT decides to proceed with innovative delivery, the RFQ could be issued in the first half of this year, with proposal submission, selection and contract execution within a year thereafter.

View a larger version of the map above on the ADOT website.

USDOT Official Comments on P3s

Victor Mendez, Acting Deputy Secretary at the U.S. Department of Transportation, participated this morning in a Bloomberg Government panel entitled “America on the Move: Investing in U.S. Infrastructure.” In a wide-ranging discussion, he addressed the issue of long-term funding for U.S. infrastructure.

He commented that there is a need for many funding options and we need the private sector in the mix. The TIFIA program has been successful, financing 40 or so projects so far with the private sector, many of them toll roads.  Some of the projects are very long term, up to 50 years.

Mendez was asked specifically about the House Transportation and Infrastructure Committee’s panel on public-private partnerships and what USDOT thinks about P3s. He repeated that the private sector has to be engaged, as we do not have enough public sector funding to do what we need to for U.S. infrastructure, and the Department supports P3s.  He commented that we have not figured out completely how to advance P3s and bring the private sector to the table, and we need to keep working on it. He spoke directly to the private sector, saying that “your ideas are critical.”  He said that through TIFIA, successful loans have been made, but getting through the negotiations can be onerous, with every deal different, and some of them very complex.  Getting the negotiations done in a more streamlined fashion will be important for all players.

He also talked about the importance of streamlining the permitting process for infrastructure.  He noted that while much of the discussion about infrastructure is focused on funding, there are other policy areas, like the permitting process, to be addressed.

Four Teams Short-listed for the Maryland Purple Line P3

On January 8, 2014, the Maryland Department of Transportation and the Maryland Transit Administration announced that four teams were short-listed to submit proposals to design, build, construct, finance, operate and maintain the Purple Line Project through a public-private partnership (“P3”). The estimated $2.2 billion Purple Line Project is 16.2 mile light rail transit line that extends from Bethesda in Montgomery County to New Carrollton in Prince George’s County, connecting major activity centers inside the Capital Beltway. The four teams, representing a combination of American and European firms, were selected from six private-sector teams that submitted statements of qualification in response to the Purple Line’s Request for Qualifications issued on November 8, 2013. 

The four teams in alphabetical order are:
  • Maryland Purple Line Partners ( Vinci Concessions, S.A.s; Walsh Investors, LLC; InfraRed Capital Partners, Limited; Alstom Transport SA and Keolis SA)
  • Maryland Transit Connectors ( John Laing Investments Limited; Kiewit Development Company; and Edgemoor Infrastructure & Real Estate LLC)
  • Purple Line Transit Partners (Meridiam Infrastructure Purple Line; Flour Enterprises, Inc.; Star America Fund GP LLC)
  • Purple Line Alliance (Macquarie Capital Group and Skanska Infrastructure Development, Inc.)
Transportation Secretary James T. Smith Jr. stated “After careful review and deliberation, I am announcing the decision to move forward with four private teams for this public-private partnership project. These teams clearly demonstrated their qualifications to deliver this important project in their responses to our Request for Qualifications.”  Evaluation criteria included teams’ prior experience, proposer’s personnel and organization, financing capabilities, and overall approach.  The Purple Line project is expected to be one of the largest P3 transit concession projects in U.S. history, with construction beginning in 2015.

East End Crossing Wins Bond Buyer Deal of the Year

Recognizing the innovative P3 approach to project delivery and financial structure for a major US infrastructure project, the Bond Buyer awarded the Indiana Finance Authority's private activity bonds for the East End Crossing the Deal of the Year Award at its annual event held at the Waldorf Astoria hotel in New York City.  Notably, this is the first P3 transaction to win the award.
 
The $1.2B East End Crossing, a portion of the $2.6B Ohio River Bridges project, one of the largest transportation undertakings in the U.S. and the first availability payment P3 for the Indiana Finance Authority, will improve connecting roadways and provide a new $1.18B toll bridge across the Ohio River between Indiana and Kentucky, connecting I-265/KY 841 with S.R. 265.
 
Indiana Finance Authority acts as the public sponsor under the availability payment contract which was signed at the end of last year as well as the conduit issuer for the private activity bonds.  The debt portion of the financing is made up of two series of tax exempt private activity bonds.  Series A, in the principal amount of $482,310,000, has maturities starting in July 2035 with final maturity in January 2051; pricing for the long bonds is between 4.56% and 4.96%.  A construction financing tranche in the principal amount of $194,495,000, has a nominal maturity of January 2019, but is callable earlier as milestone payments are achieved; baseline substantial completion is scheduled for the end of October, 2016.  This Series B short-term piece is priced to yield 2.28%.  Lead underwriter for the deal is Bank of America Merrill Lynch, with JP Morgan, Goldman and RBC Capital as co-senior underwriters.  Equity members will contribute approximately $78 million towards project costs.  In conferring the award, the Bond Buyer noted the unique structure of the short term pabs which are payable from IFA's milestone payments and suggested that this innovative approach will prove to be a template for future transactions.
 
Kendra York, Public Finance Director for the state of Indiana, accepted the award, noting Governor Mike Pence’s commitment to using tools such as P3s to foster economic development and to improve the lives of residents of the Hoosier state.
 
This recognition comes on the heels of the East End Crossing winning the ARTBA "Project of the Year," as but one of a sweep of awards in the July 26 25th anniversary awards dinner, which also recognized Ms. York as "Public-Sector Entrepreneur of the Year" and Matt Walsh, among the equity members of the winning East End Crossing concessionaire/developer team.
 
Indiana continues to lead the P3 market, as it expects proposals for its follow-on availability payment concession, the I-69 Section 5 project mid-January and recently issued an RFQ for its share of the Illiana Expressway, also a bi-state project with the Illinois Department of Transportation.
 

Indiana Finance Authority Issues RFQ for the Indiana Portion of the Illiana Corridor Project and I-65 Added Capacity Project

The Indiana Finance Authority (“IFA”) issued its Request for Qualifications (“RFQ”) for an availability payments public private partnership for the financing, building and operating of the Indiana portion of the Illiana Corridor Project (the “Indiana Portion”) and I-65 Added Capacity Project (“I-65 Project” and collectively with the Indiana Portion, the “Project”) on November 12.  The Illiana Corridor Project is a collaborative effort among the Illinois Department of Transportation (“IDOT”), Indiana Department of Transportation, and IFA to construct a highway, approximately 46.8 miles long, which provides an east-west connection between I-65 in Indiana and Interstates 57 and 55 in Illinois.  The Indiana Portion consists of the new construction of an 11.7 mile, four-lane median divided tolled highway, extending from the Illinois/Indiana stateline at the west end and connecting to I-65 north of Lowell, Indiana at the east end.  The IDOT recently issued an RFQ for the Illinois portion of the Illiana Corridor Project.  The I-65 Project involves the construction of additional travel lanes on I-65 and will be located between SR 2 extending north to US 30.

Firms will have until January 10, 2014 to submit their statement of qualifications (SOQs) in response to the RFQ.  The IFA will then review the SOQs and shortlist the most highly qualified firms to provide design-build services for the Indiana Portion and I-65 Project. Firms will be selected based on experience, technical competency, ability to perform and other factors. The anticipated announcement of shortlisted proposers is set for February 19, 2014 with the selection of a firm and commercial close projected for November 2014.

The Project follows IFA’s recent successful completion of the East End Crossing Project, another bi-state project.  The Project is expected to spur substantial economic development in Northwest Indiana.   The route is also expected to relieve roadway congestion and strengthen the regional transportation network in Northwest Indiana and Northeast Illinois (including improved business accessibility to labor, suppliers and markets and improved personal accessibility for residents).  The environmental clearance process for the route is already underway and is anticipated to be final by Spring 2014.

The RFQ is posted on the IFA’s website.

Sean Wainwright co-authored this entry.

Indiana Finance Authority issues the Request for Proposals for the I-69 Section 5 Project

Continuing Indiana’s successful employment of availability payment model public-private partnership (“P3”) concessions, the Indiana Finance Authority (“IFA”) issued its second P3 Request for Proposals (“RFP”) to proposers shortlisted at the end of July for the Interstate 69, Section 5 project (the “Section 5 project”).  As with the successful East End Crossing procurement, IFA, with its partner, the Indiana Department of Transportation, or INDOT, has met each and every procurement deadline since release of the Request for Qualifications (“RFQ”) in late May, which places the Section 5 project on pace to exceed the East End Crossing’s procurement pace, then the quickest procurement of its kind and scale from RFQ to commercial close in the United States.

The Section 5 project is one of six sections under development to complete the federal interstate connection from Evansville, Indiana to Indianapolis, collectively, part of a further development of the national I-69 corridor, running from the U.S. border with Mexico to its border with Canada.  The Section 5 project is approximately 26 miles long, varying from 4 to 6 lanes wide in each direction, located in Morgan, Johnson, and Marion Counties, involving construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses.  Notably, the Section 5 project moves through Bloomington, Indiana, placing maintenance of traffic issues prominently in the would-be Developer’s plan.  Furthermore, the limestone topography of mid-to-southern Indiana presents unique construction challenges.

Proposals are due to IFA on January 23, 2014, and IFA anticipates notifying the preferred proposer by mid-to-late February.

ADOT Executes First P3 Agreement

The Arizona Department of Transportation (ADOT) and Infrastructure Corporation of America (ICA) have entered into a concession agreement under which ICA will operate and maintain ADOT’s 14 highway rest areas.  The concession agreement is the first agreement ADOT has executed under its public-private partnership (P3) statute, which has been in place since 2009, and is one of several P3 opportunities ADOT is pursuing.

ADOT’s concession agreement with ICA went into effect on October 1st and has an initial term of five years.  ADOT may, at its discretion, extend the term of the agreement for an additional five years.  Up until now, ADOT managed the rest areas under separate contracts.  By consolidating the rest areas under a single contract, ADOT will be able to more efficiently manage these facilities.  In addition, under the concession agreement, ICA will implement an advertising and sponsorship program and will be able to provide new services, such as WiFi access, to create a better experience for travelers.  ADOT is guaranteed a share of the advertising and sponsorship revenues generated by ICA and will use those revenues to fund other transportation projects.

Possibly the most interesting thing about ADOT’s rest area concession agreement is that it will allow ADOT to not only keep its rest areas open, but improve its service to the traveling public.  Budget cuts have forced several other Departments of Transportation around the nation to close rest areas.  Looking at these two realities side-by-side helps bring into focus the benefits of P3s when properly applied.

ADOT’s press release regarding the rest area P3 agreement can be found on the ADOT website.

Congressional Caucus on Public-Private Partnerships Launched

Before departing Washington, DC for the traditional August Congressional recess, Congressmen Mike Rogers (R-AL-3) and Gerry Connolly (D-VA-11) announced that they are forming the Congressional Caucus on Public-Private Partnerships, or the Congressional P3 Caucus.  In the press release announcing the caucus, Rogers says that “he hopes the group will help raise awareness of infrastructure issues and examine public-private partnerships across the country.”  Congressional caucuses are formed by Members seeking to work collectively on issues, usually with the goal of increasing the visibility of a specific topic or advancing a legislative agenda.

Faced with decreasing revenues from the federal gas tax, and reluctant to continue transferring billions of dollars a year in general funds into the Highway Trust Fund, policymakers are seeking creative solutions to the nation’s infrastructure needs.  There is little congressional appetite to simply increase the federal gas tax to replenish the Trust Fund.  Much of the discussion and legislative activity on P3s is occurring at the state level, and Rogers wants to foster a dialogue at both the Member and congressional staff level about the federal role in P3s.  Rogers’ staff said they want to examine what actions the federal government has taken that work to advance P3s, and what federal barriers may still exist.  They also recognize the importance of educating local elected officials and constituents about alternative financing, and the many ways in which P3s can be accomplished.  While P3s are most common in the transportation sector, Rogers’ staff have said that he is interested in how federal P3 policies can be expanded into additional areas such as wastewater and social infrastructure. 

Rogers and Connolly are actively seeking additional Members to join their efforts, and the caucus will likely have a kick-off event sometime in October.

Simon Santiago co-authored this entry.

Indiana Finance Authority Shortlists 4 Proposers for its I-69 Section 5 Project

On July 31, 2013, the Indiana Finance Authority (“IFA”), in coordination with the Indiana Department of Transportation (“INDOT”), shortlisted four teams for its I-69 Section 5 Project (the “Project”) located between Evansville, Indiana and Indianapolis, Indiana.  The Project marks the second foray of Indiana into the emerging availability payment structure of public-private partnerships in the United States, having led with the East End Crossing project (part of the Louisville-Southern Indiana Ohio River Bridges Project), successfully financed the end of March, 2013.  The Project also marks the second effort of the joint IFA and Indiana Department of Transportation Team in using innovating project delivery approaches to meet growing transportation infrastructure demands in Indiana. 

The Project is one of six sections that are anticipated to complete the interstate connection from Evansville, Indiana to Indianapolis, Indiana, including improvements to Highway 37 outside of  Bloomington, the home of Indiana University. The broader I-69 project is part of the national I-69 corridor connecting Mexico with Canada. Four of the six sections have either been completed or construction is underway.  Section 5 is approximately 26 miles long, varying from 4 to 6 lanes wide in each direction, located in Morgan, Johnson, and Marion Counties, involving construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses. 

The shortlisted teams, in alphabetical order, are:

  • Connect Indiana Development Partners (joint venture of Macquarie Capital Group Limited, Lane Infrastructure, Inc. and Lane Industries Incorporated), partnering with The Lane Construction Corporation and Ames Construction, Inc. as the joint venture design-builder, Parsons Brinckerhoff, Inc. as the project designer and with others.
  • Isolux Infrastructure Netherlands B.V. (through its members, Public Sector Pension Investment Board and Grupo Isolux Corsán S.A.), partnering with Corsán as the builder, AZTEC Engineering Group, Inc. and TYPSA (Tecnica y Projectos S.A.) working together as the project designer and with others
  • Plenary Roads Indiana (through the Plenary Group), partnering with Granite Construction Company and Fred Weber, Inc. as the joint-venture builder, AECOM as the project designer and with others.
  • WM I-69 Partners (joint venture of Walsh Investors, L.L.C. and Meridiam Infrastructure), partnering with Walsh Construction Company II, LLC as the builder, Parsons Transportation Group as the project designer and with others.

As was the case with the East End Crossing procurement, several new players to the US P3 transportation scene responded to the I-69 Section 5 RFQ, including Isolux and Plenary.

IFA plans to issue a final RFP in October of this year with award and execution of the comprehensive P3 agreement in the first half of 2014.

The press release can be found on the INDOT website or the IFA website.

A Roadmap for Assessing the Benefits of P3 Procurement for Highways

Earlier this year the SHRP 2 Program and the Transportation Research Board issued a report entitled “The Effect of Public-Private Partnerships and Non-Traditional Procurement Processes on Highway Planning, Environmental Review and Collaborative Decision Making,” which is available on the TRB website.

Public-private partnerships (“P3s”) have become an important tool in developing and financing infrastructure improvements, and are being used by transportation agencies across the nation.  One issue faced by agencies wishing to explore the use of P3s concerns how P3 strategies interrelate with programming and planning efforts.  In an effort to promote a better understanding of these interrelationships, the SHRP2 Program asked a team that included Parsons Brinckerhoff, HS Public Affairs and Nossaman LLP to conduct a study on the subject.  

The report produced by this team documents the nature, timing and implementation of P3 projects in the United States, focusing on the different points in time during which the private sector may become involved in project development, private sector investment interest, and how P3s may be integrated into the collaborative decision-making tool developed under SHRP 2 C01 (the TCAPP Decision Guide).  Other topics addressed in the report include legal and financial issues affecting P3 implementation, management of challenges in implementing P3s, timing and implementation of P3s, and encouraging early consideration of P3s.  The report provides the results of interviews with state transportation departments and private investors, which, among other things, confirm the widely-held belief that the private sector gravitates toward larger, higher visibility projects than smaller projects, and prefers projects with NEPA approval over those awaiting clearance. 

This report will provide a useful roadmap for transportation agencies in deciding how to integrate P3s into the programming and planning process.

Thanks to Jaya Velamakanni for her assistance with this entry.

Welcome to Las Vegas! Nevada DOT Holds Industry Workshop, Issues RFQ For Project Neon Availability Payment Project

Last week the Nevada Department of Transportation (NDOT) conducted a two-day industry workshop at the Golden Nugget Conference Center in Las Vegas, Nevada, for Project Neon, a freeway improvement project on the west side of Las Vegas. More than 200 attendees, including major international developers and local contracting firms, learned about NDOT’s plans to procure the first phase of the project (the “P3 Phase”) under an availability payment approach where the winning bidder would design, build, finance, operate and maintain the project for approximately a 35-year term. This would be the first highway transportation project procured under the state’s P3 law. 

The project includes major improvements to the I-15 freeway between Sahara Boulevard and the I-95 connector with the goal of addressing a number of corridor deficiencies related to congestion, crash rates, operations deficiencies, and system linkages. Cole Mortensen, senior project manager, explained that the project is “shovel ready.” NDOT has completed NEPA requirements, progressed right-of-way acquisition including the major utility relocations, and studied various project risk issues, including subsurface conditions and preliminary design features.  A major project risk is anticipated to be managing traffic during construction in this highly-congested corridor. Capital cost estimates range from $400-$500 million. 

Following the general session in the morning, NDOT held invitation-only meetings with a number of major developers and contractors to gain insights into the industry’s views on a number of topics, including contract approach, major project risks, financial terms and proposed schedule. Despite the recent increase in the number of U.S. P3 transportation projects for which the procurement processes have begun or are about to begin, meeting participants told NDOT that this project is viewed as an attractive opportunity given the availability payment structure, the strong credit rating of the state and NDOT, the size of the project and its “project ready” status. 

On July 30, 2013, NDOT issued a Request for Qualifications for teams interested in bidding on the project; responses are due before the end of September 2013. Given the keen interest expressed at the industry workshop, NDOT expects to receive several responses and qualify three to four teams to respond to the RFP which is currently scheduled for issuance in February/March of 2014.

Additional Project Information can be found on the Project Neon website.

ARTBA Recognizes East End Crossing Participants, Bill Reinhardt and P3 Founders at 25th Anniversary Awards Dinner

On July 26, the American Road & Transportation Builders Association (“ARTBA”) held its awards dinner for the 25th Annual P3s in Transportation Conference.   Each year during this dinner, the ARTBA P3 Division honors projects that exemplify the value of P3s in the United States and also recognizes two individuals, one public sector and one private sector, for their exemplary contributions to the development, growth and public education of P3s.  

This year, the Ohio River Bridges – East End Crossing and its public and private participants swept the awards dinner.  The project won “Project of the Year”, being recognized for its groundbreaking accomplishments.  Kendra York, public finance director of the State of Indiana, won “Public-Sector Entrepreneur of the Year” for her role in shepherding the procurement for the public sector.  Matt Walsh, CEO & co-chair of The Walsh Group, won “Private-Sector Entrepreneur of the Year”.  His company was part of the consortium that was awarded the P3 contract for the East End Crossing. 

ARTBA also honored Bill Reinhardt with the “Legacy Award."  The award is given to an individual who has spent a career making powerful, industry-wide contributions to the P3 community.  Bill is the editor and publisher of Public Works Financing, which is the international business guide to P3s and infrastructure finance published monthly since 1988.

At the special award dinner, the following P3 founders were recognized by ARTBA: Henry Schrader, Bill Allen, Raymond Tillman, Jack Kinstlinger and John Wight.  

Georgia Selects Private Partner to Finalize P3 Contract for Northwest Corridor Project

On July 23, the Georgia State Transportation Board (“STB”) voted to accept the selection of Northwest Express Roadbuilders (“NWER”) as the apparent best value proposer for the $840 million Northwest Corridor managed lanes P3 project located in Cobb and Cherokee Counties.  The project is the largest transportation infrastructure project in the history of the Georgia Department of Transportation (“GDOT”).  It includes two reversible tolled managed lanes along the west side of I-75 between its interchanges with I-285 and I-575.  Also, above the I-575 interchange, one reversible tolled managed lane will be added on the I-75 center median to Hickory Grove Road and a similar new I-575 lane will extend to Sixes Road.  Motorists will be able to use the managed lanes by choosing to participate in the Peach Pass program administered by the State Road and Tollway Authority, who is partnering with GDOT on the project. 

NWER’s proposal of $599,001,817 contributed to an estimated $100 million reduction from the previous overall project cost estimate.  In the press release issued by the Georgia Department of Transportation (“GDOT”), STB Chairman Johnny Floyd thanked Governor Nathan Deal for his leadership and all those who worked on the procurement to date.  Also, Darryl VanMeter who is GDOT’s Innovative Program Delivery Engineer acknowledged the quality of all three proposals received for the project and appreciated each proposer’s efforts and diligence.   

The P3 design-build-finance contract is expected to be finalized later in the year with construction commencing in 2014.  With this timetable, the project is targeted to open for traffic in 2018.

Virginia Releases Draft P3 Pipeline for 2013 for Industry Comment

After achieving several P3 project milestones and awards in 2012, Virginia’s Office of Transportation Public-Private Partnerships (OTP3) on behalf of the Commonwealth of Virginia released a draft document entitled “2013 Virginia PPTA Project Pipeline” for public comment.  The document identified the following 10 projects as potential P3 projects to be procured under Virginia’s Public-Private Transportation Act:

  • I-66 Corridor Improvements
  • Air Rights Development
  • I-64 HOV to HOT Lane Conversion
  • I-64 Peninsula Improvements
  • Hampton Roads Crossing Improvements
  • I-73 Corridor
  • Route 460 / 58 Connector
  • I-495 Express Lanes Extension
  • Cell Towers / Fiber Optic within Right of Way
  • Route 460 / I-85 Connector

There is a 30-day comment period ending on August 1, 2013.  Also, the OTP3 will be hosting a webinar on July 22, 2013 at 1:30 pm eastern to discuss the draft 2013 Virginia PPTA Project Pipeline in more detail.  Additional information can be found at the OTP3 website.

Florida Governor Signs New P3 Bill into Law

On June 27th, Florida Governor Rick Scott signed a bill into law that gives counties, municipalities, school boards and other political subdivisions in the Sunshine State authority to enter into public-private partnership (P3) agreements for facilities that “serve a public purpose.”  The bill - HB 85 - authorizes 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.  The bill does not cover the Florida Department of Transportation or other Florida state agencies.

The new P3 law will go into effect on July 1, 2013 and builds on Florida’s success in using P3s for social infrastructure and landmark transportation facilities such as the Port of Miami Tunnel and the I-595 Corridor Roadway Improvements Projects.

View a full copy of the P3 bill.

Notably, the new law creates a seven-member task force that will recommend P3 guidelines, including guidelines related to the factors public entities should consider when procuring a P3 project.  The task force must submit its recommendations to the Governor, President of the Senate and Speaker of the House of Representatives by July 1, 2014.  While such guidelines will be helpful, the bill does not require the guidelines be established or for public entities to adopt the guidelines as a condition to entering into a P3 agreement.

Other highlights of the bill include the following:

  • Authorization and related guidelines for consideration of unsolicited proposals;
  • Safeguards against P3 agreements precluding the construction of additional capacity or competing facilities;
  • A requirement that private sector partners meet standards otherwise applicable to providing professional services;
  • Flexible payment and performance security requirements (e.g., letters of credit, parent company guarantees, etc.), provided that standard bonding requirements apply to all construction work (see F.S., § 255.05);
  • Either before the procurement is initiated or before the contract is awarded, public entities must perform an independent analysis of the proposed P3 and demonstrate its cost-effectiveness and overall public benefit; and
  • Public entities procuring P3s must give affected local jurisdictions notice of the project – with a copy of the project proposal – and consider any comments it receives from the local jurisdictions before entering into the P3 agreement.

Global Recognition of US Infrastructure Projects and Transportation Agencies Continues at Partnerships Awards

As we previously reported in April, organizations that annually recognize top projects and industry organizations worldwide have proven that they are no longer focusing solely on mega-projects that are part of major design-build contracts.  This was apparent at the Partnerships Awards hosted by Partnerships Bulletin and PPP Bulletin International on May 23, 2013, where numerous US agencies and projects received recognition.

The Commonwealth of Virginia’s Office of Transportation Public-Private Partnerships received the distinction of Best Central/Regional Government PPP Promoter, recognized for its work on some of the largest infrastructure projects currently taking place in the US, including the 95 Express Lanes project and the Midtown Tunnel.  Continuing their winning streak, Dusty Holcombe, Deputy Director of the Virginia Office of Transportation P3, was also honored for Best Individual Contribution. 

Also receiving recognition, Presidio Parkway was "Highly Commended" for Best Transport Project, essentially making it one of top three transport projects in world.  This $1.1 billion project was the first to be delivered under California’s P3 law, and only the third anywhere in the United States to be developed through an availability payment structure.

We would also like to recognize Ernst & Young for being named Best Financial Adviser and KPMG for being “Highly Commended” in the same category.  Congratulations also to Arup for being named Best Technical Adviser.

The Partnerships Awards recognize people and projects from around the world for innovation, inspiration and collaboration.  Entries are first reviewed by an 80-plus expert panel before going on to the 20 head judges. 

Congratulations to all the agencies and their private partners involved in these projects for this highly-deserved recognition.

Indiana Finance Authority Issues the Request for Qualifications for the I-69 Section 5 Project

On the heels of its very successful foray into availability payment model public-private partnership (“P3”) concessions, the Indiana Finance Authority (“IFA”) issued its second P3 Request for Qualifications (“RFQ”) on May 23, 2013, this one to develop, design, build, finance, operate and maintain the I-69, Section 5 project.  As with the preceding P3 procurement of the East End Crossing (part of the broader Ohio River Bridges Project), the I-69 Section 5 project will be a public-private partnership between the State of Indiana, through the IFA and the Indiana Department of Transportation (“INDOT”) and the successful proposer. 

The I-69 Section 5 project consists in upgrading approximately 21 miles of existing State Route (“SR”) 37, a four-lane median divided highway between Bloomington, Indiana (home of Indiana University) and Martinsville, Indiana, and development of a six-lane divided highway in designated urban areas.  In addition, the project involves construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses at the Fullerton Pike, Tapp Road/SR 45/2nd Street, Sample Road and Liberty Church Road, all of which are current intersections with SR 37.

Section 5 is one of six sections under development to complete the interstate connection from Evansville, Indiana to Indianapolis, collectively part of a further development of the national I-69 corridor to connect Mexico with Canada.  Four of the remaining five sections are completed or development and construction are underway, and Section 6 is still in the planning stage.

Over 175 people attended a industry workshop on May 22, where Governor Mike Pence reaffirmed Indiana’s, and his administration’s, commitment to exploring innovative approaches to deliver much-needed infrastructure – particularly transportation – improvements in Indiana.

IFA is an independent financing instrumentality of the State, which in working with INDOT, reprises a successful partnership that brought the East End Crossing to the American P3 industry, the first availability payment concession in the United States to have met each of its procurement schedule deadlines in among the fastest P3 procurements in the United States and to have successfully achieved financial close with a “flat” investment grade rating.

Statements of qualifications are due at the IFA’s offices in Indianapolis, Indiana at 3:00 p.m. on July 9, 2013.  Shortlisting is anticipated by the end of July 2013, with award tentatively scheduled for late first quarter, 2014 and financial close early second quarter, 2014.

LA Metro to Hold Industry Forum for Sepulveda Pass Corridor

On May 1, the Los Angeles County Metropolitan Transportation Authority (Metro) will hold an industry forum to present initial concepts for several multimodal P3 projects that are being considered for the Sepulveda Pass Corridor in Los Angeles County.  The forum will be held from 9:00 a.m. to 12:00 p.m. in the Ticket Room at Los Angeles Union Station.  Los Angeles Mayor Antonio Villaraigosa, Los Angeles County Supervisor Don Knabe, and Art Leahy, Metro's CEO, are expected to address the forum attendees. 

The projects under consideration include a high-capacity rail system and a tolled highway within the Corridor in the vicinity of the I-405 Freeway, a transit connection to the Los Angeles International Airport and a north-south transit opportunity in the east San Fernando Valley that would provide connections to Metro's County-wide transportation network.  The I-405 through the Sepulveda Pass is one of the most congested freeway segments in the nation.  An additional HOV lane is currentlly under construction.
 
Highway and rail tunnels through the Sepulveda Pass, with an initial cost estimate from US $10 - 13 billion, were identified in a concept study authorized by the Metro board this past December.  The study indicated that premium transit fares and tolls will be necessary to finance the projects due to limited alllocation of public funding under the Measure R sales tax measure that the voters of Los Angeles County approved in November 2008. The Sepulveda Pass Corridor is one of twelve transit projects with funding allocations from Measure R. 
 
Metro is considering the procurement of a pre-development agreement with a private consortium to plan the scope, financing and method for delivering portions or all of the projects.  The project delivery method may be a long term DBFOM concession agreement.
 
To attend the forum, RSVP by April 26 to Teri Argabright of HDR/InfraConsult, Metro's P3 Advisory Team Lead, at Teri.Argabright@hdrinc.com.  Please provide your name, firm contact information and names of attendees.  
 
Tristan Robinson co-authored this entry.

Presidio Parkway Project Named "Best Real Estate Deal of the Year" by San Francisco Business Times

Nossaman would like to congratulate the California Department of Transportation and the San Francisco County Transportation Authority for the Presidio Parkway Project's recognition as the "Best Real Estate Deal of the Year" in the category of Infrastructure/Public-Private Partnership by the San Francisco Business Times.  Winners were announced at the publication's annual awards dinner in San Francisco on March 20, 2013.

This recognition is the latest in a number of industry awards honoring the Presidio Parkway Project, which is the first transportation project to be procured under California's 2009 PPP statute, and only the fourth highway project in the United States developed using an availability payment structure.  A Nossaman team, led by Barney Allison, advised Caltrans on the $1.1 billion deal, which reached financial close on June 14, 2012.
 

Recognition for USA Infrastructure Continues to Grow on Global Stage

As the 2013 award season heats up for 2012 successes around the world, the juries are increasingly finding the US market hard to ignore. Infrastructure Journal and PPP Bulletin International, the two London-based media organizations that annually recognize top projects and industry organizations worldwide, have each announced their finalists for this year's best transportation transactions and firms. Focusing on public-private partnership projects as opposed to those mega-projects which are the subject of major design-build contracts, these organizations nevertheless both found much to honor during a standout period.

Infrastructure Journal has announced that the Virginia Department of Transportation's Downtown Tunnel/Midtown Tunnel/MLK Extension Project ("Midtown Tunnel") is one of four finalists for its Global Transport Deal of the Year, the third time in four years IJ has so recognized US projects, starting with the Texas Department of Transportation's North Tarrant Express, named the Global Transport Project of 2009 and finalist for the overall Global Infrastructure Project of that year; and the Florida Department of Transportation's I-595 Project, also a finalist for the 2009 Global Transport Project. For this year's awards, the publication reviewed more than 600 submissions and will announce the winner on April 17, 2013.

PPP Bulletin International has announced that the California Department of Transportation's Presidio Parkway Project, the Midtown Tunnel and VDOT's I-95 Express Lanes project are all among the finalists for its Best Transport Project of the Year. The publication will announce the winner on May 23, 2013.

We congratulate VDOT, Caltrans and their private partners for this well-deserved recognition.

ARTBA's 25th Annual P3 Gala Dinner To Be Held at Smithsonian Museum

This year, the American Road and Transportation Builders Association (ARTBA) will be holding its 25th Annual Public-Private Partnership conference on July 24-26 in Washington, D.C.  To commemorate the silver anniversary of the conference, ARTBA has announced that a special cocktail reception and gala dinner will be held at the Smithsonian Museum of American History on the evening of July 25. 

Attendees will have exclusive access to the ARTBA-sponsored “America on the Move” exhibition currently on display at the museum.  The exhibition explores the role of transportation in American history, including how transportation transformed cities and suburbs and how it helped farms and factories become part of regional, national and international economies.

Over 300 public and private sector leaders are expected for this milestone event.  The special early-bird discounted registration rate expires April 1.  To register or for more information on the conference, please visit the conference website.

From One End of the US to the Other, Project Finance Magazine Recognizes P3 Projects as Deals of the Year

On March 7, Project Finance Magazine held its annual “Project Finance Americas Deals of the Year” awards dinner in New York City.  The awards – which started 14 years ago – are for innovation, deal repeatability, best practice, problem solving, value for money and speed of delivery in the financing of infrastructure projects.  Two public-private partnership projects – one on the East coast and one on the West coast – received honors at this year’s dinner.     

The award for 2012 North America Toll Road Deal of the Year was given to the Midtown Tunnel project located in the Hampton Roads region of Virginia.  The $2.1 billion toll concession project, which reached financial close in April 2012, is comprised of a new two-lane tunnel adjacent to the existing Midtown Tunnel, the maintenance and safety improvements to the existing Midtown and Downtown Tunnels, and an extension of the Martin Luther King Freeway to Interstate 264.  The project sponsor was Elizabeth River Crossings Opco LLC, a consortium led by Macquarie and Skanska ID.  The awarding authority was the Virginia Department of Transportation.  Nossaman served as legal advisor to VDOT.   

The award for 2012 North America Public Private Partnership Deal of the Year was given to the Presidio Parkway project located in San Francisco, California.  The $1.1 billion project was the first transportation project in California to be delivered using the state’s recently enacted P3 statute and only the third highway project in the United States developed through an availability payment structure.  The project sponsor was Golden Link Concessionaire, LLC, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America.  The awarding authorities were the California Department of Transportation and the San Francisco County Transportation Authority.  Nossaman served as legal advisor to Caltrans.  

Attendees at the awards dinner included: Dale Bonner, formerly the Secretary of the Business, Transportation and Housing Agency for the State of California; Sean Connaughton, Secretary of Transportation for the Commonwealth of Virginia; Dusty Holcombe, Deputy Director for the Virginia Office of Public Private Partnerships; and Ryan Pedraza, Program Manager for the Virginia Office of Public Private Partnerships.

Nossaman would like to extend its congratulations to VDOT, Caltrans and the San Francisco County Transportation Authority for their achievements, and to all those who made these awards possible.   

FHWA Holds P3 Model Contract "Listening Sessions" and Beta-tests "P-3 VALUE Toolkit"

As part of its effort to meet MAP-21’s legislative requirement to develop “standard public-private partnership transaction model contracts for the most popular types of public-private partnerships,” the Federal Highway Administration held a “listening session” with representatives from the transportation industry at the U.S. Department of Transportation in Washington D.C. on January 16.  Representatives from state departments of transportation, general contractors, trade associations, legal advisors and others were in attendance, and solicited to provide FHWA with the P3 community’s view of what the model contracts should be. 

In her introductory remarks, the Hon. Beth Osborne, Deputy Assistant Secretary of Transportation for Policy, saw the effort as “compiling best practices” of the P3 community, but one for which FHWA did not have “pre-conceived notions.”  FHWA and USDOT representatives spent the better part of four hours hearing out the industry’s hopes for, expectations about and cautionary recommendations regarding FHWA’s final product.  The resounding theme of the audience comments was that “every P3 is different,” FHWA’s effort should tilt toward educating public sponsors as to the project-specific risk-sharing and “value-for-money” considerations that makes a P3 an effective delivery tool, and FHWA should refrain from prescribing risk allocations or other contract terms.

In a companion effort, FHWA is also beta-testing an interactive model, which intends both to help educate public sponsors in alternative procurement strategies (like the public-private partnership (“P3”)) “apples to apples” comparison with conventional procurements).  The “P3-VALUE Toolkit” collects project sponsors’ (and their consultants’) project-specific risks, quantifies their value, and, with other financing assumptions and project-specific parameters considered, produces a snapshot of the value-for-money that a P3 strategy may or may not present for that project.  FHWA held an initial roll-out “webinar” of the draft toolkit on January 10, with a follow-up webinar session on January 24.

FHWA has set up a docket, Federal Register No. FHWA-2012-0126, to collect industry comments by May 31, to keep pace with the rigorous requirement of MAP-21 to produce and promulgate model contracts by December 31, 2013.

Fred Kessler co-authored this entry.

Virginia Releases P3 Public Outreach Materials

A key element of a successful P3 program is an effective and comprehensive public outreach strategy.  Demonstrating why Virginia remains a leader in closing P3 transportation deals, the Virginia Office of Transportation Public-Private Partnerships (OTP3) recently prepared a variety of fact sheets, presentations and FAQs focusing on different aspects of P3s in Virginia.  The materials can be found at the OTP3 website.

These materials were prepared in cooperation with the Public Private Transportation Act Working Group.  This group was established in June 2012 to solicit ideas and feedback on how to improve public involvement in P3 development and procurement, and consists of elected officials as well as private and public sector stakeholders.            

20th Annual CCPPP Conference Looks to the U.S.

The 20th annual conference of The Canadian Council of Public-Private Partnerships (CCPPP) was held in Toronto on November 26-27, 2012.  Drawing industry leaders from within and outside of Canada, the conference this year reflected the maturity of the Canadian market and the interest of P3 players looking beyond its borders for future opportunities, particularly participating in the growing U.S. P3 market. 

One of the keynote speakers was Michigan Governor Rick Snyder, who championed the proposed $3.5 billion Detroit-Windsor bridge and expressed appreciation for Canada’s leadership on the proposed project and in the P3 sector generally.  With the Canadian government indicating that it will take the lead in procuring and financing the project, Governor Snyder stated that he hopes to see the project come to market within the next couple of years.

A well-attended session discussed recently closed US P3 projects:  California’s Presidio Parkway Project (awarded to a Hochtief consortium in 2011); Florida’s I-595 Project (awarded to an ACS consortium in 2009); and Denver’s Eagle Project (awarded to a Fluor consortium in 2010).  The panelists discussed the complexity of bringing these projects to financial close and US-specific issues.

Many attendees felt that, while the Canadian P3 market continues to generate a steady pipeline of P3 projects, the US infrastructure market is well-poised to attract many of the seasoned Canadian P3 players.  SNC-Lavalin, an experienced Canadian P3 developer, was recently shortlisted and submitted a bid on the East End Crossing Project.  Other seasoned Canadian P3 participants, such as Bilfinger Berger and Hochtief, were also members of shortlisted consortia for the project, and the Presidio Parkway Project was awarded to Hochtief.  Canadian P3 players have also expressed interest in potential upcoming P3 projects such as Los Angeles County Metropolitan Transportation Authority’s Accelerated Regional Transportation Improvements Project and the Travis Country Courthouse project in Texas. 

Expansion of P3 Concession Model To Water/Wastewater Facilities For California Municipality

On November 29, 2012, financial closing was achieved on a 30 year concession relating to the water and wastewater facilities of the City of Rialto, California.  The agreement, which had been executed in March 2012, is among Rialto Water Services, LLC, the single purpose vehicle set up by Table Rock Capital as the project sponsor, the City of Rialto and the Rialto Utility Authority.  

The approximately $175 million transaction is being bond financed through a private placement and an approximately $26 million equity contribution.  The concession agreement provides for approximately $40 million of near-term capital improvements, long-term operations and maintenance of water and wastewater facilities and potential future capital improvements throughout the 30 year term. 

The capital improvement and operations and maintenance work will be provided by Veolia Water West Operating Services, Inc. pursuant to a contract with Rialto Water Services.  The Veolia contract includes an array of performance measurements and incentives for enhanced and efficient facility performance.  Veolia has been providing operations and maintenance services for the City’s wastewater facilities for the past several years.

The City of Rialto is located in San Bernardino County, approximately 60 miles east of Los Angeles and has approximately 110,000 residents. 

The P3/private financing nature of this transaction is likely to garner regional and national attention, providing a potential blueprint for accessing capital and funding for communities facing budget challenges and critical water and wastewater facility infrastructure demands.

District of Columbia DOT Stands Ready, Willing and Able to Enter Into P3s

On October 11, Nick Nicholson, Deputy Director and Chief Engineer of the District of Columbia Department of Transportation (DDOT) Infrastructure Project Management Administration, participated in a panel session at the American Road & Transportation Builders Association (ARTBA) Annual Public-Private Partnerships in Transportation Conference in Washington, D.C.  Mr. Nicholson told conference attendees that DDOT is actively looking at public-private partnerships to deliver several projects in the District of Columbia.  Although the District does not have dedicated P3 legislation typically found in other jurisdictions, Mr. Nicholson indicated that the current framework provides DDOT with the flexibility to enter into P3 agreements with approval from the District Council. 

Mr. Nicholson stated that DDOT will be exploring the possibility of using P3s to construct a managed lanes facility within the District of Columbia boundaries connecting I-395 to the 14th Street Bridge.  Also, DDOT will look at value capture concepts for improving and replacing the area’s bridges.  Currently, DDOT is considering a P3 to deliver a 22-mile streetcar system and non-regional bus system and received 20 responses from the industry to a Request for Information issued on June 26, 2012.        
 

ARTBA Announces Recipients of 2012 P3 Awards

On October 10 through 12, the American Road & Transportation Builders Association (ARTBA) held their 24th Annual Public-Private Partnerships in Transportation Conference in Washington, DC.  Each year during this conference, the ARTBA P3 Division honors two individuals, one public sector and one private sector, for their exemplary contributions to the transportation industry. 

This year we are proud to announce that Nossaman's Geoff Yarema was named "P3 Private Sector Entrepreneur of the Year."  Geoff is the first two-time recipient of this award, having received the award in 2003.  Geoff was recognized for his outstanding contributions to the advancement of P3s within the transportation construction industry, particularly for his involvement in the National Surface Transportation Infrastructure Financing Commission and the Moving Ahead for Progress in the 21st Century Act (MAP-21), a measure to reauthorize transportation funding through the end of 2014.

Also, Tony Kinn of Virginia’s Office of Transportation Public-Private Partnerships (OTP3) was named “P3 Public Sector Entrepreneur of the Year.”  Appointed as the director of OTP3 in 2011, Tony is in charge of one of the largest P3 transportation programs in the United States.  This year, he oversaw the financial closing of two major Virginia Department of Transportation (VDOT) P3 projects, including the Midtown Tunnel Project in April.  A Nossaman team, led by Simon Santiago, advised VDOT on the $2.1 billion Midtown Tunnel Project, which is comprised of a new two-lane tunnel adjacent to the existing Midtown Tunnel, the maintenance and safety improvements to the existing Midtown and Downtown Tunnels, and an extension of the MLK Freeway to Interstate 264.  Tony told the conference attendees that his goal is to have OTP3 and VDOT remain in the forefront of closing deals and we wish him continued success in this endeavor.   

In addition to the individual awards, each year ARTBA recognizes projects for the innovation that they brought to the process of public-private partnerships in the United States.  We would like to congratulate the California Department of Transportation and the San Francisco County Transportation Authority for the Presidio Parkway Project’s recognition as "P3 Project of the Year."  A Nossaman team, led by Barney Allison, advised Caltrans on the $1.1 billion deal, which will be the first transportation P3 in California under the recently enacted P3 statute, Streets and Highways Code section 143, and only the third highway project in the United States developed through an availability payment structure.  

Established in 1902, ARTBA is the oldest national transportation construction-related association.  Their primary goal is to aggressively grow and protect transportation infrastructure investment to meet the public and business demand for safe and efficient travel.
 

FHWA Issues Interim Guidance on P3 Assessments for Major Projects

The Federal Highway Administration (FHWA) recently issued guidance for implementing various aspects of the Moving Ahead for Progress in the 21st Century Act (MAP-21), including:  Infrastructure; Environment, Planning and Realty; Safety; Operations; and Innovative Program Delivery.  The guidance became effective October 1, 2012.

The interim guidance on Innovative Program Delivery includes provisions for implementing the new public-private partnership (P3) assessment requirement for Major Project Finance Plans under MAP-21.  The new P3 assessment requirement is, in our view, a welcome development that brings the U.S. closer to an approach that has been adopted with substantial success in Canada’s efficient and mature P3 market.

Interim Major Project Financial Plan Guidance – P3 Assessment

The interim guidance discusses two significant changes to the financial plan requirements for Major Projects arising from MAP-21:  (1) a financial plan may include a phasing plan in the event there are insufficient financial resources to complete the entire project; and (2) a financial plan must assess the appropriateness of a P3 to deliver the project. 

“Major Projects” means Federal-aid projects with estimated total costs of $500 million or more and other projects as may be identified by the Secretary (see 23 U.S.C. 106(h)(1)). 

FHWA will now approve a financial plan for a Major Project only if it includes an assessment of P3 appropriateness.  FHWA requires that all initial financial plans submitted on or after October 1, 2012 include such an assessment, regardless of whether a P3 is the anticipated project delivery method.  To this end, all cost estimate reviews conducted prior to the issuance of the NEPA decision document must include a component to analyze the allocation of risk in delivering the project via the P3 model.

The interim guidance provides that the P3 assessment is expected to be brief and should include:  documentation of the results of the risk allocation analysis; discussion of whether a P3 or traditional procurement could more effectively leverage the revenue stream for the project; a discussion of the current State statutory authority for P3s (including with respect to public sector debt capacity); and a concluding statement regarding appropriateness of a P3 to deliver the project.

Positive Development

The new P3 assessment requirement is a welcome development in the U.S. market, which trails more mature P3 markets such as Canada and the United Kingdom in effectively leveraging the P3 delivery model, despite our enormous infrastructure deficit.  The MAP-21 requirement for P3 assessment is an excellent first step in mainstreaming P3 as a project delivery alternative.  By requiring a preliminary P3 screen for major Federal-aid projects, it will hopefully help bring to market projects that would have either cost more (when taking into consideration lifecycle costs) or taken longer to complete, or would not have been undertaken using traditional procurement methods.

By way of comparison, jurisdictions within Canada have long applied mandatory P3 screens to potential infrastructure projects.  In British Columbia, one of the most active P3 jurisdictions within Canada, consideration of P3 suitability is mandatory for all projects having a minimum capital cost of $50 million.  At the federal level, the P3 screen is applied to projects of $100 million or more.  Municipalities, the newest front for P3s in Canada, are encouraged to undertake a P3 assessment early in the decision-making process to identify projects suitable for P3 development, and some have adopted formal P3 policies (e.g., City of Edmonton has a mandatory P3 screen for complex projects of CAD$30 million or more).  That P3 screens have been applied for years and are being expanded in application is a testament to Canadian faith in the P3 model.   Its use has contributed to the robust P3 pipeline and timely addressing of infrastructure needs in Canada, a large percentage of which could not be addressed in the absence of the P3 delivery model.
 
While a mandatory P3 assessment for major Federal-aid projects is not a panacea for addressing infrastructure needs in the U.S., it is arguably an important step in raising the collective awareness, consideration and appreciation of P3s at a national level, and should encourage more States and public authorities to examine P3 as a valuable project delivery alternative where appropriate. 

Further Guidance Needed

The interim guidance is relatively brief and does not contain guidance regarding details such as whether the TIFIA application/oversight, if applicable, would meet the Major Projects Financial Plan requirements.  FHWA is in the process of developing formal revisions to its guidance documents, which presumably will provide further clarity and information.

Fred Kessler co-authored this entry.

Tags: , ,

FHWA Levels Playing Field for P3 Availability Payment Concessions

Hot on the heels of the financial close of the Presidio Parkway, the first California transportation public-private partnership (“P3”) availability payment deal and only the fourth in the United States, Federal Highway Administration’s (“FHWA”) Office of Innovative Program Delivery has issued guidance regarding the eligibility of periodic availability payments for reimbursement from federal aid funds.  Federal-Aid Funding and Availability Payments

Recognizing that availability payment concessions can offer the benefits of enhanced performance and project cost savings, FHWA will allow a portion of the state's availability payments to be reimbursed from Title 23 funds even though the state is not directly paying for the cost of construction and major maintenance.  Also, FHWA acknowledges that a component of the availability payment is profit to the private developer as consideration for taking on many of the project risks associated with project completion and life cycle costs over the 30-35 year term of a typical availability payment contract. 

Even though the availability payment is viewed as a "unitary" payment, FHWA will look into the developer's financial model to subtract those costs that are not eligible for reimbursement (regular operations and maintenance as well as TIFIA loan repayments if TIFIA is used) over the term of the concession and arrive at a formula upfront for calculating the eligible portion of the annual availability payment throughout the term of the concession.  State DOT's will now be able to consider the use of availability payment contracts vs. traditional project delivery methods without sacrificing their ability to use federal aid funds.
 
A groundbreaking project for a number of reasons, the Presidio Parkway served as the model for FHWA in developing a form of project agreement between the feds and the state, which acknowledges this approach to using federal funds to reimburse availability payments.

California Department of Transportation Reaches Financial Close on Presidio Parkway Project

The California Department of Transportation (“Caltrans”), in cooperation with the San Francisco County Transportation Authority, reached financial close on the Presidio Parkway Project public-private partnership (“P3”).  The $1.1 billion deal is the first transportation P3 in California under the recently enacted P3 statute, Streets and Highways Code section 143, and only the third highway project developed through an availability payment structure. 

Caltrans entered into an agreement with Golden Link Concessionaire, LLC, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America, to design, build, finance, operate and maintain the Presidio Parkway for 30 years. The P3 delivery method allows the project to proceed when limited state money is available through conventional means. The P3 will reduce construction costs, transfer financial risks to Golden Link, free up state funding for other uses, and ensure a high-level of maintenance during the 30-year contract.  Funding for the project includes a combination of equity, bank debt and TIFIA loans.   

The Presidio Parkway Project will replace iconic Doyle Drive, which is the southern access point to the Golden Gate Bridge and travels through the Presidio of San Francisco and the Golden Gate National Recreation Area. The improvements include seismic upgrades, two sets of short tunnels, a wide landscaped median, enhanced pedestrian accommodations and improved traffic transitions into city streets.

The project successfully overcame litigation challenges at the Alameda County Superior Court, 1st District Court of Appeal and California Supreme Court where opponents tried to stop the project as a P3. The litigation ended on Nov. 16, 2011 after almost a year and enabled the P3 to reach financial close.

Nossaman advised Caltrans on the procurement, financing and contracts for the project and represented the San Francisco County Transportation Authority on the litigation matters.

LA Metro Highway Project Workshop Approaching

On July 9, LA Metro is hosting an Industry Outreach Workshop to accelerate PPP delivery of six highway improvement projects in Los Angeles County known as the Highway Goods Movement Package.  The workshop is being held at Metro’s Gateway Building headquarters where there will be a 2-hour presentation in the morning detailing the six projects, followed by one-on-one meetings with Metro representatives. 

You can RSVP to Metro’s Public-Private Partnership Program Manager Kathleen Sanchez at SanchezK@metro.net.  Here are the details:

Metro’s Gateway Building
One Gateway Plaza
Los Angeles, CA 90012

Industry Briefing: 9:00am – 11:00am
One-On-One Meetings: 11:00am – 5:00pm

Click on Save the Date for more event information and click here to learn more about the Highway Goods Movement Package.

RFQ Issued for Development of Arizona DOT Facilities

On March 30, 2012, the Arizona Department of Transportation issued a Request for Qualifications (RFQ) soliciting statements of qualifications from prospective private and/or public entities for development and implementation of a public-private partnership (P3) for ADOT facilities on a new site to replace the current ADOT and MVD facilities located in Flagstaff, Arizona. The RFQ represents the first P3 solicitation issued by ADOT through its Office of P3 Initiatives.

The objective of the project is to relocate ADOT from its current location on Milton Road to new facilities in the Flagstaff area, freeing up the Milton Road property and adjacent property owned by the City of Flagstaff for local transportation improvements and re-development.  The project allows ADOT and the City of Flagstaff to partner, putting their two parcels together in a way that adds value for the developer, allows the City to achieve higher impact redevelopment from the two parcels combined, and also enables ADOT to derive maximum value from its parcel while encouraging creative responses to its need for new facilities.

Proposers have the option to propose constructing the planned City of Flagstaff transportation improvements (Beulah Boulevard extension and University Avenue realignment) on the Milton property, or to allow the City to hire the contractor and to work around the City’s construction phases and processes. 

Statements of qualifications are due on June 6, 2012.

Tags: , ,

NCDOT Advertises RFQ for the I-77 HOT Lanes Project

On Feb. 15, 2012, the North Carolina Department of Transportation advertised a Request for Qualifications (RFQ) for the I-77 HOT Lanes Project located in the Charlotte-Mecklunberg area.  The RFQ seeks interested teams to submit their Statement of Qualifications to develop, design, build, finance, operate, and maintain HOT lanes along the I-77 corridor through a public-private partnership.  The project will involve the conversion of existing HOV lanes to HOT lanes, and the extension of HOT lanes along the I-77 corridor.

An industry forum is scheduled for Feb. 23, 2012 in Charlotte, N.C., and responses to the RFQ will be due March 15, 2012.  Information on the project and how to request a copy of the RFQ can be obtained here.

California Supreme Court Allows Presidio Parkway to Proceed as P3

On November 16, challenges to the legality of the Presidio Parkway public-private partnership (P3) contract ended with a one sentence order from the California Supreme Court: “The petition for review is denied.”  Professional Engineers in California Government (PECG), the union representing Caltrans engineers, had asked the Supreme Court to review the Aug. 8, 2011, decision of the California Court of Appeal in San Francisco (First District), which unanimously held that Phase 2 of the Presidio Parkway project can move forward as a P3.  As a result, the California Department of Transportation (Caltrans) and the San Francisco County Transportation Authority (SFCTA) will continue with Phase 2.  The project will replace the old and outmoded approach to the Golden Gate Bridge in San Francisco.  The Supreme Court’s action denying the petition comes a year after PECG filed the lawsuit in the trial court.

When the California Transportation Commission considered whether to approve use of a P3 for the project under Streets and Highways Code section 143, the California Legislative Analyst Office (LAO), and the California Attorney General’s office (AG) as counsel to the Commission, gave written opinions concluding that the project was not authorized.  Caltrans’ general counsel, along with Nossaman acting as P3 legal advisor to Caltrans, took a contrary position.  Section 143, adopted in 2009, broadens the types of P3 projects authorized in California.  The Commission approved the project for a P3, while noting the unresolved legal issue.

PECG sued Caltrans and the SFCTA to stop Phase 2 of the project, arguing, like the LAO and AG had earlier, that the project was not authorized by section 143.  The courts rejected PECG’s argument that, under section 143, Caltrans’ internal personnel must perform all the preliminary planning and design services, as opposed to being responsible only for seeing them done correctly.  The courts also rejected the argument that P3 efforts under California law must be confined to toll projects, holding that the legislation authorized much broader use of innovative financing, in this case an availability payment.  Finally, the courts also held that the project was properly characterized as supplemental to existing facilities, as required by section 143.

The Presidio Parkway Project is the first project to reach award under California’s new P3 statute.  The decision of the courts—and now the finality—is important beyond the Presidio Parkway Project.  This should ease the way to use P3s under section 143 for other projects, and also provide helpful precedent for design build projects authorized under parallel legislation passed at the same time.

At the beginning of 2011, Caltrans, in cooperation with SFCTA, signed a contract for the project to Golden Link Concessionaire, LLC, a consortium led by Hochtief  PPP Solutions North America and Meridiam Infrastructure North America. 

Nossaman represented SFCTA in the litigation and advised Caltrans during the P3 procurement.  Caltrans was represented in the litigation by its own department counsel.

For more about the Presidio Parkway Project and section 143, see Appeals Court Rules Presidio Parkway Can Move Forward as P3, Presidio Parkway Project Awarded, Preferred Proposer Selected for Presidio Parkway Project, Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.

Knik Arm Receives Six Quals

Yesterday the clock struck 4 p.m. in Anchorage, Alaska, the deadline for the P3 industry to submit statements of qualifications for the Knik Arm Crossing project. The public sponsor, Knik Arm Bridge and Toll Authority (KABATA), found on its desk statements from six experienced teams. This level of interest in a U.S. P3 project has few parallels.  
 
Here are the six teams:
 
Knik Bridge Partners
Bechtel Enterprises Holdings
CSEC Holding Company, Inc.
China State Construction International Holdings, Ltd
Bechtel Infrastructure Corporation
CCA Civil, Inc.
Finley Civil Engineering Group, Inc.
Hanson Alaska LLC
Roy Jorgenson Associates, Inc.
BNP Paribas

Cook Inlet Passage Partners
Meridiam 
Kiewit Development Company
Kiewit Infrastructure West Co.
Manson Construction Co.
VMS Inc. dba Transfield Services North America, Transportation Infrastructure
Parsons Transportation Group Inc.
Golder Associates Inc.
Dowl HKM
Dan Brown and Associates, PLLC
BMT Fleet Technologies
KPMG Corporate Finance LLC

Plenary Roads Alaska
Plenary Group USA Ltd.
John Laing Investments Limited
PCL Civil Constructors, Inc.
Granite Construction Company
H.W. Lochner, Inc.
MMM Group Limited
Michael Baker, Jr., Inc.
T.Y. Lin International
Shaw Environmental, Inc.
Goldman, Sachs & Co.
Deutsche Bank AG

Alaska Infrastructure Access Partners
Infrared Capital Partners Limited
Bouygues TP
Colaska Inc. dba QAP
Weeks Marine, Inc.
URS Alaska, LLC
Moffatt & Nichol, Inc.
USKH, Inc.
R&M Consultants, Inc.
Macquarie Capital (USA) Inc.

Cintra Infraestructuras S.A.
Cintra Infraestructuras S.A.
Ferrovial Agroman S.A.
Orion Marine Contractors, Inc.
Anchor QEA, LLC

North Star Mobility Group
HOCHTIEF PPP Solutions North America, Inc.
HOCHTIEF Aktiengesellschaft
ACS Infrastructure Development, Inc.
ACS Servicios y Concessiones, S.L.
Iridium Concesiones de Infraestructuras, S.A.
Flatiron Constructors, Inc.
Dragados USA, Inc.
Dragados SA
Traylor Bros., Inc.
HNTB Corporation
CH2M Hill Engineers, Inc.
Alaska Interstate Construction LLC
Arcadis
Kodiak Map
Hart Crowser
Earth Mechnanics
Bitttner-Shen
Denali Drilling
Gregg Drilling
 
KABATA has commenced the evaluation process and plans to announce a short list in about a month.

GDOT Issues Final RFP for West by Northwest Project

On Sept. 19, 2011, the Georgia Department of Transportation (GDOT) sent a press release announcing that GDOT issued the final Request for Proposal (RFP) for the West by Northwest Project.  The RFP was provided to three short-listed proposers, comprised of several national and international developers and contractors.  Brandon Beach, P3 Committee Chair of the State Transportation Board, viewed the issuance of the RFP as further evidence that GDOT’s P3 program “is vibrant and continuing to make huge strides in coordinating these mega-projects with our partner agencies.”

Responses to the RFP are currently scheduled to be submitted in February 2012, with construction expected to start in Spring of 2013.

Update: Proposed Legislation Threatens Design-Build and P3s in California

Fred Kessler co-authored this post.

We are pleased to report that AB 294--the bill that was the subject of our blog yesterday--is no longer in play. 

Proposed Legislation Threatens Design-Build and P3s in California

Fred Kessler co-authored this post.

A last-minute amendment to California Assembly Bill 294, if passed, would wreak havoc on Caltrans and local agency plans to use design-build for state highway projects (Public Contract Code section 6800 et seq.) and to enter into public-private partnerships (P3s) for highway projects (Streets and Highways Code section 143).
 
The language added to the bill would preclude local agencies from hiring consultants to work on the projects, stating that all work must be done through Caltrans employees or consultants under contract with Caltrans.  Project consultants are often hired well in advance of the decision to use design-build or P3s for the project--which means that this bill would create significant inefficiency by requiring new consultants to be brought on board once that decision is made.   

Given the existing sunsets for P3 projects (January 1, 2017) and design-build projects (January 1, 2014), this bill could make public-private partnerships and design-build a hollow tool for California highway projects.
 
This appears to be an attempt by the Professional Engineers in California Government (PECG) to do an end-run around a recent California appellate court ruling regarding the Presidio Parkway P3 agreement.  Although the legislation would not affect contracts that have already been awarded, such as the Presidio Parkway agreement, the bill would impact future P3 projects under Section 143 and future design-build projects under Section 6800, possibly including some projects that are already in the procurement process.  In the Presidio Parkway case, PECG sought a determination that the agreement was invalid because engineering consultants under contract with the San Francisco County Transportation Authority performed services on the project while section 143 allegedly requires the consultants to be under Caltrans direct contract and supervision.  Caltrans and the SFCTA have pursued the project for many years under a series of cooperative agreements.
 
The bill, authored by Assemblyman Portantino, was originally short-titled "Design-sequencing contracts" and is now called "Transportation projects: procurement."  It would appear more appropriate to call it "Increased inefficiency in government."
 
The legislative session closes at the end of next week (September 9), and September 2 is the last day to amend existing bills.  It seems likely this bill will make it to the floor.  The authors of this blog urge readers to contact their legislators and ask them to oppose the bill.

Appeals Court Rules Presidio Parkway Can Move Forward as P3

On August 8, 2011, the 1st District Court of Appeal in San Francisco published a decision holding that Phase 2 of the Presidio Parkway project can move forward as a public-private partnership (P3).  The unanimous opinion approved of and affirmed the February decision by Judge Wynne Carvill of the Alameda County Superior Court to the same effect, allowing the California Department of Transportation (Caltrans) and the San Francisco County Transportation Authority (SFCTA) to proceed with Phase II as a P3. The decision was issued less than five months after the appeal had been taken, because Caltrans and SFCTA had asked the Court to expedite what would normally be a longer process in order to get the critical project moving forward promptly.

Professional Engineers in California Government (PECG), the union representing Caltrans engineers, sought to stop Phase II of the project, which is replacing the old and outmoded approach to the Golden Gate   Bridge in San Francisco.  PECG sued Caltrans and the SFCTA, arguing that the project was not authorized by Streets and Highways Code section 143, recent legislation broadening the types of P3 projects that could be performed in California.  However, the Court of Appeal rejected PECG’s argument that, under section 143, Caltrans employees or direct consultants must perform all the preliminary planning and design services, as opposed to being only responsible to see them done correctly.  The Court also rejected PECG's other arguments, that the project was not supplemental and that P3 efforts under California law must be confined to toll projects, holding that the legislation authorized much broader use of innovative financing, in this case an availability payment.

The Presidio Parkway Project is the first project to reach award under California’s new public-private partnership statute.  This decision should ease the way for other projects, and also provide helpful precedent for design build projects authorized under parallel legislation.

At the end of 2010, Caltrans, in cooperation with SFCTA, signed a contract awarding the project to Golden Link Concessionaire, LLC, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America.

PECG will have until September 16 to ask the California Supreme Court to review the Court of Appeal decision.  It is not known if PECG will seek review, however the Supreme Court grants review in only a small number of cases based on specific criteria.

Nossaman represented SFCTA in the litigation and Caltrans was represented by its own Department counsel. Nossaman has also provided assistance to Caltrans in the procurement of the project.

For more about the Presidio Parkway Project and section 143, see Presidio Parkway Project Moves Forward as Court Denies Request for Writ of Mandate and Injunction, Presidio Parkway Project AwardedPreferred Proposer Selected for Presidio Parkway Project, Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.

Our Mature Northern Cousins - Canadian P3 Practice

If you want to know what a mature, effective federal and state P3 policy can look like, we need not look very far beyond our U.S. borders.  Two Canadian provinces, Ontario and British Columbia, provide us a road map for building successful, sustainable P3 programs and policies.

At the International Bridge Conference in Pittsburgh last month, panelists for a workshop on P3s, including Len Kozachuk with Infrastructure Ontario (IO), described the essential features of this agency and its “alternative financing and procurement” program.  The contrast with how our federal and state policy makers view P3s was striking:

  • All three major political parties in Ontario support the use of P3s.  They do so because the track record proves the benefits of P3s. The woeful experience in the U.S. is that if one party supports it in a particular state, usually the other party opposes it.
     
  • IO has plenary province-level authority over P3 procurements for all forms of transportation and social infrastructure.  It is a center of expertise.  We are aware of no state entity with comparable procurement powers or expertise.  Virginia is making an effort in this direction with its recently announced Office of Transportation Public-Private Partnerships.
     
  • IO handles a wide range of project types, from transportation to social infrastructure such as hospitals, courts, schools and water projects.   It is a rarity in the U.S. to find any state even considering use of P3s for social infrastructure, and only a handful of states have transportation projects under active consideration for P3s.
     
  • IO is staffed with a strong group of financial, technical and legal professionals and analysts.  IO carefully screen projects for P3 suitability and does not hesitate to reject those that are not ready or suitable.  They then run the procurement, and negotiate and administer the contracts.  In most states, we witness P3 offices in state DOT’s formed as an afterthought, often understaffed, with insufficient prior training and experience and inadequate support from other DOT divisions.
     
  • IO is dedicated to maintaining a pipeline of P3 projects - over 50, worth $23 billion, since 2005.  Compare this to 96 projects throughout the entire U.S., worth $54.3 billion in transportation P3 contracts, over the past 22 years, a bunch of which are design-build only (see Public Works Financing, May 2011 issue, p. 4-5).  And IO has something like 20 more projects concurrently under active procurements, dwarfing any U.S. state effort. 
     
  • When IO folks commence a P3 procurement, they finish it, because they have the political support, authority, analysis, staffing and funding to do so.  This track record has bred credibility for the IO in the P3 industry.  In most states, the use of P3s is decided on a project-by-project basis, with little promise of a steady stream of opportunity.  Delayed, prolonged procurements, and too many failed procurements, undercut acceptance of P3s and industry confidence.
     
  • Every Ontario infrastructure project with estimated capital costs of $50 million or more must be analyzed for P3 suitability.  This is the law for any project seeking Canadian federal support.  Indeed, IO’s working presumption is that P3 will be the preferred method of project delivery for such projects.  In the U.S., nowhere do we find a presumption in favor of P3s for significant projects, much less a standing policy to evaluate for P3 suitability.  P3s are usually viewed as a last resort, when no other means to close a funding gap can be identified.
     
  • The driver behind the presumption favoring P3s in Ontario is life cycle cost efficiency.  “We believe this model — with the inherent private-sector efficiencies — will create an overall lower cost for taxpayers than if the government financed projects directly.” [From website]  Time and again IO has found that P3s produce the best value for money over the useful life of large, complex projects.  While cost effectiveness should be the central reason for using a P3 (see Public Works Financing, May 2011 issue, p. 24), the driver for using P3s in the U.S. is lack of traditional financing.  If the necessary capital can be raised through any non-P3 means, that is usually the choice, even though a P3 approach can delivery quality assets and performance at a lower life cycle cost.

The story is the same in British Columbia, where Partnerships British Columbia has successfully pursued P3s for dozens of transportation and social infrastructure projects.  It analyzes projects for P3 suitability and manages the P3 procurements for provincial and municipal government owners.  All projects of $50+ million are “considered first … to be built as public-private partnerships (PPPs) unless there is a compelling reason to do otherwise.” It delivered 35 PPP projects between 2002 and 2010, worth $12.5 billion. P3s are expected to meet 10-20% of the province’s infrastructure capital needs.  P3 market share in the U.S. since 2008 is about 2% (see Public Works Financing, May 2011 issue, p. 6).

In a nutshell, the Ontario and B.C. governments champion P3s, because they know they produce the best value for the public when applied to the right projects in the right way.   We need many more states with well-positioned elected and executive officials steadfastly advocating a change from episodic to programmatic P3 decision making (see TR News Magazine May-June 2011, p.23).  Our northern cousins are showing us how.

Buzz for Knik Arm P3 Project at InfraAmericas Conference

The just ended InfraAmericas P3 conference in New York City brought together virtually every active participant, public and private, in the U.S. transportation P3 industry.  A number of public agencies showcased their plans and projects, and there was a palpable sense that opportunities to bring U.S. projects forward are growing significantly.

Perhaps the project producing the most buzz at the conference is the Knik Arm Bridge and Toll Authority’s Knik Arm Crossing project in Alaska.  KABATA came to the conference loaded for bear (a not infrequent pastime in this bountiful state).  The day before the conference, KABATA hosted a very well attended industry forum at the Citicorp World Headquarters.  Attendees were greeted with messages from key political stakeholders, including Congressional representatives, Alaska Gov. Sean Parnell, state representatives and local officials.  In attendance were key policy and decision makers from the state, including State Sen. Linda Menard, KABATA’s Chairman Mike Foster, CEO Andrew Niemiec, CFO Kevin Hemenway and executives from the Departments of Revenue and Transportation.

During the two-day conference, KABATA held 17 individual meetings with major concessionaires, equity funds and constructors.  The appetite for this project appears large and growing.  KABATA received useful input and provided the industry with information on project status and the intended P3 procurement.  It was quite evident that teams are forming, some in an advanced stage and some still gelling.

Why does this project command the intense attention it is receiving?  We think a number of factors have converged to uniquely position the project.  What do you think?

  • Project maturity.  The project is well-defined.  The ROD and a no jeopardy biological opinion regarding beluga whales are in hand, permitting is well on its way, KABATA should have all ROW in place by the time of P3 award, and site conditions are well documented.
  • The political climate for the project has never been more favorable.  The essentiality of the project to the state-wide economy is broadly recognized.
  • KABATA’s decision to convert from a toll concession to an availability payment concession has better aligned the project with market realities and drawn attention from many players.
  • Analysis of the project’s financial feasibility is well-developed, realistic and positive, with industry leaders HDR, Wilbur Smith Associates, and Citgroup providing cost estimation, revenue estimation and financial planning.
  • KABATA’s plan for legislation in the Senate (SB 79 and SB 80) and the House (HB 158 and HB 159) to enhance the availability payment credit will underpin the project with the state’s AA appropriation debt rating.
  • Few new U.S. transportation projects are commencing serious, active procurement in the next few months.  The timing is excellent.

Stay tuned.  The RFQ is expected next month.
 

Presidio Parkway Project Moves Forward as Court Denies Request for Writ of Mandate and Injunction

On February 17, 2011, Judge Wynne Carvill of the Alameda County Superior Court filed a 38 page opinion denying the efforts of Professional Engineers in California Government (“PECG”), the union that represents Caltrans engineers, to stop Phase 2 of the Presidio Parkway project in San Francisco.  PECG sued the California Department of Transportation (“Caltrans”)  and the San Francisco County Transportation Authority (“SFCTA”), as well as the California Transportation Commission and officials of each of these agencies, seeking a halt to Phase 2, which had been awarded as a public private partnership (”P3”) contract, with an availability payment as a financing mechanism.  PECG had argued that this project did not meet the criteria set forth in the 2009 legislation authorizing P3 projects in California, Streets and Highways Code section 143.  Among other reasons, it asserted that tolls were the exclusive financing mechanism under the legislation and that availability payments could not be used.

Nossaman represented SFCTA in the litigation and Caltrans for the P3 procurement.
After the same judge dissolved a temporary restraining order and denied a preliminary injunction at the end of 2010, Caltrans, in cooperation with SFCTA, signed a contract awarding the project to Golden Link Concessionaire, LLC, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America.  Golden Link proposed a maximum availability payment of $28,549,189 for the 30-year contract to design, build, finance, operate, and maintain the project. 
 
The Presidio Parkway Project is the first project to reach award under California's new public-private partnership statute. For more about the Presidio Parkway Project and section 143, see Presidio Parkway Project AwardedPreferred Proposer Selected for Presidio Parkway Project, Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.

NCSL Releases "Public-Private Partnerships for Transportation: A Toolkit for Legislators" Report

The National Conference of State Legislatures (NCSL) has released the report "Public-Private Partnerships for Transportation: A Toolkit for Legislators."  The text of the report is short and concise (32 pages, with multiple appendices), yet provides a thorough overview of the the pros and cons of PPPs.  It also sets forth nine principles for consideration by legislators in deciding if and how to pursue public-private partnerships.  
 
The report is very well sourced, with examples of how projects and jurisdictions addressed matters that affected their programs and projects.  The appendices include a number of resources for use in pursuing public-private partnerships.  Materials prepared by Nossaman are frequently cited by the NCSL among the resources and appendices.

Tags:

AASHTO Conference Report on Highway Funding and Finance Released

AASHTO, through its Center for Excellence in Project Finance, has released its final report on strategies for funding and financing surface transportation for the next decade. The report, Funding and Financing Solutions for Surface Transportation in the Coming Decade,  is available for download via AASHTO’s website at the following address:

http://www.transportation-finance.org/pdf/featured_documents/sep_30_report_final_2011_02_02.pdf

In September 2010, AASHTO convened a forum of members of Congress, representatives of state and local governments, and professionals from educational and private sector transportation-focused organizations and businesses. The forum was organized to address:

  • Near- and medium-term funding options for the Federal surface transportation programs
  • Current and potential future applications of Federal financing tools
  • Funding and financing initiatives that are meeting with success at state and local levels of government and whose use could be expanded

The report highlights the findings of the Congressionally mandated National Surface Transportation Policy and Revenue Study Commission (Policy Commission), the National Surface Transportation Infrastructure Financing Commission (Finance Commission), and USDOT’s most recent Conditions and Performance Report

These groups found that revenues generated under current policies (e.g. fuel taxes) provide enough resources to meet only 44 percent of the requirements to maintain the current system, and will continue to lose power in the future. A broad array of existing and potential funding and financing sources were discussed in the report, which includes speaker white papers detailing the creative approaches advocated at the meeting.

Geoff Yarema, with contributions from Ed Kussy and Adam Horsley, provided insight on how Federal credit assistance programs like TIFIA, Private Activity Bonds, and the proposed national infrastructure bank could be expanded and improved to meet the nation’s growing needs. Several of Mr. Yarema’s suggestions expanded on recommendations he helped craft as a member of the Finance Commission.

Presidio Parkway Contract Awarded

The California Department of Transportation started off the New Year with a significant step in its public-private partnership program.  After an Alameda County Superior Court judge dissolved a temporary restraining order and denied a preliminary injunction sought by Professional Engineers in California Government, the California Department of Transportation, in cooperation with the San Francisco County Transportation Authority, awarded the contract for the Presidio Parkway Project to Golden Link Concessionaire, LLC, a consortium led by Hochtief PPP Solutions North America and Meridiam Infrastructure North America.  Golden Link Concessionaire, LLC proposed a maximum availability payment of $28,549,189 for the 30-year contract to design, build, finance, operate, and maintain the Presidio Parkway Project.
 
The Presidio Parkway Project in San Francisco is the first project to reach award 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 Preferred Proposer Selected for Presidio Parkway Project, Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.

Bond Buyer Names Port of Miami Tunnel Project Deal of the Year

Continuing a string of awards recognizing its groundbreaking financial structure, The Bond Buyer named the Port of Miami Tunnel Project the 2010 Deal of the Year in the nontraditional financing category.  The ninth annual black tie event, held in New York City on Dec. 9, recognized some of the country’s most innovative municipal bond issuers for transactions in a range of sectors, including transportation, schools, water and sewer systems, wind, and public pensions.  The publication considered nearly 80 deals that closed between Oct. 1, 2009, and Sept. 30, 2010.

The $1 billion Port of Miami Tunnel Project was procured by the Florida Department of Transportation. The concession agreement for the project calls for the concessionaire to design, build, finance, operate, and maintain twin 39-foot diameter tunnels that provide two lanes of traffic in each direction for large cargo trucks and cruise-ship passenger buses going to and from the port from MacArthur Causeway, bypassing downtown Miami.  The concession is only the second availability payment scheme ever undertaken in the U.S., following in the footsteps of the Florida Department of Transportation's I-595 managed lanes project.  The project was previously honored by Project Finance magazine as the 2009 Global Deal of the Year and 2009 North American PPP Deal of the Year.  In addition, ARTBA named it the Public Private Ventures Division Project of the Year.  Nossaman served as legal advisor to the Florida Department of Transportation on the project.

Preferred Proposer Selected for Presidio Parkway Project

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.
 

Governors ask Senate to Safeguard State P3 Authority and Flexibility

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. 

VDOT to Hire Public Private Transportation Officer

The Virginia Department of Transportation (VDOT)'s commitment to public-private partnerships can be seen in the new opening for a Public Private Transportation Act (PPTA) Program officer. This position is part of the new Administration's efforts to re-invigorate the PPTA program by developing a comprehensive, programmatic approach to its public-private partnerships procurement process.

As described in the full job description, this position will focus on providing "multi-modal solutions to Virginia's transportation challenges by providing strategic leadership for the reorganization and improvement of project delivery for solicited and unsolicited proposals from private corporations to finance and build major highway, rail, ports and public transportation projects."    
 
VDOT also explains that the objective of their Public Private Transportation Act (PPTA) Program, enacted in 1995, "is to facilitate access to additional project financing, private sector innovation, enhanced timeliness of construction and improved efficiency at a reduced whole-life cost."

Tags:

ARTBA Awards TxDOT P3 Deal of the Year and Amadeo Saenz Entrepreneur of the Year

Producing ground breaking advancements in transportation infrastructure is not without its challenges, highlighting the importance of celebrating each success. Today our client, the Texas Department of Transportation (TxDOT) and the organization’s Executive Director, Amadeo Saenz, are being recognized for their paradigm shifting approach to building roads.

The American Road & Transportation Builders Association (ARTBA) is holding their 22nd Annual Public Private Partnerships in Transportation Conference in the nation’s capital. In what is being called a sweep, TxDOT has been awarded “P3 Project of the Year” for both the North Tarrant Express and the LBJ-635 Express projects, and Amadeo Saenz has been awarded “Public Sector Entrepreneur of the Year.” Cintra’s U.S. President, Nicolas Rubio, was awarded “Private Sector Entrepreneur of the Year.”

A well-respected organization established in 1902, ARTBA is the oldest national transportation construction-related association and the first to articulate a need for a federally-built network of Interstate highways. For 21 years the organization has assembled leaders in the transportation industry at this annual conference to discuss key transportation issues, including the private financing of transportation infrastructure projects.

Final RFP for the Presidio Parkway Project Released

Following extensive industry review of the draft Request for Proposals, on Friday, July 9, 2010, the California Department of Transportation, in coordination with the San Francisco County Transportation Authority, issued the final Request for Proposals for the Presidio Parkway Project. According to the latest procurement schedule in the Request for Proposals, technical proposals are due on September 10, 2010, and financial proposals are due on September 24, 2010.

The Presidio Parkway Project is the first public-private partnership procurement under California's new public-private partnership law, Section 143 of the Streets and Highways Code. For more about the Presidio Parkway Project and Section 143, see Presidio Parkway Reaches Two Important Milestones and Presidio Parkway Project RFQ Issued.

Financing Completed for the Largest U.S. Greenfield Transportation P3 Deal of All-time

On June 22, 2010 the Texas Department of Transportation’s I-635 project became the first U.S. highway public-private partnership (P3) to achieve financial close in 2010. LBJ Infrastructure Group - a Cintra-led consortium - will build, finance, maintain and operate a 17-mile corridor which includes managed lanes in the congested Dallas-Fort Worth area. This project along with the North Tarrant Express (NTE), one of three U.S. transportation P3s to close in 2009, are nationally significant for advancing the use of managed lanes to address congestion.

The projects are notable not only for their magnitude and the method in which they will be developed, but also for their unique tolling and financial characteristics. Specific precedent setting-features include:

  • The projects are valued as the largest transportation greenfield P3 projects in the United States and include construction costs of $2.7 billion for the I-635 and $2 billion for the NTE.
  • The projects confirm the importance of Transportation Infrastructure Finance and Innovation Act (TIFIA) and private activity bonds (PABs) as financing mechanisms. The I-635 includes the largest amount of PABs for a U.S. toll road concession. The TIFIA loans of $850 million for I-635 and $650 million for NTE are the second and third largest to close.
  • The Dallas Police and Fire Pension System is an equity partner in the private developer for both projects, making it the first pension fund to invest directly in infrastructure development in the U.S.
  • They are the first two projects to obtain federal tolling authorization under the United States Department of Transportation’s Express Lanes Demonstration Program.
  • To the extent that toll revenues exceed specified levels, the private developer will share up to 75% of the excess toll revenues with the Texas DOT.

The I-635 and NTE validate toll concession P3s as a viable method for delivering needed transportation projects in the United States.  For example, with the I-635, Texas DOT was able to leverage $489 million in public funds to deliver a project worth over $4 billion including costs for design, construction, operations and maintenance.  If past is prologue, the P3 market can expect more P3 toll concessions, as well as managed lanes projects, in the future.

GDOT Shortlists Three Consortia for the West by Northwest Project

On June 1, the Georgia Department of Transportation (GDOT) announced the shortlist of qualified proposers for the West by Northwest Project.  The three shortlisted teams are eligible to receive the Request for Proposals for the project, which is expected to be issued in the fall. The selected teams are as follows:

The West by Northwest Development Partners

  • Equity: VINCI Concessions and OHL Concesiones.
  • Lead Contractors: Archer Western Contractors, OHL USA and the Hubbard Construction Company.
  • Lead Engineering Firm: Parsons Transportation Group.
  • Lead Operations and Maintenance Firm: VINCI Concessions and OHL Concesiones.

The Georgia Mobility Partners

  • Equity: Cintra Infraestructuras, MINA USA (subsidiary of Meridiam Infrastructure) and Grupo Soares da Costa.
  • Lead Contractors: Ferrovial Agroman and Prince Contracting.
  • Lead Engineering Firm: AECOM Technical Services.
  • Lead Operations and Maintenance Firm: Cintra Infraestructuras, MINA USA and Grupo Soares da Costa.

The Northwest Atlanta Development Group

  • Equity: ACS Infrastructure Development.
  • Lead Contractors: Dragados USA and C.W. Matthews Contracting Co.
  • Lead Engineering Firm: PBS&J.
  • Lead Operations and Maintenance Firm: ACS Infrastructure Development.

In addition to being GDOT’s first project under its new P3 program, the West by Northwest Project is viewed as a vehicle to reinvigorate the metro Atlanta and statewide economy.  Further information is available on the GDOT website

Las Vegas Bankruptcy Monorail Decision Bodes Well for Project Owners

We are pleased to include here the comments of colleague, Allan Ickowitz, Co-Chair of Nossaman's Financial Services and Bankruptcy Practice Group.

 

Public agency project owners can breathe a sigh of relief over a recent bankruptcy court decision in the Las Vegas monorail case. They will not be held liable for the debts of non profit corporations established to build public infrastructure simply because the corporation was formed “on behalf” of a public agency. 

When the  Las Vegas Monorail Company  filed a Chapter 11 bankruptcy petition on January 13, 2010, the Ambac Assurance Corp. filed a motion to dismiss. The Monorail bankruptcy filing and Ambac’s motion raised concerns in the US infrastructure industry about the potential liability for public agency sponsors of these types of projects for the liabilities of the non-profit corporation’s formed on their behalf to develop and finance infrastructure projects. Ambac had insured $450 million of the bonds issued to finance the Monorail project, and argued that the Monorail shouldn’t be able to file under Chapter 11 on the grounds that the Monorail was a "municipality" for purposes of the Bankruptcy Code and, therefore, ineligible to file a bankruptcy case under any Chapter other than Chapter 9.   (A dismissal of the Monorail's Chapter 11 case would render the Monorail unable to seek bankruptcy protection because the company was not specifically authorized by Nevada law to file a Chapter 9 bankruptcy case, a requirement that applies municipalities filing bankruptcy under Chapter 9.)  Ambac argued that the Monorail was an "instrumentality" of the State of Nevada, because, among other things, the Monorail was controlled by the Governor, identified itself as an "instrumentality" of the State of Nevada controlled by the Governor in the tax certification in connection with obtaining tax exempt status for its bonds, and because the bonds were issued by the state (and various exemptions granted to the monorail company by the Clark County government).

This public private partnership structure (sometimes referred to as a 63-20 Corporation) is designed to shift financial risk away from the public agency. The bond documents used in this financing are explicit that neither the full faith and credit or any assets of the public issuer, the state, or the county are liable for the debts of the corporation, even though for federal tax purposes the corporation was formed 'on behalf of' a public agency.

The Bankruptcy Court rejected Ambac's arguments and issued a ruling entered on April 26th denying Ambac's motion.  The court in effect, and based upon the totality of circumstances in the case, found that the Monorail should be treated as a nonprofit corporation as was intended. It was organized to be a non-profit under Nevada state law and the certification of the entity as an "instrumentality" for tax purposes did not change its status under bankruptcy law.  In ruling this way, the court has helped protect the integrity of the type of conduit financing. The Monorail's bonds, issued by a state to finance operation of a project by a private nonprofit corporation – albeit for  public purposes under significant oversight and control by the state are the responsibility of the nonprofit, not the public agency.

Ambac has initiated appeal proceedings seeking to reverse the Bankruptcy Court’s decision.

                                                                                                                           -Allan Ickowitz

 

Presidio Parkway Reaches Two Important Milestones

California's first public-private partnership procurement has passed two major hurdles in the last week.  First, after a long anticipated and much-debated hearing, the California Transportation Commission approved the San Francisco Presidio Parkway Project last week on an 8-3 vote.

Second, on May 25, the California Department of Transportation released the draft request for proposals to design, build, finance, operate and maintain the Presidio Parkway.  The project, sponsored by Caltrans and the San Francisco County Transportation Authority, is being closely watched because it is the first P3 project under the new Section 143 of the California Streets & Highways Code, which permits Caltrans and regional transportation agencies to work with the private sector in developing transportation facilities in the state (for more about Section 143, see 'California Passes First Significant Transportation PPP Law in 20 Years').

The CTC vote was a topic of discussion at the California Public Infrastructure Advisory Committee meeting this week, which preceded the Public Infrastructure Financing Forum held at the California Science Center in Los Angeles.

Caltrans plans to issue the final RFP on June 29, 2010.


 

West by Northwest Project to Jump Start Georgia's Economic Recovery

A recent independent report on the Georgia Department of Transportation’s West by Northwest Project indicates that the project will result in significant economic benefits to the Atlanta region and statewide. Prepared by the Fiscal Research Center at Georgia State University, the report focused on the short-term effects of the project and found:

  • The project will result in an estimated 9,705 private sector jobs in Georgia (including 9,169 jobs in the Atlanta metro region) that would not otherwise exist;
  • The project will generate over $528 million in additional income in the state of Georgia and an additional $507 million in the Atlanta metro area;
  • The project will increase the total economic output in the Atlanta metro area by more than 57%.

A full copy of the report is available from the Fiscal Research Center, which frequently writes about the economic implications of policies and public sector projects of significance to the state.

The West by Northwest Project is the first of several P3 projects in the pipeline for the state. GDOT issued a Request for Qualifications for the project earlier this month, and is expected to shortlist proposers next week. 

The Future of Interstate Tolling

The IBTTA is discussing the future of tolling existing interstate capacity in light of the Federal Highway Administration’s decision to reject Pennsylvania’s application to toll Interstate 80.

My opinion?

The political barriers to tolling existing interstate capacity are just as real and monumental as raising the gas tax. In the short to mid term the more likely scenario is an acceleration of the trend to toll new capacity within existing interstate rights of way. The Ft. Lauderdale I-595, the Ft. Worth North Tarrant Express, and the Dallas I-635 are all recent examples of blending existing nontolled interstate upgrades with new tolled lanes. I project many more such projects which will benefit all concerned with less political friction. In reauthorizing the highway program Congress should follow the recommendations of the National Surface Transportation Infrastructure Financing Commission and give the states more leeway to utilize this tool.

You can see what others have to say about it at the ITBBA’s blog Tolling Points.

Alternative Financing - the New Mainstream?

State and local strategies to bridge the gap between traditional funding and current needs – which has been referred to as alternative finance – are now becoming mainstream. 

Consider Los Angeles Mayor Antonio Villaraigosa’s plan to speed up the development of LA’s transit infrastructure, which the LA Times reports would include financing from ‘a combination of private financing and bonds, such as Build America Bonds, established in the economic recovery bill to cut interest costs for local and state infrastructure projects.’ 

In fact, this model has already been used in several states for highway projects (see Texas and Florida for recent examples).  Recent changes in TIFIA rules and the Obama administration’s so-called ‘livability’ criteria may indicate the federal credit program’s shift of emphasis toward funding transit programs.  And enhanced versions of existing credit programs, such as the proposal to establish and capitalize a National Infrastructure Bank, could present a new vehicle to make these financing options available.

Public agencies responsible for developing high speed rail will also have to consider alternative financing methods.  The ARRA grant funds allocated for these projects, although impressive, will only make up a portion of the monies necessary to provide a viable service.  The choice comes down to this: wait years or even decades for the federal government to dole out enough funds on a pay-as-you-go basis to build the infrastructure we need, or creatively finance critical deals using low cost federal credit, bonds, and private equity so that we can reap the benefits of increased mobility sooner.  After sitting in L.A. traffic this morning, I can certainly tell you which option I would prefer.
 

Infrastructure Journal Honors Texas, Florida, and Nossaman

A week after the Project Finance Awards honored the Florida deals, the Infrastructure Journal Awards honored the Texas DOT’s North Tarrant Express project as its 2009 Global Transport Deal of the Year. The Florida DOT’s I-595 Project was nominated along with one other project for the honor.

The North Tarrant Express was nominated with two other projects for the IJ’s 2009 Global Deal of the Year – which selects from projects in all sectors, including: power, renewables, oil and gas, PPPs, and transport.

Nossaman was nominated along with two other law firms for the 2009 Transport Legal Advisor of the Year award for our work in the industry, including our work on the North Tarrant Express, the I-595, and the Port of Miami Tunnel.    


Photo source: Infrastructure Journal
Angus Melville, IJ Editor, with Nossaman’s Geoff Yarema and Meridiam's Thierry Déau.

We heartily congratulate the Texas and Florida Departments of Transportation on their impressive accomplishments and appreciate the opportunity to have been associated with their successful projects. 

Infrastructure Journal reported that the North Tarrant Express deal “marks the first time a US pension fund has come on board as a direct equity shareholder in a toll road concession, and the first time long-term investment grade transportation private activity bonds (PABs) have been issued, sold "unwrapped"."   It is the only road development project in the country to have closed in 2009 in which the private sector assumed revenue risk. IJ notes the North Tarrant Express deal "has the potential to kick start a trend across the States of pension funds becoming more active in infrastructure investment.”

The London-based IJ called the I-595 a “pathfinder deal” and remarked that the “nomination of US law firm Nossaman is an indicator of where the market is heading, with three landmark deals in the States making it away in 2009 - Port of Miami Tunnel, North Tarrant Express (Transport Deal of the Year) and the I-595.”

Background and analysis about the NTE, the I-595, and the POMT are available on nossaman.com and Infra Insight blog.

Florida Department of Transportation Honored for Two Projects

The Port of Miami Tunnel Improvement Project was named the 2009 Global Deal of the Year and the 2009 North American PPP Deal of the Year by Project Finance Magazine

The I-595 Corridor Roadway Improvements Project was named the 2009 North American Transport Deal of the Year

Project Finance Magazine, a leading global infrastructure industry trade publication, announced the honors at its awards ceremony in New York on March 4th and profiles both the Port of Miami Tunnel and I-595 projects in its current issue.  Nossaman is honored to have had the opportunity to work on both of these projects with the Florida Department of Transportation and congratulates the department on its vision and success.  

"We are excited to see this landmark project begin construction.  We assembled an excellent team of FDOT employees and consultants to deliver this project.  Nossaman, under Patrick Harder's leadership, was an integral team member whose creativity and excellent judgment helped deliver the project on time and within budget."
       - Gerry O'Reilly, FDOT Director of Transportation Development

Background and analysis about the I-595 and the POMT, both precedent-setting availability payment PPP projects, are available on nossaman.com and Infra Insight blog.

Photo Source: Florida Department of Transportation

I-595 Corridor Roadways Improvement ProjectPort of Miami Tunnell Project

 

 

Tags:

West by Northwest: Georgia DOT's First P3 Project

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. 

Tags:

Presidio Parkway Project RFQ Issued

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.

A Look At 2009's Major US P3 Transactions

“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…

Continue Reading...

TRB takes on BOLD ideas

For the 89th year, January brings new ideas in transportation. The 89th 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.

Tags: ,

Texas DOT's North Tarrant Express Deal Reaches Financial Close

 

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. 

Port of Miami Tunnel: Digging Through Novel Risks

The closing of the Port of Miami Tunnel Project deal was just short of miraculous, given the tight financial markets and the political ups and downs of the project procurement. Novel risk allocations helped ensure the success of the deal. The current issue of Public Works Finance includes an excerpted discussion of the risks and the way the Florida Department of Transportation chose to address them. The full text of Port of Miami Tunnel: Digging Through Novel Risks is available on Infra Insight.

Continue Reading...

Florida Department of Transportation Closes $900 million Port of Miami Tunnel Project PPP

The Florida Department of Transportation (FDOT), announced at a press conference in Miami today that it has reached financial close on the Port of Miami Tunnel Project

FDOT, in partnership with Miami-Dade County and the City of Miami, entered into an agreement with MAT Concessionaire, LLC (MAT) which includes Meridiam Infrastructure Finance, S.a.r.l. and Bouygues Travaux Publics as equity members. The $900 million public-private partnership (PPP) deal uses an availability payment structure that provides for payment to MAT over 30 years after completion of construction, which is expected to occur in five years. This is the second transportation infrastructure project in the United States to use an availability payment structure, following the recently closed FDOT I-595 Corridor Improvements Project

Financing for the project includes a $341 million low-cost federal loan through the Transportation Infrastructure Finance and Innovation Act, equity contributions from MAT, and $330 million in loans from the following senior lenders:

  • BNP Paribas
  • Banco Bilbao Bizcaya Argentina
  • RBS Citizens
  • Banco Santander
  • Bayerische Hypo
  • Calyon, Dexia
  • ING Capital
  • Societe Generale
  • WestLB

The Port of Miami Tunnel will link the Port of Miami facilities on Dodge Island with MacArthur Causeway and I-395 via twin 42’ diameter tunnels under Biscayne Bay, increasing the Port’s competitiveness and relieving congestion in downtown Miami by diverting passenger and freight traffic to I-395 and improving access to I-95. The project also includes widening of MacArthur Causeway and other roadway improvements.

Bouygues Civil Works Florida, Inc. will design and construct the project with engineering assistance from Jacobs Engineering Group, Inc. VMS, Inc. will serve as the lead operations and maintenance contractor. In addition to Nossaman, FDOT’s advisors include Jeffrey Parker & Associates (financial), Parsons Brinkerhoff and T.Y. Lin (technical), and Marsh (insurance).

CTC Approves P3 Policy Guidance

California is now ready to assess P3 candidate projects. At its October 14th meeting, the California Transportation Commission approved policy guidance addressing the Commission’s role in selecting proposed P3 projects. The CTC developed the guidelines to assist Caltrans and regional transportation agencies (RTAs) as they move to develop P3 transportation projects, taking advantage of the new authority granted to them under Senate Bill X2 4, enacted in February of this year.

The enabling legislation requires the CTC to select projects nominated by Caltrans or an RTA seeking to use the P3 model. The CTC policy guidance describes the selection process, including the project report and information required to be submitted to the CTC, the CTC’s criteria for evaluating projects, and the timing and scope of the CTC’s role. 

California Conference Highlights State Funding Options

With the delay of the federal transportation re-authorization and federal transportation funding in limbo, state transportation agencies across the nation are trying to cope any way they can. In California this week, 19 “self help” local transportation financing agencies - that collectively generate more than $4 billion a year for transportation - drew a large crowd of transportation public agency officials, elected officials, contractors and consultants to the 20th Annual Focus on the Future Conference in Los Angeles to explore their options. Conference speakers discussed current developments in transportation funding, environmental compliance and project delivery. The news on project delivery and innovation was positive, the environmental compliance news mixed, and the funding news pretty discouraging.

Interspersed with the grim chronicling of the current state and federal funding landscapes, the conference highlighted some bright spots, including federal ARRA funds, Measure R funding in Los Angeles, and innovative project delivery, PPPs and congestion pricing.

Continue Reading...

Does NJ Law Signal P3 Trend in Social Infrastructure?

Included in New Jersey’s Economic Stimulus Act of 2009  are provisions to allow the use of PPPs to design, build, finance, operate and maintain higher education facilities.  Is this the start of a trend for developing social infrastructure in the US?

Social infrastructure includes housing, educational, recreational and law and order facilities that support the community's need for social interaction.  As reflected by several projects in Canada, this is not a new concept for North America.  Along with the recent use of a PPP for development of the Long Beach Courthouse, New Jersey’s authorization of PPPs for higher education projects may indicate that the US market is warming to the idea as well.

Under the  new law, a State or county college may enter into a PPP that permits the private entity to assume full financial and administrative responsibility for the on-campus construction, reconstruction, repair, alteration, improvement or extension of a building, structure or facility of the institution.  The project must be financed in whole by the private entity, and the State or institution of higher education retains full ownership of the land upon which the project is completed.

Proposals for higher education PPP’s must be submitted to the New Jersey Economic Development Authority within 19 months of the law’s July 2009 enactment for review and approval.  In order to be considered, proposals must include, at a minimum:         

  • A public-private partnership agreement between the State or county college and the private developer; 
  • A full description of the project;
  • The estimated costs and financial documentation for the project (including a long-range maintenance plan);
  • A timetable for completion of the project extending no more than five years after consideration and approval; and
  • Any other requirements that the Economic Development Authority deems appropriate or necessary.

With budgets stretched to the limit across the country, we’ll be watching to see if other states look to PPPs  to develop much needed social infrastructure.

Transit P3s On Track

Two potential public-private partnership transit projects appear closer to leaving the station, after several delays. Denver Regional Transportation District (RTD) recently held a public hearing on the Eagle P3 project and is poised to issue a request for proposals to three prequalified/shortlisted teams on September 30th with proposals anticipated in March 2010. Bay Area Rapid Transit (BART) is on an accelerated schedule for its stimulus-revamped Oakland Airport Connector project, with proposals due in late September and contract award slated for December.

The Federal Transit Administration selected both projects to participate in the Public-Private Partnership Pilot Program or Penta P, a program authorized by SAFETEA-LU to demonstrate the pros and cons of P3s for certain new FTA-funded fixed guideway capital projects. FTA officially launched the program in January 2007, focusing on projects that utilize procurement methods that integrate risk-sharing and accelerate project delivery.

FTA recognized the inherent obstacles in transit P3s in its 2007 “Report to Congress on the Costs, Benefits, and Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects,” emphasizing that private partners for transit projects have been reluctant to provide long-term equity investment or assume ridership or revenue risk. Overcoming the challenges to private sector equity investment and assumption of revenue risk for transit projects will be a gradual process, even with Penta P support. Denver’s Eagle P3 project, to be delivered as an availability payment concession, calls for the concessionaire to finance the project, although the RTD will assume the farebox risk. While BART’s initial plans for the Oakland Airport Connector called for the private sector to provide financing and share in the farebox risk, BART has since switched gears; the contractor will now design, build, operate and maintain the project, but BART will fund the project itself, using a combination of traditional funding sources and an injection of stimulus funds.
 

FDOT I-595 Project Helps Sweep ARTBA PPV Awards

The Florida Department of Transportation’s I-595 project and its public and private partners won several awards at this year’s American Road & Transportation Builders Association (ARTBA) P3 conference. “It’s pretty much a Florida sweep,” declared Pamela Bailey-Campbell, ARTBA Public Private Ventures Division president, as she announced the recipients of the Project, Public Sector Entrepreneur, and Private Sector Entrepreneur of 2009.ARTBA PPV awards luncheon

Bailey-Campbell announced three awards at the September 25 award luncheon in Washington D.C. The I-595 project in Fort Lauderdale, Florida received the Project of the Year award. ARTBA called the project, which achieved commercial and financial close in March of this year, a seminal project in public-private partnerships because it is the first availability payment concession highway project in the United States. FDOT Secretary Stephanie C. Kopelousos accepted the award on behalf of the department.

The Public Sector Entrepreneur of the Year award went to Gerry O’Reilly, Director of Transportation Development of FDOT District Four. Secretary Kopelousos credited Mr. O’Reilly - who led the FDOT team on the I-595 project - as the primary individual responsible for the project’s success.

The Private Sector Entrepreneur of the Year award went to Juan Santamaria, Chief Operating Officer of ACS Infrastructure Development, Inc. Mr. Santamaria was the lead representative and negotiator of the I-595 concessionaire team. In accepting the award, Mr. Santamaria thanked ARTBA for being a leading voice and organization in the PPP industry.

Nossaman served as legal advisor to FDOT on the I-595. Jeffrey Parker served as financial advisor and RS&H served as technical advisor.

Photo: Courtesy of ARTBA. Pictured are Juan Santamaria, Stephanie Kopelousos, Pamela Bailey-Campbell (outgoing ARTBA PPV Division President), Brian Howells (incoming ARTBA PPV Division President), and Gerry O'Reilly.


 

TxDOT Executes LBJ-635 CDA

Texas Department of Transportation (TxDOT) officials executed a comprehensive development agreement (CDA) with the LBJ Infrastructure Group to design, construct, finance, operate and maintain the 13-mile LBJ-635 corridor in Dallas County. Following the North Tarrant Express (June 2009), the LBJ-635 is TxDOT’s second toll concession to reach commercial close this year.

Construction is expected to begin by mid-2011 and open to traffic in late 2016. Motorists will have a choice of either using the managed toll lanes or remaining on the improved and rebuilt free main lanes. The new LBJ  highway will feature the following improvements:

  • 8 rebuilt free main lanes (a foot wider than they are now)
  • Additional shoulders on the outside of the main lanes
  • Continuous frontage roads (two or three lanes wide)
  • 6 barrier-separated managed toll lanes located between or below all frontage roads

For a state investment of approximately $445 million, these improvements will provide $4 billion of needed infrastructure to the Dallas area, as well as operations and maintenance over the next 52 years.  

The financing plan for the project through project completion includes a combination fo senior bank debt, private activity bonds, a subordinated TIFIA loan and a sizeable equity contribution.

 

 

Sources of Funds
($ million)

 

Uses of Funds
($ million)

Toll Revenue

35

Design–build agreement (“DB Agreement”) price

2,110

Senior Term Facility

395

Intelligent Transportation System (“ITS”) and Toll Collection System (“TCS”) budget

56

Private Activity Bonds (“PABs”)

395

Operating costs (“Operating Costs”) and maintenance capital expenditure

109

TIFIA Loan

790

Transaction costs

35

Equity Contribution

683

Interest / (Interest income)

239

Public Funds

445

Debt fees

40

   

Cash reserves funding

125

   

TIFIA subsidy cost

29

Total

2,743

Total

2,743

LBJ Infrastrucure Group is a limited liability corporation consisting of:

  • Cintra, Concesiones de Infraestructuras de Transporte, S.A (Equity Owner)
  • Ferrovial Agroman, S.A. 
  • W.W. Webber LLC 
  • Bridgefarmer & Associates, Inc. 
  • Meridiam Infrastructure Finance (Equity Owner) 
  • Macquarie Capital (USA) Inc. 
  • Ferrovial Infraestructuras S.A 
  • Grupo Ferrovial 
  • Meridiam Infrastructure, S.C.A. SICAR 
  • Dallas Police and Fire Pension System (Equity Partner)

The presence of the Dallas Police and Fire Pension System within the group is notable as further evidence of public pension funds’ interest in making direct investments in transportation infrastructure.

GAO Approves PPP Project Mileage/Traffic Inclusion in Federal Funding Formulae

The Government Accountability Office (GAO) has endorsed USDOT’s policy of allocating Highway Trust Fund (HTF) apportionments based on total lane miles in each state – including miles of highway built, operated or maintained through public private partnerships (PPPs). 

Each state’s share of the nation’s highway system (quantified as “lane miles”) has factored in federal aid allocations since 1976, though initially this measure excluded tolled facilities. In 1998, Congress greatly expanded the use of the lane mile funding formula with TEA-21, and eliminated the exclusion of toll roads from the allocation formula.

On guidance from GAO, Congress has used lane miles as a proxy for need, rather than relying on direct measures of need.  Under a “direct need” model, a state that let its roads crumble might be able to demonstrate a greater need, and garner more federal aid, than a state that responsibly invested in maintenance.   

GAO’s report, prepared for Senator Jeff Bingaman of New Mexico, describes the high level approach Congress has taken, which bases funding decisions on “states' highway system needs taken as a whole, not on direct state highway system construction or operating costs.” Under this approach, states can pursue critical transportation projects through PPPs without fear of diminishing their share of HTF dollars. 

GAO’s ruling recognizes the political and fiscal realities facing state transportation agencies. Denying inclusion of these PPP projects in the HTF allocation calculus would put states that have demonstrated their need for more funds and taken positive steps toward self-help by reaching out to private partners at a disadvantage. 

The report follows on the heels of two new bills introduced by Senator Bingaman, one of which, if adopted, will place a heavier burden on states seeking to deliver transportation projects through PPPs.  The Transportation Equity for All Americans Act (S. 884) would reduce the funding such states receive through their Highway Trust Fund allocation by changing the grant allocation formulas for several programs to exclude privately operated facilities from the state network. The bills are currently before the Senate Committees on Environment and Public Works and Finance

Massachusetts Authorizes PPPs

In addition to the recent passage of comprehensive P3 legislation in Arizona and California, the newly created Massachusetts Department of Transportation (MassDOT) has also been authorized to utilize public private partnerships for transportation projects. Provisions for design-build-operate-maintain (DBOM) and design-build-finance-operate-maintain (DBFOM) procurements are included in Senate Bill 2087, commonly known as the "Transportation Reform Act," under which MassDOT was formed. Under the Act, P3’s may be used for a new or existing highway, road, bridge, tunnel ferry, airport, parking facility, seaport, rail facility or other transportation facilities.

Massachusetts has opted to take markedly different approaches to funding DBOM and DBFOM projects. Payments under DBOM contracts must come in whole or in part from funds appropriated prior to award of the contract or must be secured by tolls or other user charges. In contrast, for DBFOM projects, no public funds may be appropriated to pay for the services provided by the contractor.  These restrictions could prove to be a significant hurdle to financing some projects.

Another notable feature of MassDOT’s new P3 program is the establishment of a P3 Infrastructure Oversight Commission which will comment on and approve all requests for proposals (RFPs) for DBOM or DBFOM services. The seven member commission will be composed of experts with experience in the fields of transportation law, public policy, public finance, management consulting, transportation or organizational change. At least one of the commission members will be a representative from the Massachusetts Organization of State Engineers and Sciences.

The P3 portion of the Transportation Reform Act also includes provisions for:

  • Asset sales and leases
  • Procurement method and evaluation factors
  • Stipends
  • Funding
  • Confidentiality
  • Contents of the concession agreement
  • Creation of a public-private partnership oversight commission.

Click here to view the entire Tranportation Reform Act.

Arizona's P3 Legislation: New and Improved

Arizona has passed comprehensive P3 legislation on the heels of the passage of similar legislation in California.  Last month, Governor Jan Brewer signed House Bill 2396 which both updates Arizona’s existing toll road development and operations laws and gives the Arizona Department of Transportation (ADOT) broad authority to develop and operate a range of transportation projects through a variety of delivery methods. 

Under House Bill 2396  ADOT is authorized to use virtually  any innovative delivery method, including P3s.  Facilities eligible in the bill include: new or upgraded highways, rail, bus rapid transit, ferries, and intermodal systems.  ADOT may also grant P3 authority to other governmental agencies for specific projects.  The new law provides for both solicited and unsolicited procurements of P3 projects and authorizes  private parties to collect user fees or tolls.  Check out Toll Road News’ initial analysis of potential P3 projects in Arizona.

Arizona’s P3 law, generally considered very P3-friendly, includes several restrictions.  Toll increases allowed under a P3 agreement must either be based on a formula or subject to contract provisions regulating the private partner’s return on investment.  Additionally, concession or other P3 agreement terms are limited to 50 years, subject to extensions.  Finally, a novel provision in the law allows drivers paying tolls to apply for a refund or credit of motor fuel taxes paid by that driver while operating a vehicle on the tolled facility, stay tuned to see how ADOT works out the details for implementing such a credit or refund. 

I-395 HOT Lanes Project Stymied by Arlington Lawsuit

Arlington County is seeking to delay (or possibly derail) a project designed to ease congestion and add new lanes to Northern Virginia’s clogged 95/395 corridor.  Arlington has challenged the Categorical Exclusion (CE) granted by the Federal Highway Administration (FHWA), which allowed the project to move forward without a full environmental analysis.

Arlington is concerned that the new lanes will “increase congestion throughout the corridor, and lengthen travel times, especially for transit.”  Buses, carpools (HOV-3), motorcycles and emergency vehicles will have free access to HOT lanes.

Drivers with fewer than three occupants will be required to pay to access the lanes.  Fully electronic tolling on the HOT lanes will allow customers to pay tolls with E-ZPass - eliminating the need for toll booths.

Tolls will rise with congestion, following a strategy known as “congestion pricing” that has been embraced with great success in San Diego and Orange County.  As the price goes up more people exit the lanes, maintaining free flow of traffic.

Fluor-Transurban, Virginia’s private sector partner charged with building and managing the new lanes, is no stranger to set-backs. Fluor has been doggedly pursuing HOT Lanes in Virginia since 2002.

Northern Virginia’s congestion woes are a serious concern - only Los Angelinos lose more time in traffic each year, according to the Texas Transportation Institute’s 2009 Urban Mobility Report. This lawsuit will likely focus pressure on the I-495 HOT Lanes project to prove the viability of the congestion pricing model for the Washington Metro Area. 

California P3s: One Step Closer To Implementing Program

California is serious about using its new legislative authority to deliver some of the state’s much-needed transportation projects through public-private partnerships (P3s). On August 12, 2009, the California Transportation Commission issued draft guidelines addressing the Commission’s role in approving the P3 delivery method for specific projects.

The draft guidelines follow the California legislature’s momentous enactment of Senate Bill 4, referred to as SBX2 4.  That bill authorizes Caltrans and regional transportation agencies to enter into P3s for transportation projects.  Prior to commencing the procurement of a proposed P3 project, Caltrans or a regional transportation agency must first nominate the project and receive Commission approval.  The draft policy guidance issued by the Commission discusses the process for obtaining the requisite project approvals from the Commission. 

The guidelines are still in draft form and will be considered by the Commission at a meeting this fall. While the guidelines may be revised prior to becoming final, interested agencies and P3 industry participants will want to keep an eye on the provisions related to the scope of the Commission’s approval, timing and mandated components of the reports required to be submitted to the Commission as well as the impact these policies will have on the timing and structure of a P3 procurement.

Infrastructure Executives: Infrastructure Development Needs More Than Favorable Economic Conditions

A recent survey conducted by KPMG International confirms what many in the infrastructure industry already knew: current infrastructure investment is insufficient to support economic growth and politics frequently influences infrastructure development in the United States.  In this global survey, KPMG surveyed 455 infrastructure executives, including 118 from the United States.

While much of the recent industry press has focused on the lack of available financing as the primary challenge to delivering infrastructure, a vast majority of the respondents indicated that governmental effectiveness and current economic conditions are bigger hurdles than available financing.  The respondents expressed specific concerns over what they viewed as an overly politicized process, changing public policy, and excessive government bureaucracy.  When asked how governmental agencies could enhance their effectiveness in delivering infrastructure, respondents suggested making infrastructure delivery less influenced by political considerations, increasing transparency in infrastructure spending, and expanding the use of public-private partnerships (PPPs). 

Recent examples of PPP projects played out in the political arena include the SH 121 project in Texas and the proposed long-term leases of the Pennsylvania Turnpike and Alligator Alley.  California, which had pioneered PPPs in the early 1990s, only recently overcame objections from various political stakeholders in the intervening years.  We are hopeful that California’s new legislation authorizing design-build and PPPs for Caltrans and regional transportation authorities is a step toward improved transportation infrastructure delivery.  Given the current administration’s focus on infrastructure, Congress and the administration may now act to address the long-term needs for a stable means of funding infrastructure development and maintenance, without the political roadblocks.

Cotton Belt PPP: DART and The T Team Up

Dallas Area Rapid Transit (DART) and the Fort Worth Transportation Authority (The T) are in the early phases of procuring a firm to enter into a Public Private Partnership to design, construct, operate, maintain and finance a cross regional passenger rail service known as the Cotton Belt Rail Line starting on or about 2013.   

The Cotton Belt Rail Line PPP project is intended to provide regional rail connectivity for communities along the project corridor to Fort Worth, Dallas-Fort Worth (DFW) Airport, the DART transit network, and major activity centers along the corridor.  This project connects passengers with the Trinity Railway Express service in downtown Fort Worth, and the DART Light Rail System via the Orange Line at DFW Airport, the Green Line in downtown Carrollton, and the Red Line in the Richardson/Plano area.  It also connects with the Addison Transit Center which provides extensive bus connectivity in the north central part of the DART Service Area.  A future connection in downtown Carrollton to the planned Denton County Transportation Authority passenger rail service between Denton and Carrollton, TX is also a possibility.  One of the objectives of the Cotton Belt Rail Line project is to provide a system that interacts seamlessly and efficiently with other transportation systems in the region.

On May 21, 2009 DART and The T issued a Request for Information to identify individuals and firms interested in a PPP for the Cotton Belt Commuter Rail Line and expect to issue a Request for Qualifications (RFQ) by September 2009.  The deadline for filing a Statement of Interest was July 24, 2009. Visit DART's website or check back here for more info.