NTE Segments 3A & 3B Project Reaches Financial Close

The North Tarrant Express Segments 3A & 3B Project (Project) reached financial close earlier today.  The Project will provide over $1.5 billion of needed infrastructure to the Fort Worth area, as well as operations and maintenance over the next several decades.  The Project will expand Interstate 35W in north Fort Worth, one of the region’s top priorities for congestion relief.  Segments 3A and 3B are the primary focus of the North Tarrant Express Master Development Plan, and will add approximately 10 miles of I-35W to the North Tarrant Express project.

Pursuant to the agreement between TxDOT and NTE Mobility Partners Segments 3 LLC (Developer), which reached commercial close last March, Developer will design, build, operate and maintain Segment 3A - the portion of the road from I-30 to Loop 820.  TxDOT will build Segment 3B - the portion of the road from north of Loop 820 to U.S. 287 at an estimated cost of $234 million, prior to turning it over to Developer.  Developer will be responsible for the operation and maintenance of the facility and will collect the tolls generated on the managed toll lanes of the facility until 2061.

Private funding for the project consists of a combination of a $531 million loan under the Transportation Infrastructure Finance and Innovation Act (TIFIA), $274 million in private activity bonds and approximately $430 million in private equity, totaling in excess of $1.2 billion.  The average interest rate on the private activity bonds (PABs) is 6.87% per annum, while the TIFIA interest rate is 3.84% per annum.  The underwriters for the PABs are JP Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc. and Estrada Hinojosa & Company, Inc.

Work under the agreement includes rebuilding existing lanes and adding two managed toll lanes in each direction of I-35W from north of Interstate 30 near downtown Fort Worth to the U.S. 287 split south of Alliance Airport.  Construction could begin by fall-2013 and be substantially completed by mid-2018.  The agreement for the NTE Segments 3A & 3B Facility is available on TxDOT’s website.

Shortlist Announced for Caltrans and Metro ARTI Project

On September 10, 2013, the California Department of Transportation (“Caltrans”) in cooperation with the Los Angeles County Metropolitan Transportation Authority (“Metro”), announced the shortlist for the Accelerated Regional Transportation Improvements (“ARTI”) Project. 

The Project, located in Los Angeles County, includes the development of one high-occupancy toll lane in each direction along Interstate 5 (“I-5”) North from the SR 14 freeway to Parker Road; the design, reconstruction, rehabilitation and maintenance of the pavement of all lanes of the same segment of I-5 North; the development of a segment of the existing SR 71 from the I-10 in Los Angeles County to the San Bernardino County line to expand it to an 8-lane freeway with three general purpose lanes and one high-occupancy vehicle lane in each direction; and the design and construction of approximately 44,800 linear feet of soundwalls at various locations along Interstate 210, SR 170, and Interstate 405.

The shortlisted teams were selected based on statements of qualifications submitted on July 19, 2013 in response to a request for qualifications issued by Caltrans in cooperation with Metro on May 31, 2013. 

The four shortlisted teams are:

Accelerate LA

HOCHTIEF, Skanska, InfraRed Capital Partners, Flatiron, Parsons Transportation Group, Cofiroute

Accelerate Los Angeles

Macquarie Capital Group Limited, Michael Baker Jr., Inc., Granite Construction Company, Roy Jorgensen Associates, Inc.

LA Accelerated Mobility Partners

Meridiam Infrastructure, Edgemoor Infrastructure & Real Estate, Walsh Investors L.L.C., Walsh Construction Company, Clark Construction Group, AECOM, Atkinson Contractors, Transfield Services Infrastructure

LA Mobility Partners

Fluor Enterprises, Balfour Beatty, Parsons Brinckerhoff, C.C. Myers, Inc., DBi Services

 

More information on the ARTI Project can be found at the project website.

Tristan Robinson co-authored this entry.
 

Riverside County Transportation Commission Closes on Billion Dollar Finance Plan for the SR-91 Project

Commuters using the heavily congested SR-91 corridor between Riverside and Orange County in Southern California can enjoy an early July 4th celebration—on July 3, 2013, the Riverside County Transportation Commission closed on a billion dollars of financing for the SR-91 project which will provide needed relief of congestion in the corridor when the project is completed in May of 2017.  RCTC achieved financial close on the project less than 60 days after awarding the design-build contract for the project to a joint venture of Atkinson/Walsh.  The SR-91 corridor improvement project includes an eight-mile extension of the highly successful SR-91 Express Lanes operated by the Orange County Transportation Authority, the first all-electronic toll collection facility in the United States.  The two counties have entered into a cooperative agreement to coordinate the development and operation of the two express lanes projects.  The project also involves adding two new general purpose lanes in Riverside County, one in each direction.

The finance plan optimizes an innovative combination of toll road revenue bonds, sales tax revenue bonds, a subordinate TIFIA loan, as well as the use of sales taxes on a pay-go basis during the construction period.  The toll road revenue bonds are sold in two series—the Series A bonds are current interest bonds in the principal amount of $123,825,000 maturing June 1, 2048, the Series B bonds are capital appreciation bonds in the initial outstanding amount of $52,829,601.60 maturing June 1, 2043.  Both series received investment grade ratings from Fitch and S&P.  The sales tax revenue bonds are made up of serial bonds with maturities ranging from 2018 to 2033 and a term bond maturing June 1, 2039; Fitch, S&P and Moody’s assigned ratings in the “AA” category to the sales tax revenue bonds.
 
The TIFIA loan is in the initial principal amount of $421,054,409, and, despite the run up in US Treasury bond rates in recent weeks, was assigned an interest rate of 3.47% and matures June 1, 2051 or the last payment date occurring no later than 35 years after the Substantial Completion Date, whichever date is earlier.  The TIFIA loan is subordinate in lien priority to the senior toll road revenue bonds except if a bankruptcy related event occurs in which case the TIFIA loan “springs” to parity with the senior bonds.

Lead investment bankers for the toll road revenue bonds and the sales tax revenue bonds are Goldman and BofA Merrill Lynch; Nossaman LLP acts as special counsel to RCTC in connection with the design/build contract and negotiation and closing of the TIFIA loan.

Shortlist Announced for FDOT I-4 Ultimate Project

On June 5, 2013, the Florida Department of Transportation (“FDOT”) announced the shortlist for the proposed I-4 Ultimate Project in Orange and Seminole Counties.

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 project adds four tolled express lanes to I-4 while maintaining the existing free general use lanes.

The shortlisted teams were selected based on qualification statements submitted on April 19, 2013 in response to the request for qualifications (“RFQ”) issued by FDOT on March 8, 2013.

The four shortlisted teams and their respective members are:

4wardPartners

  • VINCI Concessions S.A.S.
  • Meridiam Infrastructure I-4 Ultimate, LLC
  • Walsh Investors, LLC

I-4 Development Partners LLC

  • Macquarie Capital Group Limited
  • OHL Concesiones S.A.
  • FCC Construccion S.A.

I-4 Mobility Partners

  • Skanska Infrastructure Development Inc.
  • John Laing Investments Limited

Ultimate Mobility Partners

  • InfraRed Capital Partners Limited
  • Fluor Enterprises, Inc.
  • Kiewit Infrastructure South Co.

A press release may be found at the I-4 Ultimate Project website.

Caltrans and Metro Issue Request for Qualifications for the Accelerated Regional Transportation Improvements Project

The California Department of Transportation (“Caltrans”), in cooperation with the Los Angeles County Metropolitan Transportation Authority (“Metro”), issued on May 31, 2013 a Request for Qualifications (“RFQ”) for teams interested in submitting Statement of Qualifications (“SOQs”) to design, build, finance, operate and maintain the Accelerated Regional Transportation Improvements Project (the "ARTI" Project) through a public-private partnership (“P3”) agreement with Caltrans. 

The ARTI Project consists of six elements, all of which are located in Los Angeles County, including: the development of one high-occupancy toll (“HOT”) lane in each direction along Interstate 5 (“I-5”) North from SR 14 freeway to Parker Road; the design, construction, rehabilitation and maintenance of the pavement of all lanes on the SR 14 to Parker Road segment of I-5 North; the reconstruction of the existing SR 71 from Mission Boulevard in to Interstate 10 (“I-10”) to provide four general purpose lanes and one high-occupancy vehicle (“HOV”) lane in each direction, one interchange, two grade separated rail crossings, and three arterial undercrossings;  the reconstruction of the existing SR 71 from SR 60 to Rio Rancho Road to provide three general purpose lanes and one HOV lane in each direction, one interchange, one arterial undercrossing, frontage roads, and one pedestrian overcrossing; the design and construction of approximately 16,300 linear feet of soundwalls at various locations along Interstate 210 (“I-210”) freeway; and the design and construction of approximately 28,500 linear feet of soundwalls along SR 170 and Interstate 405 ("I-405") freeways. 

The RFQ and related Project documents are available from Metro’s procurement website.

Tristan Robinson co-authored this entry.

Orange County's Transportation Corridor Agencies Name New CEO

The Transportation Corridor Agencies recently named Neil Peterson the new CEO as of June 3.  A transportation industry veteran, Mr. Peterson succeeds Tom Margro, who retired last year.  TCA's Chief Communications Officer Lisa Telles has been acting CEO since Mr. Margro's retirement and will resume her role as CCO on June 3.

Mr. Peterson has a long history in the industry and joins TCA from CH2M Hill where he was a senior transportation strategy consultant.  Prior to that, he worked at Booz, Allen & Hamilton and served as executive director of the Los Angeles County Transportation Commission and chief executive of public transportation systems in Seattle and Oakland. 

Mr. Peterson is also the founder of the non-profit Edge Foundation and was the founding CEO of the car-sharing company Flexcar, now named Zipcar.

For more information, visit TCA’s website.

TxDOT Achieves Commercial Close on the $845 Million I-35E Managed Lanes Project

On May 17, 2013, the Texas Department of Transportation and AGL Constructors reached commercial close on the design-build and capital maintenance agreements for the I-35E Managed Lanes Project.  AGL Constructors is a joint venture comprised of Archer Western Contractors, LLC, Granite Construction Company and The LANE Construction Company. AGL Constructors was conditionally awarded the contract in December 2012, and was one of four teams the Texas Department of Transportation shortlisted for the project in early 2012.

The I-35E Managed Lanes Project is the first phase in a multi-phase program to relieve traffic congestion along an existing 28-mile corridor of I-35E in Dallas and Denton Counties. The scope of the $845 million design-build contract includes the design and construction of tolled managed lanes, general purpose lanes, collector-distributor roads and bridges. The scope of the capital maintenance agreement includes the optional long-term maintenance of the project’s managed lanes component.  The capital maintenance agreement consists of up to three optional five year terms.
 

Contract Award for Riverside Extension of SR-91 Express Lanes

On May 8th, 2013, the Riverside County Transportation Commission (RCTC) approved a $632 million dollar design-build contract for the SR-91 Corridor Improvement Project.  The design-builder is a joint venture between Atkinson Contractors, LP and Walsh Construction Company.  URS is the team’s lead designer.

RCTC had previously pre-qualified 4 teams for the project and issued the RFP on July 26, 2012:  The 4 pre-qualified teams were:  Atkinson/Walsh, a joint venture; Flatiron/Skanska/Rados, a joint venture; Shimmick/Obayashi/FNF, a joint venture; and Kiewit Infrastructure West.

RCTC’s selection of the Atkinson/Walsh joint venture was the culmination of a best value procurement and evaluation of proposals received from the four prequalified proposers.  The best value selection criteria included the combination of a net present value price score and a technical proposal score as well as an adjustment to the price score based on completion schedule.  Atkinson/Walsh’s design and construction price is $140 million lower than RCTC’s engineer’s estimate.  In addition, all proposers proposed a schedule duration of 1218 days, 10 months earlier than the outside completion deadline set by RCTC.

The project is being developed under California’s Design-Build Demonstration Program authorized by legislation passed in 2009.  The project will widen State Route 91 with the addition of new freeway lanes, toll/express lanes extending the existing SR-91 express lanes into Riverside County, expanded freeway-to-freeway connectors and better access to and from the freeway at congested locations.  The toll lanes will connect to the existing SR-91 Express Lanes operated by Orange County Transportation Authority and provide drivers with a seamless tolled express lane from I-15 to SR-55.  RCTC is developing the project in cooperation with Caltrans.  Upon completion of the project, RCTC will operate and maintain the toll facilities for a period of 50 years.

The project will be financed through a combination of toll revenue bonds, sales tax bonds and an approximately $416 million dollar TIFIA loan from USDOT. 

Corey Boock co-authored this entry.

FDOT Receives SOQs for I-4 Ultimate Project

The Florida Department of Transportation (FDOT) announced on April 19, 2013 that it accepted Statements of Qualifications (SOQs) from seven proposers in response to a Request for Qualifications for the I-4 Ultimate Project.  The list of proposer teams may be found at the I-4 Ultimate Project website.

The project involves the reconstruction of over 21 miles of I-4 in Orange and Seminole Counties, including 19 major interchanges, 56 new bridges and 71 bridge replacements, and the addition of two managed toll lanes in each direction.  The estimated cost of the project is approximately $2.1 billion. 
 
The I-4 is often considered the backbone of surface transportation in Central Florida.  It provides a crucial link between Tampa on the west coast and Daytona Beach on the east coast, as well as serving the Orlando Metro area, one of the world's most popular travel destinations.  The I-4 Ultimate Project seeks to alleviate congestion by adding managed lanes and improving access to and from the interstate. 
 
The project is being procured as a public-private partnership, through an anticipated 40-year design, build, finance, operate and maintain (DBFOM) concession agreement.   The Concessionaire will receive availability payments throughout the operating period, and FDOT assumes the traffic revenue risk.  This is only the fifth highway P3 in the United States to adopt an availability payment structure.
 
Next month, FDOT is expected to short-list at least three and as many four proposers, who will have the opportunity to submit their proposals in early 2014.   The successful proposer is anticipated to be selected in the spring of 2014. 

TxDOT Executes Agreement for Grand Parkway Project

Texas Department of Transportation (TxDOT) executed agreements on March 22 for the development of the SH 99 Grand Parkway project with Zachry-Odebrecht Parkway Builders, JV, a joint venture comprised of Zachry Construction Corporation and Odebrecht Construction Inc.  The agreements provide for the design, construction and long-term capital maintenance of the Grand Parkway project, a 38 mile, greenfield toll road in Houston.

Project Details

The high-priority project reaching final award consists of Segments F-1, F-2 and G of the Grand Parkway, part of a proposed 180+ mile highway, encircling the Houston area. The larger Grand Parkway has been shown on governmental planning documents since the early 1960's.  A few of the other segments of the Grand Parkway are being developed using traditional construction contracts. Segments D and E are currently under construction and Segment I-2 and portions of Segment D are already open to traffic. 

Procurement

In September 2012, Zachry-Odebrecht Parkway Builders was determined to be the apparent best value proposer and conditionally awarded the design-build and capital maintenance agreements.  The best value selection criteria included price, technical and schedule scores. Zachry-Odebrecht's proposed design and construction price is $1.07 billion, including $30 million in options.TxDOT's construction cost estimate exclusive of design was $1.160 billion.  In addition, Zachry-Odebrecht proposed the fastest schedule at 842 days, which is 150 days earlier than the outside deadline set by TxDOT.  The award to Zachry-Odebrecht was conditioned upon successful completion of negotiations and finalization of the agreements, as well as compliance with various legislative conditions to execution of the agreements. The necessary approvals, including a determination of legal sufficiency from the Attorney General's office, were received by TxDOT earlier last week.

Financing

It is anticipated that approximately $3 billion in revenue bonds will be issued in connection with the financing for Segments E, F-1, F-2 and G of the Grand Parkway. In addition, TxDOT has applied for a TIFIA loan.  Financial close is anticipated to occur in May.

Florida Department of Transportation Issues Request for Qualifications for the I-4 Ultimate Project

On March 12, 2013, the Florida Department of Transportation (FDOT) issued a press release regarding their publication of a Request for Qualifications (RFQ) soliciting statements of qualifications from prospective private entities for development and implementation of a public-private partnership for the $2 billion+ Orlando-area project.  FDOT is seeking a private firm that is experienced in designing, building, financing, operating and maintaining both general use and managed lane roadways.   

The I-4 Ultimate Project will be structured as an availability payment transaction.  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 and adds four tolled Express Lanes to I-4 while maintaining the existing free general use lanes.  As currently contemplated by FDOT, the project includes reconstruction of 15 interchanges, 56 new bridges and 68 bridge replacements.   

The release of the RFQ follows the industry forum held on March 4, 2013 which had over 1,200 industry participants in attendance.  Statements of qualifications are due on March 29, 2013. 

TxDOT Executes Agreement for North Tarrant Express Segments 3A & 3B

Texas Department of Transportation (TxDOT) officials executed a Facility Agreement  with NTE Mobility Partners Segments 3 LLC (Developer) on March 1 for Segments 3A and 3B of the North Tarrant Express project in northeast Tarrant County.  The agreement provides for the expansion of Interstate 35W in north Fort Worth, one of the region’s top priorities for congestion relief.  Segments 3A and 3B are the primary focus of the North Tarrant Express Master Development Plan, and will add approximately 10 miles of I-35W to the North Tarrant Express project.

Pursuant to the Facility Agreement, the Developer will finance, design and build Segment 3A (the 6.5 mile portion of the road from I-30 to north of I-820) and TxDOT will build Segment 3B (the 3.3 mile section from north of I-820 to North Tarrant Parkway). The Developer will then be responsible for operation and maintenance of both segments, and will collect tolls generated on the managed toll lanes until 2061. Work under the agreement includes rebuilding existing lanes and adding two managed toll lanes in each direction of I-35W from north of Interstate 30 near downtown Fort Worth to the U.S. 287 split south of Alliance Airport.  Construction is expected to begin by mid-year and scheduled to be substantially completed by mid-2018.

The project will provide over $1.5 billion of needed infrastructure to the Fort Worth area, as well as operations and maintenance over the next several decades. The estimated funding sources for the project delivery include $270 million of private activity bonds,  $530 million subordinated Transportation Infrastructure Finance and Innovation Act (TIFIA) loan and a $440 million equity contribution from the Developer, as well as construction and funding commitments from TxDOT and the North Central Texas Council of Governments of $330 million.

The executed agreement for the NTE Segments 3A & 3B Facility is available on TxDOT’s website.

Florida Department of Transportation Sets Date for I-4 Industry Forum

The Florida Department of Transportation has scheduled an industry forum for the I-4 Ultimate Project.  The forum will be held on March 4, 2013 to introduce this $2 billion+ Orlando-area project.  The project will add two managed lanes in each direction from west of Kirkman Road in Orange County to the east of SR 434 in Seminole County, a distance of 21.1 miles.  As currently contemplated by FDOT, the project includes reconstruction of 15 interchanges, 56 new bridges and 68 bridge replacements and will be procured as a public-private partnership. 

The forum is intended for all those interested in participating in the development, design, construction, financing, operations and maintenance of the project.  The forum will include a series of presentations on the project scope, procurement timeline, procurement process, traffic and revenue, and financing information for the project.  One-on-one meetings for interested proposer teams are scheduled for March 5th and 6th.  The forum and the one-on-one meetings will be held at the Rosen Centre Hotel, 9840 International Drive, Orlando, Florida.  FDOT has established a website for the project at: www.moving-4-ward.com for those seeking more information or to request a one-on-one meeting after the forum.

Things Are Getting HOT on Los Angeles Freeways

On Saturday November 10, the California Department of Transportation (“Caltrans”) and Los Angeles County Metropolitan Transportation Authority (“MTA”) converted the I-110 Harbor Transitway lanes (“ExpressLanes”) from High Occupancy Vehicle (“HOV”) or carpool lanes to High Occupancy Toll (“HOT”) lanes.  The ExpressLanes, extending from Harbor Gateway Transit Center to Adams Boulevard, are part of a one-year demonstration program that seeks to introduce congestion pricing to the I-110 freeway, and later the I-10 freeway.  This conversion follows a growing trend in California, as well as many other states such as Virginia, North Carolina, Texas, Florida and Colorado, in implementing HOT lanes to alleviate high congestion corridors.

The ExpressLanes are equipped with 14 entry and exit points to the general purpose lanes, allowing single-occupancy drivers to access carpool lanes by paying a toll that fluctuates based on current traffic levels.  Each driver intending to utilize the new HOT lanes must purchase a transponder that will charge tolls electronically. 

With expected tolls between $0.25 and $1.40 per mile, aggregate gross revenues from the I-110 and later I-10 are projected at approximately $20 million per year.  Per its application to the US Department of Transportation for its grant to develop through the Congestion-Reduction Demonstration Initiatives Program, MTA proposes to use excess toll revenues to subsidize transit service as an alternative to drive alone transportation. 

The demonstration program comes 18 years after Geoff Yarema, Nossaman LLP partner and former Infrastructure Practice Group Chair, proposed essentially this same innovation for the I-110 in a 1994 article entitled “Trying Out Congestion Pricing in Los Angeles: A Low-Risk Proposal for the Harbor Freeway Transitway.”  Citing authority from sources such as the Environmental Defense Fund, the Union of Concerned Scientists and the National Science Foundation, Mr. Yarema touted the benefits of pricing roadway capacity according to demand, drawing parallels with pricing models for electrical and telephone services.  This conversion will be the first example of roadway pricing in the County of Los Angeles.

Texas' New P3 Toll Road Project Open to Traffic

The Texas Department of Transportation (TxDOT) and SH 130 Concession Company have announced the opening of Central Texas' newest toll road on October 24.  SH 130 Segments 5&6 is a 41-mile extension of the existing 50-mile SH 130 toll system that currently connects Georgetown to South Austin.  The new toll road extension starts at Mustang Ridge, spanning three counties and ending at Interstate 10 near Seguin. 

The new toll road is entirely automated, and will be fully interoperable with the existing SH 130 toll system so that travel between various segments will be seamless.  The new roadway will operate without tolls until November 11, the anticipated date of Service Commencement.  Toll rates will initially be around 15 cents a mile for cars and two-axle trucks, and may be adjusted annually based on GDP increases.

SH 130 Segments 5&6 is the State's first toll road concession, developed and constructed over the past six years through a public-private partnership with the SH 130 Concession Company.  The new toll road represents a $1.3 billion private investment in the state's transportation system, and also provides the state with a share of the toll revenues to be used for other regional mobility improvements.

Texas Department of Transportation Has Reached Tentative Deal to Expand I-35W

The Texas Department of Transportation (TxDOT) has reached a tentative, $1.6 billion deal with a private developer to expand Interstate 35W in north Fort Worth.  According to a report released by TxDOT in late August, the stretch of I-35W in northern Tarrant County that is the subject of the agreement is the most congested roadway in the state - causing motorists to collectively waste more than 2 million hours.  The deal between TxDOT and the developer, an affiliate of the entity that is currently developing the $2.5 billion North Tarrant Express project in northeast Tarrant County, will add approximately 10 miles of I-35W to the North Tarrant Express work. 

Pursuant to the agreement, the developer will design, build, operate and maintain Segment 3A - the portion of the road from I-30 to Loop 820. TxDOT will build Segment 3B - the portion of the road from north of Loop 820 to U.S. 287 at an estimated cost of $234 million, prior to turning it over to the developer.  The developer will be responsible for the operation and maintenance of the facility and will collect the tolls generated on the managed toll lanes of the facility until 2061.

There are a number of sources of funding for the project.  According to TxDOT, the North Central Texas Council of Governments has committed $89.5 million, as well as a possible additional $40.5 million for project contingencies.  The U.S. Transportation Department has invited the developer to apply for a federal loan of up to $537 million under the Transportation Infrastructure Finance and Innovation Act (TIFIA).  The developer will contribute $273 million in private activity bonds and $446 million in equity to the project. 

Work under the agreement includes rebuilding existing lanes and adding two managed toll lanes in each direction of I-35W from north of Interstate 30 near downtown Fort Worth to the U.S. 287 split south of Alliance Airport.  The parties intend to execute the agreement by early 2013 and the construction could begin by mid-2013 and be substantially completed by mid-2018.  The draft agreement for the NTE Segments 3A & 3B Facility is available on TxDOT’s website

Fred Kessler co-authored this entry.

The Texas Transportation Commission Selects Apparent Best Value Proposer for Grand Parkway Project

The Texas Transportation Commission selected the apparent best value proposer for the design, construction and long-term capital maintenance of the Grand Parkway project, a 37-mile, greenfield toll road in Houston. The high-priority project awarded on Thursday consists of Segments F-1, F-2 and G of the Grand Parkway, part of a proposed 184-mile highway, encircling the Houston area. A few of the other, smaller segments of the Grand Parkway are being developed using traditional construction contracts. Segments D and E are currently under construction and Segment I-2 is already open to traffic.

Four short-listed proposers submitted technical proposals on August 15 and price proposals on August 22.

  • FBW, a consortium comprised of Fluor, Balfour Beatty Infrastructure and Williams Brothers;
  • Kiewit-Granite Parkway Constructors, a joint venture between Kiewit Texas Construction, Granite Construction Co. and Texas Sterling;
  • Spring Creek Constructors, a joint venture between J.D. Abrams, FCC Construccion, The Lane Construction Company and Shikun & Binui; and
  • Zachry-Odebrecht Parkway Builders, a joint venture comprised of Zachry Construction Corporation and Odebrecht Construction Inc.

Zachry-Odebrecht Parkway Builders was determined to be the apparent best value proposer and conditionally awarded the design-build and capital maintenance agreements. The best value selection criteria included price, technical and schedule scores. According to the RFP, TxDOT's construction cost estimate exclusive of design was $1.160 billion. Zachry-Odebrecht's proposed design and construction price is $1,007,053,000, resulting in significant cost savings. In addition, Zachry-Odebrecht proposed the fastest schedule with completion approximately 7 months earlier than the outside deadline set by TxDOT.

The award to Zachry-Odebrecht is conditioned upon successful completion of negotiations and finalization of the agreements, as well as compliance with various legislative conditions to execution of the agreements. Commercial close is anticipated to occur at the end of the year.

Indiana Toll Road Debate Sparked by Bingaman Amendment

Governor Mitch Daniels of Indiana and Senator Jeff Bingaman of New Mexico exchanged comments regarding Indiana’s privatization of 157 miles of toll roads through two articles that appeared in The Washington Post, titled “Indiana didn’t ‘sell its toll roads” and “Taxpayers paying for roads – twice”.  This exchange concerns the Senator's proposal to, among other provisions, remove lane miles which are under a long-term PPP lease agreement from the formula which generates federal gas tax dollars to the states.  If Senator Bingaman's proposal were to become law, Indiana's groundbreaking long-term lease of the Indiana Toll Road (“ITR”) in 2006 to a private entity which generated over $4 billion of upfront money for needed state transportation improvements, as well as over $4 billion of improvements to the ITR, would cause the Hoosier state to take the biggest hit. 

It's important in this debate to highlight what may be the unique circumstances under which the ITR was initially paid for and then added to the federal interstate system; but the Governor's broader point about the role of the federal government in encouraging private investment and innovation rather than squelching such efforts should resonate in every statehouse.

Shortlist Announced for TxDOT's IH 35E Managed Lanes Design-Build Project

On April 26, 2012, the Texas Department of Transportation (“TxDOT”) announced the shortlist for the proposed IH 35E Managed Lanes Project in Dallas and Denton Counties.  The shortlisted teams were selected based on qualification statements submitted on March 23, 2012 in response to the request for qualifications (“RFQ”) issued by TxDOT on January 23, 2012.

The RFQ solicited separate qualification statements from teams with experience in design-build and toll concession contracting.  TxDOT decided to move forward with the design-build alternative with a capital maintenance option.  The four shortlisted teams and their respective equity members are:

AGL Constructors
-  Archer Western Contractors, LLC
-  Granite Construction Company
-  The LANE Construction Company

Dallas to Denton Constructors
-  Zachry Construction Corporation
-  SNC-Lavalin Inc.

IH 35E Infrastructure
-  Ferrovial Agromán S.A.
-  Webber, LLC
-  Texas Sterling Construction Co.

Northern Link Constructors
-  Fluor Enterprises, Inc.
-  Balfour Beatty Infrastructure, Inc.
-  Kiewit Infrastructure South. Co.

IH 35E serves the rapidly growing areas of southern and central Denton County, as well as major Dallas suburbs.  Since it opened as part of the original national interstate program almost 50 years ago, the northern portion of the corridor has been under a constant state of maintenance, upgrade, expansion, evaluation, planning, design and construction.

On February 23, 2012, TxDOT announced the shortlist for the Grand Parkway Project Design-Build Project and on March 29, 2012, TxDOT announced the shortlist for the Horseshoe Design-Build Project.

Sid Jiménez co-authored this entry.

North Carolina Shortlists Four Teams for HOT Lanes Project

On March 30, 2012, the North Carolina Department of Transportation (NCDOT)  shortlisted four teams for its I-77 HOT Lanes Project located in the Charlotte-Mecklenberg area.

The I-77 HOT Lanes Project is the first road transportation infrastructure project under a pubic-private partnership (P3) delivery model in North Carolina and will set the precedent for the use of P3s to implement HOT lanes projects in the state.  NCDOT anticipates that partnership with the private sector, and the innovative funding strategies that private sector funding brings, will more quickly and more efficiently bring this project to completion and introduce new approaches to managing a traffic corridor in a region of the state that has seen tremendous growth and with it heavy commuter congestion.  NCDOT invites the contemporary dynamic tolling technology within the HOT lanes approach, which it anticipates will improve corridor safety and reduce what has been an elevated number of secondary crashes during peak hour congestion.

The project consists of three sections: Central Section, South Section, and North Section.   The project will involve the conversion of existing high occupancy vehicle (HOV) lanes to high-occupancy toll ("HOT") lanes, and the addition of HOT lanes along the I-77 corridor.  The chosen team will develop, design, build, finance, operate, and maintain the Project through a toll concession agreement.

The shortlisted teams are:

  • The Charlotte Access Mobility Group (ACS Infrastructure Development, Inc. and InfraRed Capital Partners Limited), partnering with Dragados U.S.A., Inc. and United Infrastructures Group, Inc., as the joint-venture builder with Florence & Hutcheson, Inc. as the designer.
  • Cintra Infraestructuras, S.A., partnering with Ferrovial Agroman, S.A. and W.C. English, Inc., as the joint-venture builder with the Louis Berger Group, Inc. as the designer.
  • Metrolina Development Partners (OHL Concessiones, S.A.), partnering with the Lane Construction Corporation and Obrascón Huarte Lain, S.A., as the joint-venture builder with HDR Engineering, Inc. as the designer.
  • Char-Meck Development Partners (Vinci Concessions, S.A.S.), partnering with Archer Western Constructors, L.L.C. and Blythe Construction, Inc., as the joint-venture builder with Parsons Transportation Group as the designer.

The anticipated procurement schedule is for issuance of the final request for proposals in the second quarter of 2012 with award and execution of the comprehensive P3 agreement by year’s end.

Simon Santiago co-authored this entry.

TxDOT Issues Request for Qualifications for US$4.4 Billion IH 35E Managed Lanes Project

On January 23, the Texas Department of Transportation (TxDOT) issued a Request for Qualifications (RFQ) soliciting qualifications from private developers interested in entering into a design-build contract and capital maintenance agreement and/or a toll concession agreement for the IH 35E Managed Lanes Project. The RFQ provides prospective developers the opportunity to submit qualifications for one or both of the two public-private partnership (P3) methods. Qualification submittals for the project are due March 23, 2012.   

IH 35E serves the rapidly growing areas of southern and central Denton County, as well as major Dallas suburbs. Since it opened as part of the original national interstate program almost 50 years ago, the northern link of the corridor has been under a constant state of maintenance, upgrade, expansion, evaluation, planning, design, and construction.    

The goal of the proposed $4.4 billion high-priority project is to rebuild the 28-mile section of IH 35E from IH 635 in Dallas County to US 380 in Denton County, and provide managed lanes that feature dynamic pricing to keep traffic moving at 50 mph. Almost $600 million in funding has been identified, with most coming from $535 million in regional toll revenue funds dedicated to Denton County.

TxDOT received authority from the 82nd Texas Legislature under Senate Bill 1420 to develop the IH 35E Managed Lanes Project and 10 other specific projects using P3s. The Texas Transportation Commission authorized TxDOT to issue an RFQ for the Project on Sept. 29, 2011. 

Get Smart Part II: If Managed Lanes Can Work in the South, Why Not the North?

Our October 21 blog on managed lanes projects in Southern California talked about how three county transportation agencies are expanding on the success of the SR91 Express Lanes in Orange County, Calif., by using managed lanes to further relieve congestion and improve mobility in the region.  Not to be outdone by its Southern California cousins, the Metropolitan Transportation Commission (MTC), the transportation planning and funding agency for the nine-county San Francisco Bay Area, just received the blessing of the California Transportation Commission (CTC) to develop and operate a value pricing program that will involve either the conversion of existing HOV lanes or the development of new HOT lanes.  As with the Southern California setting, several Bay Area agencies are already developing and operating HOT lanes in their jurisdictions.  MTC’s application is the last that will be processed under California’s HOT lanes demonstration program, which expires at the end of this year, and authorized four HOT lanes projects (the RCTC and LA Metro express lanes projects described in our last entry secured the two Southern California slots under this legislation).

MTC’s goal in pursuing the HOT lanes application is to fill in the “gaps” in the HOT lanes network by converting 149 miles of existing HOV lanes to HOT lanes and adding 116 miles of new HOT lanes to create a seamless experience for the motorist.  According to a detailed cost-benefit analysis, implementation of the program could produce benefits equal to over 3.3 times the costs of developing the network, achieved primarily from travel time savings and emission reductions.  MTC estimates that—depending on the availability of funding and the timing of the permitting process—delivery of the new network will occur between 2015 and 2030.  The Bay Area Toll Authority, which operates the seven state-owned toll bridges in the region, is likely going to be the toll collection entity.  MTC anticipates utilizing a variety of funding sources, including senior toll road revenue bonds, TIFIA loans, local contributions, and grant funds to pay for the $3.5 to $4.3 billion capital costs of the program.

MTC’s application acknowledges that there is still a fair amount of work ahead to implement the program, including the execution of agreements with the California Department of Transportation (the network will be built in state right of way), FHWA (several of the projects involve tolling federal interstates), and county transportation agencies (integration of the new/converted lanes into the existing projects).  And MTC will be looking at the optimal delivery approach for design, construction, operations, and financing.

Get Smart: How Three Transportation Agencies Are Using Managed Lanes to Reduce Congestion

Southern California can’t say it’s “number one” when it comes to having the worst traffic congestion in the country, but it’s a huge economic and social problem for the region which three Southern California transportation agencies are addressing through the use of managed lanes.  That’s what we recently learned at the Women’s Transportation Seminar presentation on October 14, 2011.

On a panel moderated by Rick Backlund, an FHWA region official, we heard from Rose Casey, Program Manager for the Orange County Transportation Authority; Stephanie Wiggins, Executive Officer with LA Metro; and Michael Bloomquist, Toll Program Director for the Riverside County Transportation Commission.  After hearing a brief history of managed lanes from the first HOV lanes in the early 1960s to the first all-electronic toll facility which opened in the early 1990s, Casey briefed the audience on one of the largest highway projects in Southern California, the widening of I-405 (or “the 405” if you are from Southern California) between SR55 and I-605.  With a capital cost of between $1.3 and $1.7 billion the project is expected to have a large funding gap, even if the express lanes alternative is selected by the OCTA board (the express lanes is one of three alternatives the authority is studying during the environmental process).  As to the feasibility of a tolled alternative, Casey alluded to the positive experience of the SR91 Express Lanes in Orange County which extend east to the Riverside County line, the first all electronic toll facility in the United States.

Bloomquist picked up on Casey’s presentation by describing RCTC’s efforts to develop and finance the extension of the SR91 Express Lanes from the Orange County border to I-15, as well as the plan to add express lanes to the I-15 to create an express lanes network (note: San Diego County is already operating an express lanes project on I-15 south of the proposed RCTC project—maybe someday there could be a connection between the facilities in the two counties??)  RCTC’s plan would be to leverage off of a significant commitment of local sales tax dollars and a TIFIA loan to issue toll road revenue bonds to finance this billion dollar project which includes new general purpose lanes.  To piggyback on the success of the SR91 Express Lanes project in Orange County, RCTC and OCTA have nearly finalized a co-op agreement for the new project that would take advantage of a common toll collection system and operator, would combine marketing efforts, and would coordinate toll policy.

The LA Metro project presented by Wiggins is the farthest along of the three projects.  Taking advantage of a $210 million federal grant, LA Metro is converting several miles of HOV lanes along the I-110 and I-10 leading into and out of downtown Los Angeles into HOT lanes.  Net tolls would be reinvested in transit and additional HOV improvements in the Los Angeles County area.  A common complaint about managed lanes is how they may adversely affect low income drivers.  To address this concern, LA Metro conducted a toll equity study and has agreed to offer toll discounts as well as a waiver of account maintenance fees to qualified individuals.

These three regional transportation agencies are building upon the success of previous managed lanes projects to work smarter to increase capacity in one of the most congested and physically contrained highway systems in the country.

Study Advances Efforts to Achieve Nationwide Inter-State Toll Interoperability

On October 24, 2011, the Alliance for Toll Interoperability (ATI), an organization of more than 40 toll road operators founded in 2007 for the purpose of promoting and implementing interstate interoperability, will commence pilot operations for four license plate interoperability hubs.  Pursuant to the Interoperability Network Pilot Program (INPP), separate hubs established by four vendors (ACS [a subsidiary of Xerox ], Federal Signal, Cofiroute USA, and Secure Interagency Flow [a CS/Egis joint venture]) will receive license plate data from six tolling agencies (E470 in Colorado, Florida Turnpike Enterprise, Maryland, North Texas Tollway Authority, Oklahoma Turnpike, and Washington State DOT) on a daily basis.  Hub operators are in turn expected to provide a response with matches of account information on a daily basis.

Pilot operations will test the vendors’ respective abilities to interchange data between the six independent toll operators.  The data would facilitate a toll operators’ use of license plate images generated by its gantry-mounted cameras to identify out-of-area motorists that do not have a transponder account with the toll operator’s facility.

According to ATI, the INPP, expected to continue for approximately three months, will permit selection of one or more operators for a clearinghouse or hub that will provide customers with the ability to utilize a single account to pay for their services.  While the hub(s)’ initial effort will be exchange of license plate image data, the focus may be expanded to cover out-of-area transponder toll clearance.  If successful, the project ultimately will increase the ability of toll agencies to use license plate image data to collect tolls with certainty from out-of-area drivers.

Riverside County Transportation Commission Seeks Toll Project Manager

The Riverside County Transportation Commission, which oversees funding and coordination of all public transportation services within Riverside County, is seeking a Toll Project Manager to manage delivery of toll projects from the environmental phase through design and construction.

This is a contract employee position that will terminate upon project completion or at the discretion of the RCTC. It is expected that the initial contract term will be three years and may be extended based on the needs of the toll program and RCTC.

Ideal candidates should have advanced knowledge of principles, practices, and techniques of project and program management for capital projects; regulatory requirements and guidelines associated with project delivery and expenditure of local, regional, state, and federal transportation funds for capital projects; standard cost estimation and value engineering techniques; report writing methods and presentation techniques; customer relations.

Candidates meeting the requirements and interested in applying for the positions must complete an application. A complete job description is available through the RCTC web site or by calling RCTC Offices at (951) 787-7141. A completed RCTC application must be submitted with a resume and salary history by June 15, 2011. Completed applications can be submitted to Riverside County Transportation Commission, Attn: Human Resources, PO Box 12008, Riverside, CA, 92502-2208; or submitted via email to mcisneros@rctc.org.

SH161 Toll Road Achieves Financial Close - It's (Almost) Like Winning the Super Bowl!

Last week, the North Texas Tollway Authority scored a touchdown by closing on $1 billion of bonds and notes to finance an 11.5 mile extension of the President George Bush turnpike in the Dallas Metroplex, which provides convenient access to the new Dallas Cowboys football stadium.  A major factor in the success of the transaction is the participation of the Texas Department of Transportation in the financial structure.  The project was originally to be procured as a P3 under TxDOT's CDA Program, but state legislation gave NTTA an option to develop and operate the project, for which NTTA agreed to pay TxDOT $458M as an "upfront payment."  However, it became clear to the parties that a standalone revenue bond financing would not raise enough proceeds to build the project and pay the "upfront payment."

Following months of negotiation, NTTA and TxDOT entered into a "toll equity" loan agreement,
which under Texas law allows TxDOT to advance state funds to cover the costs of design, construction, operation, maintenance, and certain other eligible project costs.  The NTTA has pledged those advances to cover shortfalls in debt service and budgeted operation and maintenance costs for the life of the project if revenues are insufficient to cover those costs.  TxDOT's "backstop" was a major factor in the rating agencies assigning long term ratings in the "AA" category - a first for a "greenfield" toll road project in the United States.

Another major piece of the capital structure is a $420M subordinated TIFIA loan commitment that will be used to "take out" the short term taxable notes.  Overlaying the TxDOT commitment with the senior bond financing and the TIFIA loan took some major play-calling in the huddle, but produced the lowest cost of debt.

The parties won't have long to savor this victory - planning for the addition of a companion project, the Southwest Parkway/Chisholm trail, is underway.

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.

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. 

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

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.

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...

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. 

FHWA Rules Opt for a Gradual Approach to Achieving Nationwide Interoperability for Toll Collection

On October 8, 2009, FHWA issued electronic toll collection rules in response to a 2005 SAFTEA-LU law, which in all respects reiterate the status quo for the tolling industry and provide no guidance or standards with respect to SAFTEA-LU’s goal of progressing towards a nationwide interoperable electronic toll collection system.

With regard to interoperability, Section 950.7 of the rules require the tolling agency to identify: (i) the projected users of the facility; (ii) the predominant electronic toll collection systems likely utilized by users of the facility; and (iii) the non-cash electronic technology likely to be in use for the next 5 years in that area, including a requirement that the tolling agency demonstrate that “the selected toll collection system and technology achieves the highest reasonable degree of interoperability with both technology currently in use at other existing toll facilities and with technology likely to be in use at toll facilities within the next five years in that area.” 

All of these requirements specifically focus on existing and local interoperability, but do not require a specific standard for nor set a specific path to achieving national interoperability. The comments that FHWA received in response to the Notice of Proposed Rulemaking suggested that setting a specific interoperability standard would be premature pending changes made possible with wide scale adoption of 5.9 GHz technology. Moreover, the response to comments also made clear that there was no clear consensus around what standards national interoperability should be built. Thus, FHWA adopted a rule that essentially maintained and encouraged existing trends toward achieving regional interoperability, and provided for reasonable opportunities for motorists outside of particular toll systems to pay tolls through alternative means. 

Hence, the “interoperability requirements” set forth in these rules have long been the industry standard in developing tolling collection systems. Well before these rules were promulgated, tolling agencies have spent considerable time and money researching these identical factors in developing toll collection systems. Without any federal rules requiring toll agencies to move towards a nationwide interoperable system, toll agencies will likely continue to focus its efforts on developing toll collection systems that are generally accepted and used in the local area, which is entirely acceptable under these newly promulgated federal rules.

FHWA signaled its intent to address interoperability again as new technologies come on line and if the demand to true interoperability increases.

California Advances Public Toll Financing Option for Transportation Projects

California will soon have a new authority that can authorize California transportation agencies to toll transportation facilities, eliminating the need for legislative approval for each tolling project. 

AB 798, a bill sponsored by state treasurer Bill Lockyer and recently signed by Governor Schwarzenegger, creates a new state level agency, the California Transportation Finance Authority, with the limited purpose of issuing revenue bonds for new capacity or improvements to the “state transportation system” at the request of a public sector “project sponsor”. Project sponsors include the state department of transportation (Caltrans) as well as regional or county transportation agencies. Eligible projects include a wide range of transportation improvements, including highways, streets, rail bus or related facilities owned and operated by Caltrans or other project sponsors. The Authority is governed by a seven member board chaired by the State Treasurer, and includes local agency representatives appointed by the State Legislature.

In addition to establishing a statewide “conduit” revenue bond issuer, the new law makes further advances in the use of pricing to pay for needed transportation improvements. 

With passage of AB 798, highway projects that meet the normal planning and environmental review requirements would be eligible for tolling if they meet the requirements for financing through the new Authority, even if they are financed by other means. 

The only political approval that would be required for these new toll projects would be a majority vote by the board of the project sponsor authorizing the imposition of tolling, OR majority approval of the voters in its jurisdiction. 

AB 798 has been described by Treasurer Lockyer as promoting “public-public partnerships” vs the “public private partnerships” for transportation projects approved earlier this year, thus giving Caltrans and local transportation agencies another option to consider.

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).

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

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.