Florida Department of Transportation Reaches Commercial and Financial Close on I-4 Ultimate Project

The Florida Department of Transportation reached commercial and financial close on the I-4 Ultimate Project in the urban Orlando area.  The $2.3 billion deal is the third transportation P3 project in Florida developed through an availability payment structure, and is the largest availability payment transaction ever undertaken in the United States.

FDOT entered into an agreement with I-4 Mobility Partners OpCo LLC, a consortium led by Skanska Infrastructure Development Inc. and John Laing Investments Limited.  The Concessionaire will design, construct, finance, maintain and operate the Project for 40 years.

The I-4 Ultimate Project involves reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County.  Along with developing a signature corridor with aesthetics and landscaping to convey the “Florida Experience,” the Project will provide a choice to motorists by adding four variable tolled Express Lanes to I-4 while maintaining the existing free general use lanes.  The design phase of the Project will begin within the next month and FDOT anticipates construction will begin in early 2015.  Through the P3 delivery model, the Concessionaire was able to provide significant technical enhancements, including direct connections from the Express Lanes to SR 408, additional auxiliary lanes and an additional pedestrian bridge along the facility.

FDOT and the Concessionaire worked expeditiously toward financial close with lenders including a consortium of six commercial banks and the Federal Highway Administration through the TIFIA credit assistance program.  This allowed FDOT to benefit from the low interest rate environment which resulted in a $68.7 million (net present value in 2014 dollars) decrease when compared to the I-4 Mobility Partners financial proposal.  I-4 Mobility Partners invested $104 million in the Project and commercial banks and TIFIA are lending $486 million and $949 million, respectively, to the Project.  The TIFIA is the largest loan ever undertaken under the TIFIA program.

Moody's assigned a provisional Baa1 rating to Concessionaire’s senior construction bank loan, short term Tranche A TIFIA loans, and long term Tranche B TIFIA loans.  S&P assigned a preliminary BBB issue rating to the proposed construction loan facility and TIFIA loan.  An S&P Analyst, Dhaval Shah, noted that “[t]he rating reflects our view of the project's contractual structure, which appropriately allocates risk between the project and FDOT, and our assessment of the project's risks in completing construction on time and within budget, and in operating the project over the long-term concession.”

FDOT Secretary Ananth Prasad said: “This is a monumental milestone for one of the most congested corridors of the state, which draws millions of tourists and is an important mid-point in Florida for commerce and commuters.  The project gives us the opportunity to show how a successful Public-Private Partnership works, through construction and beyond, benefitting those who count on great infrastructure, which feeds a robust economy.”

Congressman Daniel Webster said the following regarding the benefit of structuring the I-4 Ultimate project as a P3 transaction: “Transportation is the economic engine that fuels Florida’s economy.  As a public private partnership, the I-4 Ultimate project will save hardworking taxpayers’ dollars while delivering the project nearly two decades sooner than could otherwise be expected. It will provide critical infrastructure that will enable us to continue to expand our business development, cultivate growth, and create jobs.  This is a big win for Central Florida.”

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

Nossaman advised FDOT on the procurement, financing and contracts for the I-4 Ultimate Project.

Tae Yeon Do co-authored this post.

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.

Indiana Announces Industry Day for Ohio River Bridges Project - East End Crossing

The Indiana Finance Authority (IFA) announced today that IFA and Indiana Department of Transportation (INDOT) will be providing updated information and answering questions from prospective proposers related to the procurement of the East End Crossing of the Ohio River Bridges Project on March 2, 2012 from 9:00 a.m. to 12:00 p.m. at the Kentucky International Convention Center in Louisville, KY. All interested parties should pre-register here for the event by 5:00 p.m. on Feb. 29, 2012.

As previously announced, the Ohio River Bridges Project will include two procurement processes, with IFA and INDOT responsible for procuring the East End Crossing on behalf of the State of Indiana.

It is expected that the East End Crossing will be procured as an availability payment concession. The IFA expects to issue a Request for Qualifications relating to the East End Crossing on or about March 9, 2012.

Contact Will Wingfield via e-mail or at (317) 233-4675 for more information.