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.