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.

Port of Miami Tunnel Open for Traffic

On August 3, 2014, the Florida Department of Transportation (FDOT) and the Port of Miami achieved an important milestone when the est. $1 billion Port of Miami Tunnel opened for traffic.  The project consists of twin tunnels under Biscayne Bay linking Port facilities on Dodge Island with a widened MacArthur Causeway and I-395.  One of the first public-private partnerships in the United States to use an availability payment contracting structure, the tunnel improves access for freight trucks and cruise passengers, reducing traffic congestion in downtown Miami and improving air quality.

Under the concession agreement, FDOT made milestone payments to the concessionaire during the construction period, upon the achievement of contractual milestones.  With the operating period now underway, FDOT will make availability payments to the concessionaire, contingent upon lane availability and service quality. The project was awarded to a Concessionaire headed by Meridiam (approx. 90% equity) and Bouygues Construction (approximately 10% equity) and reached financial close in October, 2009, at the height of the recession following the collapse of Lehman Brothers.  

In March, President Obama toured the construction site for the new tunnel while promoting a new initiative intended to encourage more projects like the Port of Miami Tunnel.  The president emphasized the important role of partnerships between public and private sectors as a part of the solution to the critical need to rebuild and upgrade the nation’s roads, bridges and ports. 

Financed with the combination of bank loans and a TIFIA loan, the project has received numerous awards, including The Bond Buyer’s 2010 “Nontraditional Financing Deal of the Year,” “Global Deal of the Year” and “P3 Deal of the Year” from Project Finance Magazine in 2009, Project Finance International’s 2009 “North American P3 Deal of the Year” and the 2007 “Project of the Year” by the American Road and Transportation Builders Association.

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.

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.

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:


  • 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.

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. 

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. 

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.

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.

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.

Port of Miami Tunnel: Digging Through Novel Risks
By Brandon Davis and Patrick Harder

On October 15th, the landmark Port of Miami Tunnel and Access Improvement Project reached financial close, eliciting a collective sigh of relief from those who participated in the 45-month procurement. Work could finally begin on the technically challenging $900 million project that will result in a tunnel under Biscayne Bay connecting the Port of Miami with I-395, thereby allowing truck and bus traffic to bypass Downtown Miami Streets. 

Florida is home to many things, but not to complex tunneling projects. Compounding the issues created by this project’s novelty was the fact that it was the Florida Department of Transportation’s (FDOT) first procurement for a true public-private partnership. Instead of lowering its head like a University of Florida fullback intent on powering the ball to the goal line by brute force, FDOT kept its head up and reconsidered its standard risk allocations. In doing so, FDOT nimbly protected both the public’s interest and ensured the private sector remained interested.

To this end, FDOT kept an open mind, engaging the private sector early and often. From the industry forum in 2005, to sitting down with the selected proposer (the Miami Access Tunnel consortium) and discussing problems with its lead equity member and the slowing economy, FDOT considered many novel risk allocations. The following four stood out.

1.         Changed Geotechnical Conditions

Because the geology under Biscayne Bay is porous and undisputedly unpredictable, the Port of Miami Tunnel project would be a challenging project for even for the most experienced tunneling contractors. Discovery of large voids or other unforeseen ground conditions during tunneling will undoubtedly lead to delays and increased costs. FDOT knew that it could not bear this risk all by itself.  At the same time, if it shifted all of the risk of changed geotechnical conditions to the private sector, either no one would bid or the bids would skyrocket.

To address these countervailing concerns, FDOT came up with the following risk sharing solution:

a) The first $10 million of extra costs due to changed geotechnical conditions is the concessionaire’s responsibility;

b) The next $150 million is FDOT’s responsibility (paid out of a contingency reserve containing FDOT and Miami-Dade County funds); and

c) The next $20 million is covered by the concessionaire.

Over this threshold ($180 million), either party may choose to terminate the agreement. This allocation ensures that the private sector will have “skin in the game” without the threat of losing its shirt.

2.         Named Windstorms (Hurricanes)

Florida’s hurricanes are as famous as its college football teams. So the shortlisted proposers were understandably concerned about the possibility of hurricanes wreaking havoc on the project. After considerable negotiations, FDOT decided to address the risk by agreeing to cover property damage costs resulting from a named windstorm (any storm severe enough for the government to name it), provided that the concessionaire:

a) Complies with the procedures in the Hurricane Readiness Plan prepared by the concessionaire and approved by FDOT;

b) Complies with storm-related directives issued by the Port of Miami or other governmental entities; and

c) Covers the first $1 million of damage caused by each storm (with a maximum liability of $3 million each year).

FDOT also agreed that if a named windstorm causes a project delay, it will extend the concessionaire’s construction completion deadlines.

Why did FDOT decide to shoulder this risk? If shifted to the private sector, FDOT would pay the cost for this risk through higher bids regardless of whether any hurricanes occur during project construction or not. In addition, the private sector may not have been able to obtain insurance to mitigate the risk of damage caused by a hurricane and the unavailability of insurance would have further increased bids. In contrast, by taking on this risk, FDOT got the benefit of lower pricing from the private sector and the ability to mitigate the risk itself through a combination of federal emergency funds and other similar sources if a hurricane were to cause extensive damage. Simply put, FDOT determined that it was more cost effective to keep this risk and hope that the only hurricanes near the project end up being students from the University of Miami.

3.         Marine Transit of the Tunnel Boring Machine

Very few companies in the world manufacture tunnel boring machines (TBM) big enough to bore the twin 42-foot tunnels for the project. Since all of these manufacturers are outside the United States the concessionaire will need to transport the TBM over open water. The concessionaire was willing to assume the risk of losing or damaging the TBM in transit. The banks, however, were not. A few weeks prior to financial close the banks demanded time relief in the event the TBM joins the Titanic at the bottom of the Atlantic.

FDOT could have dug in its heels and rejected this request. Instead, FDOT kept an open mind. Ultimately, FDOT agreed to extend construction deadlines if the loss or damage results in at least 60 days of project delay, provided that the ship transporting the TBM was seaworthy. This compromise enables the concessionaire to avoid default if forced to replace its TBM (which takes a year or longer), though it does not extend the term of the concession or otherwise provide for monetary relief.

4.         Bonding Requirements

Florida law required contractors on public works projects to provide surety bonds covering 100 percent of the contract price. Although such requirements are common, they can by themselves undermine PPP programs because the surety market does not provide bonds big enough to cover the contract price of many PPP projects.  Nevertheless, legislatures are slow to pull back these requirements due to concerns that the state and local subcontractors will be unprotected if there is a default by the prime contractor.

To resolve this problem, FDOT spearheaded an effort to enact legislation in 2007 that permits FDOT to reduce bonding requirements for larger projects, as long as the private sector provides alternate security for the balance of the uncovered contract amount. With this revision in hand, FDOT was able to require payment and performance security that are obtainable in the market. This security, coupled with other project-appropriate tools, provides FDOT and local subcontractors with the protection they need in case of concessionaire default.


Although the Port of Miami Tunnel Project is novel in many ways, the construction industry generally, and the PPP market in particular, can learn from the deal. Specifically, as documented above, the industry can learn the value of early and active engagements between the sponsoring agencies and proposers regarding their concerns and re-assessing standard risk allocations when appropriate. At the end of the day, this approach played a key role in enabling FDOT to reach financial close on a project unlike any other in the state’s history, despite the worst recession in decades. 

Nossaman LLP attorneys Patrick Harder and Brandon Davis served as lead outside legal counsel to the Florida DOT on both the Port of Miami Tunnel Project and the recently closed I-595 Corridor Roadway Improvements Project.