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

Posted on July 23, 2010 by Christine Ryan

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

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

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

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

Posted on June 23, 2010 by Brian Papernik

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.

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Infrastructure Journal Honors Texas, Florida, and Nossaman

Posted on March 17, 2010 by Barney A. Allison

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

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

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


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

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

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

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

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

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A Look At 2009's Major US P3 Transactions

Posted on February 1, 2010 by Barney A. Allison

“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…

I-595 The $1.8 billion I-595 Corridor Roadway Improvements Project was the nation’s first transportation concession to use an availability payment structure. The successful deal closing is remarkable because the private equity markets for U.S. projects had been essentially frozen for most of 2008. As the first PPP infrastructure deal to reach financial close in almost a year, the transaction signaled to the credit markets that infrastructure is still considered a strong asset class. This P3 was the first to use availability payments in a concession in the United States and allows Florida to complete a major transportation infrastructure project that would have been otherwise impossible given the dearth of public funds available. On the finance side, the flexibility of the parties to respond to change with a "can-do" attitude allowed the sponsor, ACS Infrastructure Development, to shift from its planned bond financing structure to a bank financing structure just weeks before the planned financial close. Without this flexibility, the transaction may well have terminated when it became apparent that the market would not bear such a large offering of alternative minimum tax debt. Similarly, the Florida Department of Transportation showed exceptional foresight to provide some protection from interest rate movements, and a risk-sharing mechanism for credit spread movements, which were key to keeping the transaction on track when volatility in the markets was at its highest levels. The American Road and Transportation Builders' Association named the project their 2009 Project of the Year.

Port of Miami Tunnel The $900 million Port of Miami Tunnel and Access Improvements Project (POMT), which had been widely expected to be the first availability payment deal, ended up as the second, after the deal survived numerous political obstacles and a near death experience. The POMT contract incorporates several novel risk allocations to accommodate the development of the nation’s largest soft earth bored tunnel. The project is a first in the U.S., a technically challenging transport project, implemented through a P3, without charging tolls to motorists. The original bid price for the project was almost 50% less than the Florida DOT’s own internal estimate, evidence of the considerable value it will bring to the public sector. Although the Port of Miami Tunnel Project actually closed financing after Florida DOT’s I-595 Managed Lanes Project, many of the innovations incorporated into the I-595 financing protocols and its TIFIA loan structure were actually developed for the Port deal. While both financial market and political fluctuations delayed the project (the project was even terminated at one point) the Florida DOT remained flexible. They were able to accommodate Meridiam Infrastructure as the lead contractor’s choice for an equity partner after the original equity players pulled out late in the procurement. As the monoline insurance market disappeared, and PABs financing became untenable, the Florida DOT turned to the TIFIA federal credit assistance program, negotiating a deal-saving loan that sets precedent for what TIFIA can accomplish. In the end the Port of Miami Tunnel Project was delivered at a lower cost than the original bid. Project Finance International named the Port of Miami Tunnel its 2009 Americas P3 Deal of the Year.

North TarrantExpress The $2.02 billion toll concession agreement was financed using a senior bond transaction that was the first tax exempt private activity bond transaction to be sold “unwrapped,” without credit enhancement from an insurer or a bank – a truly remarkable feat in this financial market environment. One of the equity holders is the Dallas Police and Fire Pension Fund – marking the first time such a fund has been a direct equity holder in a transportation infrastructure deal

Nossaman was pleased to have the opportunity to work on all three deals, which represented all of the U.S. deals that reached financial close in 2009.

On the design-build front, both the $1.4 billion Metro Solutions Phase 2 in Houston, Texas and the $1.02 billion Dallas-Fort Worth Connector received notices to proceed.

Looking ahead, 2010 continues to hold promise for the P3 industry. The $2.68 billion IH-635/LBJ project in Texas, which reached commercial close this year will be moving toward financial close. North Carolina’s $640 million Mid-Currituck Bridge and Texas’ $2.68 billion second phase of the North Tarrant Express are both proceeding under pre-development agreements executed this year.

The stimulus funding coupled with new state PPP programs under development in Georgia, California, Nevada and Arizona, as well as a regional program in Los Angeles mean the next few years are likely to see ongoing P3 dealflow.

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