OCTA 91 Express Lanes Bonds Get 2 A's from S&P

In an historic move, Standard & Poor’s upgraded the Orange County Transportation Agency SR91 Express Lanes Toll Revenue Bonds to “AA-”, making it one the highest rated managed lanes projects in the world.  The bonds were issued last year to refund bonds that were issued in 2003 when OCTA acquired the SR91 Express Lanes project from the private consortium that developed the project under California’s prior P3 law.

The 91 Express Lanes is a four-lane, 10-mile toll road built in the median of California’s Riverside Freeway, State Route 91, between the Orange/Riverside County line and the Costa Mesa Freeway, SR 55. “It was the first privately financed toll road built in the U.S. in more than 50 years, the world's first fully automated toll facility, and the first application of value pricing in the U.S.,” according to the S&P report.

S&P analysts cited an expectation that the region's fundamental economic and demographic trends will continue to support growth for the upgrade, and that traffic and revenue performance will meet or exceed projected levels.  Annual traffic volume in the corridor grew to 12.1 million vehicles in fiscal 2013 from 5.5 million in 1996, according to the S&P report.  The availability of high-paying jobs in Orange County combined with the more reasonably priced homes available in Riverside and San Bernardino counties has kept traffic to the managed-lane toll road robust.
 

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.
 

Six Teams Submit SOQs for UC Merced 2020 P3 Project

The Regents of the University of California (the “Regents”), on behalf of the University of California, Merced (“UC Merced”), announced on August 1, 2014 that it received Statements of Qualifications (SOQs) from six teams in response to a Request for Qualifications for the UC Merced 2020 P3 Project.

The respondents and their equity members are (in alphabetical order):

- Edgemoor Plenary EdR Partners (EP2):  Edgemoor Infrastructure & Real Estate LLC, Plenary Group USA Ltd., and Education Realty Trust, Inc.
- E3 2020:  Balfour Beatty Investments, Inc.
- Gateway2Learn:  HOCHTIEF PPP Solutions North America and Meridiam Gateway2Learn, LLC
- Innovation Partners:  Hunt Development Group LLC and Shikun & Binui, Ltd.
- Merced Campus Collaborative:  Lend Lease (US) Investments, Inc., Macquarie Capital Group Limited and American Campus Communities, Inc.
- Merced 2020 Partners:  Skanska Infrastructure Development Inc. and Fengate Capital Management Ltd.

The complete list of respondent team members may be found at the UC Merced 2020 Project website.

The Project represents the second phase of campus development under UC Merced’s Long Range Development Plan and involves a significant campus expansion to support projected enrollment growth from 6,200 current students to 10,000 students by the year 2020. 

The project consists of the comprehensive development, design, construction, and financing of academic, administrative, research, recreational, student residence and student services buildings, together with utilities and infrastructure, outdoor recreation and open space areas, and associated roadways, parking and landscaping.  The project will also include operations and maintenance of some or all of these facilities.  The Regents intend to make shortlist decisions in November, 2014. 

Tae Yeon Do co-authored this post.
 

EPA Won't Require Formal Rulemaking for WIFIA Program

During the “Use of WIFIA” breakout session at the NCPPP P3 Connect conference this week in Denver, Elizabeth Corr, Associate Division Director for the EPA, confirmed that the agency will not need to complete the formal federal rulemaking process to implement the Water Infrastructure Finance and Innovation Act.  The Act, or WIFIA, was recently enacted by Congress to make low cost loans and loan guarantees available to public and private sponsors of water projects and is based on the highly successful TIFIA program for transportation projects.  Ms. Corr mentioned that EPA conducted its first listening session and plans several others around the country to hear from interested parties about how to best implement the program.  EPA has also setup a website, wifia@epa.gov, to provide information about the program.  Jordan Dorfman, Attorney-Advisor for EPA, acknowledged that there were unique challenges to implementing the program, including the prohibition on the use of tax exempt financing in conjunction with WIFIA assistance and the need to deal with the so-called “springing lien” provision.
 

National Conference for Public-Private Partnerships Concludes P3 Connect Summit

After a re-boot, the National Conference for Public-Private Partnerships (NCPPP) concluded a three day summit July 30 in Denver, Colorado on all things P3.

NCPPP’s “P3 Connect” annual meeting held programs addressing P3 project delivery in the water/waste water, federal and state disaster recovery, U.S. Department of Defense/U.S. General Service Administration (GSA) and emerging “social infrastructure” spaces, in addition to the more traditional transportation/transit spaces that has seen recent sustained growth in the United States.

Nossaman’s Barney Allison facilitated a panel of state transportation officials discussing the value proposition of the P3 strategy.  Panel members included Dale Witmer, Special Assistant for Finance and Innovation at the Pennsylvania DOT, Doug Koelemay, Executive Director for the Virginia Office of Transportation Public-Private Partnerships and Michael Cheroutes, Director of Colorado’s High Performance Transportation Enterprise (“HPTE”).  Mr. Cheroutes was also awarded NCPPP’s 2014 National P3 Leadership Award for both his work and his colleagues’ work in integrating P3 solutions to Colorado DOT’s booming transportation infrastructure demands.

Several panels and presentations focused on P3 strategies to address the need to update federal and public buildings.  Dan Tangherlini, recent appointee as Administrator of the GSA presented to a general session of attendees on GSA’s successes in Washington D.C. in “swap” arrangements, which he viewed as successful precursors to more fulsome P3 arrangements across the country.  NCPPP recognized the 200 Eye Street SE project - a social infrastructure project - with its “Infrastructure Project Award.” 

Since NCPPP’s relaunch earlier in 2014, the organization has sought to balance state interests and projects with federal interests, projects and policy advocacy, and has expanded beyond transportation infrastructure focus.  Overall, NCPPP exists to educate stakeholders and interested parties in the utility of P3 project delivery solutions.

Arizona DOT Announces Procurement Decision for South Mountain Freeway Project

The Arizona Department of Transportation announced today its decision to deliver the $1.9 billion South Mountain Freeway Project under a single design-build-maintain public-private partnership.  While there will be a long-term maintenance component, ADOT, in collaboration with the Maricopa Association of Governments and the Arizona Division of the Federal Highway Administration, has decided to use available public funds together with public financing to pay for the project.
 
ADOT received an unsolicited proposal for the project more than a year ago.  Under its P3 regulations, it proceeded with a detailed analysis of the unsolicited proposal, concluding that the proposed acceleration of the project through a single contract had merit.  ADOT, with the assistance of its consultants HDR, PFM and Nossaman, then undertook a risk-adjusted cost assessment and value for money analysis, examining and comparing six different project delivery methods ranging from traditional design-bid-build with delivery of the project in separate segments, to a design-build-finance-maintain availability payment approach.  The quantitative results of the value for money analysis were tightly grouped and non-quantitative considerations received considerable discussion and analysis.

Prior to making its decision, ADOT and its partner agencies sought industry input.  ADOT issued a request for information and held an industry forum in February 2014 to garner industry views on a range of pertinent questions.  Weighing this input together with the quantitative and qualitative considerations in the value for money analysis, ADOT and its partner agencies determined that the DBM alternative will provide the best value for Arizona taxpayers, will provide effective mitigation of risk and will be the most efficient delivery option.
 
The environmental work on the South Mountain Freeway Project is ongoing, and the Final Environmental Impact Statement (FEIS) is expected in mid to late September.  ADOT’s announcement makes clear that a Request for Qualifications will only be released if a build alternative is recommended under the FEIS.  If it issues a RFQ, ADOT expects to provide a six-week period to respond, with shortlisting within four weeks after it receives statements of qualifications.

Contact projects@azdot.gov for inquiries about the project and the procurement process.

The Maryland "Purple Line" Transit Project Releases its Final Request for Proposals

On July 28, 2014, the Maryland Transit Administration (MTA) and Maryland Department of Transportation (MDOT) issued the final request for proposals for a public-private partnership to design, build, finance, operate and maintain the “Purple Line” light rail transit project using an availability payment approach.  The Purple Line is a 16-mile route extending from New Carrollton in Prince George’s County to Bethesda in Montgomery County, with 21 stations and three links to the Washington DC, Metro and MARC commuter train systems.  The Purple Line has estimated project value of $2.37 billion, with the private sector expected to invest between $500 million and $900 million.  The winning concessionaire will be expected to operate and maintain the project for 30 years after construction (roughly 35 years overall).

Legislative and regulatory efforts to kick off the procurement began in earnest in mid 2013, with release of a request for qualifications issued in November 2013.  Four consortia were shortlisted and initial industry review of the proposal documents and draft contract began in February 2014.

The Purple Line has, as among its champions, Lt. Governor Anthony Brown.  MTA/MDOT also enjoys considerable federal support for the Purple Line, with the Obama Administration allocating $100 million toward construction costs in its March 2014 budget submission to Congress.  A full funding grant agreement is expected from the Federal Transit Administration and the Purple Line is seeking further federal funding support through FTA’s “New Starts Program.”

Proposals are due in January 2015, with the preferred proposer selected as the concessionaire in spring 2015.  Subject to approval by the Maryland Board of Public Works, the concessionaire would likely begin construction by the end of 2015.

More information can be found on MDOT’s website including the primary RFP documents located under “Public-Private Partnerships.”

Simon Santiago and Katherine Bourdon contributed to this post.

Indiana I-69 Section 5 Availability Payment Project Closes Financing

On July 23, 2014, the Indiana Finance Authority closed financing on its second availability payment P3 project, the I-69 Section 5 highway project, a 21-mile reconstruction project located outside of Bloomington Indiana, the home of Indiana University.  The project is a component of the I-69 Corridor Project which will strengthen connectivity between the northern and southern portions of the state.  After signing the public-private agreement in April of this year, Isolux Infrastructure, a major Spanish infrastructure company, brought in Infra-PSP Canada, an affiliate of the Public Pension Investment Board, a Canadian crown corporation, to take 49% of the equity in the project development company, the first time an international public pension player has made a direct investment in a US P3 project during the construction phase of the project.  The total equity commitment is approximately $40.4 million. 
 
Total project capital costs are expected to be approximately $370 million; in addition to the private equity commitment, funding is coming from a $243,845,000 tax-exempt private activity bonds issued by IFA with Citi and Jeffries as the bond underwriters.  IFA has committed $80 million in milestone payment payments towards project costs.  After application of the interest-rate risk sharing provision of the agreement, and with the rally in the muni bond market since Isolux submitted its winning bid in January 2014, the final base maximum annual payment decreased by $1.5 million per year.
 
The PABs are comprised of a single short-term serial bond maturing March 1, 2017 and several term bonds with maturities ranging from September 1, 2027-September 2046.  Yields on the term bonds range from 3.98% to 5%.
 
The source of repayment of the PABs is anticipated to be availability payments made by IFA under the public-private agreement as consideration for the private developer designing, constructing, financing, operating and maintaining the project.  The availability payments, which commence on substantial completion of the project, are subject to quarterly deductions if the private developer fails to meet certain performance requirements relating to the availability of the project and compliance with the technical requirements.
 
The project is scheduled for completion on October 31, 2016, which, coincidentally is the same date the East End Bridge project, IFA’s first availability payment P3 project, is scheduled to be completed.

Study Finds San Francisco Veterans Administration Medical Center is Prime Candidate for P3 Delivery Method

According to a recently released study by the Bay Area Council Economic Institute, a public-private partnership (P3) may be the most effective method to deliver a proposed expansion of the San Francisco Veterans Administration Medical Center (SFVAMC) – but there are some barriers that need clearing. 

The SFVAMC is a leading Veterans Administration (VA) medical center, having the largest research program in the national VA system, and providing one-third of the clinical education and curriculum for medical students and residents from the medical school at the University of California, San Francisco (UCSF).  The SFVAMC has outgrown its existing, 80-year facility near the Golden Gate Bridge, and is considering building a new state-of-the art building in the city’s Mission Bay district, where it would relocate research and hospital operations and form part of UCSF’s growing health sciences complex there.  

Based on current delays in federal appropriations, the much-needed expansion project faces an estimated wait time of 10 to 15 years if delivered through conventional federal procurement methods.  In contrast, the Economic Institute’s study finds that there is an immediate opportunity for the VA to pilot a P3 to design, build, finance, operate, and maintain the expansion project.   If structured properly as a P3, the project can attract private capital and could result in a significantly accelerated delivery schedule.  When compared to conventional procurement methods, the study concludes that a P3 could achieve capital cost savings of at least 20 %, and life-cycle cost savings (including operations and maintenance) of 10-30 %. 

Moving forward with the P3 alternative, however, will require changes in federal procurement laws. For starters the Economic Institute recommends passing enabling legislation to allow the VA to enter into long-term space lease agreements and lease-leaseback transactions.  For now, the VA is in dialog with US congressional leaders, as well as UCSF and prospective private partners, to move the project to the next step.  

The study was broadly peer reviewed, by Stan Taylor and Patrick Harder of the Firm’s Infrastructure Practice Group.

A copy of the Economic Institute’s study may be found at: http://www.bayareaeconomy.org/publications-list/

Nossaman Posts Draft Model P3 Legislation for Public Buildings and Invites Comments

As demand for government services continues to grow across the United States, federal, state and local government agencies must identify innovative and cost effective methods to deliver essential social infrastructure. While many agencies are interested in pursuing innovative P3 delivery models to procure public buildings, they often lack the clear necessary legislation to authorize P3 deals. 

We offer below, for consideration and comment, a draft model social infrastructure P3 bill.  We developed the draft legislation based on our experience advising US public agencies using innovative delivery methods for other classes of infrastructure. This draft model legislation seeks to provide the authorizations that a public sponsor requires to engage in the P3 delivery of a social infrastructure project.  The draft model legislation is also intended to be a flexible instrument and as such it does not set out rigid rules that a public sponsor must follow in the execution of P3 project.  
 
We invite you to review and consider our draft bill.  We are very interested in receiving your comments and suggestions.  Please send your comments by June 11, 2014 to Yukiko Kojima at ykojima@nossaman.com or to Andrée Blais at ablais@nossaman.com.

Yukiko Kojima co-authored this entry.

Indiana Achieves Commercial Close on its Second Availability Payment P3

Indiana closed its second availability payment-based P3 project, the I-69 Section 5 project.  "Section 5" is the fifth of six planned sections to link Evansville, Indiana with Indianapolis.  The RFQ for Section 5 was published on May 23, 2013 and the Indiana Finance Authority ("IFA") – once again partnering with the Indiana Department of Transportation – never missed a deadline, achieving commercial close on April 8, 2014.

Indiana’s private partner is the I-69 Development Partners, with Isolux Infrastructure Netherlands B.V., a Spanish-Dutch P3 developer (“IIN”) partnering with its affiliate, Corsan-Corviam Construccion, S.A., as its design-builder, and the joint venture of Arizona-based AZTEC Engineering Group, Inc. and Técnica y Proyectos S.A. (or “TYPSA”), as its designer.  Regional and Indiana-based team members Burgess & Niple, Inc., E&B Paving, Inc. and others round out the concessionaire team.  The I-69 Section 5 project involves reconstructing a 21 mile stretch of existing Indiana State Route 37 to interstate standards, a project with both rural and urban design features, underground geological “karst” challenges and located adjacent to the home of Indiana’s flagship state university in Bloomington.

The Section 5 marks IIN’s first stateside P3.  IIN, with three other major international and domestic  developers and regional P3 players, are also shortlisted for Indiana’s next P3 procurement, the Illiana/I65 Project, linking Northwest Indiana with the companion P3 project being procured by the Illinois Department of Transportation, creating alternative entry into the greater Chicago area.

I-69 Development Partners bid an attractive $21.78 million base year “maximum availability payment,” and also achieved a high technical evaluation score.  Four shortlisted teams submitted proposals in response to IFA’s RFP and  were evaluated in late January.  A low bid and a high technical evaluation won IIN the day.  Financial Close is expected in late June 2014.

John Smolen co-authored this entry. 

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.

Congressional Panel Explores Industry's Views on Public-Private Partnerships

On Wednesday, March 5, the House Transportation and Infrastructure Special Panel on Public-Private Partnerships held a hearing entitled "Overview of Public-Private Partnerships for Highway and Transit Projects" to review the role of P3s in delivery of highway and transit projects. The witness list and links to their testimony are as follows:

Mr. Joseph Kile, Assistant Director for Microeconomic Studies, Congressional Budget Office (CBO) Written Testimony

Mr. James M. Bass, Interim Executive Director and Chief Financial Officer, Texas Department of Transportation Written Testimony
 
Mr. Phillip Washington, General Manager, Regional Transportation District Written Testimony
 
Mr. Richard A. Fierce, Senior Vice President, Fluor; on behalf of Associated General Contractors of America Written Testimony
 
The hearing was well-attended by Members of the panel, who all expressed their interest in the issue and usefulness of the hearing, and the question and answer period delved into a variety of subjects, from if and how the federal government should be involved in P3s to exploring specific examples of how P3s would be beneficial.
 
Both Members and witnesses discussed the importance of evaluating each potential project for its suitability to proceed as a P3.  There was wide agreement that P3s are a valuable tool for infrastructure projects, but they are not a “silver bullet” for solving our nation’s infrastructure needs.  There were many questions directed at Mr. Kile from the CBO as Members tried to drill down on whether savings exist in the short and long term by using P3s versus traditional financing and project delivery.  The CBO’s research is limited by the number of major P3s to examine, but Mr. Kile noted that they are delivered slightly faster and are slightly less expensive.  Witnesses also said that P3s, particularly those involving the operation and maintenance of projects, may benefit from efficiencies as the private sector takes into account life-cycle costs during the design and construction of the project. 
 
Members and witnesses also identified environmental streamlining as an area where project timeframes and costs can be reduced. Mr. Bass noted that as a result of MAP-21 provisions, Texas will be taking lead responsibility for environmental reviews, which will create permitting efficiencies.  Additionally, as states go through the procurement process with P3s, it is critical that environmental reviews of projects stay on schedule.
 
Rep. Sean Patrick Maloney (D-NY), a self-professed fan of P3s, asked panelists whether the PAB and TIFIA programs are structured correctly as is, or if they need expansion.  Witnesses universally expressed the importance of these two particular programs to successful P3 projects, with Mr. Fierce of Fluor advocating to lift the cap on PABs. 
 
Del. Eleanor Holmes Norton (D-DC) expressed some concern at how “private” some P3s are, given the common use of PABs, the TIFIA program, or other federal funding sources to make up a large portion of the project funding.  Witnesses clarified that in some projects, the private equity bridges a gap in funding that allows a project to move forward faster than it otherwise could. 
 
Rep. Michael Capuano (D-MA), while saying he likes the idea of finding new tools to upgrade our country’s infrastructure, noted that P3s would play a lesser role if policymakers made the politically unpopular decisions to increase taxes or other fees and fully fund the Highway Trust Fund and local funding sources. 
 
Rep. Candice Miller (R-MI), from a state without a P3 law, focused on eliciting from witnesses what states have had success with P3s.  Witnesses pointed to Virginia as a leader, and also to the useful role the U.S. Department of Transportation has taken in bringing together folks with expertise in P3s in various states to share thoughts with other states considering adopting a P3 law. 
 
Simon Santiago co-authored this entry. 

White House Backs the $2.2 Billion Purple Line

On Tuesday, March 4th federal officials recommended the Maryland Transit Administration’s Purple Line Public-Private Partnership Project ("Purple Line") to receive $100 million in federal construction money as part of the Obama Administration’s 2015 fiscal year budget. The Federal Transit Administration recommended the Purple Line as one of seven large transit projects in the nation to receive full funding grant agreements, which allow for a longer-term payment commitment by the federal government. The other six projects are the Westside Subway Expansion – Section 1 (Los Angeles), Sunrail Phase II South (Orlando), Green Line Extension (Cambridge to Medford, MA), Red Line (Baltimore), Columbia River Crossing Project (Portland) and TEX Rail (Fort Worth).

The Purple Line, which is estimated at $2.2 billion in construction costs, is seeking a total of $900 million in federal funding.  Representative Donna Edwards (D-MD), whose district is located along the proposed line in Prince George’s County commented on the announcement, “This really keeps the Purple Line on the trajectory we need.” Maryland transit officials hope to begin construction on the 16-mile light-rail transit line in 2015, with services beginning in 2020. 

 

Indiana Finance Authority Shortlists 4 Proposers for its Indiana Portion of the Illiana Corridor Project & I-65 Added Capacity Project

On February 28, 2014, the Indiana Finance Authority ("IFA"), in coordination with the Indiana Department of Transportation ("INDOT"), shortlisted four teams for its Indiana Portion of the Illiana Corridor Project (the "Indiana Portion") and I-65 Added Capacity Project ("I-65 Project" and collectively with the Indiana Portion, the "Project").  The project website is located at http://www.in.gov/ifa/2763.htm.  

The Illiana Corridor Project is a collaborative effort among the Illinois Department of Transportation (“IDOT”), INDOT, and IFA to construct a highway, approximately 46.8 miles long, which provides an east-west connection between I-65 in Indiana and Interstates 57 and 55 in Illinois.  The Indiana Portion consists of the new construction of an 11.7 mile, four-lane median divided tolled highway, extending from the Illinois/Indiana stateline at the west end and connecting to I-65 north of Lowell, Indiana at the east end.  The I-65 Project involves the construction of additional travel lanes on I-65 and will be located between SR 2 extending north to US 30.  IDOT is pursuing a separate procurement for the portion of the Illiana Corridor located in Illinois; three out of the four teams shortlisted by IFA were also shortlisted by IDOT.

The Project marks the third foray of Indiana into the emerging availability payment structure of public-private partnerships in the United States, having led with the East End Crossing project (part of the Louisville-Southern Indiana Ohio River Bridges Project), successfully financed at the end of March 2013 and the I-69 Section 5 Project, scheduled for commercial close in April 2014.  The Project also marks the third effort of the joint IFA and Indiana Department of Transportation Team in using innovative project delivery approaches to meet growing transportation infrastructure demands in Indiana.  

The shortlisted teams, in alphabetical order, are: 
  • Indiana Corridor Transportation Group (joint venture of ACS Infrastructure Development, Inc. and Fengate Capital Management Ltd.), partnering with Dragados USA, Inc., F.H. Paschen, S.N. Nielsen & Associates LLC and William Charles Construction Company, LLC  as the joint venture lead contractor, Jacobs Engineering Group, Inc. as the lead engineering firm and with others. 
  • Illiana East Mobility Partners (through its sole equity member, Cintra Infraestructuras, S.A.), partnering with Ferrovial Agroman US Corp and White Construction, Inc. as the joint venture lead contractor and Janssen & Spaans Engineering, Inc., as lead design and engineer and with others.
  • Isolux Infrastructure Netherlands B.V. (with Isolux Infrastructure Netherlands B.V. acting as sole equity member) partnering with Corsan-Corviam Construccion, S.A. as lead contractor, a joint venture of AZTEC Engineering Group, Inc. and TYPSA (Tecnica y Projectos S.A.) working together as the lead engineering firm and with others. 
  • WM Indiana- Illiana Partners, LLC  (joint venture of Walsh Investors, L.L.C. and Meridiam Infrastructure Illiana IN, LLC), partnering with Walsh Construction Company II, LLC as the builder, Parsons Transportation Group as the lead engineering firm and with others.
IFA plans to issue a final RFP in July of this year with award and execution of the comprehensive P3 agreement at the end of 2014.
 
The INDOT press release can be found on the project website. 

Indiana Does it Again! IFA Selects Preferred Bidder for I69 Section 5 Availability Payment Project

Following on the success of the East End Crossing P3 project, the Indiana Finance Authority selected a team led by international P3 developer Isolux Infrastructure to design, build, finance, operate and maintain a 21 mile interstate project.  The developer expects to spend $325 million on capital costs for the project and has brought several local contractors on board to assist in the design and construction of the project.  Commercial close is expected in early April, with financial close and the commencement of construction expected this summer.  Substantial completion is anticipated by late fall 2016, several years ahead of schedule.  A major component of the developer’s responsibilities include operation and maintenance of the existing SR 37 highway, a portion of which is located outside of Bloomington, IN, home to Indiana University.

The project is a key component of the new Interstate 69 between Evansville and Indianapolis, a 142 mile corridor that is a major access route for the entire region.

As with the East End Crossing P3 procurement, IFA met every procurement milestone and all 4 shortlisted teams actively participated in the process and submitted compliant bids.  The success of the I69 procurement and the commencement of the P3 procurement for the Illiana/I65 project evidences Indiana’s position as a national leader in leveraging private capital and innovation to deliver transportation infrastructure sooner than expected and at the lower possible cost to taxpayers.  Indiana’s P3 transportation program benefits from the stellar credit ratings conferred on the State attracting low-cost private sector financing using an availability payment form of public-private partnership. 

View a larger version of the map above. 

Arizona DOT Issues RFI for South Mountain Freeway Project

Yesterday the Arizona Department of Transportation issued to the P3 and design-build industry a Request for Information for the South Mountain Freeway project.  ADOT is seeking perspective and feedback from lead developers, design-build contractors, maintenance contractors, and equity investors on a list of questions, and is providing an opportunity for industry input on the overall procurement process for the project.

Responses are requested by February 25.  ADOT will convene and open industry forum on the project at the ADOT auditorium on February 27, and the industry has the opportunity to sign up for one-on-one meetings with ADOT on February 27 and 28.

In planning and development for over 20 years, the project is planned as a 22-mile, eight-lane greenfield freeway in the southwest quadrant of Phoenix.  The environmental review of the project is expected to culminate in a final environmental impact statement in the summer of 2014 and a record of decision a few months later.  Estimated capital costs are in the range of $1.8 billion, including at least $600 million for right of way acquisitions.

Maricopa County has a ½ cent sales tax dedicated to transportation.  A major portion of the sales tax revenue is scheduled for the capital cost of the project.  ADOT originally planned the project for construction via traditional design-bid-build delivery in nine separate segments stretching through 2026, timed to match cash flows from the sales tax.  But ADOT’s recent analysis indicates that there may be benefits from using financing to accelerate delivery of the full project under a single procurement.  The financing, in the range of $400 –800 million, could be arranged as public or private debt, including use of private activity bonds and a TIFIA loan. 

The RFI explains that ADOT is examining three P3 methods:  design-build-finance-maintain using availability payments, design-build-maintain, and “enhanced” design-build.  All of these delivery methods are authorized under ADOT’s public-private partnership authority.  ADOT would use a two-stage competitive procurement, first short-listing proposers based on evaluation of statements of qualifications and then using a best value evaluation of proposals to select the winner.

If ADOT decides to proceed with innovative delivery, the RFQ could be issued in the first half of this year, with proposal submission, selection and contract execution within a year thereafter.

View a larger version of the map above on the ADOT website.

House Transportation Committee Establishes Panel on Public-Private Partnerships

House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) and Ranking Member Nick Rahall (D-WV) announced the creation of a special committee panel to examine public-private partnerships (P3s) in the United States.  This panel will inform the Committee’s work this year on reauthorizing surface transportation programs and other legislative activity.

Committee Vice Chairman John J. Duncan, Jr. (R-TN) will serve as the Chair, while Rep. Michael Capuano (D-MA) will be the Ranking Member.  Joining them are five other Republicans - Candice Miller of Michigan, Lou Barletta of Pennsylvania, Tom Rice of South Carolina, Mark Meadows of North Carolina and Scott Perry of Pennsylvania, and four Democrats – Peter DeFazio of Oregon, Eleanor Holmes Norton of Washington D.C., Rick Larsen of Washington, and Sean Patrick Maloney of New York, to look at “P3s across all modes of transportation, economic development, public buildings, water, and maritime infrastructure and demand.”

More specifically, the Committee says the panel will identify: “(1) the role P3s play in development and delivery of transportation and infrastructure projects in the U.S., and on the U.S. economy; (2) if/how P3s enhance delivery and management of transportation and infrastructure projects beyond the capabilities of government agencies or the private sector acting independently; and (3) how to balance the needs of the public and private sectors when considering, developing, and implementing P3 projects.”

The format of panel events will resemble the activities of last year’s Panel on 21st Century Freight Rail Transportation, which held hearings in Washington, D.C., and around the country to examine the future of freight rail. The first event of the P3 panel has yet to be announced. This is not the first time the Transportation and Infrastructure Committee has focused on the use of P3s for various kinds of infrastructure.  Rep. Barletta’s Economic Development, Public Buildings and Emergency Management Subcommittee has held several meetings about the use of P3s in redeveloping underutilized federal properties, Rep. Denham’s Railroads Subcommittee has held several meetings regarding the use of innovative financing in intercity passenger rail, including a roundtable in Chicago, among other events.

Four Teams Short-listed for the Maryland Purple Line P3

On January 8, 2014, the Maryland Department of Transportation and the Maryland Transit Administration announced that four teams were short-listed to submit proposals to design, build, construct, finance, operate and maintain the Purple Line Project through a public-private partnership (“P3”). The estimated $2.2 billion Purple Line Project is 16.2 mile light rail transit line that extends from Bethesda in Montgomery County to New Carrollton in Prince George’s County, connecting major activity centers inside the Capital Beltway. The four teams, representing a combination of American and European firms, were selected from six private-sector teams that submitted statements of qualification in response to the Purple Line’s Request for Qualifications issued on November 8, 2013. 

The four teams in alphabetical order are:
  • Maryland Purple Line Partners ( Vinci Concessions, S.A.s; Walsh Investors, LLC; InfraRed Capital Partners, Limited; Alstom Transport SA and Keolis SA)
  • Maryland Transit Connectors ( John Laing Investments Limited; Kiewit Development Company; and Edgemoor Infrastructure & Real Estate LLC)
  • Purple Line Transit Partners (Meridiam Infrastructure Purple Line; Flour Enterprises, Inc.; Star America Fund GP LLC)
  • Purple Line Alliance (Macquarie Capital Group and Skanska Infrastructure Development, Inc.)
Transportation Secretary James T. Smith Jr. stated “After careful review and deliberation, I am announcing the decision to move forward with four private teams for this public-private partnership project. These teams clearly demonstrated their qualifications to deliver this important project in their responses to our Request for Qualifications.”  Evaluation criteria included teams’ prior experience, proposer’s personnel and organization, financing capabilities, and overall approach.  The Purple Line project is expected to be one of the largest P3 transit concession projects in U.S. history, with construction beginning in 2015.

Maryland Purple Line P3 Project Receives Qualifications from Six Teams

The Maryland Department of Transportation and Maryland Transit Administration (“MDOT/ MTA”) announced on December 11, 2013 that six private-sector teams responded to a Request for Qualifications to design, build, construct, finance, operate and maintain the Purple Line project.  The list of proposer teams is included in the joint press release.

The 16-mile light rail line, which will be constructed under Maryland’s newly adopted Public-Private Partnership law, runs between Bethesda in Montgomery County, Maryland and New Carrollton in Prince George’s County, Maryland.  Funded by a combination of federal, state and local governments, the total project cost is estimated at $2.2 billion.

Transportation Secretary James T. Smith, Jr. noted that “the six responses, from local, national and worldwide firms, clearly demonstrate leaders in the P3 industry have strong interest in delivering this long-awaited project.”

MDOT/MTA will announce a short list of teams in January 2014, following a thorough review.  Formal proposals will be due in early summer, and in late 2014 or early 2015, MDOT/MTA will select a preferred partner.  Construction is expected to begin as early as Spring 2015.

Maryland Transit Administrator Robert L. Smith said that the “intent is to short list as many as four teams to ensure competition and innovation in the Purple Line project.”

More information can be found on the project website.

Congressional "P3 Caucus" Holds First Public Meeting

The Congressional Public Private Partnerships (P3) Caucus held its first public event on Tuesday, November 19 in the Cannon House Office Building.  Co-chairs Reps. Mike Rogers (R-AL) and Gerald Connolly (D-VA) were joined by caucus member John Delaney (D-MD) for an hour-long discussion entitled “Innovating public service delivery with P3s."  Panelists were Porter K. Wheeler, Ph.D., P3 Policy Program at George Mason University; Drew Preston, Manager, Congressional and Public Affairs, U.S. Chamber of Commerce; Matt Reiffer, Director, Transportation Programs, American Council of Engineering Companies; and Joseph Fengler, Director Defense Logistics Policy, Honeywell. 

The Caucus’s members and panelists held a wide-ranging discussion, touching on the use of P3 strategies in the defense, transportation, and education spaces for both infrastructure and services.  The group addressed at length issues regarding legal authority for P3s, the “language barrier” between the private and public sectors, and cited examples of successful P3s both domestically and internationally.

Rep. Connolly highlighted “win-win” transportation P3s in Virginia, including the I-495 Express Lanes in northern Virginia and the Dulles rail line, each examples of new infrastructure financed up front by the private sector.  He noted, however, a public policy challenge with P3s being the perception of a loss of direct accountability of a concessionaire to the public.  Additionally, Rep. Connolly highlighted a similar public policy concern where a private company takes over existing public roads.

As a member of the Armed Services Committee, Rep. Rogers is especially interested in P3s as they relate to the military, where he has already seen an example of a successful P3 in his district.  Mr. Fengler of Honeywell discussed the successful P3 between Anniston Army Depot and Honeywell, highlighting the differences between a traditional government purchase contract and a typical P3-type service contract.  Rep. Rogers, however, voiced concerns he hears as a member of the Homeland Security Committee about cancelled RFPs by other agencies. He has heard that after private sector responses suggesting alternative service delivery are offered, instead of meaningful public-private partnerships being explored, the RFPs are cancelled, betraying a private perception of governments as inflexible and agency leadership difficult to approach.

The group uniformly noted the lack of unity in P3 enabling laws at the federal and state level and across different spaces, in contrast to Canada and Puerto Rico, perceived to have progressive and further developed P3 infrastructure in place.  Mr. Fengler noted that the Department of Defense does not engage in the kind of decades-long contracts that may allow for additional efficiencies and “thinking big,” where state transportation agencies mostly focus on long-term projects. Mr. Wheeler of George Mason University noted that 33 states have P3 enabling laws, but no two are the same, and furthermore, there is no formal federal legal structure, which creates uncertainty for potential P3 partners seeking opportunities in the United States. Rep. Delaney noted that no panelist could identify a repository of “best practices” for P3s in the U.S. 

Rep. Rogers ended the meeting by promising that the P3 Caucus would meet again, and regularly, to continue a useful discussion on the place and utility of P3s in the United States.

Indiana Finance Authority issues the Request for Proposals for the I-69 Section 5 Project

Continuing Indiana’s successful employment of availability payment model public-private partnership (“P3”) concessions, the Indiana Finance Authority (“IFA”) issued its second P3 Request for Proposals (“RFP”) to proposers shortlisted at the end of July for the Interstate 69, Section 5 project (the “Section 5 project”).  As with the successful East End Crossing procurement, IFA, with its partner, the Indiana Department of Transportation, or INDOT, has met each and every procurement deadline since release of the Request for Qualifications (“RFQ”) in late May, which places the Section 5 project on pace to exceed the East End Crossing’s procurement pace, then the quickest procurement of its kind and scale from RFQ to commercial close in the United States.

The Section 5 project is one of six sections under development to complete the federal interstate connection from Evansville, Indiana to Indianapolis, collectively, part of a further development of the national I-69 corridor, running from the U.S. border with Mexico to its border with Canada.  The Section 5 project is approximately 26 miles long, varying from 4 to 6 lanes wide in each direction, located in Morgan, Johnson, and Marion Counties, involving construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses.  Notably, the Section 5 project moves through Bloomington, Indiana, placing maintenance of traffic issues prominently in the would-be Developer’s plan.  Furthermore, the limestone topography of mid-to-southern Indiana presents unique construction challenges.

Proposals are due to IFA on January 23, 2014, and IFA anticipates notifying the preferred proposer by mid-to-late February.

Indiana Finance Authority Shortlists 4 Proposers for its I-69 Section 5 Project

On July 31, 2013, the Indiana Finance Authority (“IFA”), in coordination with the Indiana Department of Transportation (“INDOT”), shortlisted four teams for its I-69 Section 5 Project (the “Project”) located between Evansville, Indiana and Indianapolis, Indiana.  The Project marks the second foray of Indiana into the emerging availability payment structure of public-private partnerships in the United States, having led with the East End Crossing project (part of the Louisville-Southern Indiana Ohio River Bridges Project), successfully financed the end of March, 2013.  The Project also marks the second effort of the joint IFA and Indiana Department of Transportation Team in using innovating project delivery approaches to meet growing transportation infrastructure demands in Indiana. 

The Project is one of six sections that are anticipated to complete the interstate connection from Evansville, Indiana to Indianapolis, Indiana, including improvements to Highway 37 outside of  Bloomington, the home of Indiana University. The broader I-69 project is part of the national I-69 corridor connecting Mexico with Canada. Four of the six sections have either been completed or construction is underway.  Section 5 is approximately 26 miles long, varying from 4 to 6 lanes wide in each direction, located in Morgan, Johnson, and Marion Counties, involving construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses. 

The shortlisted teams, in alphabetical order, are:

  • Connect Indiana Development Partners (joint venture of Macquarie Capital Group Limited, Lane Infrastructure, Inc. and Lane Industries Incorporated), partnering with The Lane Construction Corporation and Ames Construction, Inc. as the joint venture design-builder, Parsons Brinckerhoff, Inc. as the project designer and with others.
  • Isolux Infrastructure Netherlands B.V. (through its members, Public Sector Pension Investment Board and Grupo Isolux Corsán S.A.), partnering with Corsán as the builder, AZTEC Engineering Group, Inc. and TYPSA (Tecnica y Projectos S.A.) working together as the project designer and with others
  • Plenary Roads Indiana (through the Plenary Group), partnering with Granite Construction Company and Fred Weber, Inc. as the joint-venture builder, AECOM as the project designer and with others.
  • WM I-69 Partners (joint venture of Walsh Investors, L.L.C. and Meridiam Infrastructure), partnering with Walsh Construction Company II, LLC as the builder, Parsons Transportation Group as the project designer and with others.

As was the case with the East End Crossing procurement, several new players to the US P3 transportation scene responded to the I-69 Section 5 RFQ, including Isolux and Plenary.

IFA plans to issue a final RFP in October of this year with award and execution of the comprehensive P3 agreement in the first half of 2014.

The press release can be found on the INDOT website or the IFA website.

A Roadmap for Assessing the Benefits of P3 Procurement for Highways

Earlier this year the SHRP 2 Program and the Transportation Research Board issued a report entitled “The Effect of Public-Private Partnerships and Non-Traditional Procurement Processes on Highway Planning, Environmental Review and Collaborative Decision Making,” which is available on the TRB website.

Public-private partnerships (“P3s”) have become an important tool in developing and financing infrastructure improvements, and are being used by transportation agencies across the nation.  One issue faced by agencies wishing to explore the use of P3s concerns how P3 strategies interrelate with programming and planning efforts.  In an effort to promote a better understanding of these interrelationships, the SHRP2 Program asked a team that included Parsons Brinckerhoff, HS Public Affairs and Nossaman LLP to conduct a study on the subject.  

The report produced by this team documents the nature, timing and implementation of P3 projects in the United States, focusing on the different points in time during which the private sector may become involved in project development, private sector investment interest, and how P3s may be integrated into the collaborative decision-making tool developed under SHRP 2 C01 (the TCAPP Decision Guide).  Other topics addressed in the report include legal and financial issues affecting P3 implementation, management of challenges in implementing P3s, timing and implementation of P3s, and encouraging early consideration of P3s.  The report provides the results of interviews with state transportation departments and private investors, which, among other things, confirm the widely-held belief that the private sector gravitates toward larger, higher visibility projects than smaller projects, and prefers projects with NEPA approval over those awaiting clearance. 

This report will provide a useful roadmap for transportation agencies in deciding how to integrate P3s into the programming and planning process.

Thanks to Jaya Velamakanni for her assistance with this entry.

Welcome to Las Vegas! Nevada DOT Holds Industry Workshop, Issues RFQ For Project Neon Availability Payment Project

Last week the Nevada Department of Transportation (NDOT) conducted a two-day industry workshop at the Golden Nugget Conference Center in Las Vegas, Nevada, for Project Neon, a freeway improvement project on the west side of Las Vegas. More than 200 attendees, including major international developers and local contracting firms, learned about NDOT’s plans to procure the first phase of the project (the “P3 Phase”) under an availability payment approach where the winning bidder would design, build, finance, operate and maintain the project for approximately a 35-year term. This would be the first highway transportation project procured under the state’s P3 law. 

The project includes major improvements to the I-15 freeway between Sahara Boulevard and the I-95 connector with the goal of addressing a number of corridor deficiencies related to congestion, crash rates, operations deficiencies, and system linkages. Cole Mortensen, senior project manager, explained that the project is “shovel ready.” NDOT has completed NEPA requirements, progressed right-of-way acquisition including the major utility relocations, and studied various project risk issues, including subsurface conditions and preliminary design features.  A major project risk is anticipated to be managing traffic during construction in this highly-congested corridor. Capital cost estimates range from $400-$500 million. 

Following the general session in the morning, NDOT held invitation-only meetings with a number of major developers and contractors to gain insights into the industry’s views on a number of topics, including contract approach, major project risks, financial terms and proposed schedule. Despite the recent increase in the number of U.S. P3 transportation projects for which the procurement processes have begun or are about to begin, meeting participants told NDOT that this project is viewed as an attractive opportunity given the availability payment structure, the strong credit rating of the state and NDOT, the size of the project and its “project ready” status. 

On July 30, 2013, NDOT issued a Request for Qualifications for teams interested in bidding on the project; responses are due before the end of September 2013. Given the keen interest expressed at the industry workshop, NDOT expects to receive several responses and qualify three to four teams to respond to the RFP which is currently scheduled for issuance in February/March of 2014.

Additional Project Information can be found on the Project Neon website.

Florida Governor Signs New P3 Bill into Law

On June 27th, Florida Governor Rick Scott signed a bill into law that gives counties, municipalities, school boards and other political subdivisions in the Sunshine State authority to enter into public-private partnership (P3) agreements for facilities that “serve a public purpose.”  The bill - HB 85 - authorizes P3s for a wide range of facilities, including education facilities, transportation facilities, water / wastewater facilities, roads, highways and bridges, healthcare facilities and sporting or cultural facilities.  The bill does not cover the Florida Department of Transportation or other Florida state agencies.

The new P3 law will go into effect on July 1, 2013 and builds on Florida’s success in using P3s for social infrastructure and landmark transportation facilities such as the Port of Miami Tunnel and the I-595 Corridor Roadway Improvements Projects.

View a full copy of the P3 bill.

Notably, the new law creates a seven-member task force that will recommend P3 guidelines, including guidelines related to the factors public entities should consider when procuring a P3 project.  The task force must submit its recommendations to the Governor, President of the Senate and Speaker of the House of Representatives by July 1, 2014.  While such guidelines will be helpful, the bill does not require the guidelines be established or for public entities to adopt the guidelines as a condition to entering into a P3 agreement.

Other highlights of the bill include the following:

  • Authorization and related guidelines for consideration of unsolicited proposals;
  • Safeguards against P3 agreements precluding the construction of additional capacity or competing facilities;
  • A requirement that private sector partners meet standards otherwise applicable to providing professional services;
  • Flexible payment and performance security requirements (e.g., letters of credit, parent company guarantees, etc.), provided that standard bonding requirements apply to all construction work (see F.S., § 255.05);
  • Either before the procurement is initiated or before the contract is awarded, public entities must perform an independent analysis of the proposed P3 and demonstrate its cost-effectiveness and overall public benefit; and
  • Public entities procuring P3s must give affected local jurisdictions notice of the project – with a copy of the project proposal – and consider any comments it receives from the local jurisdictions before entering into the P3 agreement.

Indiana Finance Authority Issues the Request for Qualifications for the I-69 Section 5 Project

On the heels of its very successful foray into availability payment model public-private partnership (“P3”) concessions, the Indiana Finance Authority (“IFA”) issued its second P3 Request for Qualifications (“RFQ”) on May 23, 2013, this one to develop, design, build, finance, operate and maintain the I-69, Section 5 project.  As with the preceding P3 procurement of the East End Crossing (part of the broader Ohio River Bridges Project), the I-69 Section 5 project will be a public-private partnership between the State of Indiana, through the IFA and the Indiana Department of Transportation (“INDOT”) and the successful proposer. 

The I-69 Section 5 project consists in upgrading approximately 21 miles of existing State Route (“SR”) 37, a four-lane median divided highway between Bloomington, Indiana (home of Indiana University) and Martinsville, Indiana, and development of a six-lane divided highway in designated urban areas.  In addition, the project involves construction of four new interchanges and four new overpasses with varying degrees of improvements to the existing interchanges and overpasses at the Fullerton Pike, Tapp Road/SR 45/2nd Street, Sample Road and Liberty Church Road, all of which are current intersections with SR 37.

Section 5 is one of six sections under development to complete the interstate connection from Evansville, Indiana to Indianapolis, collectively part of a further development of the national I-69 corridor to connect Mexico with Canada.  Four of the remaining five sections are completed or development and construction are underway, and Section 6 is still in the planning stage.

Over 175 people attended a industry workshop on May 22, where Governor Mike Pence reaffirmed Indiana’s, and his administration’s, commitment to exploring innovative approaches to deliver much-needed infrastructure – particularly transportation – improvements in Indiana.

IFA is an independent financing instrumentality of the State, which in working with INDOT, reprises a successful partnership that brought the East End Crossing to the American P3 industry, the first availability payment concession in the United States to have met each of its procurement schedule deadlines in among the fastest P3 procurements in the United States and to have successfully achieved financial close with a “flat” investment grade rating.

Statements of qualifications are due at the IFA’s offices in Indianapolis, Indiana at 3:00 p.m. on July 9, 2013.  Shortlisting is anticipated by the end of July 2013, with award tentatively scheduled for late first quarter, 2014 and financial close early second quarter, 2014.

Maryland Transit Administration Issues RFI on New Purple Line and Red Line

This week the Maryland Transit Administration (“MTA”) issued a Request for Information (“RFI”) requesting private sector involvement to collect best practices for delivery and financing of the planned Maryland National Capital Purple Line and Baltimore Red Line.  The proposed Maryland National Capital Purple Line is a 16-mile light rail transit line project that will extend between Bethesda and New Carrollton, Maryland.  The proposed Baltimore Red Line is a 14.1 mile, east-west transit line that will connect Woodlawn, Downtown Baltimore and Johns Hopkins Bayview Medical Center campus.  The RFI comes days after Governor O’Malley signed the new Maryland Public-Private Partnership (“P3”) legislation into law.  The new P3 legislation provides a more predictable and linear process for private sector involvement in future P3 projects, while also requiring competitive bidding, protection of public assets and the ability for private sector actors to submit unsolicited proposals to address Maryland’s imminent infrastructure needs.  With the new P3 law paving the way, the MTA hopes the RFI will uncover combinations of traditional project delivery approaches that will achieve the highest time and cost savings, while ensuring high-quality service.

The deadline for RFI responses is May 8, 2013.  The RFI and the official press release can be found on the Maryland Transit Administration website.

Federal Report Endorses P3 Infrastructure Financing for Transit-Oriented Development

The U.S. Environmental Protection Agency (“EPA”) has issued a report that details funding mechanisms and development strategies that communities can use to provide innovative financing options for transit-oriented development (“TOD”). 

The report affirms the need for local and state transportation agencies to continue to think beyond traditional funding, procurement and contracting approaches to satisfy their burgeoning infrastructure needs. 

Detailed in the report is an explanation of innovative financing mechanisms, which should be required reading for those interested in innovative P3 financing and transit development. 

These include:

  • Direct fees: user or utility fees and congestion pricing;
  • Debt tools: private debt, bond financing and federal and state infrastructure debt mechanisms;
  • Credit assistance: state and federal credit assistance tools, such as TIFIA;
  • Equity: public-private partnerships and infrastructure investment funds;
  • Value capture: developer fees and exactions, special district and tax increment financing and joint development;
  • Grants and other philanthropic sources: federal transportation and community and economic development grants and foundation grants and investments; and
  • Emerging tools: structured funds, land banks, redfields to greenfields, and a national infrastructure bank. 

Four innovative models should also be considered when developing financing plans for TOD infrastructure, according to the report:

1. Anchor institution partnerships: partnering with nonprofit or private entities (such as universities, hospitals and corporations) that have a strong nexus with their location because of real estate holdings, capital investment, history or mission;

2. Corridor-level parking management: setting parking prices and managing parking demand across a transit corridor or system for parking structures and off-street spaces;

3. Land banking: land assembly and acquisition that makes it easier and more affordable to acquire right-of-way for TOD infrastructure; and

4. District energy systems: reducing energy use, encouraging renewable energy and facilitating compact development.

In addition to the clear benefit of providing local or state agencies with multiple funding sources and the ‘life cycle’ benefits from grouping projects together, the report also speaks to ‘softer’ community benefits.  It notes that the use of integrated transportation and land use planning expands transportation choices and can reduce transportation costs, giving more freedom and mobility to low-income individuals, senior citizens, disabled persons and others who cannot or choose not to drive a car.  Further, TOD development can help improve air quality and reduce greenhouse gasses. 

The full text of the report is available on the EPA website.

FHWA Holds P3 Model Contract "Listening Sessions" and Beta-tests "P-3 VALUE Toolkit"

As part of its effort to meet MAP-21’s legislative requirement to develop “standard public-private partnership transaction model contracts for the most popular types of public-private partnerships,” the Federal Highway Administration held a “listening session” with representatives from the transportation industry at the U.S. Department of Transportation in Washington D.C. on January 16.  Representatives from state departments of transportation, general contractors, trade associations, legal advisors and others were in attendance, and solicited to provide FHWA with the P3 community’s view of what the model contracts should be. 

In her introductory remarks, the Hon. Beth Osborne, Deputy Assistant Secretary of Transportation for Policy, saw the effort as “compiling best practices” of the P3 community, but one for which FHWA did not have “pre-conceived notions.”  FHWA and USDOT representatives spent the better part of four hours hearing out the industry’s hopes for, expectations about and cautionary recommendations regarding FHWA’s final product.  The resounding theme of the audience comments was that “every P3 is different,” FHWA’s effort should tilt toward educating public sponsors as to the project-specific risk-sharing and “value-for-money” considerations that makes a P3 an effective delivery tool, and FHWA should refrain from prescribing risk allocations or other contract terms.

In a companion effort, FHWA is also beta-testing an interactive model, which intends both to help educate public sponsors in alternative procurement strategies (like the public-private partnership (“P3”)) “apples to apples” comparison with conventional procurements).  The “P3-VALUE Toolkit” collects project sponsors’ (and their consultants’) project-specific risks, quantifies their value, and, with other financing assumptions and project-specific parameters considered, produces a snapshot of the value-for-money that a P3 strategy may or may not present for that project.  FHWA held an initial roll-out “webinar” of the draft toolkit on January 10, with a follow-up webinar session on January 24.

FHWA has set up a docket, Federal Register No. FHWA-2012-0126, to collect industry comments by May 31, to keep pace with the rigorous requirement of MAP-21 to produce and promulgate model contracts by December 31, 2013.

Fred Kessler co-authored this entry.

Virginia Releases P3 Public Outreach Materials

A key element of a successful P3 program is an effective and comprehensive public outreach strategy.  Demonstrating why Virginia remains a leader in closing P3 transportation deals, the Virginia Office of Transportation Public-Private Partnerships (OTP3) recently prepared a variety of fact sheets, presentations and FAQs focusing on different aspects of P3s in Virginia.  The materials can be found at the OTP3 website.

These materials were prepared in cooperation with the Public Private Transportation Act Working Group.  This group was established in June 2012 to solicit ideas and feedback on how to improve public involvement in P3 development and procurement, and consists of elected officials as well as private and public sector stakeholders.            

Ohio River Bridges - East End Crossing - Reaches Commercial Close

On December 27, 2012, the Indiana Finance Authority (“IFA”) achieved commercial close of the East End Crossing project in southern Indiana, part of the broader Louisville-Southern Indiana Ohio River Bridges Project.  WVB East End Partners, LLC (“WVB”), is the private counterparty for the East End Crossing project under an availability payment concession, a first for Walsh and VINCI in an equity role in the US P3 market.  The parties reached agreement and executed the public-private agreement before the end of the year as scheduled, capping an extraordinary procurement on an expedited pace, throughout which IFA met each and every interim schedule deadline, making IFA’s East End Crossing procurement among the fastest “P3” procurements in the United States.  Financial close is scheduled for the end of March, 2013. 

WVB East End Partners, LLC is a joint venture consortium of affiliates of Walsh Investors, LLC, VINCI Concessions S.A.S. and Bilfinger Berger PI International Holding GmbH.  WVB has contracted with the joint venture of Walsh Construction Company and VINCI Construction Grand Projets to design and build the project with Jacobs Engineering Group, Inc. as the project’s lead designer.  Walsh Construction Company was also selected by the Kentucky Transportation Cabinet as the apparent best value bidder for the $900 million Downtown Crossing, Kentucky’s part of the overall Ohio River Bridges Project. 

IFA issued its Request for Qualifications March 9, 2012 shortly after Indianapolis played host to the 2012 Super Bowl, and shortlisted four of six bidder teams on April 20.  All four shortlisted teams submitted conforming proposals on October 26, and WVB was preliminarily selected by IFA on November 16.  With today’s commercial close, IFA successfully conducted a procurement from shortlisting to contract execution in less than nine months.

Barney Allison co-authored this entry.

20th Annual CCPPP Conference Looks to the U.S.

The 20th annual conference of The Canadian Council of Public-Private Partnerships (CCPPP) was held in Toronto on November 26-27, 2012.  Drawing industry leaders from within and outside of Canada, the conference this year reflected the maturity of the Canadian market and the interest of P3 players looking beyond its borders for future opportunities, particularly participating in the growing U.S. P3 market. 

One of the keynote speakers was Michigan Governor Rick Snyder, who championed the proposed $3.5 billion Detroit-Windsor bridge and expressed appreciation for Canada’s leadership on the proposed project and in the P3 sector generally.  With the Canadian government indicating that it will take the lead in procuring and financing the project, Governor Snyder stated that he hopes to see the project come to market within the next couple of years.

A well-attended session discussed recently closed US P3 projects:  California’s Presidio Parkway Project (awarded to a Hochtief consortium in 2011); Florida’s I-595 Project (awarded to an ACS consortium in 2009); and Denver’s Eagle Project (awarded to a Fluor consortium in 2010).  The panelists discussed the complexity of bringing these projects to financial close and US-specific issues.

Many attendees felt that, while the Canadian P3 market continues to generate a steady pipeline of P3 projects, the US infrastructure market is well-poised to attract many of the seasoned Canadian P3 players.  SNC-Lavalin, an experienced Canadian P3 developer, was recently shortlisted and submitted a bid on the East End Crossing Project.  Other seasoned Canadian P3 participants, such as Bilfinger Berger and Hochtief, were also members of shortlisted consortia for the project, and the Presidio Parkway Project was awarded to Hochtief.  Canadian P3 players have also expressed interest in potential upcoming P3 projects such as Los Angeles County Metropolitan Transportation Authority’s Accelerated Regional Transportation Improvements Project and the Travis Country Courthouse project in Texas. 

Expansion of P3 Concession Model To Water/Wastewater Facilities For California Municipality

On November 29, 2012, financial closing was achieved on a 30 year concession relating to the water and wastewater facilities of the City of Rialto, California.  The agreement, which had been executed in March 2012, is among Rialto Water Services, LLC, the single purpose vehicle set up by Table Rock Capital as the project sponsor, the City of Rialto and the Rialto Utility Authority.  

The approximately $175 million transaction is being bond financed through a private placement and an approximately $26 million equity contribution.  The concession agreement provides for approximately $40 million of near-term capital improvements, long-term operations and maintenance of water and wastewater facilities and potential future capital improvements throughout the 30 year term. 

The capital improvement and operations and maintenance work will be provided by Veolia Water West Operating Services, Inc. pursuant to a contract with Rialto Water Services.  The Veolia contract includes an array of performance measurements and incentives for enhanced and efficient facility performance.  Veolia has been providing operations and maintenance services for the City’s wastewater facilities for the past several years.

The City of Rialto is located in San Bernardino County, approximately 60 miles east of Los Angeles and has approximately 110,000 residents. 

The P3/private financing nature of this transaction is likely to garner regional and national attention, providing a potential blueprint for accessing capital and funding for communities facing budget challenges and critical water and wastewater facility infrastructure demands.

A Tale of Two Bridges (A Tale of Bi-State Cooperation)

On November 16, 2012, the Indiana Finance Authority (“IFA”) selected WVB East End Partners (“WVB”) as the “Preferred Proposer” for IFA’s East End Crossing project in southern Indiana.  WVB East End Partners is a joint venture consortium of Walsh Investors, LLC, VINCI Concessions S.A.S. and Bilfinger Berger PI International Holding GmbH, partnering with Walsh Construction Company and VINCI Construction Grand Projets as the builders, with Jacobs Engineering Group, Inc. as the designer, and with others.  VINCI Concessions S.A.S. will be performing the operations and maintenance of the East End Crossing for the thirty-five year term.

The East End Crossing is one component of a larger, bi-state project that has been in the planning and development stage for almost ten years.  The Louisville-Southern Indiana Ohio River Bridges Project (or “ORB”) spans the Ohio River in two places, and Indiana and its neighbor to the south, the Commonwealth of Kentucky, split the project in half.  Thus, the ORB is a tale of two bridges, each state responsible for one, but working cooperatively to achieve completion of both.

“One Project; Two Procurements”

On March 5, 2012, Indiana Governor Mitch Daniels and Kentucky Governor Steve Beshear met and decided on a “one project, two procurements” strategy.  Indiana was to handle the East End Crossing (a bridge, tunnel and associate roadway project eight miles east of the present Kennedy Bridge between Louisville and Southern Indiana).  Kentucky was to handle the Downtown Crossing (refurbishment of the Kennedy Bridge, addition of a second span, and associated roadway improvements).  Each would share 50/50 in the gross toll revenues generated by the two projects; toll revenues would be collected by a single toll systems operator for each project. 

What followed the March 5 memorandum of understanding was an historic bi-state development agreement that fleshed out how this understanding would turn into the ORB.  The “bi-state” mapped out parallel, separately handled procurements of each state’s part of the ORB and the involvement of each state in the other’s procurement.  The bi-state agreement also established an approach to ownership of the right of way for each project so as to enable each state to allow its contractor to perform work in the other state.

Kentucky elected a conventional design-build contract procurement, with the Commonwealth handling the financing of its project.  Indiana pursued an innovative availability payment public-private partnership, leaving the financing to the winning proposer.  Each state was offered the right to review and approve the technical plans and specifications for the portion of each project to be built and operated in that state.

Eight short months later, Kentucky held a public bid opening, selecting Walsh Construction Company as its apparent best value bidder.  Less than twenty-four hours later, Indiana, through IFA and in very close coordination with the Indiana Department of Transportation (“INDOT”), announced WVB as its preferred proposer and anticipated counterparty in a public-private partnership.  Walsh Construction Company is part of WVB, and through two, separated and distinct procurements, will be involved in the entire ORB.

The “one project, two states” approach aligned both states in a collective effort to address a growing need for additional cross-river transportation in the greater Louisville-Southern Indiana region, which is presently hampered by significant traffic congestion on the existing Kennedy Bridge and within its interchange and connecting roadways.  And now, one major infrastructure project will be the product of two innovative solutions.

About the ORB

The ORB is a construction, reconstruction, and rehabilitation project to address demand for remedying inadequate and inefficient cross-river mobility for existing, planned and expected population growth in downtown Louisville and Southern Indiana counties. 

When completed, the ORB will improve connecting roadways and provide two new toll bridges across the Ohio River.  Kentucky’s Downtown Crossing will deliver the new “Downtown Bridge” –  carrying I-65, upstream on the Ohio River from the existing Kennedy Bridge.  The East End Crossing builds a new bridge connecting I-265/KY 841 (the “Gene Snyder Freeway”) with S.R. 265 (the “Lee Hamilton Highway”) in Indiana.  The ORB also features several multi-modal improvements to increase transportation choices for area residents, including enhanced bus service and pedestrian and bicycle trails and pathways.

Indiana and Kentucky plan to see both bridges open as early as late Fall, 2016.

John Smolen co-authored this entry.
 

Indiana Selects Preferred Proposer For East End Crossing (Ohio River Bridges Project)

On November 16, 2012, the board of the Indiana Finance Authority (“IFA”), with Governor Daniels in attendance, based on the recommendation of Kendra York, IFA’s Public Finance Director, approved the preliminary selection of WVB East End Partners as the preferred proposer for the East End Crossing project, Indiana’s second foray into public-private partnerships as a solution to infrastructure planning for the State.  The East End Crossing is Indiana’s part of the Louisville-Southern Indiana Ohio River Bridges Project (the “ORB Project”).  WVB East End Partners is a joint venture consortium of Walsh Investors, LLC, VINCI Concessions S.A.S. and Bilfinger Berger PI International Holding GmbH.  The WVB East End Partners consortium proposes to contract with Walsh Construction Company and VINCI Construction Grand Projets as the builders, with Jacobs Engineering Group, Inc. as the lead designer.  VINCI Concessions S.A.S. will be performing the operations and maintenance of the East End Crossing for the thirty-five year operating term.  Ms. York made the announcement at the historic Indiana Repertory Theater in downtown Indianapolis.  Governor Daniels applauded the efforts of the proposer teams, emphasizing the success of several recent Indiana infrastructure projects, benefits of this project to the citizens of the State of Indiana and the Commonwealth of Kentucky. 

In early March 2012, Governor Daniels and Kentucky Governor Steve Beshear signed a memorandum of understanding regarding the roles and responsibilities of each state in the “Ohio River Bridges Project,” of which the East End Crossing is one part.  A week later, IFA issued a request for qualifications to develop, build, finance, operate, and maintain the East End Crossing under an availability payment concession structure.  From release of the “RFQ” to the short-listing of four bidders, to submission of proposals by all four bidders, the procurement proceeded at a record pace of less than eight months.  Governor Daniels specifically cited the rapid pace, resulting in a preferred proposer who offered a bid both under budget and ahead of schedule, as a success for public procurements and public-private partnerships. 

The WVB consortium proposed maximum availability payments for the term of $32.9 million (2012 dollars) per year.  Their proposal offered a construction price of $764 million, with planned substantial completion of the project by Halloween, 2016 – almost nine months prior to the date that the Indiana Department of Transportation had specified.  IFA plans to execute the public-private (“P3”) agreement in mid-to-late December.  Financial closing for the consortium is anticipated in late March, 2013. 

Stay tuned for more about the success of this bi-state cooperative effort.

Indiana Shortlists Four Teams for East End Crossing

On April 23, 2012, the Indiana Finance Authority (“IFA”), in coordination with the Indiana Department of Transportation, shortlisted four teams for its East End Crossing (Louisville-Southern Indiana Ohio River Bridges Project) (the “East End Crossing”) located in Southern Indiana.

The East End Crossing is part of the broader “Ohio River Bridges Project” in the greater Louisville, Kentucky/Southern Indiana region.  Specifically, the Ohio River Bridges Project will consist in improvements to connecting roadways, but most prominently, provide two new toll bridges across the Ohio River:  the “Downtown Bridge” – a new bridge carrying I-65 and upstream on the Ohio River from the existing Kennedy Bridge – and the “East End Bridge” – also a new bridge connecting I-265/KY 841 with S.R. 265 in Indiana.  The Ohio River Bridges Project also features several multi-modal improvements to increase transportation choices for area residents, including enhanced bus service and pedestrian and bicycle trails and pathways.

The East End Crossing project involves construction of the East End Bridge and approaches on both the Kentucky and Indiana sides of the Ohio River.  The selected proposer will develop, design, build, finance, operate and maintain the East End Crossing through an availability payment concession.
The shortlisted teams, in alphabetical order, are:

  • East End Mobility Partners (joint venture of SNC-Lavalin Capital, John Laing Investments Limited and Zachry Resources, Inc.), teaming with Tutor Perini Corporation, Zachry Construction Corporation and SNC-Lavalin Transportation USA, Inc. collaborating as the design-builder, with Frontier Kemper Constructors Inc., ARUP USA, Inc. and Daelim Industrial Co, Ltd., among others.
  • Ohio River Mobility Group (joint venture of ACS Infrastructure Development, Inc., Hochtief PPP Solutions North America, Inc. and Skanska Infrastructure Development, Inc.), teaming with Skanska USA Civil Southeast, Inc., Flatiron Constructors, Inc. and Dragados USA, Inc. as the builders, with URS Corporation and T.Y. Lin International as the designers, and with others.
  • Ohio River Transportation Partners (joint venture of InfraRed Capital Partners Limited, Balfour Beatty Capital and Kiewit Development Company), teaming with Ohio River Transportation Constructors East as the joint-venture builder (Kiewit Infrastructure Co., Traylor Bros., Inc., Massman Construction Co. and Kokosing Construction Company, Inc.), with Ohio River Transportation Designers as the joint-venture design team (HNTB Corporation and Parsons Brinkerhoff), and with others.
  • WVB East End Partners (joint venture of Walsh Investors, LLC, VINCI Concessions S.A.S. and Bilfinger Berger PI International Holding GmbH), teaming with Walsh Construction Company and VINCI Construction Grand Projets as the builders, with Jacobs Engineering Group, Inc. as the designer, and with others.

IFA plans to issue a final RFP in late July, 2012 with award and execution of the comprehensive public-private partnership agreement by year’s end.

John Smolen co-authored this entry.

Virginia DOT Reaches Financial Close on Midtown Tunnel Project

The Virginia Department of Transportation and Elizabeth River Crossings Opco LLC (“ERC”) reached financial close on a toll concession public-private partnership ("PPP") for the $2.1 billion Midtown Tunnel Project.  It is the first United States transportation PPP to reach financial close in 2012 and will include construction of a new Midtown Tunnel, rehabilitating the existing Midtown and Downtown Tunnels, extending Martin Luther King Boulevard and will provide much needed transportation improvements and congestion relief to motorists in the Hampton Roads region.  Construction will begin in Fall 2012 and completion is expected in 2018.

Under the Public-Private Transportation Act, the Virginia DOT will continue ownership of the Project elements and oversee ERC's activities.  ERC will finance, build, operate and maintain the facilities for a 58-year concession period and also assumes risk of delivering the project on a performance-based, fixed-price, fixed-date contract, protecting users and taxpayers from construction cost overruns and delays. 

The Project will involve tolling of the existing and newly-constructed assets with tolls initially ranging from $1.59 to $1.84 per car for the tunnels and $.50 for the MLK Extension for tunnel users and $1 for non-tunnel users.  This is approximately 40 percent lower than the $2.89 toll rate estimated under the interim agreement signed in January 2010 before Governor Bob McDonnell took office.  Additional financing includes a $422 million TIFIA loan, $663.75 million of private activity bonds and $310 million in public contribution from Virginia DOT.  ERC, a joint venture of Macquarie and Skanska, will contribute up to $272 million in equity.

The Midtown Tunnel Project was a priority of the region’s leaders and is the largest transportation project to get under way in almost 30 years.  More than 500 jobs will support the construction efforts and another 1,000 jobs in other sectors of the local economy.  The Project is anticipated to cut round-trip travel time by 30 minutes a day and improve safety, reliability and connectivity to the region’s transportation network.

Click here to learn more about this Project.

Arizona Adopts Electronic Toll Enforcement Legislation

The Arizona Legislature sent to Gov. Jan Brewer on April 4, 2012 the landmark bill HB 2491, creating state-of-the-art toll collection and enforcement authority for the Arizona Department of Transportation (ADOT).

The bill follows on the heels of the state’s enactment of its public-private partnership (P3) law two years ago.  While that law authorizes tolling, it lacked the enforcement mechanisms needed for effective open road electronic tolling, essential to modern toll road financing and operations. 

HB 2491 includes a three-notice system, increasing charges for delayed payment, an administrative hearing process, and a panoply of means to enforce collection, including license suspension and denial, vehicle registration denial, and towing and impoundment.

The P3 law included the right of toll road users to obtain refunds of fuel taxes on fuel consumed using tolled facilities.  This unusual and administratively impractical provision, backed by the trucking industry, was repealed by HB 2491.  In exchange, the trucking industry accepted a provision limiting the toll enforcement law to new transportation facilities, which could include new tolled lanes.

Arizona does not yet have tolled transportation facilities.  ADOT is considering a potential P3 for a tolled bypass facility at the Nogales border crossing, and the Maricopa Association of Governments is actively studying a managed lanes system for the Phoenix metropolitan area, which could include conversion of HOV lanes to HOT lanes.

Nossaman assisted ADOT in drafting the legislation.

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. 

California Supreme Court Allows Presidio Parkway to Proceed as P3

On November 16, challenges to the legality of the Presidio Parkway public-private partnership (P3) contract ended with a one sentence order from the California Supreme Court: “The petition for review is denied.”  Professional Engineers in California Government (PECG), the union representing Caltrans engineers, had asked the Supreme Court to review the Aug. 8, 2011, decision of the California Court of Appeal in San Francisco (First District), which unanimously held that Phase 2 of the Presidio Parkway project can move forward as a P3.  As a result, the California Department of Transportation (Caltrans) and the San Francisco County Transportation Authority (SFCTA) will continue with Phase 2.  The project will replace the old and outmoded approach to the Golden Gate Bridge in San Francisco.  The Supreme Court’s action denying the petition comes a year after PECG filed the lawsuit in the trial court.

When the California Transportation Commission considered whether to approve use of a P3 for the project under Streets and Highways Code section 143, the California Legislative Analyst Office (LAO), and the California Attorney General’s office (AG) as counsel to the Commission, gave written opinions concluding that the project was not authorized.  Caltrans’ general counsel, along with Nossaman acting as P3 legal advisor to Caltrans, took a contrary position.  Section 143, adopted in 2009, broadens the types of P3 projects authorized in California.  The Commission approved the project for a P3, while noting the unresolved legal issue.

PECG sued Caltrans and the SFCTA to stop Phase 2 of the project, arguing, like the LAO and AG had earlier, that the project was not authorized by section 143.  The courts rejected PECG’s argument that, under section 143, Caltrans’ internal personnel must perform all the preliminary planning and design services, as opposed to being responsible only for seeing them done correctly.  The courts also rejected the argument that P3 efforts under California law must be confined to toll projects, holding that the legislation authorized much broader use of innovative financing, in this case an availability payment.  Finally, the courts also held that the project was properly characterized as supplemental to existing facilities, as required by section 143.

The Presidio Parkway Project is the first project to reach award under California’s new P3 statute.  The decision of the courts—and now the finality—is important beyond the Presidio Parkway Project.  This should ease the way to use P3s under section 143 for other projects, and also provide helpful precedent for design build projects authorized under parallel legislation passed at the same time.

At the beginning of 2011, Caltrans, in cooperation with SFCTA, signed a contract for the project to Golden Link Concessionaire, LLC, a consortium led by Hochtief  PPP Solutions North America and Meridiam Infrastructure North America. 

Nossaman represented SFCTA in the litigation and advised Caltrans during the P3 procurement.  Caltrans was represented in the litigation by its own department counsel.

For more about the Presidio Parkway Project and section 143, see Appeals Court Rules Presidio Parkway Can Move Forward as P3, Presidio Parkway Project Awarded, Preferred Proposer Selected for Presidio Parkway Project, Final RFP for the Presidio Parkway Project Released, Presidio Parkway Reaches Two Important Milestones, and Presidio Parkway Project RFQ Issued.