Congressional Panel Explores International Experience with Public-Private Partnerships

On Tuesday, April 8th, the House Transportation and Infrastructure Panel on Public-Private Partnerships held a hearing on "The International Experience with Public-Private Partnerships".  The Panel focused in particular on the Canadian experience, observing that over the past two decades Canada has become one of the most advanced and active markets for P3s. The witness list and links to their testimony are as follows:

The Honorable John Delaney, United States Representative, Maryland

Dr. Larry Blain, Chairman of the Board of Directors, Partnerships British Columbia | Written Testimony

Mr. David Morley, Vice President, Business and Government Strategy, Infrastructure Ontario | Written Testimony

Cherian George, Managing Director – Americas, Global Infrastructure & Project Finance, Fitch Ratings | Written Testimony

Dr. Matti Siemiatycki, Associate Professor, Program in Planning, University of Toronto | Written Testimony

Congressman John Delaney began by describing the magnitude of the nation’s infrastructure deficit.  Referring to an estimate made by the American Society for Civil Engineers, he explained that close to $4 trillion needs to be invested to bring infrastructure in the US up to world class standards.  As governments are cash strapped, he advocated that private sector capital be engaged to increase investment in infrastructure to fill the gap, and he noted the importance of smart P3 frameworks to meet this infrastructure challenge.  Congressman Delaney referred to The Partnerships to Build America Act (H.R. 2084), which he introduced to the House on May 2013.  He explained that The Partnerships to Build America Act would provide for the financing of state and local government transportation, energy, communications, water, and education infrastructure projects through the creation of an infrastructure fund.

The Panel did not put questions to Congressman Delaney, leaving that for the House. The Panel did, however, engage in a lively discussion with the remaining witnesses about the Canadian experience with P3s and explored the suitability of the Canadian approach for infrastructure projects in the US.

Witnesses outlined various factors that have resulted in successful P3 projects in Canada.  The creation of specialized provincial agencies staffed with experts skilled with both evaluating projects for P3 delivery and negotiating with the private sector was noted as a significant factor contributing to successful P3 deals. Further, the development by these agencies of consistent and predictable procurement processes and standardized documentation has facilitated the delivery of P3 projects and encouraged the development of the P3 market in Canada.

Mr. George of Fitch Ratings, discussing P3s from a global perspective, pointed out that P3s can provide public value, but these transactions need to be appropriately designed and carefully crafted to address all stakeholder concerns.  He indicated that projects that have a defined scope where performance can be measured are better suited to P3 delivery.  He noted that lessons can be learned from past P3 projects undertaken around the world.  He spoke to a few examples including the 407 toll road in Ontario and Chicago’s Skyway toll concessions, each of which came under considerable criticism and involved legal disputes.

Witnesses pointed out that in Canada P3s are not typically used to raise new money to pay for infrastructure through user fees or tolls.  Instead, P3s are viewed in Canada as a way to finance a project using private capital that is repaid overtime by the government through availability payments.  Congressman Sean Patrick Maloney (D-NY) indicated that while P3s are not viewed as a funding solution in Canada, P3s are being considered for that purpose in the US.

Dr. Siemiatycki of the University of Toronto indicated that the leading motivation in Canada for P3 delivery is achieving value for money, as opposed to finding new funding sources. Dr. Blain indicated that while their approaches and methodologies do vary, the various agencies developing infrastructure through P3s in Canada undertake value for money assessments that compare the relative cost of P3 delivery to the cost of traditional delivery. While noting the strengths of Canadian P3s, Dr. Siemiatycki described the challenges associated with determining whether P3s actually deliver better value for money when compared to traditional project delivery using government financing.

The Panel had many questions for the witnesses about the concept of value for money and whether a P3 delivery is actually cheaper than traditional delivery. The Members posed questions about expected rates of return and profit to the private party, risk transfer and associated risk premiums paid to the private party, and the disclosure of data relating to the assessment of a project for P3 delivery.

Witnesses did not all agree on whether construction, operations and maintenance costs are cheaper in a P3 delivery compared to a traditional delivery. However, the witnesses were generally aligned in noting the benefits of P3 delivery for the right projects including budget and schedule certainty, lifecycle asset management, risk transfer and innovation.
 

Florida I-595 Express Lanes Open

On March 26, the Florida Department of Transportation (FDOT) celebrated the grand opening of the $1.2 billion I-595 Express Corridor Improvements Project (Project) in Broward County, Florida.  The Project is the nation’s first Availability Payment public-private partnership and the first public-private highway deal in Florida.

The Project consists of the reconstruction of the I-595 mainline from the I-75/Sawgrass Expressway interchange to the I-595/I-95 interchange on I-595 and from Peters Road to Griffin Road on Florida's Turnpike, for a total project length of 13 miles.  The Project includes three reversible express, variable-toll lanes at grade in the median of the existing highway, from Interstate 95 to Interstate 75, a distance of approximately 10 miles.  

In March of 2009, FDOT signed the concession agreement with ACS Infrastructure Development Inc., a U.S. subsidiary of Group ACS in Spain, to design, build, finance, operate and maintain the I-595 for 35 years.  Construction of the Project began in June 2009 and was completed in less than 5 years and ahead of schedule.
 
Some of the key milestones and achievements highlighted by FDOT are:
  • I-595 improvements completed over 15 years sooner than originally projected
  • Innovative design/build processes allowed for execution of the I-595 Project in record time
  • Less than 0.7% of the construction cost in scope changes
  • No time added to the contract
  • All project milestones achieved
  • Project of the Year Award in 2009 by the American Road & Transportation Builders’ Association (ARTBA) for outstanding contributions to the promotion of public private partnerships that advance transportation infrastructure improvements
  • Award of Excellence in Civil/Public Works in 2010 by Southeast Construction Magazine for partnering with three private golf courses for storm water treatment and saving millions of dollars in right of way acquisitions.
  • 2009 North American Transport Deal of the Year by Project Finance Magazine. 
Nossaman is proud to have served as FDOT’s outside legal advisor on this groundbreaking transaction.
 
For more information about the I-595, visit the project website.

FDOT Receives Financial Proposals from Four Teams for I-4 Ultimate Project

The Florida Department of Transportation (FDOT) announced yesterday that it received four financial proposals in response to a Request for Proposals issued by FDOT on October 11, 2013 for the I-4 Ultimate Project.  On June 5, 2013, FDOT announced a shortlist of four proposers, all of whom submitted financial proposals yesterday and technical proposals on February 12, 2014 seeking the contract to design, build, finance, operate and maintain the project.

The estimated $2 billion project, which will be developed through a public-private partnership concession agreement, includes the reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County.   The project adds four tolled express lanes to I-4 while maintaining the existing free general use lanes, providing a choice to motorists. 

FDOT received financial proposals from the following shortlisted teams (listed in the order received):

  1. Ultimate Mobility Partners (InfraRed Capital Partners Limited; Fluor Enterprises, Inc.; Kiewit Infrastructure South Co.);
  2. I-4 Mobility Partners (Skanska Infrastructure Development Inc.; John Laing Investments Limited);
  3. 4wardPartners (VINCI Concessions S.A.S.; Meridiam Infrastructure I-4 Ultimate, LLC; Walsh Investors, LLC); and
  4. I-4 Development Partners LLC (Macquarie Capital Group Limited; OHL Concesiones.A.; FCC Construccion S.A.).
FDOT is reviewing the financial proposals and technical proposals and expects to make final selection of a best value proposer at a public meeting on April 23, 2014.  
 
For further information, please visit the project website at www.moving-4-ward.com.  A more detailed list of each proposer team can be found under “Project Info/Docs” on the project website.

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 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.

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.

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.

Recognition for USA Infrastructure Continues to Grow on Global Stage

As the 2013 award season heats up for 2012 successes around the world, the juries are increasingly finding the US market hard to ignore. Infrastructure Journal and PPP Bulletin International, the two London-based media organizations that annually recognize top projects and industry organizations worldwide, have each announced their finalists for this year's best transportation transactions and firms. Focusing on public-private partnership projects as opposed to those mega-projects which are the subject of major design-build contracts, these organizations nevertheless both found much to honor during a standout period.

Infrastructure Journal has announced that the Virginia Department of Transportation's Downtown Tunnel/Midtown Tunnel/MLK Extension Project ("Midtown Tunnel") is one of four finalists for its Global Transport Deal of the Year, the third time in four years IJ has so recognized US projects, starting with the Texas Department of Transportation's North Tarrant Express, named the Global Transport Project of 2009 and finalist for the overall Global Infrastructure Project of that year; and the Florida Department of Transportation's I-595 Project, also a finalist for the 2009 Global Transport Project. For this year's awards, the publication reviewed more than 600 submissions and will announce the winner on April 17, 2013.

PPP Bulletin International has announced that the California Department of Transportation's Presidio Parkway Project, the Midtown Tunnel and VDOT's I-95 Express Lanes project are all among the finalists for its Best Transport Project of the Year. The publication will announce the winner on May 23, 2013.

We congratulate VDOT, Caltrans and their private partners for this well-deserved recognition.

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.

Florida Department of Transportation Issues Request for Qualifications for the I-4 Ultimate Project

On March 12, 2013, the Florida Department of Transportation (FDOT) issued a press release regarding their publication of a Request for Qualifications (RFQ) soliciting statements of qualifications from prospective private entities for development and implementation of a public-private partnership for the $2 billion+ Orlando-area project.  FDOT is seeking a private firm that is experienced in designing, building, financing, operating and maintaining both general use and managed lane roadways.   

The I-4 Ultimate Project will be structured as an availability payment transaction.  The project includes the reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of State Road 434 in Seminole County and adds four tolled Express Lanes to I-4 while maintaining the existing free general use lanes.  As currently contemplated by FDOT, the project includes reconstruction of 15 interchanges, 56 new bridges and 68 bridge replacements.   

The release of the RFQ follows the industry forum held on March 4, 2013 which had over 1,200 industry participants in attendance.  Statements of qualifications are due on March 29, 2013. 

Confidentiality Issues in Government Contracting: Promoting Open Government and Fair Competition

State public records acts and the federal Freedom of Information Act (FOIA) were enacted to prevent favoritism and corruption, but have had unintended consequences on competition for public projects.  As discussed in a recent article, requests for information have become a vehicle for contractors to obtain valuable information about their competitors that might not otherwise be available. 

In addition, requirements to disclose information about a project to the public, including information about proposals received, whether compelled by law, political pressure, or otherwise, pose challenges for agencies running complex procurements.  The desire for greater transparency must be balanced against competing objectives as well as constraints such as federal and state laws limiting disclosure in certain cases, the risk of challenges to the procurement, and the desire to maximize the agency’s negotiating leverage to achieve the best commercial outcome. 

One example is a recent public-private partnership (PPP) procurement that proceeded under enabling legislation requiring the preferred bidder’s “proposal” to be posted to the project website prior to contract execution.  The procuring agency adopted a conservative interpretation of the law and asked the preferred bidder to provide a redacted proposal (including financial and technical submittals), removing only those portions of the proposal that were exempt from disclosure under the public records act.  This information is now available to the bidder’s competitors without any need to submit a formal request.

Another example involves an agency that conducted a PPP procurement under laws requiring public access to all procurement meetings in which official acts are taken.  To avoid premature disclosure of proposal information, evaluation subcommittee members were required to work independently, eliminating the opportunity to use a consensus approach to scoring, and project selection committee members were precluded from learning the proposal scores, or otherwise discussing the proposals, until the public meeting where the proposer was selected.

For some PPP projects, disclosure of information to the public is affected by restrictions associated with federal funding.  Both the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) impose such restrictions.  The FHWA design-build rule (23 CFR Part 636) requires certain information about proposals to remain confidential until selection is made.  The FTA’s Best Practices Procurement Manual specifically recommends that public agencies keep proposals confidential prior to award, in order to promote more meaningful negotiations and ensure trade secret protection.  The FTA also warns against the practice of “technical leveling” (i.e., providing information to proposers about ideas submitted by others, and then asking for revised proposals) since proposers are unlikely to invest their resources to develop ideas that may be transferred to other firms.

In the face of competing policies and requirements, several agencies have adopted a compromise solution, asking proposers to include executive-level summaries of their proposals and making it clear that the summary is subject to public disclosure.  Others require proposers to provide detailed information about their proposals in a form suitable for posting to the agency website after selection for negotiations, but prior to contract execution.  Agencies facing political pressure to provide greater disclosure might want to look to one of these models, if permitted by applicable law.

Nancy Smith co-authored this entry.

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.

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. 

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.

MAP-21: Treatment of Public-Private Partnerships Under Surface Transportation Reauthorization

The Moving Ahead for Progress in the 21st Century Act (MAP-21) contains meaningful reforms that collectively represent a significant improvement in federal surface transportation law.  For the most part, federal law directly on the subject of public-private partnerships saw little change of significance.  Other federal laws, though not directly addressing PPPs, also affect the viability as a project financing mechanism.  Changes to the TIFIA program and to federal tolling law that will markedly improve project finance via public-private partnerships were addressed in our earlier postings.

Meaningful Reform:

  • Private Sector Participation.  MAP-21 requires the Secretary to develop policies and procedures to (1) promote public understanding of the role of private investment in public transportation projects and (2) better coordinate the public and private sectors with respect to public transportation services.  To that end, the bill further requires the Secretary to identify impediments to the greater use of public-private partnerships and to address them by developing and implementing procedures similar to those used in FHWA's "SEP-15" process.  The SEP-15 process allows the Secretary to waive statutory and regulatory requirements on a case by case basis in order to increase project delivery flexibility and promote public-private partnerships.

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