Infra Insight Blog : written by Nossaman LLP Infrastructure attorneys, covers infrastructure project delivery, including Public-Private Partnerships, Operations & Management Agreements, policy, and news.

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. 

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At its October 27 meeting, the Texas Transportation Commission approved the issuance of a request for qualifications for the Horseshoe Project in Dallas County.  The project will be the first under new design-build legislation passed by the Texas legislature during the 2011 session.  Subchapter F, Chapter 223, of the Transportation Code prescribes the process by which the Texas Department of Transportation (TxDOT) may enter into a design-build contract with a private entity that provides for the design, construction, expansion, extension, related capital maintenance, rehabilitation, alteration, or repair of a highway project. Transportation Code §223.242 authorizes TxDOT to enter into, in each fiscal year, up to three design-build contracts for highway projects with estimated construction costs of $50 million or more.

The Horseshoe Project is part of the larger Project Pegasus, a $2.1 billion (construction only) project in downtown Dallas on two major interstates, I-35E and I-30.   All four legs of Project Pegasus are on the list of 2011 Top 100 Most Congested Roadways in the State of Texas.  The Horseshoe Project will replace two key bridges and connecting roadways crossing the Trinity River at I-30 and I-35E, as well as upgrading outdated roadway geometry.  The estimated construction cost of the Horseshoe Project is $800 million. 

The Horseshoe Project is one of several major new design-build projects in the United States, including the Gerald Desmond Bridge replacement project in Long Beach, Calif., VTA’s BART Berryessa extension project in the Silicon Valley, and New York's Tappan Zee Bridge replacement project, which is one of 14 projects chosen by the Obama administration for expedited federal review and approval.

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Ted Houghton is the new chair of the Texas Transportation Commission. Governor Rick Perry announced Houghton's appointment, effective October 7.  Houghton succeeds Deirdre Delisi, who recently resigned.  Delisi had served as chair since 2008.

Houghton was first appointed to the Commission in 2003 and was reappointed in 2009. A native of El Paso, Houghton is self-employed in the financial services industry. He is the first resident of El Paso to serve on the Commission.

"I'd like to thank Governor Perry for his trust in me to continue TxDOT down a path of responsiveness, change and modernization,” Houghton said.  “I look forward to leading the department as it becomes a better TxDOT, living up to the expectations of the Governor, the Legislature and our stakeholders.  Texas is a national leader in infrastructure and transportation system development, and I intend to reaffirm our place among the best, strongest and most innovative states as TxDOT delivers the projects the Legislature, our local partners and Texas motorists expect."

Houghton previously served on the School Land Board, the El Paso Water Utilities Public Service Board, El Paso's Rapid Transit Board, the board of directors of the El Paso Electric Company and as president of the Sun Bowl Association. He was also a member of the 1984 Los Angeles Olympic Committee.

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At its first regular meeting since the retirement of Amadeo Saenz, Jr. at the end of August, the Texas Transportation Commission named its choice for his replacement.  Effective October 17, 2011, former Texas Secretary of State Phil Wilson began his new job as TxDOT’s 19th Executive Director.  Mr. Wilson comes to TxDOT from Luminant, a Dallas-based electric generation company, where he was the senior vice president of public affairs.

In addition to his position as Texas’ Secretary of State, Mr. Wilson’s history of public service includes time working for both former U.S. Senator Phil Gram and current Texas Governor Rick Perry.  He also served as the chairman of the Governor’s Competitiveness Council where he fostered ideas for improving the state’s economic position for continued long term success including proposals to re-examine public-private partnerships, expand inland ports, repair and maintain existing infrastructure and promote rail relocation efforts.

In 2009, Texas adopted new legislation removing the requirement that TxDOT’s executive director must be a professional engineer.  Mr. Wilson will be the first non-engineer to hold the position since the new law passed.

“I am honored to be selected as the next executive director of TxDOT.  This is an agency with a rich history in successfully building for our future with dedicated employees,” said Wilson.” I look forward to working with the agency, Commission, Legislature and local communities on the most efficient ways to build infrastructure for Texas.”

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

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

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

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On June 22, 2010 the Texas Department of Transportation’s I-635 project became the first U.S. highway public-private partnership (P3) to achieve financial close in 2010. LBJ Infrastructure Group - a Cintra-led consortium - will build, finance, maintain and operate a 17-mile corridor which includes managed lanes in the congested Dallas-Fort Worth area. This project along with the North Tarrant Express (NTE), one of three U.S. transportation P3s to close in 2009, are nationally significant for advancing the use of managed lanes to address congestion.

The projects are notable not only for their magnitude and the method in which they will be developed, but also for their unique tolling and financial characteristics. Specific precedent setting-features include:

• The projects are valued as the largest transportation greenfield P3 projects in the United States and include construction costs of $2.7 billion for the I-635 and $2 billion for the NTE.
• The projects confirm the importance of Transportation Infrastructure Finance and Innovation Act (TIFIA) and private activity bonds (PABs) as financing mechanisms. The I-635 includes the largest amount of PABs for a U.S. toll road concession. The TIFIA loans of $850 million for I-635 and $650 million for NTE are the second and third largest to close.
• The Dallas Police and Fire Pension System is an equity partner in the private developer for both projects, making it the first pension fund to invest directly in infrastructure development in the U.S.
• They are the first two projects to obtain federal tolling authorization under the United States Department of Transportation’s Express Lanes Demonstration Program.
• To the extent that toll revenues exceed specified levels, the private developer will share up to 75% of the excess toll revenues with the Texas DOT.

The I-635 and NTE validate toll concession P3s as a viable method for delivering needed transportation projects in the United States.  For example, with the I-635, Texas DOT was able to leverage $489 million in public funds to deliver a project worth over $4 billion including costs for design, construction, operations and maintenance.  If past is prologue, the P3 market can expect more P3 toll concessions, as well as managed lanes projects, in the future.

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At the June 2009 meeting of the Texas Transportation Commission, TxDOT Assistant Director Phil Russell provided a first look at a proposed Rail Division for TxDOT, focusing on both passenger and freight rail planning for the future.  If created, the new  Rail Division would have a Rail Division Director, with  four departments under that to-be-named person's purview including Operations, Railroad Crossings, Safety and Project Development.

Commissioners indicated that it would be a wise move to create a Rail Division.  Commissioner Bill Meadows voiced that "the Commission needs to take a leadership position on rail", citing that other states are far ahead of Texas on rail planning and development.

In July 2009, Texas Department of Transportation (TxDOT) officials submitted seventeen preapplications to the Federal Railroad Administration for a variety of rail projects across the state.  The competitive grant program is a part of the American Recovery and Reinvestment Act (ARRA) and advances the Obama Administration’s vision for high-speed intercity passenger rail throughout the nation. In all, $8 billion in ARRA funds, in addition to a little over $90 million in FY 2008 and 2009 federal appropriations are available through this program.  To find out more, you can view a list of TxDOT’s proposed projects.

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