Financial Close for Denver International Airport’s Great Hall Project

On December 21, 2017, the City and County of Denver and Denver Great Hall LLC  reached financial close on the $1.8 billion Jeppesen Terminal redevelopment project (Great Hall Project) at Denver International Airport.

Following on the heels of Denver City Council’s approval of the Development Agreement and commercial close in August 2017, this represents a critical milestone in Denver International Airport’s plans to upgrade its signature terminal for the post-9/11 era by, among other things, relocating and modernizing its security screening areas and improving the passenger experience through the development and management of a new concessions program.

The project will leverage the expertise of Denver Great Hall LLC, a consortium led by Madrid-based Ferrovial Airports that includes equity members Magic Johnson Enterprises/Loop Capital and Saunders Concessions, and a design-build team of Ferrovial Agroman West and local contractor, Saunders Construction.  The team was selected following a competitive procurement process and entered into a pre-development agreement with the Airport in September 2016.

The term of the Development Agreement is 34 years, comprised of an anticipated four-year construction period and a 30-year operating period.  The maximum contract value of $1.8 billion includes $650 million in capital costs, a contingency for potential Owner-initiated changes, and annual supplemental payments following substantial completion.  Revenues from the revamped concessions program will be shared 80%/20% between the Airport and Developer.

Developer’s financing consists of $189 million in short- and long-term private activity bonds, issued in eight tranches with maturities ranging from 2022 to 2049, and $73 million in equity.  Citigroup served as the lead underwriter of the bonds.  The bonds were rated BBB by Fitch and BBB- by Standard & Poor’s.

The Airport opened the “Great Hall” two decades ago, when it was designed to accommodate 50 million passengers each year.  With the Great Hall now nearly 20 percent over capacity, and significantly higher passenger traffic projected in the coming years, the Great Hall Project “will greatly enhance security, improve passenger flow and return the terminal to a passenger oasis.” (

Federal Government Repeals MPO Consolidation Rule

President Trump recently signed into law a repeal of the MPO Coordination and Planning Area Reform rule less than a year after the rule was finalized by the Obama administration’s Federal Highway Administration and Federal Transit Administration. The rule, which was largely unpopular with local metropolitan planning organizations (“MPOs”) across the country, aimed to consolidate many MPOs. As a demonstration of just how unpopular the rule was, the bipartisan repeal effort unanimously passed in the Senate and overwhelmingly passed in the House.

The MPO Consolidation Rule was championed by former Transportation Secretary Foxx following his experience as the Mayor of Charlotte, North Carolina, where he was frequently frustrated in his efforts to coalesce support for major infrastructure projects among multiple MPOs. The rule sought to ensure MPO planning took place at a regional level, encompassing entire urbanized areas. Critics of the rule pointed out that it removed from local authorities the ability to plan their own infrastructure initiatives and placed increased control in the hands of federal agencies, including the USDOT.

Congress swiftly repealed the rule, but did not do so under the Congressional Review Act. Because of this, future Administrations are not prohibited from attempting to implement a new rule that approaches the subject slightly differently. However, the Trump administration has not indicated any interest in doing so.

MPOs were first established through the Federal Aid Highway Act of 1962 and have been strengthened by several generations of legislation since. The nation’s 409 MPOs provide regional perspectives and help departments of transportation in each respective state determine priorities for certain regional infrastructure needs. Under the now-repealed rule, MPOs whose jurisdiction overlapped with urbanized areas were to be consolidated into a single, larger MPO.

With the Public Law 115-33 repeal of the MPO Consolidation Rule, the former MPO structure remains in place. While many industry experts agree the infrastructure planning process can be improved at the local and regional level, the industry consensus is that the MPO Consolidation Rule was not the proper vehicle for improvement and its repeal has been widely praised.


Bombardier and Metrolinx Make a Nice Recovery on Problematic Eglinton LRV Order

Bombardier and Metrolinx announced that they have amended their Eglinton Crosstown LRV contract and settled their pending arbitration, showing how re-negotiation and compromise can preserve project schedule and quality, cement customer relationships and eliminate financial uncertainty.

Under the agreement, Bombardier’s LRV production is dramatically cut from 182 to 76 vehicles. However, Bombardier also secured an 18 month extension on its Metrolinx-owned GO Transit operations and maintenance contract.  The amended contract “resets the relationship … and brings certainty to the completion of this project,” Bombardier officials said. The financial terms are not disclosed, but Bombardier deserves credit for this recovery.

The Eglinton Crosstown line is scheduled to open in 2021.  In May of 2017, in order to ensure vehicle supply for start-up, Metrolinx ordered 61 Citadis Spirit LRVs from Alstom, including 44 slated for potential deployment on Eglinton Crosstown line.  Assuming Bombardier delivers on the amended order, Metrolinx will deploy the Alstom vehicles on the Hurontario light-rail project.  A Metrolinx press release said: “This new agreement is positive news for commuters who can continue to have full confidence that we are building an excellent transit system for them. We are focused on building a great Eglinton Crosstown LRT with reliable vehicles that are delivered on-time – this is a decisive and significant step towards that goal.”  Kudos to Metrolinx, for first ably implementing a feasible vehicle supply contingency plan for Eglinton and then negotiating to secure a portion of the original Bombardier order.

Home Stretch for Toronto’s Finch West LRT Procurement

Humber College students and Toronto West residents will soon be able to access Canada’s largest subway system in five years.  The CA$1 billion Finch West LRT project is slated to open in 2022.  The new dedicated light rail transit line will run 11 kilometres along the surface of Finch Avenue from Humber College’s north campus to the new Finch West subway station on the Toronto-York Spadina Subway Extension that opened yesterday.  There will be 16 surface stops and 2 below-grade termini at Humber College and the subway station.  The Finch West LRT project includes a maintenance and storage facility for the light rail vehicles.

Infrastructure Ontario and Metrolinx issued a Request for Proposals to three shortlisted bidders on February 20, 2016 to design, build, finance and maintain the Finch West LRT project:

  • Humber Valley Transit Partners, including SNC-Lavalin, Graham, ACI;
  • Mosaic Transit Group, including ACS, Aecon, and CRH; and
  • FACT Partners, including EllisDon, Bechtel, and Herzog Transit.

Following an extension of the proposal due date, the procurement was stalled to allow time for the resolution of a dispute between Metrolinx and Bombardier over repeated delays in the supply of a light rail vehicle prototype and subsequent vehicles for Toronto-area lines.  Procurement restarted in May 2017 after Metrolinx announced that it had entered into a new supply contract with Alstom as the alternative supplier of the vehicles.

All three teams have submitted their proposals by the new deadline on December 13, 2017.  The preferred proponent is expected to be identified in Spring 2018.

New York MTA Approves $1.8B Design-Build Contract for the Long Island Railroad Expansion Project

The New York Metropolitan Transportation Authority’s (NYMTA) board has approved a $1.8 billion expansion project for another important milestone in Governor Andrew M. Cuomo’s, comprehensive, interconnected plan to improve transit and transportation throughout the New York metropolitan region.

The project includes signal system and bridge state-of-good-repair elements, but the central element is the addition of a 9.8-mile third track between Floral Park and Hicksville, NY on a segment of the LIRR mainline that handles more than 250 trains per weekday.

The project also includes removal of seven at-grade rail crossings, where there were more than 100 vehicle strikes in 2015. The work was procured as a design-build contract and awarded to a Dragados USA-lead joint venture called 3rd Track Constructors (3TC).

“This modernization initiative will provide faster commuting with a more reliable network, and will allow us to keep the railroad in a state of good repair,” said MTA Chairman Joseph Lhota. “All too often, major delays on the LIRR are tied to incidents along this corridor. With this investment, Long Islanders and New York City residents alike will be able to avoid the crippling and cascading delays that affect the entire network.”

Governor Cuomo announced the project in January of 2016 and a two-step procurement process was approved by the MTA Board in November of 2016. Four bidders were pre-qualified; MTA convened a series of one-on-one meetings with the bidders. Three of the bidders submitted design-build proposals, which were reviewed by technical committees, including staff from the LIRR, MTA and NY Department of Transportation. The Final Selection Committee, comprised of railroad, transportation, and construction industry experts, reviewed the technical and price proposals during the summer before pricing negotiations this fall.

Beginning in January 2018, the contractors will work to complete design, surveying, mobilization, utility relocations, and other early construction activities. Major construction is expected to begin in late 2018 with project completion in 2022.

Design-build is not new to MTA.  MTA has successfully used design-build in other recent projects such as the new Gov. Mario M. Cuomo Bridge, and LIRR’s Ellison Avenue Bridge and Post Avenue Bridge replacements.


P3 Lawyer Appointed Federal Railroad Administration Chief Counsel

President Trump recently appointed former Seyfarth Shaw LLP (“Seyfarth”) attorney Juan D. Reyes, III as Chief Counsel of the Federal Railroad Administration (“FRA”).  Mr. Reyes was previously a partner in the real estate department of the New York City office of Seyfarth and he led the firm’s P3 practice.  Proponents of P3s may be pleased to have a Chief Counsel that understands the potential benefits of P3s.

The appointment of Mr. Reyes marks a continuation from the Obama Administration of appointing counsel with P3 experience.  President Obama’s first FRA Chief Counsel, Karen Hedlund, a partner at Nossaman LLP prior to her appointment, also had considerable expertise with P3s.  Prior to the Obama administration, the FRA Chief Counsel position was more often staffed with an attorney focused on the FRA’s safety mission.  The appointment of Mr. Reyes may indicate that the current administration will pursue an infrastructure legislative package that includes P3s as part of that effort.

Mr. Reyes will assist the FRA in upgrading its passenger and freight rail systems, which includes the Northeast Corridor and high speed rail in California and Texas.  Further, he “will also play a critical role in reviewing and advising on Elon Musk’s proposed ‘hyperloop.’”

Mr. Reyes will oversee FRA’s legal department of 50 attorneys.

LAWA Receives Technical Proposals from Three Teams for APM Project

Los Angeles World Airports (LAWA) announced last Thursday that it has received three Technical Proposals in response to its Request for Proposals for the Automated People Mover (APM) project.

Part of LAWA’s $5.5 billion Landside Access Modernization Program (LAMP), the APM system will be approximately 2.25 miles long and feature an elevated dual lane guideway, six passenger stations, and an off-line maintenance and storage facility.  Three stations will be located within the central terminal area at LAX, and three stations will be located at two new intermodal transportation facilities and a new consolidated rental car center.  The stations within the central terminal area will provide fast and easy connections to the airline terminals via pedestrian bridges equipped with moving walkways.

LAWA’s APM project is the first APM system in the United States to be procured through an availability payment public-private partnership (P3) delivery model.  The selected proposer will design, build, and partially finance the APM system, and will then operate and maintain the APM system over a 25-year term.

LAWA received Technical Proposals from the following shortlisted proposer teams (listed in alphabetical order):

  • Gateway Connectors
  • LAX Connecting Alliance

Financial Proposals for the project are due on December 20, 2017.  LAWA will review the Technical and Financial Proposals over the next two months, and expects to make a selection decision in January 2018.

LAWA’s official press release can be found here.  For more information, please visit the project website at

Proposed House Ways and Means Committee Tax Bill Would Eliminate All PABs

Last week the House Republican leadership unveiled its much anticipated US tax reform bill.  The bill proposes the most sweeping changes to the tax code in 30 years—since the 1986 Tax Act, which by the way imposed many of the restrictions on private activity bonds that we operate under today.  Among its many provisions would be the outright elimination of tax exempt private activity bonds for a host of public works type projects.

PABs have been the cornerstone of the financing of billions and billions of dollars of new public infrastructure—much of the focus has been on the $6.5 billion of PABs for qualified transportation projects issued since 2005 helping in large part to spark the use of P3’s for highway and transit projects across the country.  The use of PABs has helped “leverage” almost $30 billion of new transportation infrastructure investment, including attracting nearly $4.5 billion of private equity.  But it isn’t just PABs for transportation projects that would be eliminated—ALL exempt facilities, including seaports, airports, water and wastewater projects that incorporate private equity (and transfer risk to the private sector) would be eliminated.  And according to the Joint Committee on Taxation, the elimination of PABs would only produce $38.9 billion of “savings” that would be used to offset the cost of, among other things, the major reduction of the corporate tax rate.

One of the primary policies behind the tax proposal is to stimulate private investment to grow our economy.  But without the 21st century infrastructure that can result (and has resulted) from the use of this delivery and financing technique, how is corporate America supposed to get its workers to their jobs and its goods to market?  Amazon understands this:  among its criteria for selecting a metropolitan area to locate its new headquarters building and make a $5 billion investment and employ 50,000 worker is proximity to mass transit, no more than 2 miles from a major highway and no more than 45 minutes from an international airport.

And without PABs the burden to finance new infrastructure projects would fall squarely on state and local governments.  According to a report released today, Fitch Ratings has expressed a concern over the fiscal strain on state and local finances that could result from adoption of the current tax proposal, including “…lowering interest in and feasibility of public-private partnerships, which have increasingly been used to procure transportation projects.”  Fitch also noted that the proposed halt to PABs “would raise airport financing costs and possibly cause a reduction in private participation in water projects.”

It’s too early to try to predict how much, if any, of the House tax proposal will survive and in what form.  Many industry groups and state and local government organizations have already written letters to House Ways and Means Committee Chair Kevin Brady and Ranking Member Richard Neal expressing their concerns about the current proposal, including the provision that would outright eliminate this valuable financing technique.


PPP Canada Phased Out Pending Launch of Canada Infrastructure Bank

The Canadian government is taking a new approach to P3s.  By the end of 2017, PPP Canada will have ceased operations, and the Canada Infrastructure Bank (the “CIB”) will be launched.

Year end is nearly upon us.  What has PPP Canada accomplished, and what is expected from the new CIB?

PPP Canada’s Contributions

PPP Canada was established by the Harper government in 2008.  At that time, certain provinces were already very experienced in the delivery of large and complex public infrastructure projects using P3 delivery models (including British Columbia, Alberta and Ontario).  The specific mandate of PPP Canada was to improve the delivery of public infrastructure by achieving better value, timeliness and accountability to taxpayers through P3s.  PPP Canada managed, and provided project funding through, the $1.2 billion CAD P3 Canada Fund and focused on leveraging greater value for money from federal investments in provincial, territorial, municipal and First Nations infrastructure.

Looking back at its accomplishments, PPP Canada reports that it has invested an aggregate of over $1.3 billion CAD in 25 infrastructure projects in Canada.  Nine of these projects are in operations and the balance are currently under construction.  These projects span Canada, reaching as far north as Iqaluit, Nunavut and Whati, Northwest Territories, stretching east out to Saint John, New Brunswick, west out to Vancouver Island, and including projects at many locations in between.  The projects that PPP Canada enabled also cover a wide variety of asset classes including roads and bridges, water/waste water facilities, bus storage and transit facilities, an LRT project, an organics biofuel facility, an airport improvement project, a hydroelectric development and a housing renewal project.

PPP Canada played a critical role in developing tools to assess projects for P3 delivery and in assisting a variety of agencies with P3 project development and procurement.  PPP Canada had a significant impact on the Canadian P3 market and contributed to the expansion and diversification of that market.

The Future: Canada Infrastructure Bank

Where does the CIB begin as the new federal agency managing federal funds for infrastructure projects that involve private sector investments?  Is the CIB’s scope and mandate different from PPP Canada’s?

The focus and approach that the CIB will take is not yet clear, which has caused some concern in the industry; overall market participants are anxious to receive more details.  There are some hints on what we might expect from the CIB in the Canada Infrastructure Bank Act (the “CIB Act”).  The CIB Act, which establishes the CIB, received royal assent on June 22, 2017.

CIB’s Purpose and Powers

The CIB Act provides that the CIB’s purpose is to invest in, and to attract investments from private sector investors and institutional investors in, revenue-generating infrastructure projects that will be in the public interest.

The CIB has a broad range of powers to carry out its purpose.  The following powers specified in the CIB Act are of particular interest:  (a) structuring proposals and negotiating agreements with the proponents of infrastructure projects and with investors in infrastructure projects; (b) investing in infrastructure projects, including by way of equity investments, loans or acquiring derivatives; (c) extending credit or providing liquidity;  and (d) receiving unsolicited proposals for infrastructure projects that come from private sector investors or from institutional investors. Further, the CIB Act provides that the CIB may provide loan guarantees for infrastructure projects provided that the Minister of Finance approves the loan guarantee.

Funding the CIB

The CIB will be funded with up to $35 billion CAD.  While not specified in the CIB Act, the CIB website indicates that: (a) $5 billion CAD will be for public transit systems, $5 billion CAD will be for trade and transportation corridors, $5 billion CAD will be for green infrastructure projects; and (b) the remaining $20 billion CAD in capital will be available for investments that will result in the CIB holding assets in the form of equity or debt.

Concluding Observations

In assessing the CIB’s powers and mandate (as we understand them so far) against the backdrop of PPP Canada’s purpose and activities over the past several years, we can see that:

  1. The CIB has a much larger pot of capital to use to advance infrastructure projects in Canada.
  2. The CIB will focus on revenue generating projects. This is an interesting variance from PPP Canada; most P3s in Canada to date have been availability payment deals for infrastructure with no or limited revenue generating potential relative to project capital cost. Canadian taxpayers are not accustomed to user-pay infrastructure beyond utilities, water/waste water, some toll roads and modest transit fares.   It is not clear to what extent the CIB will provide federal support to non-revenue generating deals.
  3. The CIB will seek to attract institutional investors. This was not a particular objective of PPP Canada.
  4. PPP Canada generally focused on granting funds, making loans and providing P3 delivery expertise to public agencies to enable infrastructure projects. The CIB has much more flexibility.  Based on the CIB Act and the CIB’s website, it appears that the CIB may be (a) a procuring authority; (b) a source of expertise, a source for credit enhancement and/or a source of public funds for projects being procured by other public agencies in Canada; and/or (c) an investor in P3 SPVs alongside private sector and institutional investors.  This flexibility has been identified as a source of concern in the market.  The CIB will need to be alert to the potential conflicts created by these options.

We must all wait and see how the CIB will engage public agencies and market participants. The CIB will need to weave through several challenging issues, including (a) determining how to handle unsolicited proposals to ensure fair opportunities to market participants and best value for tax payers (each typically derived from competitive processes); (b) identifying criteria for selection of projects for funding; (c) deciding how involved the CIB should be in infrastructure procurements (acting as a procuring agency or an advisor?); and (d) determining the position that the CIB should take on projects that involve private investor and institutional investor investments.

News arising from the CCPPP conference in Toronto this week indicates that the CIB chair, Janice Fukakusa, intends that the CIB (a) will complement existing models as opposed to competing with or replacing approaches that are already working in Canada; and (b) will provide federal support in whatever form is best suited for a given project.[1]  This sounds like a wise approach.

Canada has a strong and stable P3 market and several provincial and municipal agencies with a track record of successful projects.  With careful planning, the CIB has the opportunity to become a reliable option for funds and expertise to enable infrastructure projects throughout Canada and to have a positive impact the Canadian P3 market.


[1] See P3 Bulletin, “Canada Infra Bank CEO due ‘shortly’”, November 7, 2017.

Past, Present, Future at P3 Bulletin’s Hub South Conference

The United States has the largest emerging public-private partnership (P3) market in the world for infrastructure projects. Due to decreased tax revenue and shrinking budgets, many state and local governments in the southern United States have embraced alternative methods of project delivery. Public entities in the southern United States boast some of the most extensive P3 experience in the U.S. and it dates back to before the turn of the century with the Pocahontas Parkway in Virginia, Texas, and Florida pioneering several complex P3s.

Public officials and industry partners convened for the third annual P3 Bulletin Hub South Conference at the Conrad Miami last month to celebrate the past, learn about present deal flow, and think about future developments.

Celebrating the Past

Florida is home to the nation’s first, second, and largest availability payment transactions in the U.S. transportation sector. The Florida Department of Transportation reported that the P3 model used in the I-595 Corridor Improvement Project enabled construction to finish on time and on budget. City of Miami commissioner and mayoral candidate Francis Suarez highlighted how the Port of Miami Tunnel has removed 80% of the truck traffic in downtown Miami, alleviating some of the 125 hours a year that Miami citizens spend in their cars. In a similar manner, the I-4 Ultimate Project is expected to relieve traffic congestion by increasing highway occupancy rates across the Orange and Seminole Counties.

Present Deal Flow

The Georgia Department of Transportation is advancing its Major Mobility Investment Program of 11 major projects that will ease congestion along key passenger and freight corridors. More than half of these will be procured as P3s, following the success of the public agency’s first P3 procurement, the Northwest Corridor Project.
The outlook for P3 deal flow in other regions ravaged by recent hurricanes is not as optimistic, but crises precede opportunities for growth and innovation. Puerto Rico plans to utilize P3s and unsolicited proposals to harness renewable energy, fiber optic cable, and undergrounding technologies to get its island back onto a sustainable grid. Affordable housing in Houston and Miami remain a top priority.

Future Developments

Multiple public officials emphasized the significant role that unsolicited proposals will play in the future. When private companies are not viewed as adversaries, new technologies such as autonomous vehicles and urban gondolas can bring innovation to public infrastructure. Decreased headways and the jaw-dropping views will be just a bonus.

Although plenty of atmospheric conditions have negatively impacted the southern United States in recent months, P3s will increasingly play an important role again as the region recovers. The P3 history in this region demonstrates that its governmental agencies have a good understanding of the value of private investment in public infrastructure.