The long-awaited Presidio Parkway opened for the first time to Bay Area motorists on July 12th, ahead of schedule and to local and national praises.
The $1.1 billion Presidio Parkway replaces Doyle Drive – an outdated and seismically deficient viaduct – as San Francisco’s main connection to the Golden Gate Bridge. The new 1.6-mile, six-lane roadway tucks elegantly into the natural contours of the historic Presidio of San Francisco, and enhances transit, pedestrian and bicycle access within the national park area. The Presidio Parkway has received numerous honors, including awards for design, public outreach, historical renovation and innovative project delivery.
The Presidio Parkway is important in California because it is the only project delivered under the state’s revived public-private partnership (P3) law, which in 2009 authorized Caltrans and regional transportation agencies (under Streets & Highways Code Section 143) to enter into an unlimited number of P3 projects without certain restrictions that previous laws had imposed.
The Presidio Parkway was procured jointly by Caltrans and the San Francisco County Transportation Authority using California’s first availability payment contract for a transportation project. Under the contract, between Caltrans and Golden Link Concessionaire (GLC), GLC is responsible for delivering and operating the project using the design, build, finance, operate and maintain (DBFOM) model. In exchange for providing these services, GLC receives a construction milestone payment (payable shortly after the project opens to traffic) and a 30-year stream of availability payments to cover its costs to finance, operate and maintain the project plus a reasonable return on equity.
Availability payment P3s gained traction in the U.S. over recent years, as cash-strapped government entities searched for innovative ways to deliver much needed infrastructure to their constituents. These deals are attractive because they can offer significant advantages over traditional project delivery methods, including freeing up public funds for use on other projects, achieving expedited delivery schedules, and shifting to the private sector the risks of financing, design, construction, operation and long term maintenance.
Despite California’s multi-year multi-billion dollar shortfalls in highway transportation funding, however, the state has been slow to use its broad P3 authority for highway projects. Some market observers attribute this to the effects of the last financial crisis and considerable in-state political opposition to P3s, which contributed to the lapse in 2003 of the state’s previous P3 statutory authority.
The Presidio Parkway is currently used as a case study by the USDOT’s Build America Transportation Investment Center (BATIC), which serves as a one-stop shop for state and local governments, public and private developers and investors seeking to utilize innovative financing strategies for transportation infrastructure projects. P3 proponents are hopeful that a Presidio Parkway success story will reinvigorate California’s appetite for highway P3s, before the existing statutory authority expires at the end of 2016.
For more information on the Presidio Parkway and other US transportation P3 projects, visit BATIC’s website at http://www.transportation.gov/buildamerica.