Posted in P3s

Contractors and investors in P3s can continue taking a full tax deduction for interest on debt under recent IRS guidance (Revenue Procedure 2018-59, issued November 26). Many P3s are highly leveraged, and the interest deduction is a valuable tax benefit for developers. Were this deduction restricted, P3 developers’ (and by extension governments’) costs would rise; potential investors would demand higher rates of return; and infrastructure projects would be more costly.  Without this guidance, the 2017  tax law would otherwise severely restrict the interest deduction for ...

Los Angeles World Airports (LAWA) and LA Gateway Partners, LLC  (LAGP), together with equity providers and lenders, achieved Financial Close on the approximately $2 billion consolidated rent-a-car facility (ConRAC) at Los Angeles International Airport (LAX) on December 6, 2018.

LAGP is owned indirectly by funds managed by Fengate Asset Management ("Fengate LAGP US I, LLC", 83.3%) and PCL Investments USA, LLC ("PCL LAGP Partnership LP", 16.7%). After achieving Commercial Close on November 6, 2018, Fengate and PCL proceeded to secure private financing for the project  comprised ...

Posted in Airports, P3s

Los Angeles World Airports (LAWA) and LA Gateway Partners (LAGP) have reached commercial close on the design-build-finance-operate-maintain (DBFOM) agreement for the consolidated rent-a-car facility (ConRAC) at Los Angeles International Airport (LAX). In reaching this milestone, LAWA’s ConRAC project becomes the first public-private partnership for a ConRAC facility in the United States. LAGP will now proceed to close the financing for the project, which is expected to occur in December. The financing structure will be a private placement.

Leading up to commercial ...

Posted in P3s, Ports

The State of Delaware and a subsidiary of Gulftainer Company Limited (Gulftainer) have finalized a concession agreement for the operation and further development of the 100-year-old Port of Wilmington (Port).

While the concession agreement signed on September 18, 2018 is not publicly available, it is expected, based on deal terms described in Port documents submitted in support of approval of the P3 transaction,[1] that the agreement grants Gulftainer exclusive rights to manage the Port for a 50-year term. In return, Gulftainer agrees to invest up to $584M in the Port in the first ...

Posted in Job Opening, P3s

Los Angeles County Metropolitan Transportation Authority has posted notice of an opening for a position as Manager, Innovation in its Office of Extraordinary Innovation.

The job responsibilities will include:

  • Managing and facilitating evaluation of unsolicited proposals submitted to the OEI
  • Managing OEI’s P3 advisors
  • Managing pre-procurement activities for P3 projects such as project screenings, qualitative and quantitative assessment and value for money analyses ...
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The Port of Vancouver USA and its rail partners BNSF Railway and Union Pacific Railroad have substantially completed a $251M railroad access improvement project which significantly increases rail access in the port. The project creates a new rail entrance to the port, increases the port’s internal track miles from 16 to more than 50 (including a new loop track at the port’s Terminal 5 facilitating unit train transport) and increases rail capacity on BNSF and UPRR lines outside the port.  According to port CEO Juliana Marler, the project reduces rail congestion on the mainline and ...

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The Federal Railroad Administration (FRA) has released its latest Positive Train Control (PTC) implementation progress report for the 2nd quarter of 2018. The FRA’s latest report indicates that railroads are making steady progress toward PTC compliance.

FRA says that 15 railroads have installed 100% and 12 railroads have installed between 95 and 99% of the mandated PTC system hardware. In addition, all but one railroad has acquired sufficient spectrum required for PTC Implementation.

FRA states that railroad implementation of PTC has improved since December 2016, where ...

Last week FRA issued a notice of grant funding of $318 million for rail infrastructure and safety improvements through the Consolidated Rail Infrastructure and Safety Improvement Grants Program known as CRISI. The deadline for applications is September 17, 2018.

CRISI grants are designed to assist with financing passenger and freight rail system improvements to achieve safety, efficiency, and reliability benefits. Eligible applicants include states, public agencies, Amtrak, and Class II and Class III rail carriers and railroad or equipment manufacturer working with ...

Posted in News

The Federal Transit Administration (FTA) recently penned a Dear Colleague letter regarding the Agency’s implementation of the Capital Investment Grants Program, stating that FTA will consider federal loans or financing tools in the context of all federal funding sources for a project, implying that such financing assistance will be calculated as part of a transit project’s federal share. Other modal agencies consider federal loan programs, such as TIFIA or RRIF, to be part of a project’s non-federal share.[1]

The letter has caused a significant amount of discussion in the ...

Posted in News

Sponsors of critical maritime transportation projects received welcome news this week, as the U.S. Department of Transportation (USDOT) published a Notice of Funding Opportunity (NOFO) for America’s Marine Highway Projects. This notice makes available roughly $7 million in recently-appropriated funds for the Short Sea Transportation Program (46 U.S.C. § 55601), commonly referred to as America’s Marine Highway Program (AMHP).

The U.S. Maritime Administration (MARAD) is in charge of this important, but perhaps not well-known, program:  The America’s Marine Highway ...

Posted in Ports

The American Association of Port Authorities (AAPA) recently released its State of Freight III – Rail Access and Port Multimodal Funding Needs Report.  For its report, AAPA surveyed its members to determine what aspects of rail infrastructure ports most need.

We thought it would be informative to talk with John Young, AAPA’s Director of Freight & Surface Transportation's Policy, about the survey results and the report.

Nossaman:

John, thank you for taking the time to speak with us.  Can you please tell us a little bit about the AAPA?

John Young:

AAPA represents 130 public port ...

Posted in Ports

A joint venture lead by Capital Development Partners, an industrial real estate and infrastructure development company, has begun construction on a $125 million logistics campus at the Port of Savannah in Georgia, known as the Savannah Port Logistics Center.

The 197-acre industrial campus will offer dual rail service by Norfolk Southern Railway and CSX Transportation. The site also will offer transload capability and more than 2,000 container storage positions, according to a Capital Development Parners press release.

The first building to be constructed as part of ...

Posted in News

Last week the U.S. Secretary of Transportation Elaine Chao notified Congress of DOT’s INFRA grant winners.  The Chicago CREATE program will receive over $132 million to reduce congestion where multiple railroads intersect and to eliminate automobile traffic delays by separating rail and automobile traffic.  In Ohio, the Ohio Rail Development Commission will receive over $16.2 million to improve 30 miles of rail line.

The INFRA program formerly known as the FASTLANE program focuses on highway projects, but projects that shift freight to other modes of transportation are ...

Posted in Airports

On June 8, 2018, the City of Los Angeles, acting through the Los Angeles World Airports (LAWA) Board of Airport Commissioners, and LAX Integrated Express Solutions, LLC (LINXS) successfully reached financial close on the $4.9 billion agreement for the APM project.

After reaching commercial close with LAWA on April 11, 2018, LINXS proceeded to secure equity contributions and to arrange and close both bond and bank financings for the project.  Private financing for the project is comprised of approximately (a) $1.2 billion in private activity bonds issued by the California Municipal ...

Posted in Ports

Today, US DOT is formally announcing 26 INFRA grant award winners.  The INFRA program is the Administration’s rebranding of the former FASTLANE grant program, authorized by the 2015 FAST Act.  Both programs were intended to prioritize highway projects, although congestion-reducing rail and port infrastructure projects are eligible.

Among the 26 winners is the Philadelphia Regional Port Authority (PhilaPort), which received a $25.5M grant for a $110.5M project to improve the Packer Avenue Marine Terminal. The project will add capacity to modernize the Terminal, including ...

Posted in Legislation, News

A new Government Accounting Office report says the Federal Transit Administration has failed to meet three statutory requirements (two from MAP-21 and one from the FAST Act) related to the Capital Investments Grant program, the primary source of federal funding for commuter, light rail, subway, ferry and bus rapid transit projects.  FTA says it has no plans to do so.

GAO says FTA has not issued regulations for rating Core Capacity Improvement projects; established a grant program for simultaneous development of multiple transit projects; or implemented a pilot program for ...

In an effort to promote project flexibility, funding innovation, efficiencies and timely implementation, this week the Federal Transit Administration (FTA) released its final rule regarding P3s (and other private involvement) in public transportation projects.

The primary goal of FTA’s Private Investment Project Procedures (or PIPP), new 49 C.F.R. Part 650, is to identify and address FTA requirements that are impediments to the greater use of public-private partnerships and private investment in public transportation capital projects, while protecting the public ...

Posted in Legislation, News

As the December 31, 2018 deadline approaches for freight, passenger, and commuter railroads to implement Positive Train Control (PTC), the Federal Railroad Administration (FRA) is reporting on the progress of individual railroads in complying with the mandate.

In 2008, Congress passed the Rail Safety Improvement Act and mandated that certain railroads carrying passengers or hazardous materials are required to install PTC. The FRA describes PTC as a communication-based/processor-based train control technology designed to prevent train-to-train collisions, overspeed ...

The U.S. Senate Committee on Commerce, Science, & Transportation (Commerce Committee) recently held a nomination hearing to fill two vacancies on the Surface Transportation Board (STB), the economic regulator of railroads.  The nomination hearing of Patrick Fuchs and Michelle Schultz provided Senators with a venue to vent concerns related to the U.S. rail system.  In particular, Senator Wicker (R-MS) voiced concern over freight train interference of Amtrak passenger trains.

Congress created Amtrak in 1970 to relieve freight railroads of their responsibility to provide ...

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Posted in Airports, P3s

The Automated People Mover (APM) train system project at Los Angeles International Airport (LAX) reached a remarkable milestone this week with Los Angeles City Council’s unanimous approval of a $4.9 billion agreement with LAX Integrated Express Solutions (LINXS).

With City Council’s approval in hand, the City, acting through the Los Angeles World Airports (LAWA) Board of Airport Commissioners (BOAC), and LINXS reached commercial close on April 11th, signing the project agreement. LINXS will now proceed to obtain private financing for the project, and financial close is ...

The Northern Lights Express intercity rail proposal, connecting Minneapolis and Duluth, Minnesota with a stop in Superior, Wisconsin, advanced forward following a Finding of No Significant Impact (FONSI) from the Federal Railroad Administration (FRA).  The FRA’s decision found that the proposed rail project would not have any significant environmental impacts and allows the project to advance beyond the environmental phase.

Project proponents envision a rail service connecting six stations operating across existing BNSF Railway track.  The Northern Lights Express ...

Infrastructure Ontario and Metrolinx have awarded a fixed-price design-build-finance $245.5 million contract to upgrade Agincourt, Milliken, and Unionville GO stations on the Stouffville GO corridor. The winning bidder, EllisDon Transit Infrastructure (EDTI), will deliver the project using Infrastructure Ontario’s Alternative Financing and Procurement model. EllisDon constituents will provide financing and construction while WSP / MMM Group will be in charge of the design. The project includes upgrades to tracks, platforms with canopies, new pedestrian ...

Posted in Legislation, News

The White House released its long-awaited infrastructure proposal to Congress this morning, along with the President’s fiscal year 2019 budget proposal. While elements have been hinted at and leaked before, the 55-page document released today provides significant new details. Though the Administration began to advance discrete priorities by executive action this past year, this broad proposal will require legislation. The Administration has opted to leave to Congress the drafting of the bill, just as it did with tax reform.

The White House proposal includes:

  • Creation of new ...

Much has been said already about President Trump's call to "rebuild our crumbling infrastructure," in his first State of the Union address. The President asked Congress to advance a $1.5 trillion infrastructure plan that, in part, should be "leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment."

But not all "crumbling infrastructure" is state and local infrastructure. The federal government's infrastructure also needs attention (e.g., river locks, some dams and levees, federal buildings, etc.). In late ...

Posted in Ports

On January 22, the Port of Long Beach Board of Harbor Commissioners approved construction of an on-dock rail facility that will allow the faster movement of cargo with lower environmental impacts, port officials said in a press release.

The new Pier B on-dock facility will allow more containers to be placed directly on trains at marine terminals. Currently, the ability to build long trains within the Port is limited due to the lack of adequate yard tracks and the configuration of mainline tracks.

Because no cargo trucks are involved in these moves, the new facility will have ...

A government shut down arises when Congress fails to pass an appropriations act that enables federal agencies to spend. There should be separate appropriations acts for groups of agencies.  However, in recent years, Congress has not enacted these separate appropriations acts, but collected them in one enormous bill that includes virtually every agency of the federal government.  Having created these monster bills, Congress then delays passage over battles about what programs or expenditures should or should not be included.  This creates the delays that lead to government ...

Posted in Airports

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 ...

Posted in Legislation, Policy

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 ...

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 ...

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 ...

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 ...

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 ...

Posted in Airports

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 ...

Posted in News, P3s

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 ...

Posted in Legislation

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 ...

Posted in P3s

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 ...

This week, the Regents of the University of California and the University of California, Merced are celebrating the one-year anniversary of groundbreaking for the $1.3 billion, 1.2 million GSF UC Merced 2020 Project (the Project).

The Project involves the design, construction, financing, operation, and maintenance of a broad mix of academic, residential, student life, and recreational facilities at the University of California’s Merced campus, including the simultaneous construction of 13 new buildings, and is expected to nearly double the physical capacity of the ...

The UC Merced 2020 Project was a big winner at P3 Bulletin’s annual P3 Awards ceremony held in Washington D.C. last month, claiming the Gold Award for Best Social Infrastructure Project, along with the Silver Award in the Government Agency of the Year category. The award comes approximately one year after the historic groundbreaking on the project, which is currently under construction.

The project consists of the comprehensive development, design, construction, financing, operations, and maintenance of academic, administrative, research, recreational, student ...

The Sonoma-Marin Area Rail Transit (SMART) District kicked off passenger rail revenue service in Sonoma and Marin counties last week. The 43-mile rail line includes ten stations from the Sonoma County Airport to Downtown San Rafael.

The new service operates across former Northwestern Pacific Railway Co. (NWP) rail line. Acquisition of the rail line dates back to 1969 when the California Legislature directed the Golden Gate Bridge, Highway, and Transportation District to develop a transportation facilities plan. In its plan, the district recommended the preservation of ...

Posted in Airports

In the early hours of August 15, 2017, the Denver City Council approved a $1.8 billion development agreement between the City and County of Denver’s Department of Aviation and Denver Great Hall, LLC, a consortium led by Madrid-based Ferrovial, for the Great Hall Project. The City Council’s approval follows a 12-month predevelopment and negotiation phase and represents an opportunity for the airport to leverage the expertise of the Ferrovial-led team to relocate and modernize its security screening facilities and revitalize and expand concessions offerings within the ...

Posted in P3s

As part of an effort to facilitate the use of public-private partnerships (P3s) in public transportation capital projects, the Federal Transit Administration (FTA) issued on Monday a Notice of Proposed Rulemaking (NPRM) that aims to streamline the project approval process.

Under the proposed Private Investment Project Procedures (PIPP) set forth in the NPRM, recipients of Federal funding for public transportation projects would be able to request a modification or waiver of specific FTA requirements if the recipient demonstrates that those requirements discourage the use of ...

Posted in Airports, P3s

Los Angeles World Airports (LAWA) released the Final Request for Proposals (Final RFP) for the procurement of the elevated 2.25-mile Automated People Mover train (APM) at Los Angeles International Airport (LAX) on July 28, 2017. The Final RFP was provided to the three short-listed Proposer teams participating in the APM procurement.

The project is the first APM system 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 then will operate and maintain the ...

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Tags: PPP
Posted in Financing

SH 130 Concession Company, the private entity that operates and maintains the 41-mile southern section of State Highway 130, has emerged from Chapter 11 protection with new ownership, new senior management and $260 million in new financing. The financial reorganization has removed $1.4 billion in debt from the balance sheet of SH 130 Concession Company and will significantly improve the liquidity of the business.

SH 130 Concession Co. operates and maintains Segments 5 & 6 of SH 130 from Mustang Ridge to Seguin, Texas. The road is owned by the Texas Department of Transportation, which ...

In Florida, All Aboard Florida, a private entity, is about to launch passenger rail service from Miami to West Palm Beach, with future service extending to Orlando. In California, the California High-Speed Rail Authority is currently constructing a high-speed passenger rail line with the long-term goal of connecting the metro areas of San Francisco and the Los Angeles.  These projects have a common denominator: each envisions intercity passenger rail service entirely within one state.  But when it comes to economic regulation by the federal government, these projects are treated ...

Posted in Airports, News

President Trump kicked off infrastructure week on Monday, June 5th, by proposing to corporatize the U.S. air traffic control system, shifting about 35,000 workers, including unionized traffic controllers, technicians, and others, off of the government payroll, and removing the Federal Aviation Administration from its role operating the business that it regulates.  It’s an idea that has been in the national discourse since at least the 1980’s, and is supported by the major U.S. airlines and other key industry players, including the union representing air traffic ...

Posted in Financing, News

Among other policy initiatives, the Trump Administration has advocated for the need to improve the nation’s infrastructure in order to maintain America’s economic competitiveness. In its recently released 2018 proposed budget, the Administration included $200 billion in outlays related to its infrastructure initiatives.  The Administration’s budget also focuses on leveraging private sector involvement as part of the overall solution to reform and change how infrastructure projects are regulated, funded, delivered and maintained.

There have been reports that one ...

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Posted in Financing, News, P3s, Policy

On Tuesday, May 16, 2017 the Senate’s Committee on Environment and Public Works Subcommittee on Transportation and Infrastructure will hold a hearing titled Leveraging Federal Funding; Innovative Solutions for Infrastructure.

The stated purpose of the hearing is for Senators to examine the need for more public sector funding and private sector financing in the Federal Highway Program.  To this end, the Subcommittee has scheduled the following individuals to testify on this topic:

  • Eric Garcetti (Mayor, City of Los Angeles; Chair of U.S. Conference of Mayors Infrastructure ...
Posted in Financing

The Angels® Flight Railway Foundation, represented by Nossaman LLP and Shumaker Mallory LLP, reached a historic agreement with a team led by ACS Group and including Sener Engineering and Systems, to put the iconic Angels Flight® Railway in downtown Los Angeles back into service by this coming Labor Day.

The agreement utilizes a public-private partnership to restore the Railway to passenger service, through full-scale modernization and state-of-the-art safety improvements, and to operate and maintain it to industry standards for 30 years. Borrowing  a revenue risk concession ...

Posted in Design-Build

Last week the Orange County Transportation Authority executed the design/build contract for the I-405 Improvement Project with OC405 Partners, a joint venture consisting of OHL USA and Astaldi Construction Corporation.  With a contract price of $1,217,065,000 and a total estimated project cost of $1.9 billion, the project, which consists of 16 miles of reconstruction of one of the most congested corridors in the United States including 14 miles of tolled express lanes, is the largest highway project in California currently under development.

OCTA is a multi-modal county ...

Posted in Legislation

A three-judge panel of the California Court of Appeal for the Third District heard oral arguments last week in the longstanding companion cases challenging the legality of AB 32’s cap and trade auctions. (California Chamber of Commerce v. California Air Resources Board and Morning Star Packing Co. v. California Air Resources Board)  The questions most frequently posed by the Justices related to the nature of payments made for greenhouse gas (GHG) emission credits, a contributor in the billions of dollars to the state general fund for programs designed to reduce greenhouse gasses ...

Nossaman LLP’s 30-plus infrastructure attorneys offer clients, colleagues, strategic partners, and industry media a wealth of practical experience, insider insight, and thoughtful analysis here on Infra Insight. We blog about what we know best, from industry-leading procurements to local and national policy developments that affect the market and our clients.

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