FHWA PUBLICPRIVATE PARTNERSHIP INITIATIVES

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FHWA PUBLIC-PRIVATE PARTNERSHIP INITIATIVES
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WHAT ARE PUBLIC-PRIVATE PARTNERSHIPS

• Contractual agreements between public and private
  sector partners to renovate, construct, operate,
  maintain, and/or manage a facility or system.
  While the public sector usually retains ownership
  of the facility or system, the private party may
  be given responsibility for major elements of the
  facility.

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DOT SUPPORT FOR PPPs

• We fundamentally rewrote the book on surface
  transportation with ISTEA, the Intermodal Surface
  Transportation Equity Act.
• We are approaching a similar crossroads today,
  and I am convinced that the smart course for
  transportations future requires a turn in the
  direction of public-private partnerships.
• Secretary Mineta

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WHY PUBLIC-PRIVATE PARTNERSHIPS?

• Increasing investment requirements
• Aging infrastructure
• Growing congestion
• Increasing construction costs
• Mounting budget pressures
• Revenue growth slowing
• Resistance to tax increases
• Increasing need for innovation to operate
  transportation systems more efficiently
• Downsizing of public highway agencies

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BENEFITS OF PPPS

• Accelerate project start-up
• Accelerate project completion
• Fix price early in design phase
• Single point of responsibility
• Allocate project risks among parties
• Provide life cycle cost efficiency
• Improve operational efficiency
• Enhance cost control and risk management
• Take advantage of each sectors strengths

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FHWA PPP INITIATIVES

• Report to Congress -- December 2004
• 5 Parts
• History of PPPs for highways and transit
• Benefits of PPPs
• Impediments to formation of PPPs
• Stakeholder comments
• Conclusions and recommendations
• Provides information on completed and planned
  PPPs that is a valuable resource for those
  interested in PPPs

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PPP WORKSHOPS

• 7 workshops intended to provide overview of PPPs,
  potential benefits, and implementation issues
• Oregon/Washington
• Minnesota
• Texas
• Florida
• California
• North Carolina
• Illinois/Missouri
• State legislators an important target audience to
  help them understand benefits and use of PPPs
• Roundtables to discuss State specific issues
• Summary report on PPP website

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PPP ENABLING LEGISLATION

• Summary and comparison of PPP legislation
  currently in place in various States
• Model legislative language covering a variety of
  potential topics that might be included in State
  PPP statutes
• Examples of contract documents/agreements that
  have been put in place and discussion of key
  points in those agreements
• Final report will be on PPP web site soon

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SUMMARY OF PPP ACTIVITY AROUND THE WORLD

• Based on Public Works Financing database of PPP
  projects
• Summarizes PPP projects in terms of
• Region
• Predominant contract types
• Size ()
• Project type (highway, bridge, tunnel)
• Toll/Nontoll

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PPP CASE STUDIES

• Examining a variety of different types of PPPs
• Examining institutional issues affecting
  implementation of PPPs
• Examining factors that led to both successful and
  less-than-successful outcomes
• Comparing projects in this country with those in
  other countries to examine similarities and
  differences.

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FHWA PPP WEB SITE

• Initiated in January 2005
• www.fhwa.dot.gov/ppp
• Closely related in innovative finance web page
  www.inovativefinance.org
• Currently updating and enhancing both web sites
  and may eventually integrate them even more
  closely

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PPP CAPACITY BUILDING

• Have heard from many sources that public sector
  agencies need training in PPP issues, especially
  financial and contractual issues
• FHWA has initiated a project to identify needs
  and develop a plan to meet those needs
• FHWA has similar professional capacity building
  programs in ITS, Planning, Security, and Freight
• Will be variety of mechanisms for delivering
  information to wide range of individuals.
• Being developed by Volpe Center

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PPP MANUAL

• Resource on techniques that can be used to
  implement PPPs and new efforts being undertaken
  to facilitate PPPs
• Manual in final review process within FHWA
• Focuses on financing techniques applicable to
  PPPs and on flexibilities in various Federal laws
  that can be used to implement PPPs.
• Will contain links to many other resources

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PPP MANUAL

• Financing techniques
• TIFIA
• Section 129 loans
• GARVEE Bonds
• Flexible matches
• Toll credits
• Tolling Fed-aid highways
• Sale or lease of Fed-aid highways

• Flexibilities in Fed law
• Environmental review process
• Integrating planning and NEPA processes
• Right-of-way
• Contracting procedures
• SEP-15

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Recent PPP Projects

• Chicago Skyway
• 99-year lease in 2004 to operate, maintain, and
  collect tolls
• Paid City of Chicago 1.83 billion
• Other State and local jurisdictions very
  interested in similar long-term leases
• First International Partner to be a major
  facility majority shareholder in U.S.A. (Cintra
  from Spain and Macquarie from Australia)

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Recent PPP Projects

• Dulles Greenway
• Privately owned Design Build Finance Operate
  project outside Washington, D.C.
• First private toll road in Virginia since 1816
• Variable peak and off-peak pricing
• Automated toll collection
• Recent sale to Macquarie (Australia) in 2005 51
  years left in lease
• About 615 M sales price 8 yield first 10 years

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Recent PPP Projects

• Trans-Texas Corridor
• Vision for 4,000 mile system of toll and non-toll
  facilities to be developed over 50 years
• Passenger and freight highways
• Passenger and freight railroads
• Water, oil, gas, and other utilities
• Cintra/Zachary group selected to develop first
  316-mile segment from San Antonio to Dallas
• 6 billion of private capital to design, build,
  and operate road
• 1.2 billion payment to State for right to
  operate as toll facility for 50 years

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SPECIAL EXPERIMENTAL PROJECT 15 (SEP-15)

• Section 502 of title 23 allows waiver of title 23
  requirements and regulations on a case-by-case
  basis.
• SEP-14, which allows experimentation with
  innovative contracting techniques such as
  design-build, not broad enough for certain PPP
  proposals such as I-81 and Trans-Texas Corridor
• SEP-15 instituted in October 2004 to allow FHWA
  to experiment in four major areas of project
  delivery - contracting, right-of-way acquisition,
  project finance, and compliance with NEPA and
  other environmental requirements.

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SEP-15 GOALS

• Increase project delivery flexibility
• Encourage innovation
• Improve timely project construction
• Promote public-private partnerships
• Identify current FHWA laws, regulations, and
  practices that inhibit greater use of public
  private partnerships (PPPs) and private
  investment in transportation improvements
• Evaluate procedures and approaches that address
  these impediments.

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SEP-15 ELIGIBILITY

• SEP-15 projects must test an innovative project
  delivery technique that is prohibited by a
  current provision of title 23 of the United
  States Code, FHWA regulations, or FHWA policy
• SEP-15 projects cannot be used to modify
  environmental or other requirements external to
  title 23 of the United States Code.
• The State must demonstrate that the experimental
  feature is one that will advance the goals of the
  SEP-15 program.

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SIMPLIFIED SEP-15 PROCESS

• State submits SEP-15 application to FHWA Division
  Office
• Application is reviewed concurrently by FHWA
  Division and HQ staff
• If approved State and FHWA enter in Early
  Development Agreement stipulating roles and
  responsibilities and how requested flexibilities
  in federal procedures will be implemented.
• Project implementation
• Project evaluation

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SEP-15 APPLICATIONS

• No specified format
• Should include following elements
• Brief project description
• Description of each proposed experimental feature
• Why State is seeking flexibility
• How desired flexibility varies from current regs,
  policies, and practices
• Expected benefits of flexibility being sought
• Performance measures that will be used to
  evaluate alternative approaches

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SEP-15 STATUS

• Approved Projects
• Trans-Texas Corridor
• Oregon Innovative Partnerships Program
• Texas Open Road Tolling System
• Other Applications
• Minnesota FAST Lanes -- on hold
• Florida I-10 Bridge Replacement SEP-15 not
  needed
• Georgia State Route 316 SEP-15 not needed,
  approved under SEP-14

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SAFETEA-LU PROVISIONS PERTAINING TO PPPs

• Private Activity Bonds
• Enhanced ability to toll Interstate System
• Increased flexibility in design-build contracting
• Streamlined environmental process
• Improvements to innovative finance programs