Infrastructure Development & Management Strategies

The New Orleans Aviation Board’s application to privatize Louis Armstrong New Orleans International Airport has been approved by the Federal Aviation Administration (FAA). The board now has the authority to commence a competitive procurement process, and expressed that it intends to issue a RFQ on November 2. In 2008, the airport had about 3.8 million passengers boarding and 131,197 aircraft operations with 9 airlines. This is another airport privatization attempt following the collapse of Chicago’s Midway Airport deal this year.

(Infrastructure Investor)

Mississippi DOT announced earlier this month that the Jackson Airport Parkway, a would-be first tollroad procured with PPPs in the state, was suspended because its senior debt failed to obtain an investment grade rating, which was a precondition for it to receive federal TIFIA loan support.

(www.Tollroadsnews.com)

With its October 1 deadline for financial close nearing, the Port of Miami Tunnel (POMT) procurement appears on track, with a ten-bank club having this week committed the necessary support for the anticipated $354M bank debt, supplementing a $354M TIFIA loan.  Both figures are in line with the concessionaire’s earlier estimates for the $1B project.  (See June 4, 2009 article for procurement details.)

The Florida DOT, the city of Miami, and Miami-Dade county will compensate the developer via availability payments, making the POMT the second US PPP to use this mechanism.  Florida’s I-595 express lanes, the first availability-payment project, reached financial close in March 2009.

(Project Finance Int’l 9/9/09, Public Works Financing 6/09)

The decision of TxDOT to choose NTTA for the development of SH121 over the private consortium led by Cintra, who had already been awarded the project though a competitive and legitimate process, stirred an intense discussion in the PPP community. In August 2009, two years after the incident, the Regional Transportation Council approved a $3.6 million payment to Cintra to compensate the company for its proposal costs. The payment will be shared by four counties.  One county objected to the payment because it had wanted Cintra to keep the project.

(Infrastructure Investor and www.star-telegram.com)

On September 4, 2009, TxDOT executed a comprehensive development agreement (CDA) with the LBJ Infrastructure Group to design, construct (maximum 5 years), finance, operate and maintain the 13-mile LBJ-635 corridor for 52 years in Dallas County.  According to the Financial Plan, the funding package of $2,743m consists of $790m senior debt (50% senior term facility and 50% PABs), $790 TIFIA loan, and $683 equity contribution.  The project was conditionally awarded on February 26, 2009 to the consortium led by Cintra Concessions, S.A.

Subject to the toll road moratorium (Senate Bill 792), the current status of TxDOT’s authority to enter into CDAs includes: (1) SH130 Segment 5&6, (2) North Tarrant Express, (3) LBJ-635 Managed Lanes, (4) DFW Connector, (5) I-69 Corridor Development, (6) SH-99 Grand Parkway, and (7) LP 9-DFW Outer Loop. The department may enter into a CDA on or before August 31, 2011 for these projects.

(Source: www.txdot.gov)

Privatizing parking-meter collections has been considered by more and more cash-strapped cities as a way to narrow budget deficits. Denver could be a part of the movement. City Councilman Doug Linhart has urged Mayor John Hickenlooper’s administration to research this concept. Following meetings with the City’s Public Works Department, he stated that he plans to express this idea for official consideration in the city council in November. Denver has 5,265 parking meters and collected $8.94 million parking revenue in 2008.

The well-known (and perhaps controversial) Chicago parking-meter deal, closed at the end of 2008, generated $1.2 billion for the City. The Mayors of Pittsburgh and Los Angeles also proposed similar programs to relieve budgetary stress.

(www.Denverpost.com, Infrastructure Investor)

Following CenterPoint’s proposal for operating four existing terminals and the development of Craney Island in March, 2009 (see previous post), the Virginia Port Authority (VPA) received another two competing proposals from Carlyle and Carrix-Goldman. VPA now has posted the three proposals on its website. Carlyle would possibly pay VPA between $500 and $700 million upfront for a concession with profit sharing ranging from 15% to 40%; CenterPoint would pay upfront cash of $500 million and accept a profit share ranging from 5% to 30%. Both of them ask for a 60-year concession lease. Interestingly, Carrix-Goldman argues that it is not the “optimal time” to privatize the East Coast US port, and their 30-year operating proposal with which it would work with the state-owned port operator (Virginia International Terminals) is more in line with industry standards. Carrix-Goldman would pay $250 million for the agreement. An Independent Review Panel will be appointed soon to evaluate these proposals.

(Infrastructure Investor, 08/12/09)

In less than a year, the city of Chesapeake in Virginia’s coastal Hampton Roads region has received its second unsolicited proposal for infrastructure improvements.  The private consortium Virginia 104, LLC proposed today to widen the congested Dominion Boulevard (formerly State Route 104) from two lanes to four and to replace the Steel Bridge, a bascule over the Southern Branch of the Elizabeth River, with a 95-foot-high fixed span.  The bridge’s openings for marine traffic frequently delay the 30,000 vehicles using the route each day.

Although the Dominion Boulevard project has long been a priority for Chesapeake, the city has little funding for its estimated $373 million price tag.  The Virginia 104 consortium, whose members include contractors Precon Marine and PCL Civil, engineer Hassell & Folkes, and financier RBC Capital Markets, indicates the project can be built as a PPP with tolls of $2.50 or less.

A September 2008 study by the regional transportation planning organization reported Chesapeake has 160 bridges, more than any other Hampton Roads locality except Norfolk.  The Jordan Bridge, another Chesapeake span, closed in November 2008 and is the subject of an earlier unsolicited proposal.

Sources: Virginian-Pilot 9/1/09, 5/14/09

The privately-financed replacement for Chesapeake’s 1928 Jordan Bridge, which was closed last year due to safety concerns, is moving forward again.  Yesterday the Virginia Marine Resources Commission unanimously approved the new structure, which is strongly supported by local businesses and legislators, as well as the state’s governor and secretary of transportation.

The final remaining hurdle is a permit from the US Coast Guard, which is now evaluating concerns by local maritime groups that the proposed high-rise bridge’s clearance (similar to that of the previous lift span) may be insufficient to accommodate future marine traffic.  Although Figg had originally hoped to start construction this spring and open the structure to traffic by July 4, 2010, the revised target is now late 2010.

In December 2008, a consortium led by Figg Bridge Developers had proposed  to build, own, and operate in perpetuity a new toll bridge across the Southern Branch of Chesapeake’s Elizabeth River.  (See January 28, 2009 article for details.)  Following the city’s approval, the Virginia General Assembly passed emergency legislation supporting this plan in March.

Sources: Daily Press 8/25/09, Virginian-Pilot 8/26/09

One year and a half extension for the Safe, Accountable, Flexible, Efficient Transportation Equity Act, a Legacy for Users (SAFETEA-LU) has been approved by Senate committees as its expiration date of September 30th is approaching.  $61.5 billion in total would be authorized over this period.  House officials continue to favor a six-year reauthorization over this short-term extension, despite concerns that Congress’s agenda will not allow the completion of preparing the bill by the deadline. The current $286.4 billion bill was signed by President George W. Bush in 2005.

(ENR News 07/15/2009)