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Massachusetts Department of
Transportation (MassDOT)
The South Coast Rail Project
High Level P3 Project Suitability
Assessment Report
September 11, 2013
Contents
Proposed Project Description
Project Background and Status
Commonwealth Considerations
Transportation Need and Benefit Statement
Assessment Criteria
Potential Delivery Structures
Key Findings Summary
Considerations and Challenges
Potential Next Steps
Appendix: Market Precedents
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South Coast Rail Project
Proposed Project Description

The South Coast Rail Project (SCR) will extend commuter rail
service from the City of Boston to the South Coast of
Massachusetts, including the cities of New Bedford and Fall
River

The service will run for 50 to 53 miles along an existing freight
rail corridor running south from Taunton to Fall River and New
Bedford

The estimated cost of the project is $1.8 billion

Key project elements include:
–
Upgrades and improvements to track infrastructure
–
Construction/reconstruction/widening of 45 bridges
–
Construction/reconstruction of 46 at-grade crossings
–
Ten new passenger stations
–
Two overnight terminal layover facilities
–
Rolling stock acquisition of six or seven train sets. Each train
set may include one locomotive, five to eight coaches and one
cab.

The Draft Environmental Impact Report/Statement (DEIR/S)
identified six alternatives for project delivery

The preferred alternative selected from the DEIR/S provides new
commuter rail service to South Station through Stoughton
(Alternative 4)
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South Coast Rail Project
Project Background and Status
This report is part of the high-level screening process used to assess the suitability of delivering a project under
a Public-Private Partnership:
Project Background
Project Name:
South Coast Rail Project (SCR)
Sponsoring Agency:
Massachusetts Department of Transportation
Preliminary Schedule
 MEPA DEIR/S issued – February 2011
 MEPA DEIR/S approved – June 2011
 MEPA FEIR/S issuance – Fall 2013 (anticipated)
 High level & detailed level P3 assessment – Fall 2013 (anticipated)
 Provisional project permits (wetlands mitigation) – Spring 2014 (anticipated)
 Record of Decision – Spring 2014 (anticipated)
 Procurements for project conservator and final design – Fall 2013 (anticipated)
 Construction period – Estimated 4 – 5 years (anticipated)
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South Coast Rail Project
Commonwealth’s Considerations
Project-specific considerations:

To more fully meet the existing and future demand for public transportation between Fall River / New Bedford and
Boston, MA and to enhance regional mobility

To encourage economic development and job-creation by providing significantly improved transportation access to a
historically underserved region with affordable housing and a growing population

To promote smart and sustainable growth by encouraging residents to reduce their automobile-usage, particularly
through transit-oriented development around new station locations

To enhance tourism and preserve environmental resources for the culturally and historically rich South Coast area
Indicative drivers for P3 delivery:

Leverage revenue that could help offset project costs

Use transit oriented development to provide additional funding

Accelerate project delivery and construction schedule

Transfer or share risk related to design/construction, financing, operations, maintenance, revenue and ridership

Create economies of scale and introduce savings through whole life costing
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South Coast Rail Project
Transportation Need and Benefit Statement
Transportation Need and Benefit Statement
To meet existing and
future demand for
public
transportation
between Fall River,
New Bedford and
Boston while
encouraging
economic
development, job
creation and
tourism.
Description of surrounding area:
 The South Coast region comprises 31 cities and towns with a combined population of approximately 740,000
 By 2030 the regional population is predicted to grow to more than 900,000, making the South Coast one of the fastest
growing regions of the State despite the recently declining populations in the cities of Fall River and New Bedford
 The current transportation system connecting Southeastern Massachusetts with Boston is primarily a highway system with
few public transportation alternatives
 The South Coast communities of Fall River, New Bedford and Taunton are the only cities within 50 miles of Boston not
served by commuter rail
 The selected preferred alternative SCR route follows existing freight lines from New Bedford and Fall River to Taunton and
involves traversing through the Hockomock Swamp, wetlands and various sites of cultural value to Native American Tribes
What is the existing transportation need?
 Population in the South Coast region of the State is projected to grow faster than any other region in Massachusetts
 There have been increased traffic volumes due to the lack of public transportation alternatives leading to traffic congestion
and adverse effects on air quality, climate change and transportation safety
 Projected regional growth and the incentive of lower cost of living outside of Boston and the greater-Boston region will
exacerbate congestion
How will the project address the existing transportation need?
 Restore commuter rail to the New Bedford/Fall River region, which was serviced prior to the 1950s
 Provide easier access between the metropolitan areas in and around Boston and the underserved populations in Fall River
and New Bedford, in addition to other cities, spurring more regional connectivity and growth
 Ease traffic congestion along the highways and adjacent commuter rail lines
 Create opportunities for economic development and revitalization throughout the region
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South Coast Rail Project
Assessment Criteria
High-Level Screening Criteria –Commonwealth Considerations
Yes
Addresses Commonwealth’s
Considerations
X
Supporting Info
The project is addressing considerations such as:
 Enhance regional mobility and access to public transportation, jobs and affordable
housing for residents between Boston and the underserved regions of Fall River
and New Bedford
 Encourage smart growth, sustainable investment, economic development, job
creation, land preservation and tourism
No
TBD
Supporting Info
 Provides connectivity to a traditionally underserved region, reduction in regional
congestion, safety improvements and economic development in the South Coast
region
 Preliminary discussions between MassDOT and local municipalities and
stakeholders indicate support for the project; however certain opponents believe
that ridership projections are too low to justify the level of investment required.
X
Yes
Addresses Priorities Identified in
State, Regional and / or Local
Transportation Plan
TBD
X
Yes
Satisfies Public Transportation
Need
No
No
TBD
Supporting Info
 The project is not yet included in the state/local/regional transportation plan;
however it does address the priorities identified in such plans.
 In June 2009 the South Coast Rail Economic Development and Land Use Corridor
Plan (Plan) was developed to coordinate and encourage smart growth, sustainable
investment, economic development, land protection and improved transportation
access in municipalities along the SCR corridor
 In fall 2010 Governor Patrick issued Executive Order 525 calling for the
implementation of the Plan through state agency actions and investments
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South Coast Rail Project
Assessment Criteria (Continued)
High-Level Screening Criteria - Opportunity for Acceleration, Innovation and Efficiencies
Yes
Opportunity for Private
Sector Innovation
X
Supporting Info
 Opportunities for innovation may include:
 Cost efficiencies in greenfield construction, O&M, and whole-life costing
 Innovative rolling stock propulsion choice, procurement and financing strategies for fleet
 Marketing and sponsorship initiatives to generate additional revenues and ridership
 Station selection and trip schedule development
 Access to alternative financing sources
 Two limitations on potential innovation are the interface with other MBTA commuter rail lines
in the system and environmental limitations imposed by Hockomock Swamp
No
TBD
Supporting Info
 Risk transfer may include: revenue and ridership, design, construction, financing, operations
and maintenance, and lifecycle risk.
 Some challenges to risk transfer may include:
 SCR not currently included within the scope of new 8 to 12-year contract for commuter
rail operations and maintenance, which may impact the structure of a P3 transaction
 If maintenance risk were to transfer to the private sector, separate facilities or
arrangement to use existing MBTA facilities may be required
 Revenue and ridership forecasts undertaken by MassDOT indicate that demand exists
but does not achieve the levels associated with MBTA’s busier lines
 MBTA’s fare policy and market appetite will need to be considered with regards to
transferring revenue/ridership risk
X
Yes
Accelerated Project
Development
TBD
X
Yes
Ability to Transfer Risk
No
No
TBD
Supporting Info
 P3 delivery could accelerate project development through the coordination of design and
construction elements by a single entity and private sector incentives for completion
 Leveraging future receipts could provide additional funds for development
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South Coast Rail Project
Assessment Criteria (Continued)
High-Level Screening Criteria – Funding/Financing
Yes
No
TBD
Supporting Info
X
 Similar projects have been financed in the market using public funds (milestone
payments and availability payments). In limited cases transit projects were
financed with revenue risk transfer.
 Financing will require reliable funding, which has not yet been identified.
 The size of recent transactions indicates that a project however the ability to
fund the project is subject to market conditions and risk allocation
TBD
Supporting Info
Ability to Raise Capital
Yes
Potential to Generate Revenue and
Funding Requirement
 According to MassDOT, the project received a $20 million TIGER grant to
undertake improvements to three related railroad bridges; there is currently no
state funding committed to the remainder of the $1.8 billion project
 The project could generate fare revenue to support at least a portion of the
capital investment needed on this project. MassDOT has already completed a
revenue ridership study, which projected moderate demand through 2035
 Other sources of revenue may be explored, such as state and local contributions,
freight user contributions, value capture, benefit assessment districts, and
advertising, etc.
X
Yes
Market Precedent
No
X
No
TBD
Supporting Info
Market precedent for P3 rail (commuter, LRT, tramway, HSR) projects includes:
 DBFOM/AP: Denver Fastracks Eagle P3 project (Colorado), HSL – Zuid
(Netherlands), Canada Line (British Columbia)
 DBFM/AP : Ottawa LRT (Quebec), Le Mans – Rennes HSR (France), Nimes –
Montpellier HSR (France)
 DBFOM/Revenue risk: Gautrain Rapid Rail Link, UK rail franchises , Nottingham
Express Transit LRT (UK),
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South Coast Rail Project
Assessment Criteria (Continued)
High-Level Screening Criteria - Readiness
Yes
No
Consistent with Federal
Requirements
Yes
No
TBD
Supporting Info
X
 NEPA clearance is required
 The preferred route will cross through the Hockomock Swamp and will require
permitting approval from the Army Corps of Engineers
TBD
Supporting Info
X
 The MEPA and NEPA processes for SCR are being run concurrently
 Based on MassDOT estimates, the FEIR/S will be issued in the Fall of 2013
 MassDOT anticipates that the Record of Decision will not be issued until the
provisional project permits for wetlands mitigation are obtained
 The SCR project is dependent upon completion of the South Station Expansion
Project to accommodate the expected increase in daily capacity
 MassDOT estimates that they are already in possession of the required Right
of Way
Readiness
Yes
Can Be Structured as a P3
X
No
TBD
 Market precedent indicates that the project may be structured as a P3
 Different payment mechanism can be used for the funding of the project,
including availability payments, milestone payments, completion payments
and transfer of limited ridership risk. Although some revenue risk deals have
taken place in the past, market appetite will have to be tested.
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South Coast Rail Project
Potential Delivery Structures
Potential Delivery Model
Features
Risk transfer: A developer will be responsible for the delivery of the project under a fixed price date certain
design build contract and will be responsible for O&M, including rolling stock, and life-cycle costs during the
term of the contract (approximately 35 years). Ridership and revenue risk, fare policy and fare collection are
retained by the Commonwealth.
Option 1: DBFOM - Availability
Payment
Payment mechanism: Commonwealth collects the fare revenue and makes an annual payment to
developer based on performance and availability. All or a portion of the availability payment may be fixed
and/or indexed for inflation. The Commonwealth may fund payments though state or federal funds and fare
revenue.
Under an amended case, a portion of the payment to the developer may be linked to milestones during
construction, construction completion or even ridership.
Private investment: Typically, under this delivery model, projects are funded with a combination of debt
and equity at a ratio between 85/15% to 90/10%.
Option 2: DBFM – Availability
payment
Similar to the previous option, but daily operation (conductors, engineers, etc.) of the line is retained by
MBTA or transferred to MBTA’s existing private sector commuter rail operator
*Please note that these are illustrative examples. Other options or variations on these themes may exist.
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South Coast Rail Project
Key Findings Summary
High Level P3 Suitability Assessment
Addresses Considerations:
Yes. This project meets the needs of the existing and future demand for public transportation between
Fall River, New Bedford and Boston while encouraging smart growth, economic development, job
creation, sustainable development, and tourism.
Opportunity for Acceleration,
Innovation and Efficiencies
Yes. This project has the potential for acceleration, innovation and efficiencies by transferring
construction, operations and maintenance and long term capital maintenance to the private sector.
Coordination will be required if the private sector partner were to be different from the MBTA then
existing commuter rail system operator.
TBD. Funding for the project is still under evaluation as it is not clear how much public funding will be
available. Funding contributions could be made by the state, local governments and municipalities along
the route, federal funding programs, advertising, naming rights and from other financial techniques such
as value capture etc.
Funding/Financing:
TBD. The project has an approved DEIR/S and is projected to issue the FEIR/S in the Fall of 2013.
However, the project is contingent on the completion of the South Station Expansion project. In addition
MassDOT must receive permits and approval from the Army Corps of Engineers due to the nature of the
proposed project.
Readiness:
Can the project be structure as a P3?
Yes
Move to the next phase for further analysis?
[TBD by the Commission]
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South Coast Rail Project
Key Considerations and Challenges

Relatively low projected levels of ridership

Market appetite for revenue and/or ridership risk

Up-front public funding might be required to reduce financing costs

Maintaining political and community support for a large investment of MassDOT resources

Funding sources not yet identified for 99% of project cost (all costs except for $20 million in improvements to three related
railroad bridges)

Potential for use of federal funding programs, including New Starts and Congestion Mitigation Air Quality Grants

Environmental concerns surrounding preserving the wildlife in the Hockomock Swamp; technical challenges associated with
construction of trestles

Expansion of South Station in Boston needed to accommodate South Coast Rail trains

Determination of fare box policy in relation to the broader commuter rail system

System integration and interfacing with the new MBTA O&M contractor

Procurement of rolling stock

Use of transit oriented developments to generate more revenue

Assurance that proper studies for sensitive tribal sites have been conducted in the construction area
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South Coast Rail Project
Potential Next Steps

Update revenue and ridership study

Refine estimates of capital, operating and maintenance costs

Perform high-level financial feasibility analysis

Assess different delivery models and payment mechanisms

Analyze affordability and impact to MassDOT finances

Identify and assess potential federal, state, and local funding and financing sources

Continue outreach efforts to the surrounding cities, political members, as well as the Tribal communities to
maintain support for the project

Facilitate market sounding inquiries and market development

Consider project-specific objectives and priorities
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South Coast Rail Project
List of References
Specific information in this report came from the following sources:
South Coast Rail Economic Development and Land Use Corridor Plan, http://southcoastrail.com/downloads/1%20%20Corridor%20Plan%20Executive%20Summary.pdf, June 2009
Interview with Charles Planck, Senior Director – Strategic Initiatives and Performance on August 6, 2013
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South Coast Rail Project
Denver FasTracks Eagle P3 Project
Characteristic
Project Detail
Project Type
Greenfield
Sector
Transportation – Light Rail
Description
 The project entails construction of two commuter rail lines and an
associated maintenance facility, provision of rolling stock, operations of
commuter rail service, and maintenance of track and equipment
 The project will include 36 miles of new commuter rail, 37 major bridge
structures, 14 new stations plus Denver Union Station hub &
Maintenance Facility, 50 cars in married pair configuration, and 29 atgrade crossings shared with Class 1 Railroads
Public sponsor
Denver Regional Transportation District
Advisor
JP Morgan/Goldman Sachs
Private sector
partner
John Laing-led Denver Transit Partners (Operator is Denver Transit
Operators, comprising ACI, BBRI and Fluor)
Status
Financial Close – August 2010; under construction
Term
35 years
Project size
$2.1 billion
Delivery model
DBFOM
Payment
mechanism
 Combined fixed and indexed availability payments
 Availability payment during Phase 1 construction - $38m
 Payment reductions are based on failure to achieve availability of rolling
stock, performance and timeliness of trains, and station cleanliness
 RTD may terminate agreement if performance deductions exceed 3% of
monthly payments in 6 out of 8 consecutive months
Funding Details: $2.1 billion
 $1.03 billion FTA New Starts Grant
 $396 million PABs Proceeds
 $280 million TIFIA Loan
 $128 million RTD Sales Tax Revenue
 $57 million Revenue Bond Proceeds
 $57 million Other Federal Grants
 $54 million Equity
 $40 million Public Grants
Revenue Public
Grants
Bond
2%
Proceeds
3%
RTD Sales
Tax
Revenue
6%
Equity
3%
Other
Federal
Grants
3%
FTA New
Starts Grant
50%
TIFIA
14%
PABs
19%
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South Coast Rail Project
Denver FasTracks Eagle P3 Project
Denver FasTracks Eagle P3 Project Map
Procurement Schedule
August – 2008
RFQ Issued
October – 2008
SOQ Due Date
November – 2008
Shortlisted Proponents
October – 2009
RFP Issued
May – 2010
Final Proposals Received
June – 2010
RTD Board Selected P3 Team
August – 2010
Phase I Notice to Proceed
Issued
Note: The RFP was originally due to be released in June of 2009, but was delayed to October of 2009
to allow more time to resolve issues raised by shortlisted teams during the one-on-one sessions.
Source: rtd-fastracks.com
Lessons Learned
P3 suitability
 Major U.S. rail P3 set precedent for future
projects
 A persistent political/policy champion is key
to success
 Greenfield rail may be well-suited for a P3
approach
Funding / Financing
 Well structured AP deals may achieve
attractive ratings (e.g. BBB versus BBBratings for most “non-recourse” new toll
facilities)
 High leverage (90/10) available in AP
structures can result in very attractive
Weighted Average Capital Costs
Other
 Initial P3 project should maintain a clearly
identified timeline to build credibility and
maximize private sector interest
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South Coast Rail Project