Massachusetts Public-Private
Partnership Infrastructure
Oversight Commission
P3 Case Studies and
Lessons Learned
July 15, 2013
Agenda
Address Questions Regarding May 29th Meeting
P3 Case Studies
• Rail
• Station Development
• River Crossings
• Managed Lanes
• Rest Stops
Next Steps
1
Address Questions Regarding May 29th Meeting
Recap of Topics
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Considerations of P3 project delivery

Keys to a successful P3 project
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P3 project suitability
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Stages of a P3 process

Measuring the value of private participation (Value for Money)
Questions
2
Rail
Denver FasTracks Eagle P3 Project
Characteristic
Project Detail
Project Type
Greenfield
Sector
Transportation – Light Rail
Description
Eagle P3 Concession 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.
 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
 29 at-grade 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
Availability Payments
 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
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$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
Proceeds 2%
3%
RTD Sales
Tax
Revenue
6%
Equity
3%
Other
Federal
Grants
3%
FTA New
Starts Grant
50%
TIFIA
14%
PABs
19%
3
Rail
Denver FasTracks Eagle P3 Project
Relevant MassDOT Projects
Procurement Details
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
August – 2011
Phase II Notice to Proceed Issued
South Coast Rail
Connect Boston to Fall River and New Bedford by
commuter rail. This will result in greater mobility for
South Coast residents, less Route 24 congestion, and is
projected to create 3,800 jobs and generate $500 million
in economic activity statewide.
Green Line Extension
Extend existing Green Line service to Somerville and
Medford – a
long-awaited project promising greater mobility,
economic opportunity, and environmental benefits for
one of the densest corridors in New England..
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: MassDOT, “The Way Forward”
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
Risk transfer
 Align concession term with useful life of asset
 Significant project delivery and operating performance
risk transfer can be achieved
 RTD retained the key risk of federal funding
commitments and cash flow
Funding/financing
 Financial close was achieved prior to receiving anticipated
federal grants
 The concession agreement provided alternatives if federal
funding was not received
 Yield on PABs “serial” bonds ranged from 4.85-5.60%,
with term bonds ranging in yield from 5.90-6.13%.
Why PPP? The Project was part of FTA’s PPP Pilot Program allowing for accelerated review. In the review process, the PPP option gave the Denver Regional
Transportation District an estimated Value for Money savings of over $300 million.
4
Rail
Denver FasTracks Eagle P3 Project
Eagle P3 Project Map
• The Denver FasTracks Eagle P3 project will provide commuter rail service east and west of
Denver Union Station
• The map below depicts in gold the two new rail lines which will be provided as part of the
Eagle P3 project
Other Potential North American Rail P3 Projects
Projects
Status
DART Cotton Belt Light Rail (TX)
Pre-Procurement
Chicago – O’Hare Airport Express Rail
Service (IL)
Pre-Procurement
Red Line Regional Rail Project (NC)
Pre-Procurement
Satour Light Rail Project (Puerto Rico)
RFQ
Washington Streetcar System (DC)
RFI
Gateway System Multimodal Transit
Center (NC)
Denver North Metro Rail Project
(FasTracks) (CO)
Preferred Bidder
Pre-Procurement
Baltimore's Purple Line (MD)
Pre-Procurement
Baltimore's Red Line (MD)
Pre-Procurement
CCT, North-South Corridor Bus Rapid
Transit (MD)
Pre-Procurement
Southeast Light Rail Line (Canada)
Pre-Procurement
Eglinton Crosstown and Scarborough
Crosstown light rail transit (LRT) lines
(Canada)
RFQ
Source: http://rtd-fastracks.com/ep3_2”
5
Station Development
Southern Cross Station (Australia)
Characteristic
Project Detail
Project Type
Greenfield
Sector
Transportation – Station development
Description
The Southern Cross Station is the State of Victoria’s gateway for interstate rail and coach
travelers. The station provides intermodal passenger transport services including suburban
trains, regional trains, interstate trains, special events trains, coach and bus services, and
trams and taxis. The project includes the following components:
 Station redevelopment, for which the government entered into a long-term service contract
with a private concessionaire to design, build, finance and maintain the transport
interchange; and
 Commercial redevelopment including a retail precinct, car parking and offices (these
developments involved no payment by the government).
Public sponsor
Southern Cross Station Authority (SCSA)
Advisor
PriceWaterhouse Coopers
Private sector partner
Civic Nexus consortium
Status
Financial Close – August 2002, Operational 2006
Term
30 years
Project size
AU$700 million (AU$350 million was estimated station value; another AU$350 million was
estimated value of commercial development)
Delivery model
DBFOM
Payment mechanism
Availability Payments
 No payment to concessionaire until construction completion.
 AU$34 million annual availability payment began at operations.
Financial structure of the Southern
Cross Station redevelopment project
6
Station Development
Southern Cross Station (Australia)
Procurement Details
Relevant MassDOT Projects
July – 2001
EOI Issued
August – 2001
EOI Closed
October – 2001
RFP Issued
February – 2002
RFP Closed
July – 2002
Selected P3 Team
August – 2002
Financial Close
October – 2002
Construction Commenced
South Station Expansion
Goal is to complete design and construction
within the next 10 years of an expanded South
Station that will accommodate future passenger
rail growth for the existing commuter rail
system, South Coast Rail, and Amtrak services
along the Northeast Corridor, the Inland Route
through Worcester and Springfield, and future
high-speed rail service to Montreal.
Source: MassDOT, “The Way Forward”
Lessons Learned
P3 Suitability
 Station redevelopment can allow for construction and
operational risk transfer, and attractive Value for Money to
the public sector
Risk Transfer
 Assess details of construction risk elements and determine
the level of risk that can be transferred to the private
developer
 Ambiguous key performance indicators can create
difficulties in supporting expected service standards
Funding/financing
 Redevelopment project can be divided into a P3 and a
fully commercial enterprise to optimize the overall
funding/financing plan and delivery approach
Why PPP? The objective of using a PPP was to minimize the long-term costs to the taxpayer associated with the construction, maintenance and operation of
the station.
7
Station Development
Other Station Development Projects
Moynihan Station, New York
Status
Prelaunch
Project Size
$270 million for Phase 1, $1 billion to $1.5 billion for Phase 2 (estimated)
Description
The project will involve building a new train hall in the Farley Post Office Building, adjacent to the
existing Penn Station. Phase 1, which is fully funded , improves Penn Station’s access to underground
passenger platforms. Phase 2 includes a new train hall in the Post Office, an intermodal hall, and retail
stores. Real estate developers Vornado Realty Trust and the Related Companies, received exclusive
development rights to Phase 2 in 2006, committing to fund approx $300 million of the total estimated
$818 million costs. More recently, the developers proposed an in-kind trade to develop the Post Office,
with Manhattan Community College as the anchor tenant, in exchange for existing Manhattan
Community College land.
Chatswood Transport Interchange, Australia
Status
Financial Close – July 2005
Project size
Total project cost (including the three residential towers) is $360m.
Description
The project was a major redevelopment and reconfiguration of the Chatswood Transport Interchange
(CTI) into a world class inter-modal public transport interchange. The project consisted of separate
transport and development components:
 The transport component included elevated twin island platforms to the existing North Shoreline,
a rail concourse beneath platforms and a new bus/taxi interchange.
 The development component included a retail center, three residential towers over the station and
related car parking.
Chatswood was partially funded by selling air-rights above the station; proceeds from the sale were
reinvested in the development of an improved station.
8
River Crossings
Ohio River Bridges, East End Crossing
Characteristic
Project Detail
Project Type
Greenfield
Sector
Transportation – Bridges and tunnels
Pursuant to a Bi-State Development Agreement:
Description
Indiana is responsible for constructing the East End Crossing of the Ohio River
between Utica, IN and Prospect, KY, as well as a new approach tunnel in eastern
Jefferson County, KY.
Funding Details: $1.2 billion
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
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Kentucky is responsible for building a new, six-lane bridge on I-65, replacing the
decking on the existing Kentucky Bridge, rebuilding a complex interchange, and
improving the I-65 approach into Indiana.
Indiana Finance Authority; Indiana Department of Transportation
Advisor
KPMG
Private sector partner
Bilfinger Berger Construction / Walsh Group / Vinci Concessions
Status
Commercial Close – December 2012
Term
35 years post-construction
Project size
$1.2 billion, of $2.4 billion total project
Delivery model
DBFOM
Payment mechanism
Availability Payments;
Public
Grants
33%
Equity
7%
PABs
60%
Ohio River Bridges - East-End Crossing - Availability and
Milestone Payments
Millions
Public sponsor
$700 million PABs Proceeds
$392 million Public Grants
$82 million Equity
250
216
200
150
151
100
50
Milestone Payments =
MAP (% Fixed Inflator)
MAP (% Indexed To CPI)
$392M
80%
20%
25
-
MAP Subject to Actual CPI (20%)
MAP Subject to Fixed Indexation (80%)
Milestone Payments
9
River Crossings
Ohio River Bridges, East End Crossing
Procurement Details
Relevant MassDOT Projects
March– 2012
RFQ Issued
April– 2012
SOQs Received
May – 2012
Draft RFP Issued
October – 2012
Final Proposals Received
November – 2012
P3 Team Selected
December – 2012
Commercial Close
March – 2013
Financial Close
Twin Sagamore Bridge, Massachusetts. A new
three-lane bridge with a pedestrian walkway
would be built parallel to the existing Sagamore
Bridge to relieve congestion The existing bridge
would be reconfigured to accommodate three 12foot-wide lanes. The twin span would be part of a
new I-93 extension along the existing MA 3
Pilgrims Highway.
Source: http://www.bostonroads.com/crossings/sagamore/
Lessons Learned
P3 suitability
 A robust competition on a whole life asset across a level
playing field can create considerable value (the WVB bid
incorporated a $763 million DB commitment, versus
INDOT’s $991 million internal cost estimate)
Funding/financing
 Well structured AP deals may achieve attractive ratings
(e.g. BBB versus BBB- ratings 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
 The East End Crossing success established tremendous
credibility for INDOT’s emerging P3 program
 The Commission’s initial P3 project should maintain a
clearly identified timeline to build credibility and maximize
private sector interest
Why PPP? The East End Crossing will be completed $228 million under budget and 8 months ahead of INDOT’s schedule.
10
River Crossings
Ohio River Bridges, East End Crossing
Ohio River Bridges Project Map
•The map below depicts the Ohio River Bridges East End Crossing and related interchanges
Source: Indiana Finance Authority
11
River Crossings
Midtown Tunnel / Downtown Tunnel / MLK Extension Project (VA)
Characteristic
Project Detail
Project Type
Greenfield / Brownfield
Sector
Transportation – Bridges and tunnels
Description
The project is in the Hampton Roads region of Virginia and consists of three
portions:
-The Midtown Tunnel portion consists of a new two-lane tolled tunnel under the
Elizabeth River parallel to the existing Midtown Tunnel, connecting the Cities of
Norfolk and Portsmouth, as well as modifications to the existing tunnel.
-The MLK Extension portion of the project extends U.S. Route 58 south from
London Boulevard, approximately 0.8 miles to I-264, with an interchange at High
Street.
-The Downtown Tunnel portion includes refurbishment of the two existing tunnels.
Public sponsor
Virginia Department of Transportation
Advisor
KPMG
Private sector partner
Macquarie / Skanska – led consortium
Status
Financial Close – April 2012
Term
58 years
Project size
$2.1 billion
Delivery model
DBFOM
Payment mechanism
Revenue / demand risk; initial peak toll is $1.84 each direction and off-peak toll is
$1.58 each direction
Funding Details: $2.1 billion
 $675 million PABs Proceeds
 $422 million TIFIA Loan
 $408 million Public Grants
 $272 million Equity
 $268 million Toll Revenues
 $43 million TIFIA Capitalized
Interest
Toll
Revenues
13%
TIFIA
Capitalized
Interest
2%
Equity
13%
Public
Grants
20%
PABs
32%
TIFIA
20%
12
River Crossings
Midtown Tunnel / Downtown Tunnel / MLK Extension Project
Midtown Tunnel / Downtown Tunnel / MLK Extension Project Map
Procurement Details
June– 2008
RFQ Issued
September– 2008
SOQs Received
January 2010
Interim Agreement Signed
January – 2011
Comprehensive Agreement
Negotiations
July – 2011
Key Business Terms Agreed
December – 2011
Comprehensive Agreement
April – 2012
Financial Close
Note: Only one consortium submitted an SOQ for the project. A 15-member Independent Review
Panel was appointed by VDOT to examine the proposal and public hearings were held through
June 2009 until approval was granted in Aug – 2009. Subsequently the project moved to
negotiations for the interim agreement.
Source: VDOT, http://driveert.com/about-the-project/
Lessons Learned
P3 suitability
 Public outreach is critical
 Project tolling is currently the subject of litigation, with
investors generally comfortable with VDOT’s ability to pay
any obligations
Risk transfer
 Define the Public Sector Comparator and
understand/agree to negotiating limits
Funding/financing
 The PABs market is significantly more advantageous
than the bank market in the current environment
 Tolling existing tunnels reduced borrowing costs, but
was a politically sensitive issue
Why PPP? Through the use of a PPP, the private partner assumes the risk of delivering the project on a performance-based, fixed-price and fixed-date contract,
protecting users and taxpayers from cost overruns and delays.
13
Managed Lanes
I-95 HOV/HOT Lanes Project
Characteristic
Project Detail
Project Type
Brownfield
Sector
Roads
Description
The Project involves development of 29 miles of HOT lanes along I-95 in Northern
Virginia (from Garrisonville Road in Stafford County to Edsall Road in Fairfax
County ), including:
- Converting existing HOV lanes to HOT and making operation improvements
- Extending by nine miles the existing HOV lanes
- Expanding existing from two to three lanes for 14 miles
- Adding eight new or improved access points at key interchanges
Expanding and adding commuter parking lots
This project is complementary to the Capital Beltway project and allows the
development of a HOT lanes network in Northern Virginia that will help address
significant congestion issues in the area.
Public sponsor
Virginia Department of Transportation
Advisor
KPMG
Private sector partner
95 Express Lanes, LLC (Fluor / Transurban – led consortium)
Status
Financial Close – July 2012
Term
76 years
Project size
$924.7 million
Delivery model
DBFOM – Dynamic Toll Concession
Payment mechanism
Toll Revenue (dynamic pricing) / demand risk
Funding Details: $925 million
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
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$308.4 million TIFIA
$292 million Equity
252.7 million PABs
$71.1 million Public Grants
$0.5 million Interest Earnings
Public
Grants
8%
Interest
Earnings
0%
TIFIA
33%
PABs
27%
Equity
32%
14
Managed Lanes
I-95 HOV/HOT Lanes Project
I-95 HOV/HOT Lanes Project Map
Procurement Details
December 2005
RFQ issued
October - 2006
Pre-development Agreement executed
June – 2010
Project re-scoping begins
January - 2011
Commercial negotiations begin
December - 2011
Agreement on key terms
July – 2012
Commercial & Financial Close
Note: The length of time required to reach financial close on this project was partially a result of
the sole-sourced nature of the procurement.
Lessons Learned
P3 suitability
 Using experienced toll operator and realizing efficiencies
with Capital Beltway
 Addressing concerns of current HOV users
 Traffic management during construction
Risk transfer
 The rating agencies are taking a hard look at revenue
risk transactions and especially those with dynamic tolling
Funding/financing
 Be clear on the pros and cons of TIFIA, particularly
under a split commercial and financial close
Why PPP? Leverage toll revenue to develop in an expedited manner an advanced system of express lanes in a highly congested area, managed by an experienced
toll operator
15
Managed Lanes
North Tarrant Express Project
Characteristic
Project Detail
Project Type
Greenfield / Brownfield
Sector
Roads
Description
The project is located in Fort Worth, North Central Texas. The scope of work is
divided into six segments: 1, 2, 3A, 3B, 3C and 4. Segment 2 is further split into 2W
and 2E. The entire project is a total of 36 miles or 430 lane miles. The project
includes two contracts: a concession for Segments 1 & 2 and a Pre-Development
Agreement (“PDA”) for the remaining segments, due to feasibility, political and
environmental status constraints.
The concession scope of work includes 12 miles of highway: reconstruction of existing
free lanes, addition of new free lanes, addition of new managed toll) lanes, addition of
a partial interchange and ongoing operations and maintenance for existing and new
facilities.
Public sponsor
Texas Department of Transportation
Advisor
KPMG
Private sector partner
NTE Mobility Partners (Cintra / Meridiam led consortium)
Status
Financial Close – December 2009
Term
52 years
Project size
$2.05 billion
Delivery model
DBFOM
Payment mechanism
Revenue / demand risk
Funding Details: $2.05 billion




$573 million Public Grants
$650 million TIFIA
$427 Equity
$400 million PABs
Public
Grants
28%
Equity
21%
PABs
19%
TIFIA
32%
16
Managed Lanes
North Tarrant Express Project
North Tarrant Express Project Map
Procurement Details
December – 2006
Project Launched
March – 2007
RFQ Issued
July – 2007
Shortlisted Proponents
March – 2008
RFP Issued
January – 2009
Preferred Proponent Selected
June – 2009
Commercial Close
December – 2009
Financial Close
Source: TXDOT, http://www.northtarrantexpress.com/Maps.asp
Lessons Learned
P3 suitability
 Innovative procurement to maximize scope of initial
construction program
 Expedited delivery of large project
 Complex construction
 Development of managed lanes system
Risk transfer
 Only road project in 2009 in which the private sector
assumed toll revenue risk.
Funding/financing
 First project to include PABs, TIFIA and equity
combined to finance construction.
Why PPP? Attract private sector innovation to expedite and “right size” delivery of large complex project and create economies of scale
17
Rest Stops
Connecticut Service Plazas
Characteristic
Project Detail
Project Type
Greenfield / Brownfield
Sector
Rest Stops
Description
Connecticut owns 23 highway service locations across the state that are being
redeveloped, operated and maintained by a private concessionaire under a revenue
sharing agreement. The project is located on I-95, I-395 and Route 15. The project
includes major rebuilds and renovations for the existing service areas, and increases
within service offerings to users.
Public sponsor
Connecticut Department of Transportation
Private sector partner
Carlyle Infrastructure Partners
Status
Financial Close – November 2009; Redevelopment started in 2010 and is expected to
continue through 2015.
Term
35 years
Project size
$178 million
Delivery model
DBFOM
Payment mechanism
Revenue / demand risk
 The concessionaire will pay for 100% of the improvements to the service plazas in
exchange for a right to redevelop, operate and maintain the facilities for 35 years.
 In addition to funding the improvements, the concessionaire will make annual
payments to the State in the form of minimum guarantees and revenue sharing.
18
Rest Stops
Connecticut Service Plazas
Connecticut Service Plazas Map
Procurement Details
July – 2008
RFP Issued
August – 2008
Notices of Intent Received
December – 2008
Proposals Received
June – 2009
Preferred Bidder Selected
November – 2009
Financial Close
Source: ConnDOT, http://www.ct.gov/dot/lib/dot/documents/dpolicy/restarea/master_voli.pdf
Lessons Learned
P3 suitability
 Single entity responsible for system-wide upgrade
 Improved service offering at rest areas
Risk transfer
 The State transferred risk for reconstruction, operations
and maintenance to the private sector for a 35-year term.
Funding/financing
 The concessionaire will pay for 100% of the
improvements to the service plazas in exchange for a right
to redevelop, operate and maintain the facilities for 35
years.
Why PPP? Offer private sector incentives to upgrade rest area infrastructure and improve long-term revenue potential
19
Next Steps
The Commission may consider the following steps to advance the program:

Identify P3 program objectives and priorities

Conduct P3 program workshops

Identify and prioritize projects with potential for meeting P3 program objectives

Perform detailed screening of specific projects against established P3 objectives
Questions
20