National P3 Update - Transportation
This installment of our National P3 Update focuses on transportation. While the transportation sector has dominated the U.S. P3 market over the last decade, the sector has experienced stagnation since the financial close of the Transform 66 project in early 2018. The one notable exception, the procurement of the Mobile River Bridge project in Alabama, was canceled by the Alabama Department of Transportation in June 2019, due to environmental issues. However, the end of 2019 and the start of 2020 saw a significant spike in activity in the U.S. P3 market.
Capital Beltway Program. The Maryland Department of Transportation and the Maryland State Highway Administration have issued a Request for Qualifications (RFQ) for the first phase of the Capital Beltway program, with responses due on April 22, 2020. A shortlist is expected by June. The first phase of the project will include the American Legion Bridge, the segment of I-495 up to the I-270 spur, and I-270 up to I-370. This will all be part of one packaged and managed lanes system.
SR 400. At least five teams have returned statements of qualifications for the SR400 P3, which is being procured by the Georgia Department of Transportation (GDOT). SR 400 is a major interstate-like freeway that serves as a main commuter route from the northern suburbs to downtown Atlanta, and the project includes the construction of managed lanes. Under the current procurement timeline, construction is expected to commence in 2022. GDOT expects to announce a shortlist before July 2, 2020.
Belle Chasse Bridge and Tunnel Replacement. The Louisiana Department of Transportation & Development has executed a comprehensive agreement with Plenary Infrastructure Belle Chasse for the Design-Build Finance Operate Maintain (DBFOM) development of a bridge and tunnel replacement project. This transaction represents the first P3 to achieve commercial close in the State of Louisiana.
Sepulveda Transit Corridor. LA Metro has shortlisted five teams (led by ACS, John Liang, Meridiam/Bechtel, Fengate/Globalvia, and Plenary as financial sponsors) following a RFQ process. A Request for Proposal (RFP) is expected in the spring of 2020. The project consists of a fixed-guideway transit system to run from the San Fernando Valley to Los Angeles International Airport and, if successful, it would be one of the largest transportation projects in the U.S.
Miami-Dade County Beach Corridor Trunk Line. Miami-Dade County has issued a request for proposals for the DBFOM development of rapid mass transit between the Cities of Miami and Miami Beach, known as the Beach Corridor. The Beach Corridor is one of six mass transit corridors that Miami-Dade County seeks to develop as part of its SMART Plan. Proposals can provide for automated people mover, monorail or bus rapid transit solutions, and are due March 17, 2020.
Wilkes Barre I-85 Reconstruction. On December 4, 2019, the Pennsylvania Department of Transportation (PennDOT) approved the procurement of the I-85 Reconstruction project under a DBFM delivery model. The project includes widening of four miles of highway to three lanes in both directions, realigning 2.5 miles of I-81 southbound, and replacing eight bridges. Timing on the release of an RFQ is uncertain as PennDOT is in the process of hiring consultants.
Refinancing Activity. A number of operational projects have launched or closed refinancings in the last quarter of 2019. A $600 million private placement refinanced the Indiana Toll Roads outstanding long-term debt in November 2019. In December 2019, the North Tarrant Express project issued $1.2 billion in tax-exempt and taxable private activity bonds, the proceeds of which refinanced outstanding tax-exempt private activity bonds and a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for the project.
PABs Availability. U.S. Department of Transportation (USDOT)'s $15 billion allocation of tax-exempt private activity bonds is dwindling. USDOT has allocated approximately $13 billion to date, leaving $2 billion in allocations for future qualifying projects. A number of bipartisan initiatives in Congress have attempted to increase USDOT’s total allocation, but definitive action will be necessary in the coming years to maintain the program.