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Case Studies of Transportation Public-Private Partnerships in the United States

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Case Studies of Transportation Public-Private Partnerships in the United States Case Studies of Transportation Public-Private Partnerships in the United States Final Report Work Order 05-002 Prepared for: Office of Policy and Governmental Affairs Prepared by: July 7, 2007 AECOM CONSULT, AN AFFILIATE OF DMJM HARRIS 3101 WILSON BOULEVARD, SUITE 400 ARLINGTON, VIRGINIA 22201 T 703.682.5100 F 703-682-5001 WWW.DMJMHARRIS.COM July 7, 2007 Mr. James W. March Team Leader - Industry and Economic Analysis Team Office of Policy and Governmental Affairs Federal Highway Administration (FHWA) - HPTS 1200 New Jersey Avenue, SE Washington, DC 20590 Case Studies of Public-Private Partnerships for Transportation Projects in the United States - Task Order 05-002 Dear Mr. March, AECOM Consult, in association with DMJM Harris, FaberMaunsell, Maunsell of Australia, the National Council of Public-Private Partnerships, and the Ybarra Group, is pleased to provide the final report of Case Studies of Public-Private Partnerships for Transportation Projects in the United States. This report provides a fundamental understanding of PPP approaches and their potential consequences on project time, cost, and quality, and presents the results of actual PPP projects performed in the United State through a series of case studies and cameo descriptions. The projects selected for case study vary in type and maturity, and cover the range of private sector involvement associated with different PPP approaches. Each case study explores the reasons why the sponsoring agency elected to pursue the project as a PPP, the structure of the partnership, the nature of project financial and delivery responsibilities, and the issues and impediments that confronted members of the PPP team and how they addressed them to move the project forward. Each case study also presents the results of using the PPP approach applied to the project, lessons learned from performing the project as a PPP, and conclusions about the project to inform the reader about challenges and opportunities encountered by practitioners of PPP approaches to project financing and delivery. This report focuses on PPP applications to transportation projects in the United States. A companion report focuses on PPP application in other countries, which began experimenting and refining PPP approaches for up to twenty-five years, where the vast majority of PPP projects overseas have occurred over the past fifteen years. This companion report describes how the forms of PPPs is continuing to evolve and expand to more countries as they struggle with the burden of funding their growing transportation infrastructure needs in this global economy. A third report provides a guidebook on developing and implementing a transportation project as a PPP and its aimed at both the early practitioners of PPP projects as well as those agencies just beginning to consider the possibility instituting some form of PPP arrangement for a particular project currently stalled for lack of available resources. We appreciate the opportunity to perform this study of PPP transportation projects in the United States. We acknowledge the support and assistance provided to the study team by members of the FHWA Office of Policy and Governmental Affairs, FHWA Office of the Administrator – PPP Unit, and FHWA Resource Center in San Francisco. We are especially grateful for your guidance and suggestions throughout this study effort. Very truly yours, Daniel L. Dornan, P.E. Senior Consulting Manager AECOM Consult, Inc. An AECOM Company CASE STUDIES OF TRANSPORTATION PUBLIC-PRIVATE PARTNERSHIPS IN THE UNITED STATES ABSTRACT Highway transportation agencies across the United States are facing a fiscal challenge caused by the growing gap between the costs of providing and preserving the highway infrastructure and available highway program funding. The inability of motor fuel taxes to provide adequate funding has prompted transportation policymakers to consider alternative ways to finance and deliver needed transportation infrastructure. Public-Private Partnerships (PPPs) represent a wide variety of project financing and delivery approaches which offer the potential to expedite project delivery, operations, and maintenance in a more cost-effective manner, enabling transportation agencies to effectively ³do more with less.´ The common element of a PPP is that the public sector sponsor of infrastructure projects engages the private sector to a greater degree in the performance of certain functions previously handled by the public sector. This can range from contracted maintenance services to full financing, development, operations, and preservation. With the U.S. Department of Transportation and its surface transportation administrations encouraging their counterparts at the state and local government levels to consider the selective use of PPP approaches to expedite urgent transportation projects, there is significant opportunity for state and local transportation agencies to add PPP approaches to their means of accomplishing their missions. One way to present the implications and potential applicability of various types of PPP approaches is through the experience gained by early users of these alternative delivery approaches. This report does so through a series of case studies and cameos of actual PPP projects which have used various degrees of private sector involvement. The projects selected for case study or cameo discussion represent a broad spectrum of highway projects varying types and maturity. Each case study explores the reasons why the sponsoring agency elected to pursue the project as a PPP, the structure of the partnership arrangement, the nature of project financial and delivery responsibilities, and the issues and impediments that confronted members of the PPP teams and how they addressed them to move the projects forward. Each case study also presents the results of using a particular PPP approach, lessons learned from performing the project as a PPP, and conclusions about the project. This information is intended to inform those considering the use of PPP approaches or are interested in learning more about what others are doing to develop and implement PPP project, noting both the challenges and opportunities encountered by practitioners of PPP approaches to project financing and delivery. This report focuses on PPP applications to transportation projects in the United States. A companion report focuses on PPP application in other countries, which began experimenting and refining PPP approaches for up to twenty-five years, where the vast majority of PPP projects overseas have occurred over the past fifteen years. This companion report describes how the forms of PPPs is continuing to evolve and expand to more countries as they struggle with the burden of funding their growing transportation infrastructure needs in this global economy. A third report provides a guidebook on developing and implementing a transportation project as a PPP and its aimed at both the early practitioners of PPP projects as well as those agencies just beginning to consider the possibility instituting some form of PPP arrangement for a particular project currently stalled for lack of available resources. U.S. PPP Case Study Final Report Abstract TABLE OF CONTENTS CHAPTER PAGE 1. INTRODUCTION 1-1 Purpose and Objectives 1-2 Scope and Methodology 1-2 U.S. Transportation PPP Case Studies and Cameos 1-3 Report Structure 1-4 2. PUBLIC-PRIVATE PARTNERSHIPS IN TRANSPORTATION PROJECTS 2-1 Background 2-1 Definition and Types of Public-Private Partnerships 2-2 Alternative PPP Arrangements 2-4 Benefits of PPPs 2-17 Risks of PPPs 2-18 Critical Success Factors 2-23 Transportation PPP Activity in the U.S. since 1991 2-27 3. U.S. TRANSPORTATION PPP STUDIES, AND CAMEOS 3-1 Background 3-1 Domestic Transportation Project PPP Case Studies and Cameos 3-2 Transportation Project Case Studies in the U.S. 3-3 Anton Anderson Memorial Tunnel, Alaska 3-4 Atlantic Station 17th Street Bridge, Georgia 3-16 Chicago Skyway Operating Lease, Illinois 3-35 Route 3 North Rehabilitation Project, Massachusetts 3-51 Route 28 Phase II Expansion, Virginia 3-63 South Bay Expressway (SR 125) Toll Road, California 3-76 Trans Texas Corridor TTC-35 Toll Road, Texas 3-87 Port of Miami Tunnel, Florida 3-105 Transportation Project Cameos in the U.S. 3-120 Atlantic City Brigantine Connector 3-121 Conroy Road Bridge 3-124 Universal Boulevard Bridge 3-130 U.S. PPP Case Studies Report i TABLE OF CONTENTS (continued) CHAPTER PAGE 4. RESULTS AND CONCLUSIONS 4-1 Issues and Strategies to Address Them 4-1 Results of U.S. Transportation PPP Project Case Studies and Cameos 4-1 Lessons from U.S. Transportation PPP Project Case Studies and Cameos 4-2 Conclusions 4-2 APPENDIX A ± GLOSSARY OF TERMS A-1 APPENDIX B ± LIST OF ACRONYMS B-1 APPENDIX C ± BIBLIOGRAPHY C-1 U.S. PPP Case Studies Report ii LIST OF EXHIBITS EXHIBIT PAGE 2.1 Major Types of Transportation PPPs 2-4 2.2 Major Phases of Infrastructure Project Development and Delivery 2-5 2.3 States Interested in Highway Concession PPPs in Late 2006 2-9 2.4 Public and Private Sector Benefits of Transit-Oriented Development 2-11 2.5 Active Value Pricing Projects by State and Type of Project 2-16 2.6 Types of Risks Associated with Transportation Infrastructure Project PPPs 2-19 2.7 Consequences and Mitigation Strategies for Major Types of PPP Project Risks 2-20 2.8 Legal Issues Associated with Transportation Infrastructure Project PPPs 2-25 2.9 States with Legislative Authority for Transportation PPPs and/or Design-Build 2-26 2.10 Major Surface Transportation PPPs
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