Description: Route 3 North is an existing 21-mile limited
access highway running north and south between
the I-95/Route 128 circumferential highway around
Boston and the New Hampshire border. The $385 million Route 3 North Transportation
Improvements Project was designed to alleviate a number of significant
transportation problems on this heavily utilized highway. The project was
completed in spring 2005 and involved:
The addition of a third travel lane in each direction
Creation of
median shoulder and a 30-foot clear zone
Improvements to 13 interchanges
Replacement of 40 bridges
In 1999 the Commonwealth of Massachusetts approved special
legislation to develop the Route 3 project on a
P3 basis. The legislation enabled the creation of a special purpose, not-for-profit
63-20 corporation which would use lease payments pledged by MassHighway
to issue bonds. Following the award of the Route 3 procurement to Modern
Continental, the legislature established the Route 3 North Transportation
Improvements Association. The Association is overseen by a three person
board, with the Massachusetts Secretary of Transportation of the Commonwealth
of Massachusetts serving as its chairman. The other two positions are filled
by the Secretary of Administration of Finance and a designated member representing
Modern Continental.
Modern Continental was responsible for arranging the
placement of the bond and retained the services of Salomon Smith Barney
and Mintz-Levin to do so on behalf of the Route 3 North Transportation Improvements
Association. The Association issued $394.5 million in tax-exempt lease revenue
bonds to finance the project on the Commonwealth's behalf. The bonds are
secured by a 30-year lease between MassHighway and Route 3 North Transportation
Improvements Association. The Commonwealth also made interest payments during
the four year construction period. MassHighway's rent payments are made
through an annual appropriation and cover debt service and the cost of operations
and maintenance.
Sponsor: Massachusetts Highway Department (MassHighway)
and the Massachusetts Executive Office of Transportation
Cost: $385.1 million
Type of Finance: Tax fee revenue bonds issued by 63-20
public benefit corporation.
Revenue Sources: Lease Payments through an annual appropriation
by the state legislature.
Project Delivery / Contract Method: Design-Build-Operate
contract. Best value award.
Private DBO Partner: Modern Continental
Private Investor: Partner Bond holders
Project Advisors: Salomon Smith Barney, Hinckley,
Allen & Snyder, Mintz-Levin
Design - Build Contractor: Modern Continental Construction
Company
Project Engineer: URS
Lenders: Bondholders
Project Status: Completed early 2005
Financial Status: Closed
Innovations: Design-build-operating procurement approach
cut delivery time from an estimated 9 years to 42 months. It was Massachusetts'
first design-build highway project.
The requirement of the developer to operate and
maintain the road for a 30-year period and then transfer it to MassHighway
provided strong incentives for quality assurance and incentives to capitalize
on asset management practices to identify an efficient and cost effective
maintenance program.
