Advanced Public Private Partnerships (P3s) Training - Q&A Information
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- With regard to right of way costs, what was the total dollar amount, the number of properties acquired, and how far in advance of construction was right of way acquisition completed?
The total cost of right of way acquisition was $35 million which included drainage rights over two golf course and purchase of a third golf course. There were 20 other parcels acquired. Acquisition overlapped the execution of the concession agreement by 8 months. This overlap was defined in the concession agreement.
- Was there incentive to the concessionaire to maximize revenue?
No, FDOT retains the toll revenue risk and will set the tolls on the I-595 Express Lanes.
- For the I-595 project, how large is the internal staff at Florida DOT?
Only two full time FDOT engineers but statewide support as needed.
- The stepped revenue sharing formula is quite complicated. What kind of analysis was done to support this formula and/or was there a precedent? Was there incentive to the concessionaire to maximize revenue?
The incentive to the developer is to maximize revenue. The formula is not as complicated as it seems. You establish an agreed upon baseline tied to an acceptable IRR. You then do the math for the band amounts to lock in the band numbers by a %. You drop the % reference then just compare your revenue in any given year to see if you are in the revenue sharing level by dollar amount. Our advisors suggested this approach. It is our first application in Texas, and is being used on our P3 Toll Concession projects.
- Is there any difference in the payment behavior between small cars (class 1) or commercial trucks (class 6) embedded into the model?
Yes. We can see this difference in the T&R reports. These values are embedded in the model for forecasting purposes. We monitor our facilities by type of vehicle and will continue to see what differences are occurring.
- In the TXDOT presentation they indicated different transaction fees (.15 and .08) can you clarify why there is a difference and how are the transaction fees determined?
The calculated transaction fee was shown as the cost of the complete transaction costs as the result of the summation of fees applicable for the given scenarios. We have transaction costs, merchant fees, video fees and interoperability fees. The highest combination of fees would have transaction costs for a toll of $1.00 at $0.15. The Interoperable cost only has a fee of $0.08 (8% of toll charged). The cost of the video charge is part of that cost in of itself. Transaction cost = mechanics of processing the payment. Merchant fee = Amount charged by credit card company to make the payment for the transponder account. Interoperability fee = Agreed upon statewide rate to cover the costs of processing your transponder on another facility. Video fees = cost of processing a video toll through recognition and the DMV database (This is done on a % of the toll by authority with usual min of $0.20 to $0.22 amount). TxDOT and NTTA currently use Video billing. HCTRA does not have this feature yet.
- What has been the experience of the state DOTs in obtaining approval from FHWA to toll managed lane projects on existing interstate highways?
FHWA has executed tolling agreements for several managed lanes projects in recent years. Since 2009, managed lanes projects on the following Interstate highways have received tolling authority:
- I-820/I-35W, TX
- I-635/I-35E, TX
- I-35W, MN
- I-15, CA
- I-35E, TX
- I-30, TX
- I-85, GA
- I-680, CA
- I-45, TX
- Where does FHWA stand with respect to tolling of interstates, and interstate crossings? And, what changes, if any, could happen within the next 3 years or so?
Tolling on Interstates may be allowed under any of the six tolling programs authorized by Congress:
- Value Pricing Pilot Program
- Express Lanes Demonstration Program
- Section 166 High Occupancy Vehicle (HOV)/High Occupancy Toll (HOT) Lanes
- Interstate System Reconstruction and Rehabilitation Pilot Program
- Interstate System Construction Toll Pilot Program
- Section 129 (Interstate bridges and tunnels only)
Any changes to the current programs would be dependent upon additional legislation. More information on these tolling programs can be found on the Office of Innovative Program Delivery’s external website at http://www.fhwa.dot.gov/ipd/revenue/road_pricing/tolling_pricing/.
- We are going through the process of making a decision on 2 versus 3 and if there are Federal issues with this during that part of the presentation, that would be helpful to know from somebody whether there’s a problem.
The 2+ vehicle occupancy requirement remains unchanged from TEA-21. A State agency that has jurisdiction over the operation of an HOV facility continues to have the authority to establish the occupancy requirements of vehicles operating on the facility.
- May inmate labor (Stalin's canals, remember?) be involved in any of those projects?
Virginia: No provision within the Virginia agreements either allows or disallowed the use of this type of labor resources. The Agreement does require the Private sector to provide all labor, equipment and materials to accomplish their obligations.
Texas: Not on a major project. We do utilize certain tasks and job functions in this manner across the state.
Florida: Inmate labor is not contemplated in the concession agreement
- What would be your expert opinion on P3 for short term concessions (say 10-15 years) involving Non-Tolling Facilities from a State DOT perspective?
Virginia: I believe they are a great idea if they bring value for the investment. In most cases this will be a DBF or an availability type structure.
Texas: We would need a better description of what this project could be. We have not considered transportation projects for a concession of this short of a term. Are you thinking of an "Availability" payment that does not involve tolls. We do have 18+ projects across the state that are part of the "Pass Through" program. Typically there is not a direct toll on these projects and the payback period to a "Public" entity is shorter in nature.
Florida: Each project is different. Factors to consider in determining concession length include the amount of the funding gap to be financed by the private sector, affordability of the availability payment and the desire to transfer lifecycle performance risks. As an alternative to concessions, FDOT has utilized Design Build Finance and Build Finance contracts to finance projects with short-term funding gaps of less than 10 years. For a summary of FDOT’s P3 projects, visit http://www.dot.state.fl.us/financialplanning/finance/private_transportation_facilities.shtm.
- For those states that require a Value for Money analysis, could you describe how that analysis is used in the development and planning process?
Virginia: While the concept of value for money should be used and considered throughout the planning and development process, Virginia specifically does a formal value for money analysis (consistent with our Guidelines and VfM Manual) at the Detailed Level Review and during the procurement stage when the bids are received to confirm that VfM is still being achieved.
Texas: In Texas we perform a "Reference Case" for if we did the project under one of our delivery models. We compare that to a "Shadow Bid" for what we think the private sector will propose for the project under a P3 model. We then see if the "Best Value" proposal meets those projections to "Award" the contract.
Florida: FDOT is required by statute to analyze cost effectiveness and overall public benefit of the project prior to moving forward with the procurement and prior to awarding the contract. The Value for Money analysis is incorporated early in the decision-making process on potential P3 concessions.