Featuring developments in Federal highway policies, programs, and research and technology.
|This magazine is an archived publication and may contain dated technical, contact, and link information.|
|Federal Highway Administration > Publications > Public Roads > Vol. 69 · No. 3 > The "Timed" is Now|
Publication Number: FHWA-HRT-05-001
The "Timed" is Now
by Dana Newsome and Buddy Porta
Innovative contracting promises to expedite completion of major transportation projects in Louisiana by 2010.
The year 2004 brought big changes to Louisiana. Newly elected Governor Kathleen Babineaux Blanco took office as the first female Governor of Louisiana. Governor Blanco appointed Johnny B. Bradberry as the new secretary of the Louisiana Department of Transportation and Development (LA DOTD). And the new administration committed to accelerating the single largest transportation program in the State's history, the Transportation Infrastructure Model for Economic Development (TIMED) Program.
The TIMED Program, which was created in 1989, directs $4.0 billion to enhance economic development in Louisiana through investments in transportation projects. The program includes widening 867 kilometers (539 miles) of State highways to 4 lanes along 11 corridors, widening existing bridges or constructing new ones, and improving both the Port of New Orleans and Louis Armstrong New Orleans International Airport.
For more than a decade, the TIMED Program has generated economic growth and provided job opportunities. But with recent commitments of additional resources and support, the new administration accelerated the program with the goal of providing all of the anticipated benefits by December 31, 2010, cutting 20 years off the original timeline.
"Governor Blanco and Secretary Bradberry understand the vital role that transportation plays in enhancing economic development, and both recognize Louisiana's need for continued growth," says Ron Hartje, who serves as program manager for the TIMED Program. "Together they refocused the TIMED Program to expedite completion."
A Brief History
In the late 1980s, the Louisiana economy was in a downward spiral. According to statistics from the U.S. Department of Commerce's Bureau of Economic Analysis, per capita income for Louisiana residents was down and progressively dropping below the national average. State officials were searching for a solution and found inspiration in an economic development initiative underway in Mississippi known as the Advocating Highways for Economic Advancement and Development (AHEAD) program. Mississippi created AHEAD in 1987 to help build 1,733 kilometers (1,077 miles) of four-lane highways over a 14-year period, using dedicated funding generated through a motor fuel tax.
On March 7, 1989, the Louisiana legislature passed House Bill No. 17, which introduced the TIMED Program to stimulate economic growth in the State by investing in 16 specific transportation projects, with a completion date of 2005. With a vote of 30 to 7, the bill passed in the Senate and was signed into law as Act 16 of the 1989 First Extraordinary Session of the Legislature, effective January 1, 1990. The act imposed an additional motor fuel tax of 4 cents per gallon to fund the entire TIMED Program, including preconstruction, construction, and administrative costs. The tax was initially scheduled to be in place until 2005, the target completion date for the program.
Act 16 included specific language pertaining to the types of projects that would be funded and how the funding would be collected and allocated. To kick off the program, the State held a bond sale in 1990 to finance the then-estimated $1.4 billion program. The initial $264 million provided funding to begin design and environmental clearance on some projects and initiate funding for the Port of New Orleans and the Louis Armstrong New Orleans International Airport--two designated TIMED projects. Once the initial bond funding was spent, the program continued on a pay-as-you-go basis, and work progressed as the State collected gas tax revenues. LA DOTD was responsible for oversight, management, and execution of the TIMED Program, reporting annually to the legislature on progress and expenditures.
The TIMED Program is mostly funded by gas tax revenues, bond sale proceeds, and interest earnings, with some support from Federal funding. Until the mid-1980s, Louisiana was listed among "donee" States in terms of Federal transportation funding, meaning that it received more than it paid into the Highway Trust Fund. But by 1990, Louisiana had become a donor State, paying more into the Highway Trust Fund than it received. The TIMED Program offered an alternative to relying on Federal funding to provide for transportation projects.
"Although collecting gas tax revenues is a slower form of income, it is steady, consistent, and dedicated," says Sherri LeBas, assistant TIMED program manager with LA DOTD.
Progress, however, proved slower than anticipated. The airport and port improvements required $175 million in funding, as designated by Act 16 legislation, from the initial $264 million bond sale. The remaining $100 million in revenues from the bond sale, combined with annual gas tax revenues of approximately $100 million, could not maintain adequate funding for the construction schedule. The TIMED Program, therefore, fell off target in meeting the original completion date. In fact, the new estimated completion date as of 2000 was 2031.
Time for a Change
In 2000, with only 4 of the program's 16 projects complete, then-Governor Mike Foster and his administration, including Lieutenant Governor Kathleen Blanco, called for measures to expedite completion of the TIMED Program. Recognizing a need to overhaul the program, LA DOTD began exploring ways to meet the Governor's challenge. In 2002 LA DOTD took two major steps to accelerate the TIMED Program.
First, the department hired a private program manager, dubbed Louisiana TIMED Managers (LTM), which is a joint venture composed of private consulting and engineering firms. LA DOTD selected LTM to manage the process of accelerating the remaining construction on 12 projects and to provide support staff in program controls, financial management, public outreach, and engineering. In addition, LTM would perform extended work on 55 of the project segments, including design oversight, environmental permitting, real estate acquisition and relocation, utility relocation, and construction engineering and inspection services. LTM and LA DOTD administration fees are paid through the dedicated gas tax. "LTM is serving as an extension of LA DOTD," says LTM Program Manager Hartje, who oversees the TIMED Program. "By having a dedicated staff working exclusively on the program, LTM is able to provide significant resources toward completing the TIMED Program ahead of schedule and on budget."
The second major step was to change the program's financing strategy. The TIMED Program initially started with bond-financed seed money and then converted to a pay-as-you-go strategy financed through gas tax revenues. Then, in 2002, LA DOTD converted the TIMED Program to a bond-financed program, which allows construction projects to be funded with bond sales in addition to pay-as-you-go funding and interest earnings. "This financing strategy facilitated an estimated 19-year acceleration in the schedule," says LA DOTD's LeBas.
The decision to pursue bond sales, subsequently approved by the Louisiana State Bond Commission, will enable LA DOTD to complete the remaining projects in less than 10 years. A series of bond sales will occur over the next 4 years, supported by the voter-approved motor fuel tax. The tax is scheduled to be in place until the TIMED debt is repaid in 2039, per the 1998 legislation.
"The 2002 bond issuance of $275 million provided enough funding to accelerate project lettings from $30 million in fiscal year 2001-2002 to $172 million in 2002-2003," LeBas says. "The current accelerated schedule has TIMED projects letting almost every month for the next 2 years to meet our new completion date."
Together, these steps ultimately helped reduce the timeline for completion by 21 years.
Act 16 laid the groundwork for accelerating construction by authorizing the use of bond sales to increase funding options. Since that time, Louisiana adopted new legislation to further ensure that the program's financing needs are met. House Bill No. 286, which became Act 64 of 1998, extended the original 4-cent per gallon tax until the TIMED debt was repaid. And Senate Bill No. 74, Act 1 of 2000, extended the opportunity to issue bonds through January 1, 2010, and extended the allowable bond maturity term from 20 to 30 years. These additional pieces of legislation further supported the use of various financing techniques to ensure that the TIMED Program could be completed on an accelerated schedule.
To ensure its continuation, the TIMED Program needs to remain financially feasible, meaning that enough projected revenue must be available to complete all 16 legislatively mandated TIMED projects in their entirety. The LTM financial team manages all aspects of funding and financial reporting for the program. One of the most significant responsibilities is the annual feasibility update. To maintain feasibility, LTM needs to forecast revenues, manage and forecast program costs, and administer the bond issuance program effectively. Therefore, the financial team actively manages the projected cost curve to align the sizing and timing of the bond issues with the program's cash needs. Since the majority of costs are funded using bond proceeds, the team needs to analyze the financing structure continuously in the context of current market conditions to manage borrowing costs properly.
"Our team has extensive knowledge of various debt structures and financial derivative instruments that are critical in managing the risks of a volatile interest rate environment," says Frank Smith, LTM finance director. "Expert financial management facilitates cost-effective and timely delivery of a complex construction program, such as the TIMED Program."
Four primary factors affect the feasibility of the program: revenues, borrowing costs, policy, and program costs. LA DOTD and LTM have varying degrees of control over these factors but are aware of the impact that changes can have on the program. Working with an in-house staff of schedulers and planners, LTM monitors and manages program changes and works to minimize scope creep.
"For the past 3 years, the TIMED Program has proven to be financially feasible," Smith says. "And LTM will continue to adapt the program's financing structure to meet the challenges presented by current market conditions."
LTM schedules bond issuances with the goal of maintaining funding through the completion of the program. For the 2005 bond sale, the team selected an investment banker and bond counsel in January 2005 and delivered rating agency presentations in April 2005. Standard & Poor's and Moody's upgraded the TIMED Program's gas and fuel tax revenue bonds to AA- and Aa3, respectively. The upgrade allows for less expensive bond insurance premiums and lower borrowing costs, which should save the program a significant amount of money in the future. The 2005 interest rate was 4.688 percent. TIMED bonds were priced on April 18 and April 19, 2005, and produced proceeds of more than $548 million. Additional bond sales currently are scheduled in 2007, 2008, and 2009.
Three Bridge Projects
When LA DOTD executed the initial program management contract in 2002, three major bridge projects were still assigned to LA DOTD management: the new St. Francisville Mississippi River Bridge, the widening of the Huey P. Long Bridge over the Mississippi River in New Orleans, and the new Florida Avenue Bridge over the Industrial Canal in New Orleans.
In 2004 LA DOTD transferred management of the bridge projects to LTM, with a challenge from Secretary Bradberry to complete the entire TIMED Program by December 31, 2010. The original schedule called for completing the bridge projects by the end of 2012, but LTM reevaluated the schedule and developed strategies to meet the secretary's challenge.
One of the strategies for acceleration includes using design-build procurement on the St. Francisville Bridge project. In 2004 the State passed legislation allowing construction to proceed using the design-build process, which is a project delivery method that combines both architectural-engineering services and construction into one contract. With the new delivery method in place, LTM officials estimated that they could reduce the scheduled completion date by 15 months.
"With the procurement schedule for the St. Francisville Bridge project, we are on target to make final selections of the design-build team in December 2005," says Chuck Duggar, LTM St. Francisville project manager. "LTM is proud to have been a part of LA DOTD's first experience with design-build delivery on a project of this size and scope, and we are eager to finalize the procurement process and see bridge construction begin."
The second major bridge project involves widening the existing Huey P. Long Bridge in New Orleans. The structure's importance as a nexus for automobile and rail traffic, as well as vessels passing beneath it on the Mississippi River, poses a significant challenge to LTM and the TIMED Program, as they will need to maintain all traffic with minimal impacts throughout the duration of the project.
Completed in 1935 and named after the Louisiana Governor who was shot and killed the same year, the bridge is one of three major Mississippi River crossings serving the New Orleans area. Nearly 50,000 vehicles a day travel across the bridge, and river traffic averages more than 6,000 vessels each year. In addition, the bridge services six Class 1 railroads on the New Orleans Public Belt Railroad tracks.
The bridge currently consists of two 2.74-meter (9-foot) vehicle travel lanes in each direction, with no inside or outside shoulders. The roadway portion is cantilevered from a high-level railroad bridge approximately 61 meters (200 feet) above the river. The bridge continues to support both vehicle and rail traffic in the same configuration as when it opened in 1935.
Engineering investigations revealed that the existing structure could support additional widening, so LTM will widen the current bridge to include three 3.35-meter (11-foot) travel lanes in each direction, with the addition of inside and outside shoulders. The current construction plans call for no additional pier foundations for the main river bridge but rather widening of the pier shafts above the existing caisson foundations and the addition of two new parallel trusses to accommodate the widened roadway along the main bridge. For the approaches, new parallel structures will be built to accommodate the new roadways.
Further, LA DOTD and LTM have committed to maintaining all traffic, including rail, roadway, and river, throughout the project. "The project itself is an engineering feat," says Juan Murillo, who serves as the LTM project manager for the Huey P. Long Bridge project, "but the true marvel will be maintaining traffic during construction. Lane closures and traffic slowing will be necessary, but there is no option for closing the bridge."
Intense communication and coordination will be vital to maintaining this commitment to the people who rely on the Huey P. Long Bridge and the Mississippi River. Until the TIMED Program came along, a lack of dedicated funding hindered making improvements to the bridge. However, now this $340 million construction project is scheduled to let its first contract for widening the main bridge piers by late 2005.
The third major bridge project is construction of the Florida Avenue Bridge in New Orleans, which will provide the only stationary bridge over the Inner Harbor Navigation Canal, or Industrial Canal, with the exception of an interstate crossing to the north. Currently, three low-level, movable bridges carry vehicular traffic over the canal but need to be lifted as vessel traffic demands.
The Industrial Canal is 8.9 kilometers (5.5 miles) long, connecting the Mississippi River to the Gulf Intracoastal Waterway and Lake Pontchartrain. The canal is home to terminals that service ships and barges transporting freight between the United States and the Caribbean, Central America, and other domestic ports. Opened in 1923, the canal today averages more than 14.5 million metric tons (16 million tons) of shipping activity annually.
"The new Florida Avenue Bridge will have a [47.5-meter] 156-foot vertical clearance over the Industrial Canal and will provide a crossing that will not be impeded by marine traffic," says Wayne Aymond, who serves as the LTM project manager for the Florida Avenue Bridge project. "Construction is scheduled to begin in 2007, and the bridge will be built in three segments-all to be completed by December 2010."
Program management responsibilities for the TIMED Program also include developing and executing public outreach. LTM planned, designed, executed, and now maintains a Web site, www.timedla.com. The public outreach office provides media relations, public interaction, dissemination of program information, and legislative monitoring. The public outreach manager creates opportunities to increase the visibility of LA DOTD and the TIMED Program through public speaking, participation in professional conferences, and media pitching in local, State, and national media outlets.
Regaining public support has been a key challenge. With a program that was years behind schedule, the residents of Louisiana had lost sight of the economic growth the TIMED Program has the capability to provide, according to LA DODT Communications Director Mark Lambert. "Many areas forgot where their 4-cent tax was going and lost the faith that they would see the benefits," he says.
By dedicating resources to improving public opinion, LTM's efforts have proven highly effective in increasing awareness of the program. The Web site, for example, received more than 20,000 visitors in fiscal year 2004, and media coverage was 95-percent positive. The positive media response garnered headlines that included the following:
According to LeBas of LA DOTD, the greatest accomplishment of the public outreach program is achieving client satisfaction. Requests for information from residents, media representatives, and elected officials are all directed to the LTM Public Outreach Office. This process enables program personnel to focus on their areas of expertise and not be distracted by answering general program questions. And it allows for a single source of information, which is a key factor in maintaining credibility and ensuring the accuracy of information. Having one person disseminate information and present the image of the TIMED Program ensures continuity and reliability in the communication efforts.
In recognition of its efforts, the TIMED Program earned a 2005 "PRIDE Award" from the American Road & Transportation Builders Association. The PRIDE Award recognizes extraordinary programs dedicated to enhancing the image of the transportation industry.
TIMED for Progress
The TIMED Program is building economic development in Louisiana, and thanks to the efforts of LA DOTD, Louisiana residents will experience those benefits even sooner than expected.
Just as the legislators planned back in 1989, the TIMED Program is bringing more jobs to Louisiana. With more than $140 million in construction lettings in fiscal year 2004 and another $160 million projected for fiscal year 2005, Louisiana contractors have the work they need for their current employees and to provide new opportunities for skilled workers.
The 4.5 million Louisiana residents are reaping the benefits of the $4 billion TIMED Program as well. Improved transportation routes, intrastate connectivity, and economic growth are the key benefits, and they are already starting to emerge. Five projects are complete, and all projects are either in design, preconstruction, or construction phases. By 2010, three improved north-south routes will be open in Louisiana, encouraging shipping, commuter and tourist travel, and business development throughout the State.
"In these days of ever-increasing congestion, the public is demanding that we as an industry deliver highway programs and projects much faster than before and on budget," says FHWA Louisiana Division Administrator William A. Sussman. "LA DOTD's accelerated TIMED Program exemplifies what we can do with focused resources and innovative funding. The FHWA Louisiana Division is pleased that this effort, along with early Federal-aid projects costing $78 million and completing [16 kilometers] 10 miles of the U.S. 90 project, will complete the TIMED Program much sooner."
For making progress on Louisiana's transportation projects, now is the "TIMED."
Dana Newsome is the public outreach manager for LTM. She has 7 years experience in transportation public relations. She joined Parsons Brinckerhoff Construction Services, Inc., in October 2002 to work on the TIMED Program. Newsome holds a degree in public relations from the University of Florida. She can be contacted at 866-846-3352 or email@example.com.
Buddy Porta is the LA DOTD TIMED program manager. He has managed the program's operation since 2001, overseeing the scope, budget, and schedule. Porta has worked at LA DOTD for 30 years and has served as design leader for roadway design and program manager for off-system bridges, the urban system program, and the overlay program. He is a certified public manager in Louisiana and received his B.S. in civil engineering from Louisiana State University.
For more information, please visit www.timedla.com or contact the TIMED Public Outreach Office at 866-TIMED-LA or 866-846-3352.
Page Owner: Office of Corporate Research, Technology, and Innovation Management
Scheduled Update: Archive - No Update
Technical Issues: TFHRC.WebMaster@dot.gov