- Briefing Room
Federal Highway Administration
[Docket No. FHWA-2014-0006]
Final Core Toll Concessions Public-Private Partnership Model Contract Guide
AGENCY: Federal Highway Administration (FHWA), Department of Transportation (DOT).
SUMMARY: The Moving Ahead for Progress in the 21st Century Act (MAP-21) requires DOT and FHWA to develop public-private partnership (P3) transaction model contracts for the most popular type of P3s for transportation projects. Based on public input favoring an educational, rather than prescriptive, contract model, on February 6, 2014, FHWA published a draft of the Core Toll Concession Model Contract Guide (Guide) (Docket No. FHWA-2014-0006), requesting comments by March 10, 2014. The FHWA received a total of 133 public comments regarding different aspects of the Guide and of P3s in general. With this notice, FHWA publishes a revised Guide reflecting these comments. In coming months, FHWA will publish additional draft guides for public comment: an Addendum to the Core Toll Concession Model Contract Guide that will address additional contract provisions, and an Availability Payment Concession Model Contract Guide that will cover this popular type of P3 arrangement. The revised Core Toll Concession Model Contract Guide can be found on the Docket (FHWA-2014-0006) and at the following link:
FOR FURTHER INFORMATION CONTACT: Mark Sullivan, Center for Innovative Finance Support, (202) 366-5785, Mark.Sullivan@dot.gov, Federal Highway Administration, 1200 New Jersey Avenue, SE. , Washington D.C. 20590; Alla Shaw, Office of the Chief Counsel, 202-366-1042, email@example.com, Federal Highway Administration, 1200 New Jersey Avenue, SE. , Washington D.C. 20590; or Prabhat Diksit, 720-963-3202, firstname.lastname@example.org, 12300 W. Dakota Avenue, Suite 370, Lakewood, CO 80228.
Comments Received and Addressed Regarding the Guide:
On February 6, 2014, FHWA published a draft of the Model P3 Core Toll Concession Contract Guide (Docket No. FHWA-2014-0006). The draft requested comments on each of the substantive topics discussed in the Guide. The FHWA received a total of 133 comments from multiple stakeholders regarding different aspects of the Guide and in varying degrees of detail. In particular, FHWA received 60 comments from the Texas Department of Transportation (TxDOT), 13 comments from Ernst & Young Infrastructure Advisors (Ernst & Young), 10 comments from Professional Engineers in California Government (PECG), 9 comments from the Drive Sunshine Institute, 6 comments from the Associated General Contractors of America, 5 comments from the Commonwealth of Virginia, 5 comments from the American Road & Transportation Builders Association (ARTBA), and 25 comments from private citizens.
A minority of comments addressed the desirability of P3s as a matter of public policy, while the majority of comments focused on the terms of the concession agreement described by the Guide (including terms relating to tolling regulation, benefit sharing, supervening events, changes in equity interest, changes in law, defaults, early termination, and handback) without commenting on the desirability of P3s generally.
The FHWA considered all of the comments it received on the Guide and revised the relevant sections of the Guide as described below. In addition, FHWA made clarifying revisions to certain sections of the Guide as noted below.
Response to Comments
Note: The comments below, as does the Guide itself, often refer to the "Department" - the public authority granting rights via a concession agreement. In all cases, this entity should be understood to be a State or local transportation agency, not the United States Department of Transportation.
Chapter 1: Introduction
Chapter 2: Tolling Regulation
Chapter 3: Benefit Sharing
The comments received on the Guide's review of benefit sharing generally related to requests to include a broader discussion on gross revenue-based sharing mechanisms and other types of benefit sharing in a refinancing context.
Chapter 4: Supervening Events
The comments received on the Guide's review of Supervening Events generally related to the scope of various types of Supervening Events, the considerations and rationale driving the allocation of risk under a Supervening Events regime, the compensation to be paid to the Developer in respect of a Supervening Event, and certain public policy concerns in respect to Supervening Events.
Chapter 5: Change in Equity Interests
The comments received on the Guide's handling of changes in equity interests generally related to the extent to which the Department should prohibit a change in equity interests, the qualifications to consider for approving a new owner, and related terminology.
Chapter 6: Change in Law
The comments received on the Guide's review of the issues surrounding change in law generally related to associated risk allocation and the scope of relevant terminology and contract language.
Chapter 7: Defaults, Early Termination and Compensation
The comments received on the Guide's review of defaults, early termination, and related compensation generally related to the scope and nature of defaults covered by a Concession Agreement, the remedies exercisable by the parties following a default, the cure periods in respect of defaults, and the mechanisms for calculating (and valuing the components comprising) termination compensation.
Chapter 8: Handback
The comments received on the Guide's review of the issues surrounding changes in equity interests generally related to the Handback Reserve Account.
Appendix A: Glossary
The comments received on the Glossary generally related to clarifications on, and scope of, various defined terms.
Other General or Public Policy Comments
FINAL GUIDE & OTHER MODEL CONTRACT P-3 PRODUCTS:
The FHWA is not accepting any further comments regarding the Core Toll Concessions Public-Private Partnership Guide. The final version can be found on the docket (Docket No. FHWA-2014-0006) or at the following link:
In addition to the Core Toll Concessions Public-Private Partnership Guide above, FHWA is also developing an Addendum document that will cover secondary, yet important provisions found in P-3 contracts. The secondary provisions will include issues such as performance standards, contract length, capacity triggers, consumer protections, Federal requirements, developer indemnities, lenders rights, insurance dispute resolution, and performance security. The provisions will be covered in less detail than the provisions in the Core Guide. Another type of P-3 contract is the availability payment based contract. Funds from public sector revenues are the sources of payments to the private contractor in these transactions. These availability payments based transactions are increasingly popular. Many of the provisions found in the toll concessions guide will also be germane to the availability payments guide. The FHWA will be publishing an Availability Payments Model P-3 Contracts Guide in 2014.
Authority: Section 1534(d) of MAP-21 (Pub. L. 112-141, 126 Stat. 405).
Issued on: _________________________
Gregory G. Nadeau
Federal Highway Administration