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Report on Highway Public-Private Partnership Concessions in the United States

December 2016
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This document is disseminated under the sponsorship of the U.S. Department of Transportation in the interest of information exchange. The U.S. Government assumes no liability for the use of the information contained in this document.

The U.S. Government does not endorse products or manufacturers. Trademarks or manufacturers' names appear in this report only because they are considered essential to the objective of the document.

Quality Assurance Statement

The Build America Bureau and the Federal Highway Administration (FHWA) provide high-quality information to serve Government, industry, and the public in a manner that promotes public understanding. Standards and policies are used to ensure and maximize the quality, objectivity, utility, and integrity of information. The Bureau and FHWA periodically review quality issues and adjust their programs and processes to ensure continuous quality improvement.

Technical Report Documentation Page
1. Report No.
2. Government Accession No. 3. Recipient's Catalog No.
4. Title and Subtitle
Report on Highway Public-Private Partnersyhip Concessions in the United States
5. Report Date
December 2016
6. Performing Organization Code
7. Author(s)
Benjamin Perez, Reno Giordano, Matthew Woodhouse, Jennifer Thompson
8. Performing Organization Report No.
9. Performing Organization Name And Address
WSP | Parsons Brinckerhoff
1015 Half St SE
Washington, DC 20590

Cambridge Systematics, Inc.
4800 Hampden Lane, Suite 800
Bethesda, MD 20814
10. Work Unit No. (TRAIS)
11. Contract or Grant No.
12. Sponsoring Agency Name and Address
Federal Highway Administration
Office of Innovative Program Delivery
1200 New Jersey Avenue, SE
Washington, DC 20590
13. Type of Report and Period Covered
14. Sponsoring Agency Code
15. Supplementary Notes
Contracting Officer's Technical Representative: Patrick DeCorla-Souza, FHWA Office of Innovative Program Delivery
16. Abstract
Public-Private Partnership (P3s) concessions are an integrated service delivery approach where a public transportation agency enters a contractual agreement with a private sector entity to deliver a service and/or facility for a specific period. Under the P3 approach, the private sector entity is singly responsible for the design, construction, finance, operations, maintenance, operation and renewal (if needed) of facilities for a specified concession period. P3 procurements encourage private sector partners to innovate and generate value through integrated delivery, effective risk management, and application of whole-life cost perspectives. This report assesses the experience of the 28 highway P3 concession projects that have been implemented in the U.S. since 1992. The report presents trends that have occurred for three groups of P3 projects: real toll concessions, availability payment concessions and long-term leases. The report analyzes how financing strategies and procurement structures have evolved over time, focusing on federal financial tools and related approvals. The report includes an appendix with 28 narrative P3 Story documents providing comprehensive information on the different highway P3 projects. These narratives describe how the projects came to be procured on a P3 basis. They provide physical descriptions of the projects, the history behind them and the steps that led to the decision to implement them on a P3 basis. The narratives also describe the procurement process that was used to award the P3 concessions, descriptions of how they were financed, the implementation process, and significant developments that have occurred since these innovative projects entered service.
17. Key Words
Public-private partnerships, highways, project delivery, project finance, tolling, real toll concessions, availability payment concessions, long-term lease concessions, SEP-15, GARVEE, TIFIA, Private Activity Bond.
18. Distribution Statement
No restrictions
19. Security Classif. (of this report)
20. Security Classif. (of this page)
21. No. of Pages
22. Price
Form DOT F 1700.7 (8-72) Reproduction of completed page authorized


On July 17, 2014, the Build America Investment Initiative was implemented as a government-wide effort to increase infrastructure investment and economic growth. As part of that effort, the U.S. Department of Transportation (USDOT) established the Build America Transportation Investment Center (BATIC). The BATIC helped public and private project sponsors better understand and utilize public-private partnerships (P3s) and provided assistance to sponsors seeking to navigate the regulatory and credit processes and programs within the Department. In December 2015, the Fixing America's Surface Transportation Act (FAST Act) was enacted, which directed USDOT to establish a National Surface Transportation Infrastructure Finance Bureau, which was renamed the Build America Bureau (the Bureau).

Building upon the work of the BATIC, the Bureau was established in July 2016 as USDOT's go-to organization to help project sponsors who are seeking to use Federal financing tools to develop, finance and deliver transportation infrastructure projects. The Bureau serves as the single point of contact to help navigate the often complex process of project development, identify and secure financing, and obtain technical assistance for project sponsors, including assistance in P3s. The Bureau replaces the BATIC and is now home to DOT's credit programs, including Transportation Infrastructure Finance and Innovation Act (TIFIA), the Railroad Rehabilitation and Improvement Financing (RRIF) and Private Activity Bonds (PAB). The Bureau also houses the newly-established FASTLANE grant program and offers technical expertise in areas such as P3s, transit oriented development and environmental review and permitting. The Bureau is also tasked with streamlining the credit and grant funding processes and providing enhanced technical assistance and encouraging innovative best practices in project planning, financing, P3s, project delivery, and monitoring.

Working through the Bureau, USDOT has made significant progress in its work to assist project sponsors in evaluating the feasibility of P3s, and helping simplify their implementation. In response to requirements under the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the FAST Act to develop best practices and tools for P3s, the Bureau, jointly with FHWA, is publishing this report on U.S. highway P3 concessions.

Executive Summary

The increasing use of Public-Private Partnerships (P3) concessions as a delivery option for complex highway projects in the US has been facilitated through a wide range of financial, technical and policy initiatives undertaken by the US Department of Transportation (USDOT). This Report on P3s assesses and synthesizes the experience of the 28 highway P3 concession projects that have been implemented in the U.S. since 1992.

The report assesses trends and market developments that have occurred for three different groups of P3s: real toll concessions, availability payments concessions and long-term leases. The report analyzes how the use of different financing strategies and procurement structures have evolved over time, focusing in particular on the use of federal financial tools and related approvals.

The report includes an appendix with 28 narrative P3 Story documents providing comprehensive information on each highway P3 project that has reached financial close in the United States since 1992. These documents convey the stories behind these projects and how they came to be procured on a P3 basis. Presented in a parallel format, the P3 Story documents provide physical descriptions of the different projects and describe the history behind them and the steps that led to the decision to implement them on a P3 basis. The P3 Story narratives also describe the procurement process that was used to award the P3 concessions and thorough descriptions of how they were financed. They also discuss the implementation process and track significant developments that have occurred after these innovative projects entered service.

The report has been prepared using information from a wide variety of sources. These include reports and other documentation available on project websites, information from FHWA's extensive project databases, industry journals, and interaction with public agencies sponsoring P3 projects and private sector developers who implement and operate P3 projects. The information in the body of the report is largely synthesized from the contents of the P3 Story documents.

This Report on P3s is organized into four chapters. Chapter 2 provides a brief overview of P3 typologies, transaction types and payment models and accompanying discussions of the opportunities and challenges encountered in application of this delivery option. Chapter 3 provides an overview of the federal role in the P3 concession process, identifying the different financial tools and related approval processes that can be used to advance P3 projects, as well as Build America Bureau and FHWA activities supporting P3 concession projects. The bulk of the analytical information in the report can be found in Chapter 4. This chapter presents trends and market developments that have occurred over the baseline horizon for real toll concessions, availability payment concessions and long-term leases.

Fourteen, or exactly half of the P3 concessions to have reached financial close in the U.S. since 1992, are real toll projects. These projects include three "greenfield" toll roads, two water body crossings, and nine priced managed lane facilities. Eleven of these facilities have opened to traffic and the remaining three are in construction. The concession periods for these project range from 35 years to 85 years, and average nearly 52 years. Of the eleven open real toll facilities, two have been purchased by public sector transportation authorities, and a third filed for bankruptcy in 2016. The concession period of one project was extended by 20 years in order to help it to avoid bankruptcy, another was extended to help recoup losses earlier in the concession period, and two others were refinanced, one in the face of lower than anticipated toll proceeds. The remaining five operational real toll P3 projects opened to revenue traffic during 2014-2016 and initial financial results from these projects appear to be exceeding expectations in most cases. Real toll concessions involve the greatest degree of risk transfer from the public to the private sector. They may result in significant financial losses and in some cases profits for private investment partners, while shielding the public sector from financial volatility.

A total of nine availability payment P3 projects have reached financial close since 2009. Over half of U.S. availability payment activity has been concentrated in two states: Florida, with three availability payment projects, and Indiana with two. The pace at which availability payment P3 projects have been developed gained momentum in 2014 and 2015, with five projects reaching financial close in those two years alone. However, deal flow slowed in 2016, and it appears that there may be fewer availability projects in coming years. 1

Availability payment P3 procurements have proven an effective strategy to accelerate the completion of large and expensive projects that would otherwise be built in smaller pieces. As with real toll projects, they also transfer lifecycle risk to the private partner and incentivize long-term maintenance efficiencies and cost savings. They can also engender rigorous competition among the companies bidding for availability payment concessions, given that award decisions are based primarily on cost.

While some sponsors may initially have equated availability payments with off-balance-sheet transactions, the financial markets consider them equivalent to public debt. As such, the use of availability payment concessions may put downward pressure on state credit ratings. Public agencies should have a clear understanding of the impact availability payment obligations will have on their budgets and the state's credit rating. Availability payment procurements are attractive to private sector developers because they mitigate the troublesome revenue risks associated with real toll projects. However, their upside profit potential is capped by the availability payments, which are fixed. Real toll concessions provide the potential for greater profit, but with much higher risks.

A total of five long-term lease concessions have reached financial close in the U.S. between 2005 and 2011. While other project owners have considered leasing toll facilities, no other lease concessions have occurred in the ensuing period. All long-term leases include a commitment to operations and maintenance over the concession term. However, unlike similar commitments for availability payment concessions, adhering to established performance standards is not as easily enforced since there are no performance-based availability payments. Lease transactions may also include provisions for facility expansion.

Experience with long-term leases in the U.S. has been mixed. Most long-term lease concessions are no longer held by their original private sector equity investors and two have incurred bankruptcies. While several initial private sector investors have been challenged to realize expected returns from their investments in the near-term, public sector sponsors have generally benefited from their long-term lease transactions. Project sponsors have received large upfront payments when entering into lease agreements. However, they have foregone the income that these existing toll facilities would have provided them.


AB Assembly Bill
APR Autopistas de Puerto Rico
BABs Build America Bond
BRT Bus Rapid Transit
Caltrans California Department of Transportation
CDA Comprehensive Development Agreement
CE Categorical Exclusion
CDOT Colorado Department of Transportation
CPTC California Private Transportation Company
CR County Road
CRSS Caudill Rowlett Scott-Sirrine
CRTPO Charlotte Regional Transportation Planning Organization
CTB Commonwealth Transportation Board
CTV California Transportation Ventures
DB Design-Build
DBF Design-Build-Finance
DBFOM Design-Build-Finance-Operate-Maintain
DBFM Design-Build-Finance-Maintain
DBOM Design-Build-Operate-Maintain
DEIS Draft Environmental Impact Statement
DOT Department of Transportation
DAAR Dulles Airport Access Road
DRAM developer ratio adjustment mechanism
DTR Dulles Toll Road
FAHP Federal-aid Highway Program
FDOT Florida Department of Transportation
FHWA Federal Highway Administration
FTA Federal Transit Administration
FTE Florida's Turnpike Enterprise
GARVEE Grant Anticipation Revenue Vehicle
GLC Golden Link Concessionaire, LLC
HB House Bill
HOT lanes High-Occupancy Toll lanes
HOV high occupancy vehicle
HPTE High Performance Transportation enterprise
IFA Indiana Finance Authority
INDOT Indiana Department of Transportation
ITRCC Indiana Toll Road Concession Company
ITS Intelligent Transportation System
LBJIG LBJ Infrastructure Group
LRTP Long-Range Transportation Plan
LP Limited Partnership
LPA Locally Preferred Alternative
MAP maximum annual availability payment
MAP-21 Moving Ahead for Progress in the 21st Century Act
MAT Miami Access Tunnel, LLC
MIG Macquarie Infrastructure Group
MIS Major Investment Study
MLK Martin Luther King
MoU Memorandum of Understanding
MPO Metropolitan Planning Organization
NCDOT North Carolina Department of Transportation
NCTCOG North Central Texas Council of Governments
NEPA National Environmental Policy Act
NHS National Highway System Designation Act of 1995
NTE North Tarrant Express
NTEMP North Tarrant Express Mobility Partners
O&M Operations & Maintenance
P3 Public-Private Partnership
PABs Private Activity Bonds
PennDOT Pennsylvania Department of Transportation
POMT Port of Miami Tunnel
PPPA Public-Private Partnerships Authority
PPTA Commonwealth of Virginia Public-Private Transportation Act
PRHTA Puerto Rico Highways & Transportation Authority
OCTA Orange County Transportation Authority
ODOT Ohio Department of Transportation
RFP Request for Proposals
RFQ Request for Qualifications
RTC Regional Transportation Council
RTD Regional Transit District
SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users
SANDAG San Diego Association of Governments
SBX South Bay Expressway
SCC Virginia State Corporation Commission
SCETS State Comprehensive Enhanced Transportation System
SFCTA San Francisco County Transportation Authority
SH State Highway
SIS Strategic Intermodal System
SR State Route
TEA-21 Transportation Equity Act for the 21st Century
TIFIA Transportation Innovation Finance Innovation Act
TIP Transportation Improvement Program
TRCV Toll Road Corporation of Virginia
TRIP II Toll Road Investors Partnership II
TTC Trans Texas Corridor
TxDOT Texas Department of Transportation
UPA Urban Partnership Agreement
USDOT United States Department of Transportation
VDOT Virginia Department of Transportation
VfM value for money
VHCA Virginia Highway Corporation Act
YOE year of expenditure


1 "Where Did P3 Deal Flow Go?" Public Works Financing, September 2015, pp 11-15.

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