2005 AASHTOSubcommittee on Construction
2005 AASHTOSubcommittee on Construction
August 1, 2005
Office of Program Admin.
Dwight Horne
PerspectivePerspectivePerspective
Starting In the 1950Starting In the 1950’’ss
–– Connectivity Connectivity –– Building of the Interstate Building of the Interstate
System.System.
2121stst CenturyCentury
–– Mobility Mobility –– Eliminating congestion.Eliminating congestion.
“In the 21st Century, the public and private
sectors must embrace each other as partners in
building and maintaining the transportation
infrastructure that will keep America’s
economy moving forward.”
-- Secretary Norman Y. Mineta
Public-Private PartnershipsDefined
PublicPublic--Private PartnershipsPrivate Partnerships
DefinedDefined
A PublicA Public--Private Partnership is a contractual Private Partnership is a contractual
agreement formed between public and private agreement formed between public and private
sector partners, which allows more private sector partners, which allows more private
sector participation than is traditional.sector participation than is traditional.
1995 States with Significant PPP Authority
1995 States with Significant 1995 States with Significant
PPP AuthorityPPP Authority
PRPR
RIRI
CurrentStates with Significant PPP Authority
CurrentCurrent
States with Significant PPP AuthorityStates with Significant PPP Authority
PRPR
RIRI
Past FHWA PPP InitiativesPast FHWA PPP InitiativesPast FHWA PPP Initiatives
•• SEPSEP--1414
•• TETE--045045
•• Flexible MatchFlexible Match
•• Toll creditsToll credits
•• Section 129 loansSection 129 loans
•• SIBsSIBs
•• TIFIATIFIA
•• GARVEESGARVEES
“Attracting private sector participation and
deploying market-based solutions to our
transportation problems is not simply a laudable
objective; it’s a necessity. And it requires us in
the Federal Highway Administration to adjust
the way we approach our Federal-aid mission.”
-- FHWA Administrator, Mary Peters
PPP Task ForcePPP Task ForcePPP Task Force
•• Different FHWA DisciplinesDifferent FHWA Disciplines
–– Environment, Policy, OperationsEnvironment, Policy, Operations
Infrastructure, TIFIA, LegalInfrastructure, TIFIA, Legal
•• Report to CongressReport to Congress
•• WebWeb--Based ResourceBased Resource
•• SEPSEP--1515
U.S. Department of
Transportation
Report to Congress
On Public-Private Partnerships
December 2004
U.S. Department of U.S. Department of
TransportationTransportation
Report to CongressReport to Congress
On PublicOn Public--Private PartnershipsPrivate Partnerships
December 2004December 2004
Spurring PPP Formation – Administration SAFETEA Proposals
Spurring PPP Formation Spurring PPP Formation –– Administration Administration
SAFETEA ProposalsSAFETEA Proposals•• TollingTolling
•• Private Activity BondsPrivate Activity Bonds
•• TIFIATIFIA
•• DesignDesign--BuildBuild
•• Environmental Environmental
StreamliningStreamlining
List of Recently Issued Environment-Related Guidance
List of Recently Issued EnvironmentList of Recently Issued Environment--Related Related
GuidanceGuidance
1.1. Application of NEPA to toll roadsApplication of NEPA to toll roads
2.2. NEPA/PlanningNEPA/Planning
3.3. Endangered Species ActEndangered Species Act
4.4. 4(f)4(f)
Future PPP-Related ActivitiesFuture PPPFuture PPP--Related ActivitiesRelated Activities1.1. More memorandumMore memorandum
�� Uniform Relocation ActUniform Relocation Act
�� Clean Water ActClean Water Act
�� Indirect & Cumulative ImpactsIndirect & Cumulative Impacts
2.2. PPP BookletPPP Booklet
�� Comprehensive manual of all FHWA PPP initiativesComprehensive manual of all FHWA PPP initiatives
3.3. PPP ResourcesPPP Resources
�� Model legislation Model legislation
�� Model contract languageModel contract language
4.4. Continued outreachContinued outreach
PPP WebsitePPP WebsitePPP Website
www.fhwa.dot.gov/pppwww.fhwa.dot.gov/ppp
••Examples of PPPsExamples of PPPs
••State legislationState legislation
••Case studiesCase studies
••Resource libraryResource library
••Links to other sitesLinks to other sites
••SEPSEP--1515
Goal of SEP-15Goal of SEPGoal of SEP--1515
Identify for trial evaluation and documentation publicIdentify for trial evaluation and documentation public--
private partnership approaches that advance the private partnership approaches that advance the
efficient delivery of transportation projects while efficient delivery of transportation projects while
protecting the environment and the taxpayers.protecting the environment and the taxpayers.
SEP-15Four Major Areas of Interest
SEPSEP--1515
Four Major Areas of InterestFour Major Areas of Interest
•• Innovative contractingInnovative contracting
•• Environmental complianceEnvironmental compliance
•• RightRight--ofof--way acquisitionway acquisition
•• Project financeProject finance
Division Admin.
& SEP-15
Steering
Committee
SEP Working
Group
Recommendation to the
Secretary for Regulation
and Statutory Change
Concept State DOT Concept Paper
Prepare Submit
Responses
PrepareSubmit
Recommendation
No Abandon
Reconsider and Resubmit
Deputy
Administrator
Project
Execution
Decision by
Deputy Admin.
Yes
Decision by
State DOT
Prepare
SEP – 15 Process
SEP-15
Application State DOT
Division Admin.
& SEP-15
Steering
Committee
Draft
Co-facilitators
and SEP-15
Steering
Committee
State DOT
Negotiate
EDA Submit
What SEP-15 Is NotWhat SEPWhat SEP--15 Is Not15 Is Not
•• Is not a magic wand to eliminate troublesome Federal Is not a magic wand to eliminate troublesome Federal
requirements.requirements.
•• Is not extended beyond Title 23 in scope.Is not extended beyond Title 23 in scope.
•• Is not an appropriate tool for broad programmatic Is not an appropriate tool for broad programmatic
changes.changes.
SEP-15 Applications ApprovedSEPSEP--15 Applications Approved15 Applications Approved
•• Texas TTCTexas TTC--3535
–– Approved as SEPApproved as SEP--1414
–– Transferred to SEPTransferred to SEP--1515
–– Early Development Agreement completeEarly Development Agreement complete
•• Texas Toll Roads StatewideTexas Toll Roads Statewide
–– Toll collectionToll collection
–– EDA being finalizedEDA being finalized
•• Oregon Innovative Partnerships ProgramOregon Innovative Partnerships Program
–– EDA in draft formatEDA in draft format
WEWE’’RE BULLISH ON MOBILITY RE BULLISH ON MOBILITY
& ECONOMIC DEVELOPMENT & ECONOMIC DEVELOPMENT
IN TEXASIN TEXAS
Trends that Require NewBusiness Models for
Highways
Trends that Require NewTrends that Require New
Business Models for Business Models for
HighwaysHighways
•• Growing populationGrowing population
•• Continually increasing demand for added Continually increasing demand for added capacity capacity
•• Aging infrastructureAging infrastructure
•• Increasing maintenance costsIncreasing maintenance costs
•• Anticipated decline in fuel tax revenuesAnticipated decline in fuel tax revenues
•• Rising construction and right of way costsRising construction and right of way costs
•• Pay as you go canPay as you go can’’t keep up with demandt keep up with demand
State Law Traditionally Provides:State Law Traditionally Provides:State Law Traditionally Provides:
•• Competitive bidding statutesCompetitive bidding statutes
–– Low bid requirementsLow bid requirements
–– Limited Limited ““sole sourcesole source”” authorityauthority
–– No negotiationsNo negotiations
–– No designNo design--build contract authoritybuild contract authority
•• Lack of revenue bonding authorityLack of revenue bonding authority
•• Constitutional restrictions on Constitutional restrictions on ““gift of public fundsgift of public funds””and investment in private companiesand investment in private companies
•• 100% surety bond requirements100% surety bond requirements
•• Open records actsOpen records acts
•• Legislative or local govt approvalsLegislative or local govt approvals
State Laws Should Provide for:StateState Laws Laws ShouldShould Provide for:Provide for:
•• Submission of competitive proposalsSubmission of competitive proposals
–– With adequate time periodsWith adequate time periods
•• Appropriate evaluation factorsAppropriate evaluation factors
•• Opportunity for public commentOpportunity for public comment
•• Authority for state grant or loan to project Authority for state grant or loan to project and contribution of federal fundsand contribution of federal funds
•• Clear and fair selection processClear and fair selection process
•• Avoidance of conflicts of interestAvoidance of conflicts of interest
•• Application review feesApplication review fees
Federal Legal RequirementsFederal Legal RequirementsFederal Legal Requirements
•• Federal DesignFederal Design--Build RuleBuild Rule
•• NEPANEPA
•• Limitations on tolling interstatesLimitations on tolling interstates
•• FHWA procurement processFHWA procurement process
•• Buy AmericaBuy America
•• Davis Bacon, etc Davis Bacon, etc
Federal Regulatory RequirementsFederal Regulatory RequirementsFederal Regulatory Requirements
•• Federal designFederal design--build rule applies to build rule applies to PPVsPPVs (23 CFR (23 CFR 636.119) 636.119)
•• Exceptions approved through SEPExceptions approved through SEP--1515
•• Approvals for negotiated contracts require SHA to Approvals for negotiated contracts require SHA to determine that the price for work is reasonabledetermine that the price for work is reasonable
•• FHWA must approve the process followed in FHWA must approve the process followed in determining price reasonablenessdetermining price reasonableness
Environmental Process Can
(but doesn’t have to)
Lengthen
Project Implementation Time
Environmental Process Can Environmental Process Can
(but doesn(but doesn’’t have to) t have to)
Lengthen Lengthen
Project Implementation TimeProject Implementation Time
•• State DOT must share early development riskState DOT must share early development risk
•• Delays caused by environmental litigationDelays caused by environmental litigation
a major cost drivera major cost driver
•• Take advantage of environmental streamliningTake advantage of environmental streamlining
•• Use Use ““tieredtiered”” environmental approachenvironmental approach
PUBLIC PRIVATE PARTNERSHIPSor
PUBLIC PRIVATE VENTURES
PUBLIC PRIVATE PARTNERSHIPSPUBLIC PRIVATE PARTNERSHIPS
oror
PUBLIC PRIVATE VENTURESPUBLIC PRIVATE VENTURES
Requirements for
Successful PPP
Implementation
Requirements for Requirements for
Successful PPPSuccessful PPP
ImplementationImplementation•• Entrepreneurial Vision Entrepreneurial Vision
•• Positive political climatePositive political climate
•• Organizational support Organizational support –– commitment to innovationcommitment to innovation
•• Institutional capacity to manage programInstitutional capacity to manage program
•• Risk management philosophyRisk management philosophy
•• Access to innovative finance mechanismsAccess to innovative finance mechanisms
•• Flexibility to respond to diverse proposalsFlexibility to respond to diverse proposals
•• Innovative procurement toolsInnovative procurement tools 2
SEP 15 Supports Private
Sector Role in Pre-NEPA
Project Development
SEP 15 Supports PrivateSEP 15 Supports Private
Sector Role in PreSector Role in Pre--NEPANEPA
Project DevelopmentProject Development
•• ““OneOne--stop shoppingstop shopping”” for Title 23 waivers to implement for Title 23 waivers to implement innovative financing and contracting. innovative financing and contracting.
•• Permit private sector involvement in early development Permit private sector involvement in early development process before final pricing.process before final pricing.
•• State DOT can issue RFPs and enter into contracts with State DOT can issue RFPs and enter into contracts with private developers prior to ROD.private developers prior to ROD.
•• Project developer can conduct environmental analysis and Project developer can conduct environmental analysis and prepare NEPA documents subject to direction and oversight prepare NEPA documents subject to direction and oversight by the State DOT in cooperation with FHWA. by the State DOT in cooperation with FHWA.
•• A A ““tieredtiered”” environmental process can be used.environmental process can be used.
Public Private Partnership Goals
Public Private Partnership Public Private Partnership
GoalsGoals
•• Optimize public fundingOptimize public funding
•• Maximize private investmentMaximize private investment
•• Combine the Combine the bestbest of Government and of Government and
Private EnterprisePrivate Enterprise
•• Long term strategic partnerLong term strategic partner
Benefits of PPP/CDA:Benefits of PPP/CDA:Benefits of PPP/CDA:
•• Accelerates project through Accelerates project through concurrentconcurrent activitiesactivities
•• Fixes price early in design phaseFixes price early in design phase
•• Guarantees completion dateGuarantees completion date
•• Designates single point of responsibilityDesignates single point of responsibility
•• Allocates project risks among all partiesAllocates project risks among all parties
•• Provides life cycle cost efficiencyProvides life cycle cost efficiency
•• Provides for continuous Value Engineering assessmentsProvides for continuous Value Engineering assessments
•• Requires continuous constructability reviewsRequires continuous constructability reviews
•• Streamlines project administrationStreamlines project administration
•• Enhances cost control and risk managementEnhances cost control and risk management
PPP AdministrationPPP AdministrationPPP Administration
•• Dedicate small staff to P3 projectsDedicate small staff to P3 projects
–– Small, effective, and efficientSmall, effective, and efficient
•• Accept nonAccept non--traditional approachestraditional approaches
–– Not business as usual, entrepreneurial (flexibility)Not business as usual, entrepreneurial (flexibility)
•• Specialized advisor supportSpecialized advisor support
–– Legal, financial, environmental, quality control Legal, financial, environmental, quality control
•• Recognize each and every project is different Recognize each and every project is different
–– Conduct risk analysis on each oneConduct risk analysis on each one
•• CoCo--locate P3, state, and federal construction stafflocate P3, state, and federal construction staff
–– Delegations of authority must go as low as possibleDelegations of authority must go as low as possible
TWO SPECIFIC EXAMPLESin TEXAS
TWO SPECIFIC EXAMPLESTWO SPECIFIC EXAMPLES
in TEXASin TEXAS
*TTC 35*TTC 35
*I*I--69/TTC6969/TTC69
The ProblemsThe ProblemsThe Problems
•• Population growth Population growth
•• Traffic growthTraffic growth
•• Aging infrastructureAging infrastructure
•• Funding not sufficient to maintain or increase Funding not sufficient to maintain or increase
capacitycapacity
The TTC ConceptThe TTC ConceptThe TTC Concept
TTCTTCTTCTTC----35 High Priority Corridor35 High Priority Corridor35 High Priority Corridor35 High Priority Corridor
Trans-Texas Corridor “TTC” Vision Announced in January 2002
TransTrans--Texas Corridor Texas Corridor ““TTCTTC”” Vision Vision Announced in January 2002Announced in January 2002
•• MultiMulti--modal contiguous corridormodal contiguous corridor
–– Auto, truck, rail, utility transmissionAuto, truck, rail, utility transmission
•• MobilityMobility
•• Congestion ReliefCongestion Relief
•• EfficiencyEfficiency
•• Economic DevelopmentEconomic Development
•• Environmental QualityEnvironmental Quality
New Tools in the State Tool Box
New Tools in the State New Tools in the State
Tool BoxTool Box
• HB 3588 enacted June 2003• Most comprehensive
transportation legislationever passed in Texas
• Broad statutory authority• Allows creativeness and
flexibility in business plans• Multiple options to supplement existing sources
– Tolls & Pass-Through Tolls– Two bonding programs
• Partnering with other Toll Authorities• TTA, NTTA, HCTRA, RMA’s
• Public-private partnerships•D/B, CDA’s
CDA Contractual RelationshipCDA Contractual RelationshipCDA Contractual RelationshipFacility Implementation PlanFacility Implementation Plan
TxDOT
Design-Build-
Finance-Operate
Design-Build-
Operate-Maintain
Design-Build
Design-Build-
Maintain
Design-Bid-Build
High Speed Rail
Commuter Rail
Truck Toll Road
Freight Rail
Toll Road
Utility
Private
Sector
Developer
Delivery Delivery
Umbrella CDAUmbrella CDA Potential FacilitiesPotential Facilities Delivery OptionsDelivery Options
Implementation
Challenges
Implementation Implementation
ChallengesChallenges•• Attracting wellAttracting well--developed proposals from financially strong and developed proposals from financially strong and
experienced entitiesexperienced entities
•• Meeting agencies policies and objectivesMeeting agencies policies and objectives
•• Maintaining a competitive processMaintaining a competitive process
•• Achieving transparency and public acceptanceAchieving transparency and public acceptance
•• Allocating risks to each party, appropriatelyAllocating risks to each party, appropriately
•• Getting buyGetting buy--in from public funding partnersin from public funding partners——federal, state and federal, state and locallocal
•• Achieving timely environmental decisionsAchieving timely environmental decisions
•• Meeting federalMeeting federal--agency regulatory requirementsagency regulatory requirements8
The ProblemThe ProblemThe Problem
ConceptualConceptual57 %57 %52 %52 %% in % in
CorridorCorridor
41,054,973 41,054,973 20,851,790 20,851,790 Texas Texas
TotalTotal
23,402,742 23,402,742 10,861,302 10,861,302 TTCTTC--35 35
CorridorCorridor
2050205020002000
PopulationPopulation
Conceptual
The ProblemThe ProblemThe Problem
Current and Projected Traffic on Interstate 35Current and Projected Traffic on Interstate 35
350,000350,000170,000170,000175,000175,000320,000320,000290,000290,00020502050
270,000270,000101,000101,000120,000120,000234,000234,000200,000200,00020302030
211,000211,00086,00086,00070,00070,000223,000223,000170,000170,000CurrentCurrent
DallasDallasWacoWacoTempleTempleAustinAustinSan San
AntonioAntonioYearYear
The CDA ApproachThe CDA ApproachThe CDA Approach
•• Purpose was to attract private sector Purpose was to attract private sector
partners that would bring inpartners that would bring in……
–– Equity ($$$$)Equity ($$$$)
–– InnovationInnovation
The CDA ApproachThe CDA ApproachThe CDA Approach
The TTCThe TTC--35 Procurement Goals were:35 Procurement Goals were:
•• Procure a longProcure a long--term strategic partner term strategic partner
•• Minimize state tax revenue contributionsMinimize state tax revenue contributions
•• Maximize private sector commitmentsMaximize private sector commitments
•• Accelerate project deliveryAccelerate project delivery
FHWA Involvement in This EffortFHWA Involvement in This EffortFHWA Involvement in This Effort
•• PastPast
–– Procurement process, including evaluation and Procurement process, including evaluation and
selection oversightselection oversight
–– Participation in multiple rounds of Industry Participation in multiple rounds of Industry
Review MeetingsReview Meetings
–– Special Experimental Project 14 Application Special Experimental Project 14 Application
review and approval (now SEPreview and approval (now SEP--15)15)
–– Environmental coordinationEnvironmental coordination
–– Approved final procurement documentsApproved final procurement documents
FHWA InvolvementFHWA InvolvementFHWA Involvement
•• FutureFuture
–– Procurement concurrenceProcurement concurrence
–– Final environmental approvalFinal environmental approval
–– Developer oversight and coordinationDeveloper oversight and coordination
–– Facility authorizationFacility authorization
–– Dedicated coDedicated co--located staff with located staff with TxDOTTxDOT & &
DeveloperDeveloper
Environmental StatusEnvironmental StatusEnvironmental Status
•• 70 public meetings have been held throughout the 70 public meetings have been held throughout the
CorridorCorridor
•• The Draft Environmental Impact Statement (EIS) is being The Draft Environmental Impact Statement (EIS) is being
prepared andprepared and includes the project's Purpose and includes the project's Purpose and
Need.Need. The Draft EIS will identify andThe Draft EIS will identify and analyze the analyze the
project's Preliminary Corridor Alternatives.project's Preliminary Corridor Alternatives.
•• Corridors are being refined and will be presented at the Corridors are being refined and will be presented at the
next round of public meetings in Spring of 2005.next round of public meetings in Spring of 2005.
•• Tier One EIS will define a viable corridor, up to 20 miles Tier One EIS will define a viable corridor, up to 20 miles
wide, to move into the development of section wide, to move into the development of section EISEIS’’ss
(Tier 2)(Tier 2)
Near-, Mid-, and Long-Term Facilities
NearNear--, Mid, Mid--, ,
and Longand Long--Term Term
FacilitiesFacilities
Conceptual
SH 130 SH 130 –– Segments 5 and 6Segments 5 and 6
Dallas Southeast ConnectorDallas Southeast Connector
Dallas Northeast ConnectorDallas Northeast Connector
Georgetown to TempleGeorgetown to Temple
Temple to Dallas SE ConnectorTemple to Dallas SE Connector
San Antonio Southeast LoopSan Antonio Southeast Loop
UP Railroad Relocation (MoPac)UP Railroad Relocation (MoPac)
IH 10 Expansion, Seguin to San Antonio SE LoopIH 10 Expansion, Seguin to San Antonio SE Loop
SH 130 SH 130 –– Segments 1 to 4Segments 1 to 4
Near Term (2005 Near Term (2005 –– 2010)2010)
Mid Term (2010 Mid Term (2010 –– 2025)2025)
Long Term (2025 Long Term (2025 -- ))
San Antonio to Rio Grande ValleySan Antonio to Rio Grande Valley
Dallas to Austin Freight RailDallas to Austin Freight Rail
Dallas to Austin High Speed RailDallas to Austin High Speed Rail
Austin Austin –– San Antonio High Speed RailSan Antonio High Speed Rail
Forth Worth Southwest & Northwest ConnectorForth Worth Southwest & Northwest Connector
2004 I2004 I--69 Concept69 Concept
& TTC Concept& TTC Concept
Trans Texas CorridorTrans Texas Corridor
69
69
69
BrownsvilleBrownsvilleMcAllenMcAllen
LufkinLufkin
TexarkanaTexarkana
HoustonHouston
LaredoLaredoCorpusCorpus
ChristiChristi
ShreveportShreveport
1992/1998 I1992/1998 I--69 Concept69 Concept
Alternates to LA-Long Beach PortsAlternates to LAAlternates to LA--Long Beach PortsLong Beach Ports
LazaroCardenas
Topolobampo
Presidio
Laredo
Odessa
Midland
Houston
Corpus Christi
Brownsville
AlternativeEast-WestCorridorRoute
AlternativeEast-WestCorridorRoute
La EntradaAl Pacifico
La EntradaAl Pacifico
Mazatlan
www.I69texas.orgwww.I69texas.org
I-69 Part of Defense Readiness SystemII--69 Part of Defense Readiness System69 Part of Defense Readiness System
www.I69texas.orgwww.I69texas.org
FORTHOOD
FORTHOOD
FORTBLISS
FORTBLISS FORT
POLK
FORTPOLK
FORTSAM
HOUSTON
FORTSAM
HOUSTON
CampBeauregard
CampBeauregard
CampMabry
CampMabry
CampBullis
CampBullis
MilitaryDeployment
Port
MilitaryDeployment
Port
MilitaryDeployment
Port
MilitaryDeployment
Port
Trans TexasPriorityCorridors
Trans TexasPriorityCorridors
PORT OF CORPUS CHRISTI
TexasT-BoneRail
TexasT-BoneRail
Proposed Gulf CoastStrategic Highway System(Port Access for Army Forts)
Proposed Gulf CoastStrategic Highway System(Port Access for Army Forts)
Trans TexasFreightAccess To
Port of Houston
Trans TexasFreightAccess To
Port of Houston
Freight Access ToPort of Corpus Christi
Freight Access ToPort of Corpus Christi
Trans TexasFreightAccess To
Port of Brownsville
Trans TexasFreightAccess To
Port of Brownsville
I-69 Part of Multi-National SystemII--69 Part of Multi69 Part of Multi--National SystemNational System
www.I69texas.orgwww.I69texas.org
So what we’re doing in Texas is trying to achieve a better quality of life for our residents and all of the traveling public in the United States.
So what weSo what we’’re doing in Texas is re doing in Texas is
trying to achieve a better quality trying to achieve a better quality
of life for our residents and all of of life for our residents and all of
the traveling public in the United the traveling public in the United
States. States.
To do that we are using the best parts of government and private enterprise to provide safer and more reliable mobility, stronger environmental protection, and more opportunity for economic development.
To do that we are using the To do that we are using the bestbest parts parts
of government and private enterprise of government and private enterprise
to provide safer and more reliable to provide safer and more reliable
mobility, stronger environmental mobility, stronger environmental
protection, and more opportunity for protection, and more opportunity for
economic development.economic development.