A financial close on the Presidio Parkway project, a public-private partnership (PPP) to construct a road to the Golden Gate Bridge in San Francisco, is expected by summer, Infrastructure Investor has learnt.
A spokesman for the California Department of Transportation (Caltrans) said Caltrans expected a financial close “no later than June 30”. Sacramento-based Caltrans is the state agency responsible for highway, bridge, and rail transportation planning, construction and maintenance.
A date for the financial close was established following the Supreme Court dismissal of a lawsuit brought by an engineering union, the Professional Engineers in California Government (PECG), in November.
The union had appealed to the California Supreme Court to postpone the PPP after a state appellate court in August upheld a lower court ruling allowing the project to proceed. The PECG had maintained the project was a “huge waste of money” and claimed the PPP model increased its cost from a $470 million competitive bidding process to a no-bid deal valued at $1.4 billion.
A year ago, Caltrans and the San Francisco County Transportation Authority finalised an agreement with Golden Link Partners, a consortium headed by French fund manager Meridiam Infrastructure and German developer Hochtief, for the project.
The contract gave Golden Link Partners a design-build mandate as well as a 30-year concession on the parkway in exchange for a $173 million 'milestone' payment. The project will be backed by an availability payment structure, where periodic payments are made to a private partner in exchange for making the asset available in good condition.
Availability payment is a rare deal structure in the US. The recent $715 million Knik Arm Crossing project in Anchorage, Alaska, is another example of a deal backed by availability payments. In the Presidio Parkway deal, the availability payments would come to $28.5 million annually.
Caltrans initiated the Presidio Parkway project under a 2009 law that granted the agency the power to privatise the development of its infrastructure. A website for the project noted the Presidio Parkway would replace the “structurally and seismically deficient” Doyle Drive, or Route 101, which, built in 1936, “has reached the end of its useful life”.