$3.9bn Texas road PPP draws interest from 11 groups

Eleven groups have responded to a request for information (RFI) for a major Texas roads public-private partnership (PPP) to develop a 28-mile segment of an interstate highway.

The highway reconstruction is one of 11 projects that the Texas Department of Transportation (TxDOT) has recently been authorised to pursue as a PPP, thanks to legislation signed into law in June by Republican Governor Rick Perry.

The project involves widening and reconstructing a 28-mile segment of the Interstate 35E (IH 35E) in Dallas and Denton Counties, and adding managed lanes to the road, according to the RFI.  The estimated project cost is $3.9 billion, and the state has secured $592 million in public funding for the project, according to the RFI.

The respondents to the RFI were:

– A consortium comprised of Spanish toll road developer Cintra and infrastructure fund manager Meridiam;

– Macquarie Group;

– Grupo ACS subsidiaries Dragados and ACS Infrastructure Development, together with Austin Bridge and Road, and infrastructure consultancy Lochner;

– Israeli developer Shikun & Binui;

– Engineering and construction firm CH2M;

– Montreal-based developer SNC-Lavalin Capital;

– A consortium comprised of Fluor Enterpises, Balfour Beatty Capital, the equity investment arm of UK developer Balfour Beatty, and Kiewit Infrastructure Group;

– Spanish developer Acciona;

– Zachry Construction Corporation;

– OHL Concesiones;

– The US unit of Spanish developer FCC Construction.

TxDOT expects to issue a request for qualifications for the project by the end of August and to issue a final request for proposals in February 2012, with the aim of choosing a preferred bidder by mid-2012.

Texas is considering various funding structures for the IH 35E project, including a full concession, a design/build or design/bid/build model with traditional tax-exempt bonds, and an availability payment structure, in which TxDOT would make regular payments to compensate the private operator for capital costs and operating or maintenance costs, according to the RFI.

TxDOT said toll revenues will be the first source of payment for the project, but if those revenues are insufficient, Texas would consider using the State Highway Fund to back the project.

Earlier this month, TxDOT announced that 23 groups had responded to an RFI for the proposed Grand Parkway PPP, which involves the development of a 180-mile ring road in the vicinity of Houston. Texas is considering similar range of funding structures for the Grand Parkway PPP, according to the RFI for the project.

Nearly all of the parties that responded to the RFI for the IH 35E project also showed interest in the Grand Parkway PPP. In addition, the Grand Parkway project elicited interest from groups including Brazilian developer Odebrecht; Edgemoor Infrastructure; and China Construction America, a subsidiary of the China State Construction Engineering Corporation.