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ACS responds to Nevada’s highway conundrum

Construction is desperately needed on a span of Nevada highway covering less than four miles. The project, which could cost the state nearly $2bn, has private firms including ACS knocking at the door.

A dangerous stretch of highway along Interstate 15 surrounding Las Vegas, Nevada sees an average of three accidents occur every day. While the state’s Department of Transportation (DOT) is prepared to begin work on a fix soon – an undertaking that will cost anywhere between $1.3 billion and $1.8 billion – private capital could hasten the completion of the multi-phase project.

The first part of a five-stage process will cost Nevada’s Department of Transportation some $500 million, financing which at this point does not appear to have been secured, according to Cole Mortensen, senior project manager at the state’s DOT. Mortensen, who has been devoting most of his time recently to the project, has been frustrated by the lack of formal infrastructure legislation coming from Washington DC that might lay the groundwork for public-private partnerships (PPPs.)

“The project is 100 percent contingent on the financing at this point in time,” said Mortensen. At the heart of the repairs is an area known as the Charleston Interchange. It is phase three of the effort, and it is in need of full reconstruction.

“Private financing would help us to deliver this,” said Mortensen. Without the inclusion of private investments, the state will rely on capital raised in the debt markets in addition to government grants.

With the exception of one road in the southern part of the state, Nevada does not have any toll highways from which to collect income. It is not in the DOT’s jurisdiction to facilitate these revenue drivers. It might be thought that a lack of income on a road that carries some 250,000 vehicles per day, with projections for double that figure, might dissaude private investors from attempting to support any infrastructure initiatives without a concise and reasonable plan for income generation.

Enter ACS Infrastructure Development (ACS). In recent months, an ACS-led consortium dubbed the Neon Mobility Group submitted an unsolicited bid to Nevada’s DOT. The group is willing to inherit the total cost of the construction project and continue to maintain and operate the Nevada roadways. In exchange, the group would assign some “indexation rate” to a series of annual payments, according to a proposal overview.

Now the state is in the financial analysis stage of the ACS submission, during which the proposal is being judged against the public sector’s resources. “The process is taking longer than I anticipated,” Mortensen told Infrastructure Investor.

The DOT has engaged consultants to evaluate the proposition. Construction of the project is planned in 2013.