California awards first PPP project

The state picked a Meridiam- and Hochtief-backed team to deliver the Presidio Parkway, a reconstruction of the southern access road to San Francisco’s iconic Golden Gate Bridge. If the $1.1bn project reaches financial close, it will be the state’s first PPP delivered under a 2009 law allowing PPPs statewide.

California said it will award its first public-private partnership, the $1.1 billion Presidio Parkway project in San Francisco, to a Meridiam- and Hochtief-backed team.

The team, Golden Link Partners, will be given the opportunity to reconstruct and maintain the southern access road to San Francisco’s iconic Golden Gate Bridge in exchange for a 30-year stream of annual inflation-indexed payments.

Presidio Parkway PPP: now
in award stage

California said in a public notice that Golden Link Partners offered to do the project for a base annual fee of about $28.5 million. That’s about $7 million less than the ceiling of $35 million the California Transportation Commission, an oversight body, placed on the public-private partnership (PPP) when it approved the Presidio Parkway’s procurement in May.

The Presidio Parkway is a major milestone for Golden Link’s equity providers, infrastructure fund manager Meridiam and German infrastructure developer Hochtief PPP Solutions. For Meridiam, it marks its fifth PPP contract award in the US market; for Hochtief, it is the firm’s third PPP in North America, after the Alberta school development and Ontario police projects it won earlier this year.

The Presidio Parkway is also the first PPP to reach the award stage since Governor Arnold Schwarzenegger signed the state’s general enabling legislation for PPPs into law in February 2009. Since then, the project has survived numerous obstacles, including legal challenges and questions over whether the state legislators would fund it.

Earlier this month, Governor Schwarzenegger signed into law a 2011 budget that included about $1.1 billion in long-term funding for the duration of the Presidio Parkway, clearing the last major obstacle for the PPP.

The contract for the PPP must next be shared with the heads of the transportation committees in the California legislature’s two chambers as well as the California’s Public Infrastructure Advisory Commission (PIAC). The PIAC is the state's clearinghouse for PPP-relates services and information.

The legislature and the commission will be free to provide their comments and input on the project. But no further approvals will be needed from them, according to Mike Bowman, a spokesperson for the California’s Business, Housing and Transportation Agency.

A public hearing on the Presidio Parkway PPP is also scheduled for this Thursday, Bowman said. The meeting will provide the public its chance to comment on the PPP contract before California officially signs on the dotted line.

The PPP now heads toward commercial close, or agreement on all the main terms of the project’s contract. The commercial close is expected by the end of the year, with financial close expected next year, Bowman said.