As the Georgia Department of Transportation embarks on its first public-private partnership, the 39.5 mile “West by Northwest” tolled lane expansion, the state is looking to Texas for inspiration on how to best proceed with the historic project.
“This project is modeled after the North Tarrant Express in Texas,” Earl Mahfuz, Georgia’s Public-Private Partnership (PPP) Programme Director, said in an interview.
“It just keeps that infrastructure moving at a more rapid rate than it would normally if they were taking each of those [segments] as individual procurement projects,” said Robert Hinkle, a spokesperson for NTE Mobility Partners, the private group developing the North Tarrant Express. A PDA, he added, “just kind of keeps the momentum behind the projects.”
Mahfuz said negotiating a PDA is like “attaching” a project that is not yet ready for procurement to another one that is ready to be built. “We think that’s a good idea and that allows us to move this project forward,” he said of West by Northwest.
It's a great time to have a PPP programme
West by Northwest will be split into two sections: 30 miles of tolled lanes along Georgia’s I-575 and I-75 highways, and 9.5 miles along portions of I-285 and I-20. The 30-mile stretch is far enough in its preparation for construction that it can enter development now, while the 9.5 mile stretch will be assigned a PDA for future development.
“[We’re] attaching a project that was literally ready to go so that by the time they get to financial close, they can start the design-build on the other,” Mahfuz said.
He added there are other elements of the North Tarrant Express that Georgia liked, such as its federal financing. North Tarrant made use of $400 million of private activity bonds, publicly-issued debt that can go toward financing privately-backed projects, and a $650 million loan from the US’ Transportation Infrastructure Finance and Innovation Act, or TIFIA lending programme for infrastructure.
Mahfuz said Georgia applied for TIFIA financing and is working on its letter of interest for issuing Private Activity Bonds to support the project.
North Tarrant and West by Northwest also share the use of a new tolling technique called “managed lanes”. Managed lanes are separate roadways where drivers pay tolls that rise and fall according to the level of traffic. The idea is to keep traffic moving at a steady pace, thereby easing congestion. Both segments of the West by Northwest project involve inserting managed lanes along existing highway lanes.
Together, the two segments would cost about $2.1 to $2.3 billion, making the project prohibitively expensive for Georgia to deliver on its own. “When you start talking about projects in the billion dollar category, it’s pretty difficult to finance those,” Mahfuz said, because of a long list of obstacles squeezing the state’s $1.2 billion transportation programme budget.
Revenues from the state’s gas tax have declined about $100 million because of the impact of the recession, Mahfuz said, and the state has little certainty over its near-term federal funding because of an ongoing battle in Congress over the reauthorisation of the US’ surface transportation spending programme. So delivering a project of the size of West by Northwest with state funds alone “would take several years and you’d decimate a couple, one to two years’ of programme budgets”.
“It’s a great time to have a PPP programme,” he added.