Michigan looks to availability PPP for highway project

The $650m project, which will modernise a 9km stretch of I-75, will go out to bid this week.

Michigan’s Department of Transportation is considering a public-private partnership to upgrade a 9km stretch of highway just north of Detroit.

The PPP would be part of the I-75 modernisation project, which will rebuild a 29km stretch of freeway from 8 Mile Road to South Boulevard in Oakland County. The project was planned for nine segments, with the first completed earlier this month. Instead, MDOT is now looking to procure the five southern segments, including the construction of a drainage tunnel, as an availability payment-based PPP. The project will modernise a portion of the highway built in the 1960s while also adding a high-occupancy vehicle lane.

Preliminary estimates put the price of the project in the $600 million to $650 million range, an MDOT spokesman told Infrastructure Investor. A request for qualifications is expected to be released this week, with a shortlist of bidders picked in January. The agency hopes to reach financial close in November 2018.

The PPP will be procured under a design, build, finance and maintain framework, with the state remaining in charge of operation of the roadway. It will be funded through performance-based annual payments, with no added tolling, MDOT said. The northern part of the project will be bid out separately under traditional procurement methods.

MDOT originally expected the entire project to take 18 years to complete. Tapping the private sector for upfront financing could shave 10 years off the project, MDOT believes.