Michigan seeks interest in pump station P3

The Michigan Department of Transportation (MDOT) has issued a request for letters of interest (RFLOI) from the private sector to gauge the potential of utilising a public-private partnership (PPP; P3) for the design, construction, finance, operations and maintenance (DBFOM) of up to 165 pump stations throughout the state. 

The RFLOI outlines two potential arrangements, the first of which calls on a private partners to manage all of Michigan's roughly 165 pump stations statewide. The second alternative would be more limited in geographic scope, focusing on the 139 pump stations in the Detroit Metro Region, which includes Wayne, Oakland, and Macomb counties. 

Last year, the agency released a 20-year capital plan to improve the inventory of pump stations. The RFLOI was issued with hope of accelerating improvements to the pump stations, with documents stating that MDOT expects the project to improve on current pump station infrastructure, enhance traveler safety, provide energy efficiencies and cost savings through use of new technologies and new efficiencies created in the operations and maintenance phase.

According to the capital plan issued in 2014, 58 percent of the system, or 96 pump stations across the state are currently in poor condition. Taking into account the rate of deterioration, MDOT expects that in the next 20 years 33 pump stations that are currently in fair condition are likely to fall into the poor condition category, with many pump stations already operating well beyond their intended 20- to 30-year lifespans.

The MDOT initiated a pump station rehabilitation program in 2006, allocating $4 million per year for related construction and maintenance. In 2017, however, the state will reduce that amount to $2 million per year in order to free up the budget in order to capitalise the I-75 and I-94 modernisation projects. According to the department, as much as $8 million annually is needed to meet current needs, though the last time the state was able to muster up that much cash for the program was in 2009. 

According to internal calculations, with $4 million in annual investment into pump stations starting in 2020, 47 percent of the system would be in poor condition by 2034. With $2 million annual investment, that number would jump to 56 percent. Even with $8 million in annual investment, it is estimated that 26 percent of stations would remain in poor conditions at the end of the 20-year period.

The department estimates that cost of constructing a single pump station is roughly $1.5 million plus $120,000 for preliminary engineering.  

MDOT would maintain ownership of the assets throughout the life of any P3 contract. Other active stakeholders would include county drain commissioners, counties, cities and power supply companies among others not explicitly listed in the documents.

While DBFOM is the suggested contract model, MDOT said it would be open to other contractual arrangements as well.

Responses to the RFLOI are due on November 24 by 10 am Eastern Standard Time.