A 12-mile toll road in Mississippi has become the latest public-private partnership (PPP) in the US to fall victim to the credit crisis.
The Mississippi Department of Transportation (MDOT) said in a statement that it has suspended its procurement of the Airport Parkway PPP in Jackson due to the credit crisis and the recession.
The project – the first PPP in the southern US state – was aimed at linking the state capital’s downtown area with the Jackson-Evers International Airport and eastern suburbs. The winning bidder was to finance, construct, operate and maintain the toll road.
The suspension came just days before the 15 September deadline for proposals for the project from shortlisted teams of bidders.
“In this economy, revenue projections are under pressure and investment grade ratings for the project's senior debt are difficult to obtain,” MDOT Executive Director Larry Brown said in a statement.
“Unless private sector bidders can genuinely deliver construction cost savings, operational savings, or financing savings, the numbers just don't work”, he added.
The Airport Parkway is only the latest PPP to be delayed or to fail to reach financial close this year.
In May, Pennsylvania suspended the bidding process for the development of the Southport Marine Terminal at the Port of Philadelphia, citing the need for financial market conditions to improve.
The same month, after twice postponing the bid submission deadline for the long-term lease of its Alligator Alley toll road, the Florida Department of Transportation received only one late bid for the project, which it refused to accept.
In April, Chicago’s proposed $2.5 billion long-term lease of Midway Airport fell apart after the selected concessionaire, Citi Infrastructure Investors-backed Midway Investment and Development Corporation, could not raise the necessary financing to close the deal.
A fourth project, the Port of Miami Tunnel, was temporarily suspended while Florida officials debated the best course of action to bring it back to market after one of the sponsors, Babcock & Brown, sought to replace its interest in the project with European infrastructure investor Meridiam. That project is now again moving toward financial close.
Additionally, multiple participants in the Midway and Alligator Alley deals have told Infrastructure Investor that the procuring authorities, the City of Chicago and the Florida Department of Transportation, respectively, have not given up on the projects and are actively working to bring them to market again.
In Mississippi, MDOT officials said they will reconsider procuring the Airport Parkway “in alternative formats” and will present a set of options to the Mississippi Transportation Commission later this year.
MDOT also said it plans on taking advantage of the US government’s infrastructure lending program known as TIFIA (Transportation Infrastructure Finance and Innovation Act), which had previously qualified the Airport Parkway project for credit. TIFIA is open to both publicly and privately-financed projects.
MDOT did not return a request for comment by press time.
In August 2008, MDOT shortlisted three teams of Spanish infrastructure developers to submit bids for the Airport Parkway. They were ACS and Dragados (The Jackson Access Mobility Group), Cintra and parent company Ferrovial (Airport Parkway PPP Group) and Global Via.