Road, bridge and – in particular – toll road projects encompassing both ‘brownfield’ and ‘greenfield’ surface transportation infrastructure are driving deal flow across the US in 2013.
In a two-week period in the month of June alone, Infrastructure Investor reported on $3.5 billion of road project finance in the American East Coast, West Coast, Midwest and Southwest.
Ohio, embarking on its second public-private partnership (PPP; P3), opened bidding on a $330 million greenfield project to design, build, finance, operate and maintain (DBFOM) a 16-mile road. A forward-thinking transportation department in Texas put a ‘pure’ toll road concession on the P3 market, structuring a revenue – or traffic – risk deal for State Highway 288 (SH 288).
In the meantime, Los Angeles began procurement on a six-part toll road P3 worth $730 million, while Florida is closing in on a private partner for its ‘Ultimate’ $2 billion Interstate 4 (I-4) project.
Texas, Florida and California, where Los Angeles is located, have in the past partnered with the private sector. Ohio, for its part, initiated its first P3 in 2013 with its Innerbelt Bridge design, build, finance (DBF) project and is planning a DBFOM project for the Brent Spence Bridge.
For America, toll road privatisation has been an on-again, off-again phenomenon. Beginning in 2004, the lease of the Chicago Skyway and Indiana toll roads ushered in private investment in US public infrastructure.
But in 2013, toll road public-private deals have evolved and are more varied: for example, procuring authorities and their private partners have the option of generating revenue based on traffic – in the manner of the Chicago Skyway lease or Indiana Toll Road deal – or, as is more common nowadays, via an availability payment structure (APS). In an APS, a private partner is compensated for maintaining an asset and is not exposed to demand risk.
In addition, a toll road P3 itself can take the form of a managed or high occupancy toll (HOT) lane deal. A report in May from ratings agency Moody’s called tolling a managed lane “increasingly […] the preferred way to augment [road] capacity” in the US.
Bridge privatisation is also coming into its own in 2013 vis-à-vis a historic $1.5 billion P3 to replace New York's 85-year-old Goethals Bridge as well as the East End Crossing P3, half of the $2.6 billion Ohio River Bridges ‘mega-project’. Alaska, meanwhile, has a toll bridge project in procurement: the $1 billion Knik Arm Crossing, the state's first P3.
Colorado in April finalised its first P3, a toll road concession of US Route 36 (US 36), while Virginia reached financial close for its US Route 460 P3.
North-south, east-west: whichever way you look at the map, there is a good chance a public-private transportation deal is taking place somewhere.