Meeting the State s Transportation Needs Julie Brogan Deputy Director, ODOT Division of Innovative Delivery

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1 Meeting the State s Transportation Needs Julie Brogan Deputy Director, ODOT Division of Innovative Delivery

2 Give it some Gas tax is not enough $1.6B shortfall in shovel-ready projects $10B need in future project development Preservation needs continue to grow while gas receipts decline No money for new capacity

3 Give it some 2011 P3 legislation 2012 Division of Innovative Delivery Steering Committee Assistant Directors Director: Jerry Wray Chief of Staff, Assistant Director: Greg Murphy Working Groups/IDTTs Construction, Communication, Planning, Engineering, Finance, Maintenance, District Representatives, Chief Legal Deputy Director: Julie Brogan Mike Wawszkiewicz Adam Sheets Julie Gwinn Consultant Contracts TFAC HNTB/E&Y TFAC PFM/HMM TFAC Parsons/E&Y Insurance Advisor AON Turnpike KPMG/PB/A&O Portsmouth CH2/E&Y/Calfee/A&O BSB HNTB/KPMG/Frost Brown

4 SMART I Revenue from advertising sales, sponsorships for the 45 Interstate rest area locations Selected Travelers Marketing Group Targ et revenue: $2M/year

5 SMART II 511 Program Freeway Service Patrol Program OHGO Traffic Generator Signs Bridges Interchanges Targ et revenue: $15M+

6 Ohio s Jobs & Transportation Plan Turnpike Options Analysis completed December 2012 Status quo option chosen over ODOT merger and private lease Issue $1.5B in new bonds backed by future toll revenues Tolls increase annually by CPI for 10 years Tolls frozen for local trips for 10 years

7 Ohio s Jobs & Transportation Plan Implementing the plan House Bill 51 Took effect July 1, 2013 Changes Ohio Turnpike Commission (OTC) to Ohio Turnpike and Infrastructure Commission (OTIC) Increases members from 9 to 10 Governor appoints 6 Term reduces from 8 to 5 years Establishes criteria for OTIC to fund ODOT Projects Projects first approved by Transportation Review Advisory Council (TRAC) Projects must have a nexus or economic or transportation impact on Turnpike

8 Ohio s Jobs & Transportation Plan Governor s plan $1.5B investment from OTIC 27 projects with nexus in Turnpike in northern Ohio $3B+ total investment with state, local and federal funds 41 projects overall

9 Implementing P3s Screening Costs O&M potential Priority Project Ripe (project status) Sufficient time and staff Prioritization Value for Money/Options Analysis Procurement

10 Active P3 Projects Portsmouth Bypass (SCI-823) Brent Spence Bridge Active Traffic and Demand Management Study for Ohio Urban Cores Turnpike Study completed New Jobs and Transportation Plan Cleveland Innerbelt CCG2

11 Cleveland Innerbelt CCG2 De s ign-build-finance Short list: Kokosing, Walsh, TGR Efficiencies in combining demolition and construction contracts Shorten duration of bi-directional traffic on single bridge (2-lane EB/4-lane WB) Roadway user cost savings $25M+ Best value selection: TGR

12 Portsmouth Bypass Project Location Rural community in Scioto County 90 miles south of Columbus, OH 45 miles northwest of Huntington, WV Population Data Scioto County approximate population - 75,000 City of Portsmouth approximate population - 20,000 Economically underserved region 22% of population living below poverty line 11.2% unemployment (3 rd highest rate in the state) Classified as economically at-risk in the bottom 10%-25% of counties nationally

13 Portsmouth Bypass 16-mile, 4-lane, limited access highway in Scioto County Bypasses 26 miles of US 23 and US 52 Interchanges at: US52 & SR140 TR234 (Shumway Road) CR28 (Lucasville-Minford Road) US23

14 Purpose & Need - Portsmouth Regional Benefits Provides improved access to areas within the Region Alternative to I-77 and I-75 for reaching Columbus, Ohio from the South Majority is full access controlled

15 Design and Construction Key Characteristics of Reference Design Significant earthwork: ~ 25M Cubic Yards of excavation, mainly rock ~ 20M Cubic Yards of embankment 21 bridges and 17 retaining walls Two horizontally curved bridges over US 23 (north end) Crossing of CSX and NS Railroads

16 Design and Construction Performance-based O&M Scope encourages efficient lifecycle decisions O&M is a relatively small portion of total Project cost Developer responsible for the majority of the O&M on the Bypass for 35 year period following Substantial Completion Mainly capital maintenance, limited routine maintenance Hand-back criteria at the end of the project term Supported by hand-back reserve, funded 24 months prior to the end of project term

17 Project Scope O&M Developer Capital Maintenance scope includes: Pavement resurfacing and reconstruction Bridge maintenance and rehabilitation Retaining walls, slopes and drainage maintenance Developer Routine Maintenance scope includes: General cleaning, mowing, minor repairs Maintenance of traffic ODOT retained Routine Maintenance scope: Winter maintenance (snow and ice treatment) Incident response/ emergency management Roadway weather information sensors

18 Project Scope O&M Performance Regime Non-compliance: Points based system covering compliance, reporting, notification requirements Each point has a dollar value, and deductions are made monthly Self reporting with ODOT audits, enforced by audit and non-compliance regime Persistent non-compliance can lead to termination of the Developer

19 Delivery Mechanism Design-Build-Finance-Operate-Maintain (DBFOM) delivery model Construction Period Anticipated to be 5 years or less, delivered as a single phase Operating Period Operations & Maintenance (O&M) responsibility for fixed 35 year period following Substantial Completion, unless terminated earlier

20 Delivery Mechanism Availability Payment structure Developer will use private capital to finance construction In return for the opportunity to earn Availability Payments: Developer will design, build, finance, operate and maintain facility for ~ 35 years following Substantial Completion Equity investors and debt providers are at-risk if payments are not earned

21 Delivery Mechanism DBFOM Availability Payment structure benefits Accelerates the project by eight years creates jobs now when construction prices are low delivers the complete project rather than phases with limited utility Frees budgetary capacity in the short-term provides similar or lower whole life cost to design-bid-build Allows ODOT to pay for the project over a longer period, without a cost premium Enables competitive, firm fixed-price with substantial risk transfer and de facto long-term warranty of construction Generate economies of scale related to construction

22 Delivery Mechanism Payment Structure Milestone payments ADHS funds paid during construction period Substantial completion milestone is subject to deductions regime for non-compliance Monthly availability payments Begin only after successful construction completion - mitigates cost and delay risk Paid on the basis of meeting performance standards (regardless of traffic volume)

23 Delivery Mechanism Performance regime generally consistent with precedent availability payment projects Periodic availability payments subject to unavailability and non-compliance deductions Unavailability: Financial deductions from monthly payments for unavailability/closures of ramps, single and multiple lanes Unavailability deductions applied hourly, with higher unavailability deductions during peak hours Deductions calibrated as LDs

24 Financial Plan Overview Shadow Model assumes Developer finances project using: PABs, TIFIA ($230 million, Rural Rate Allocated) Developer equity and Milestone payments Milestone payments using ADHS funds anticipated to be paid in three tranches: 70% of D&C spend 80% of D&C spend Substantial Completion

25 Private Activity Bonds Conditional PABs allocation of $610m for project approved by USDOT in November 2013 Ohio Treasurer of State available to act as conduit Proposers may use other Ohio based conduit, if desired Proposers have the option, but not obligation, to use PABs in their financing plans

26 Facts Portsmouth Bypass Portsmouth Bypass Development Partners Equity: Cintra Construction: Ferrovial/Allan A. Meyers Designers: Othon, Mannik & Smith and Bowman Consulting SHORT-LISTED PWP Portsmouth Equity: Plenary Group, Walsh Investors, Parsons Enterprises Construction: Walsh/Trumbull/Parsons JV Designers: Parsons Transportation Group Portsmouth Gateway Group Equity: ACS Infrastructure, InfraRed Capital Partners, Star America Fund Construction: Dragados USA, Beaver Excavating, John R. Jurgenson Designers: ms Consultants Issuance of last planned RFP Addendum- July 25, 2014 Technical proposals due- August 22, 2014 Financial proposals due- September, Selection of successful proposal- October 17, 2014

27 Brent Spence Bridge Corridor (I-71/I-75 Improvements) Options Analysis August 2013 Initial Financial Plan December 2013 Potential DBFOM with Tolling/Availability Payment TIFIA LOI to be submitted Ohio HB533 passed in May 2014 Video Tolling Tolling Enforcement

28 Questions? Julie Brogan phone: / julie.brogan@dot.state.oh.us