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Evaluation of Public Private Partnership ProposalsByDr. Qingbin CuiDepartment of Civil and Environmental EngineeringThe University of MarylandCollege Park, MDandDr. Jay K. LindlyDepartment of Civil, Construction, and Environmental EngineeringThe University of AlabamaTuscaloosa, ALPrepared byUTCAUniversity Transportation Center for AlabamaThe University of Alabama, The University of Alabama at Birmingham, andThe University of Alabama in HuntsvilleUTCA Report Number 08402June 2010iUTCA Theme: Management and Safetyof Transportation Systems
Evaluation of Public Private Partnership ProposalsByDr. Qingbin CuiDepartment of Civil and Environmental EngineeringThe University of MarylandCollege Park, MDandDr. Jay K. LindlyDepartment of Civil, Construction, and Environmental EngineeringThe University of AlabamaTuscaloosa, ALPrepared byUTCAUniversity Transportation Center for AlabamaThe University of Alabama, The University of Alabama at Birmingham, andThe University of Alabama in HuntsvilleUTCA Report Number 08402June 2010ii
Technical Report Documentation Page1. Report NoALDOT 930-7412. Government Accession No.3. Recipient Catalog No.5. Report Date: Submitted May 2010;4. Title and SubtitlePublished June 2010Evaluation of Public Private Partnership Proposals6. Performing Organization Code7. AuthorsDr. Qingbin Cui and Dr. Jay Lindly8. Performing Organization Report No.UTCA #084029. Performing Organization Name and Address10. Work Unit No.The University of AlabamaDepartment of Civil, Construction, and EnvironmentalEngineeringTuscaloosa, AL 3548711. Contract or Grant No.ALDOT 930-741The University of MarylandDepartment of Civil and Environmental EngineeringCollege Park, MD 2074212. Sponsoring Agency Name and Address13. Type of Report and Period CoveredAlabama Department of Transportation1409 Coliseum BoulevardMontgomery, AL 36130Final Report of research conducted fromJune 2008–January 200914. Sponsoring Agency Code15. Supplementary Notes16. AbstractIn Alabama, a shortage of transportation funds requires the Alabama Department of Transportation(ALDOT) to combat that shortage by implementing innovative programs. Nationwide, Public PrivatePartnerships (PPP) in transportation projects are increasingly gaining acceptance as an alternative to thetraditional approaches of project delivery and public financing. It is expected that ALDOT will beauthorized soon to conduct PPP projects. Therefore, there is urgent need for the state agency tounderstand nationwide PPP practices and develop a proposal evaluation procedure for PPP projects. Thisreport documents the current practices of Public-Private Partnerships in transportation investment,summarizes the PPP evaluation and implementation processes in leading states, investigates alternativefinancing options available for transportation projects, and assesses the legal environment and publicopinion with respect to PPP implementation. The I-10 connector project has been used as an example toillustrate an appropriate method for Alabama to evaluate the economic viability of PPP proposals in aneffort to protect public interest.17. Key Words18. Distribution StatementPublic Private Partnerships, Transportation Financing,Economic Evaluation19. Security Classification20. Security Classification(of this report)(of this page)21. No of Pages96Form DOT F 1700.7 (8-72) Reproduction of completed page authorizedii22. Price
AcknowledgmentsThe authors would like to acknowledge the following individuals from ALDOT and FHWA whoprovided overall project guidance and leadership:Mr. Bob JillaMr. D.W. VaughnMr. Don ArkleDr. Emmanuel OranikaMr. Jeff BrownMr. Clint AndrewsThe authors would like to extend special acknowledgement to the following ALDOT and FHWApersonnel who offered technical direction, guidance, and assistance: Ms. Ivy Harris, Ms. KidadaDixon, Mr. Xiyan Zhang, Mr. Mark Bartlett, Mr. Dave Harris, and Mr. Shaun Capps.Several undergraduate and graduate students of The University of Alabama and The Universityof Maryland assisted in the research project, including Bryan Fair, Justin Belue, Chad Harvell,Deepak Sharma, and Morteza Farajian. Their hard work is greatly appreciated.DisclaimerThe contents of this report reflect the views of the authors, who are responsible for the opinions,findings, and conclusions presented herein. The contents do not necessarily reflect the officialviews or policies of the Alabama Department of Transportation (ALDOT) or the FederalHighway Administration (FHWA). This report does not constitute a standard, specification, orregulation, nor is it intended for construction, bidding, or permit purposes.iii
Acronyms and CTTSCDACDOTDBDBFDBOMDOTDSCRETCFDOTFHWAGARVEEGO ORSAFETEA-LUSIBSMPSOVTIFIAAnnual average daily trafficAmerican Associate of State Highway and Transportation OfficialsAssociated General ContractorsAlabama Department of TransportationAlabama Toll Road, Bridge, and Tunnel AuthorityBond Anticipation ld- Operate-TransferCentral Texas Turnpike SystemComprehensive Development AgreementColorado Department of gn-Build-Operate-MaintainDepartment of TransportationDebt Service Coverage RatioElectronic Toll CollectionFlorida Department of TransportationFederal Highway AdministrationGrant Anticipated Revenue VehicleGeneral Obligation BondHigh Occupancy TollHigh Occupancy TollIndustrial Development BondIndustrial Revenue BondInternal Rate of ReturnIntelligent Transportation SystemsLow Occupancy VehicleMinnesota Department of TransportationNotice to ProceedOperation and MaintenancePrivate Activity BondPublic Private PartnershipsRequest for ProposalRequest for QualificationRate of ReturnSafe Accountable, Flexible, Efficient Transportation Equity ActState Infrastructure BankStatewide Mobility PartnerSingle Occupant VehicleTransportation Infrastructure Finance and Innovation Activ
TIPTxDOTUTCATransportation Improvement ProgramTexas Department of TransportationUniversity Transportation System for Alabamav
Table of ContentsContents . viList of Tables . viiiList of Figures . ixExecutive Summary . x1.0 State of Practice of Public Private Partnerships . 1Introduction . 1History of Public Private Partnerships . 1Types of Public Private Partnership Arrangements in Transportation Projects . 2State of Practice in the United States . 3Summary . 82.0 Case Studies on Current PPPs. 10Introduction . .10Route 895, Pocahontas Parkway, VA . 11Indiana Toll Road . 12Dulles Greenway . 13Texas SH 130 . 13Colorado Northwest Parkway . 15Lessons Learned . 163.0 PPP Evaluation Process . 17Introduction . 17Texas DOT CDA. 17Georgia DOT PPI . 20Florida DOT PPP . 23Virginia PPTA. 234.0 Legal Issues and Public Opinion. 26Legal Issues for PPP . 26Public Opinion of PPPs . 29Legislative Branch’s Opinions of PPPs . 29Professional Organization’s Opinions of PPPs . 30Laws Impacting PPP Financing . 31PPP Legislation in Alabama. 33vi
5.0 Financing Options . 35Introduction . 35Debt Financing . 36Federal Credit Assistance . 42Concessions and Leases . 496.0 I-10 Connector Project Analysis . 51Project Overview. 51Need for the Project . 53Traffic Studies and Estimation . 54Debt Financing Test . 56Equity Financing Evaluation . 60Alternative Analysis: 40-Year Concession Period . 63Risks and Other Issues . 647.0 Summary . 65Research Findings . 65Recommendations and Future Research Needs . 668.0 Bibliography . 679.0 Appendices . 76Appendix A: Sample Questionnaire . 77Appendix B: Survey Responses . 79Appendix C: Discount Rate . 82Appendix D: PPP Legislation . 84vii
List of TablesNumberPage1-1Experienced and Currently Practicing vs. Success and Failure. 51-2Popular PPP Types Being Used in the United States . . 61-3Individual State’s General Satisfaction Rating . . .72-1Summary of Case Study Projects . .103-1CDA Development Process . . . 193-2TTC-35 Proposal Scoring System . . .203-3GA I-75/I-575 NW Corridor Proposal Timeline (Source: GDOT) . . . 223-4Virginia PPTA Proposal Evaluation Timeline (Source: Virginia DOT) . . .255-1GARVEE BONDS - SERIES 2002-A (Source: ALDOT Annual Report 2008) .
Evaluation of Public Private Partnership Proposals 5. Report Date: Submitted May 2010; Published June 2010 6. Performing Organization Code 7. Authors Dr. Qingbin Cui and Dr. Jay Lindly 8. Performing Organization Report No. UTCA #08402 9. Performing Organization Name and Address The University of
