Infra Insight Blog

Yesterday the Arizona Department of Transportation issued to the P3 and design-build industry a Request for Information for the South Mountain Freeway project. ADOT is seeking perspective and feedback from lead developers, design-build contractors, maintenance contractors, and equity investors on a list of questions, and is providing an opportunity for industry input on the overall procurement process for the project.

Responses are requested by February 25. ADOT will convene and open industry forum on the project at the ADOT auditorium on February 27, and the industry has the opportunity to sign up for one-on-one meetings with ADOT on February 27 and 28.

In planning and development for over 20 years, the project is planned as a 22-mile, eight-lane greenfield freeway in the southwest quadrant of Phoenix. The environmental review of the project is expected to culminate in a final environmental impact statement in the summer of 2014 and a record of decision a few months later. Estimated capital costs are in the range of $1.8 billion, including at least $600 million for right of way acquisitions.

Maricopa County has a ½ cent sales tax dedicated to transportation. A major portion of the sales tax revenue is scheduled for the capital cost of the project. ADOT originally planned the project for construction via traditional design-bid-build delivery in nine separate segments stretching through 2026, timed to match cash flows from the sales tax. But ADOT’s recent analysis indicates that there may be benefits from using financing to accelerate delivery of the full project under a single procurement. The financing, in the range of $400 –800 million, could be arranged as public or private debt, including use of private activity bonds and a TIFIA loan. 

The RFI explains that ADOT is examining three P3 methods:  design-build-finance-maintain using availability payments, design-build-maintain, and enhanced design-build. All of these delivery methods are authorized under ADOT’s public-private partnership authority. ADOT would use a two-stage competitive procurement, first short-listing proposers based on evaluation of statements of qualifications and then using a best value evaluation of proposals to select the winner.

If ADOT decides to proceed with innovative delivery, the RFQ could be issued in the first half of this year, with proposal submission, selection and contract execution within a year thereafter.