Infra Insight Blog

The enormous deficit in public transportation funding, coupled with appetite from  capital markets, have increasingly triggered the use of public-private partnerships (P3s) to design, build, finance, operate, and maintain the largest and most expensive transportation projects. The use of P3 delivery methods brings with it new challenges for navigating complex federal environmental requirements that govern infrastructure project development.  Nossaman partners Robert Thornton and David Miller discuss innovative solutions to these challenges in a new paper published in ...

In his Infra Insight Blog post on April 9, Frank Liu reported on the uncertain status of the long awaited federal infrastructure bill.  As the federal deficit balloons and election season intensifies, the likelihood of prompt Congressional action on a major infrastructure bill is diminishing.  All indications are that it will be sidelined as Congress works on a “Phase 4” coronavirus relief bill to ameliorate the unprecedented loss of jobs throughout the nation and provide further direct assistance to the business community.  The Phase 4 bill also should include ample stop gap ...

Last Tuesday, President Donald Trump tweeted his support for a “very big and bold” $2 trillion infrastructure package to be included in Congress’ next response to the COVID-19 pandemic.  To date, Congress has passed three bills to combat the effects of the coronavirus outbreak, which has ravaged the global economy and caused more than 297 million Americans to be placed under some form of lockdown.  The latest bill, known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, was signed into law on March 27, 2020 and directs more than $2 trillion in spending to ...

As the number of those impacted by the coronavirus (“COVID-19”) pandemic continues to grow, affected parties across all industries look for guidance on how to deal with this novel situation.  Governments and private parties are analyzing project contracts as they take precautionary actions to prevent the spread of COVID-19.  In this midst of all of this confusion, two questions arise:  What does the COVID-19 pandemic and the steps being taken in response mean for your project contracts? And, will an excusable delay/force majeure clause provide any protection for the impacts of ...

Like several state and local transportation agencies around the nation, the Jacksonville Transportation Authority (JTA) is looking to roll out a fleet of autonomous vehicles. However, unlike other entities, the JTA is hoping to meld this new technology with an aging monorail system that needs updating.

Through its Ultimate Urban Circulator Program (U²C), the JTA is looking for a private partner to help it roll out an autonomous vehicle fleet through multiple phases. The JTA will first deploy autonomous vehicles at-grade along Bay Street in downtown Jacksonville, then convert the ...

The Los Angeles County Metropolitan Transportation Authority (Metro) has authorized a three-year $27.5 million environmental and engineering study to investigate the replacement of existing High-Occupancy Vehicle (HOV) lanes on the 405 freeway with toll lanes between the 101 and 10 freeways.

According to Metro, the 405 is one of the nation’s most traveled urban highways, with more than 400,000 people commuting through this corridor each day. The proposed toll lanes are aimed at creating a faster way for some drivers to navigate the Sepulveda Pass from the 101 freeway in the San ...

Ever since both 2016 presidential candidates made infrastructure investment a core component of each of their platforms, we have been waiting for a significant infusion of federal funds to modernize our aging bridges, highways, and transit systems. One of the few remaining bipartisan issues, members of both political parties had high hopes that a large infrastructure bill would be possible. While this has yet to materialize, the Senate, House, and Administration have all taken steps to advance the ball. But with the current transportation law—the Fixing America’s Surface ...

The Federal Transit Administration (FTA) has announced (as of last month) the Accelerating Innovative Mobility (AIM) initiative to encourage and advance innovation in the transit sector.  AIM will provide a total of $11 million in challenge grants to transit agencies experimenting with innovative ways of doing business, such as exploring new service delivery models, creative financing, novel partnerships and integrated payment.  As part of the AIM initiative, FTA’s Fiscal Year 2020 competitive grant programs, totaling $615 million, will highlight innovation as part of ...

Rhode Island is trying to put the brakes on a federal lawsuit brought by the trucking industry that could steer the state’s truck toll system into a ditch.  The outcome could create speed bumps for transportation agencies considering deployment of innovative congestion management tools.

In 2016 the Rhode Island General Assembly passed the Rhode Island Bridge Replacement, Reconstruction, and Maintenance Fund Act of 2016 (“RhodeWorks Act”) to fill a funding gap between revenue needed to maintain the state’s bridges in sound condition and the state’s revenue sources.  The ...

Last week I attended the Transportation Research Board Annual Meeting in Washington, D.C.  During my Revenue and Finance Committee meeting we heard a presentation from Roger Bohnert, Director of Outreach and Development, for the Build America Bureau.  Among several priorities for the TIFIA Program, the low cost federal credit program for transportation projects, Mr. Bohnert described the Rural Projects Initiative, or “RPI,” which is designed to encourage more utilization of the TIFIA Program for projects in communities with a population of less than 150,000 (based on the ...

The University of Iowa has entered into a 50-year utility public-private partnership (P3), engaging a private partner to operate, maintain, optimize, and improve the University’s existing utility system and help the University transition to coal-free energy production by 2024. ENGIE North America and Meridiam will serve as the University’s private partner. According to the University, the deal represents one of the first utility P3s entered into by any university in the country.  

Under this 50-year P3 agreement, the University’s private partner will provide steam ...

Watch out Silicon Valley, Sacramento is gearing up to launch a research center and prototype lab focused on developing electric and autonomous vehicle technologies.  The California Mobility Center is largely funded by the Sacramento Municipal Utility District and supported by a band of public and private partners, including the City of Sacramento, Greater Sacramento Economic Council, Los Rios Community College District, University of California Davis, California State University Sacramento, PEM Motion, and Valley Vision Inc.  EnerTech of Toronto will be managing the ...

A few weeks ago, I had the privilege of again attending CoMotion LA.  Spearheaded by John Rossant, CoMotion LA brings together leaders and innovators of new solutions to solve the mobility issues of our modern world.  One of the central themes was adopting new mobility solutions to relieve congestion, an increasingly prevalent reality as populations in cities continue to grow.

During the panel on “Financing the Future:  Public-Private Partnering for New Mobility Solutions,” a panel comprised of representatives from the Canadian electric school bus manufacturer Lion Electric ...

Nossaman attorneys Yuliya Oryol, Peter Mixon and Allan Ickowitz provided feedback and comments on drafts of Bridging Public Pension Funds and Infrastructure Investing, a white paper co-authored by Clive Lipshitz and Ingo Walter (NYU Stern School of Business).

The paper is a thoughtful evaluation of the sustainability of the largest public pension systems in the United States and the role of infrastructure investing in their portfolios. Lipshitz and Walter argue that infrastructure should become more central to pension portfolios despite the existing challenges for ...

Last December we told you about favorable IRS guidance letting P3 contractors and investors keep full tax deductions for interest on debt.[1] The IRS kept a P3-friendly approach in last week’s proposed regulations on qualified opportunity zones – which, like the interest limitations in our December post, come from the 2017 Tax Cuts and Jobs Act (TCJA).[2]  The qualified opportunity zone legislation promotes a broad range of real estate and business development in distressed areas, and these proposed regulations are particularly helpful to private parties contracting for and ...

One of the key events for the P3/infrastructure industry this year will be the P3 Policy and Delivery Summit, which is being held in Washington D.C. on May 14th and 15^th. The Summit is taking place during, and in partnership with, Infrastructure Week, and is poised  to attract industry leaders from the private sector and senior officials from federal, state, and local government. The event will be held at the Cosmos Club, a D.C. landmark listed on the National Register of Historic Places.

The Summit’s focus is to analyze the respective roles of federal, state and local government in ...

A pair of Senators from both sides of the aisle, Senator Todd Young (R-Ind.) and Senator Catherine Cortez Masto (D-Nev.), introduced the Public Buildings Renewal Act of 2019 last week, which would authorize the use of tax exempt financing along with private equity to rebuild schools and public buildings through public-private partnerships.  We owe it to our students and teachers, our firefighters and nurses, and all taxpayers to find a way to upgrade our schools and public buildings.  This is a public health and safety issue that impacts not just Hoosiers, but all Americans.  Our bill ...

Have you ever wished there was a comprehensive, easily accessible project cost database for major US transportation projects?  It would be populated following an in depth review of information available from State DOT’s and would capture not just the capital cost of the project, but it’s operation and maintenance cost and delivery and financing approach.  The information could be valuable in many ways, including assessing the project performance outcomes for P3’s and non P3’s.

As I found out a couple of weeks ago at the Transportation Research Board annual meeting, there ...

Contractors and investors in P3s can continue taking a full tax deduction for interest on debt under recent IRS guidance (Revenue Procedure 2018-59, issued November 26). Many P3s are highly leveraged, and the interest deduction is a valuable tax benefit for developers. Were this deduction restricted, P3 developers’ (and by extension governments’) costs would rise; potential investors would demand higher rates of return; and infrastructure projects would be more costly.  Without this guidance, the 2017  tax law would otherwise severely restrict the interest deduction for ...

Los Angeles World Airports (LAWA) and LA Gateway Partners, LLC  (LAGP), together with equity providers and lenders, achieved Financial Close on the approximately $2 billion consolidated rent-a-car facility (ConRAC) at Los Angeles International Airport (LAX) on December 6, 2018.

LAGP is owned indirectly by funds managed by Fengate Asset Management ("Fengate LAGP US I, LLC", 83.3%) and PCL Investments USA, LLC ("PCL LAGP Partnership LP", 16.7%). After achieving Commercial Close on November 6, 2018, Fengate and PCL proceeded to secure private financing for the project  comprised ...

Los Angeles World Airports (LAWA) and LA Gateway Partners (LAGP) have reached commercial close on the design-build-finance-operate-maintain (DBFOM) agreement for the consolidated rent-a-car facility (ConRAC) at Los Angeles International Airport (LAX). In reaching this milestone, LAWA’s ConRAC project becomes the first public-private partnership for a ConRAC facility in the United States. LAGP will now proceed to close the financing for the project, which is expected to occur in December. The financing structure will be a private placement.

Leading up to commercial ...

The State of Delaware and a subsidiary of Gulftainer Company Limited (Gulftainer) have finalized a concession agreement for the operation and further development of the 100-year-old Port of Wilmington (Port).

While the concession agreement signed on September 18, 2018 is not publicly available, it is expected, based on deal terms described in Port documents submitted in support of approval of the P3 transaction,[1] that the agreement grants Gulftainer exclusive rights to manage the Port for a 50-year term. In return, Gulftainer agrees to invest up to $584M in the Port in the first ...

Los Angeles County Metropolitan Transportation Authority has posted notice of an opening for a position as Manager, Innovation in its Office of Extraordinary Innovation.

The job responsibilities will include:

• Managing and facilitating evaluation of unsolicited proposals submitted to the OEI

• Managing OEI’s P3 advisors

• Managing pre-procurement activities for P3 projects such as project screenings, qualitative and quantitative assessment and value for money analyses ...

The Port of Vancouver USA and its rail partners BNSF Railway and Union Pacific Railroad have substantially completed a $251M railroad access improvement project which significantly increases rail access in the port. The project creates a new rail entrance to the port, increases the port’s internal track miles from 16 to more than 50 (including a new loop track at the port’s Terminal 5 facilitating unit train transport) and increases rail capacity on BNSF and UPRR lines outside the port.  According to port CEO Juliana Marler, the project reduces rail congestion on the mainline and ...

The Federal Railroad Administration (FRA) has released its latest Positive Train Control (PTC) implementation progress report for the 2nd quarter of 2018. The FRA’s latest report indicates that railroads are making steady progress toward PTC compliance.

FRA says that 15 railroads have installed 100% and 12 railroads have installed between 95 and 99% of the mandated PTC system hardware. In addition, all but one railroad has acquired sufficient spectrum required for PTC Implementation.

FRA states that railroad implementation of PTC has improved since December 2016, where ...

Last week FRA issued a notice of grant funding of $318 million for rail infrastructure and safety improvements through the Consolidated Rail Infrastructure and Safety Improvement Grants Program known as CRISI. The deadline for applications is September 17, 2018.

CRISI grants are designed to assist with financing passenger and freight rail system improvements to achieve safety, efficiency, and reliability benefits. Eligible applicants include states, public agencies, Amtrak, and Class II and Class III rail carriers and railroad or equipment manufacturer working with ...

The Federal Transit Administration (FTA) recently penned a Dear Colleague letter regarding the Agency’s implementation of the Capital Investment Grants Program, stating that FTA will consider federal loans or financing tools in the context of all federal funding sources for a project, implying that such financing assistance will be calculated as part of a transit project’s federal share. Other modal agencies consider federal loan programs, such as TIFIA or RRIF, to be part of a project’s non-federal share.[1]

The letter has caused a significant amount of discussion in the ...

Sponsors of critical maritime transportation projects received welcome news this week, as the U.S. Department of Transportation (USDOT) published a Notice of Funding Opportunity (NOFO) for America’s Marine Highway Projects. This notice makes available roughly $7 million in recently-appropriated funds for the Short Sea Transportation Program (46 U.S.C. § 55601), commonly referred to as America’s Marine Highway Program (AMHP).

The U.S. Maritime Administration (MARAD) is in charge of this important, but perhaps not well-known, program:  The America’s Marine Highway ...

The American Association of Port Authorities (AAPA) recently released its State of Freight III – Rail Access and Port Multimodal Funding Needs Report.  For its report, AAPA surveyed its members to determine what aspects of rail infrastructure ports most need.

We thought it would be informative to talk with John Young, AAPA’s Director of Freight & Surface Transportation's Policy, about the survey results and the report.

Nossaman:

John, thank you for taking the time to speak with us.  Can you please tell us a little bit about the AAPA?

John Young:

AAPA represents 130 public port ...

A joint venture lead by Capital Development Partners, an industrial real estate and infrastructure development company, has begun construction on a $125 million logistics campus at the Port of Savannah in Georgia, known as the Savannah Port Logistics Center.

The 197-acre industrial campus will offer dual rail service by Norfolk Southern Railway and CSX Transportation. The site also will offer transload capability and more than 2,000 container storage positions, according to a Capital Development Parners press release.

The first building to be constructed as part of ...

Last week the U.S. Secretary of Transportation Elaine Chao notified Congress of DOT’s INFRA grant winners.  The Chicago CREATE program will receive over $132 million to reduce congestion where multiple railroads intersect and to eliminate automobile traffic delays by separating rail and automobile traffic.  In Ohio, the Ohio Rail Development Commission will receive over $16.2 million to improve 30 miles of rail line.

The INFRA program formerly known as the FASTLANE program focuses on highway projects, but projects that shift freight to other modes of transportation are ...

On June 8, 2018, the City of Los Angeles, acting through the Los Angeles World Airports (LAWA) Board of Airport Commissioners, and LAX Integrated Express Solutions, LLC (LINXS) successfully reached financial close on the $4.9 billion agreement for the APM project.

After reaching commercial close with LAWA on April 11, 2018, LINXS proceeded to secure equity contributions and to arrange and close both bond and bank financings for the project.  Private financing for the project is comprised of approximately (a) $1.2 billion in private activity bonds issued by the California Municipal ...

Today, US DOT is formally announcing 26 INFRA grant award winners.  The INFRA program is the Administration’s rebranding of the former FASTLANE grant program, authorized by the 2015 FAST Act.  Both programs were intended to prioritize highway projects, although congestion-reducing rail and port infrastructure projects are eligible.

Among the 26 winners is the Philadelphia Regional Port Authority (PhilaPort), which received a $25.5M grant for a $110.5M project to improve the Packer Avenue Marine Terminal. The project will add capacity to modernize the Terminal, including ...

A new Government Accounting Office report says the Federal Transit Administration has failed to meet three statutory requirements (two from MAP-21 and one from the FAST Act) related to the Capital Investments Grant program, the primary source of federal funding for commuter, light rail, subway, ferry and bus rapid transit projects.  FTA says it has no plans to do so.

GAO says FTA has not issued regulations for rating Core Capacity Improvement projects; established a grant program for simultaneous development of multiple transit projects; or implemented a pilot program for ...

In an effort to promote project flexibility, funding innovation, efficiencies and timely implementation, this week the Federal Transit Administration (FTA) released its final rule regarding P3s (and other private involvement) in public transportation projects.

The primary goal of FTA’s Private Investment Project Procedures (or PIPP), new 49 C.F.R. Part 650, is to identify and address FTA requirements that are impediments to the greater use of public-private partnerships and private investment in public transportation capital projects, while protecting the public ...

As the December 31, 2018 deadline approaches for freight, passenger, and commuter railroads to implement Positive Train Control (PTC), the Federal Railroad Administration (FRA) is reporting on the progress of individual railroads in complying with the mandate.

In 2008, Congress passed the Rail Safety Improvement Act and mandated that certain railroads carrying passengers or hazardous materials are required to install PTC. The FRA describes PTC as a communication-based/processor-based train control technology designed to prevent train-to-train collisions, overspeed ...

The U.S. Senate Committee on Commerce, Science, & Transportation (Commerce Committee) recently held a nomination hearing to fill two vacancies on the Surface Transportation Board (STB), the economic regulator of railroads.  The nomination hearing of Patrick Fuchs and Michelle Schultz provided Senators with a venue to vent concerns related to the U.S. rail system.  In particular, Senator Wicker (R-MS) voiced concern over freight train interference of Amtrak passenger trains.

Congress created Amtrak in 1970 to relieve freight railroads of their responsibility to provide ...

The Automated People Mover (APM) train system project at Los Angeles International Airport (LAX) reached a remarkable milestone this week with Los Angeles City Council’s unanimous approval of a $4.9 billion agreement with LAX Integrated Express Solutions (LINXS).

With City Council’s approval in hand, the City, acting through the Los Angeles World Airports (LAWA) Board of Airport Commissioners (BOAC), and LINXS reached commercial close on April 11^th, signing the project agreement. LINXS will now proceed to obtain private financing for the project, and financial close is ...

The Northern Lights Express intercity rail proposal, connecting Minneapolis and Duluth, Minnesota with a stop in Superior, Wisconsin, advanced forward following a Finding of No Significant Impact (FONSI) from the Federal Railroad Administration (FRA).  The FRA’s decision found that the proposed rail project would not have any significant environmental impacts and allows the project to advance beyond the environmental phase.

Project proponents envision a rail service connecting six stations operating across existing BNSF Railway track.  The Northern Lights Express ...

Infrastructure Ontario and Metrolinx have awarded a fixed-price design-build-finance $245.5 million contract to upgrade Agincourt, Milliken, and Unionville GO stations on the Stouffville GO corridor. The winning bidder, EllisDon Transit Infrastructure (EDTI), will deliver the project using Infrastructure Ontario’s Alternative Financing and Procurement model. EllisDon constituents will provide financing and construction while WSP / MMM Group will be in charge of the design. The project includes upgrades to tracks, platforms with canopies, new pedestrian ...

The White House released its long-awaited infrastructure proposal to Congress this morning, along with the President’s fiscal year 2019 budget proposal. While elements have been hinted at and leaked before, the 55-page document released today provides significant new details. Though the Administration began to advance discrete priorities by executive action this past year, this broad proposal will require legislation. The Administration has opted to leave to Congress the drafting of the bill, just as it did with tax reform.

The White House proposal includes:

• Creation of new ...

Much has been said already about President Trump's call to "rebuild our crumbling infrastructure," in his first State of the Union address. The President asked Congress to advance a $1.5 trillion infrastructure plan that, in part, should be "leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment."

But not all "crumbling infrastructure" is state and local infrastructure. The federal government's infrastructure also needs attention (e.g., river locks, some dams and levees, federal buildings, etc.). In late ...

On January 22, the Port of Long Beach Board of Harbor Commissioners approved construction of an on-dock rail facility that will allow the faster movement of cargo with lower environmental impacts, port officials said in a press release.

The new Pier B on-dock facility will allow more containers to be placed directly on trains at marine terminals. Currently, the ability to build long trains within the Port is limited due to the lack of adequate yard tracks and the configuration of mainline tracks.

Because no cargo trucks are involved in these moves, the new facility will have ...

A government shut down arises when Congress fails to pass an appropriations act that enables federal agencies to spend. There should be separate appropriations acts for groups of agencies.  However, in recent years, Congress has not enacted these separate appropriations acts, but collected them in one enormous bill that includes virtually every agency of the federal government.  Having created these monster bills, Congress then delays passage over battles about what programs or expenditures should or should not be included.  This creates the delays that lead to government ...

On December 21, 2017, the City and County of Denver and Denver Great Hall LLC  reached financial close on the $1.8 billion Jeppesen Terminal redevelopment project (Great Hall Project) at Denver International Airport.

Following on the heels of Denver City Council’s approval of the Development Agreement and commercial close in August 2017, this represents a critical milestone in Denver International Airport’s plans to upgrade its signature terminal for the post-9/11 era by, among other things, relocating and modernizing its security screening areas and improving the ...

President Trump recently signed into law a repeal of the MPO Coordination and Planning Area Reform rule less than a year after the rule was finalized by the Obama administration’s Federal Highway Administration and Federal Transit Administration. The rule, which was largely unpopular with local metropolitan planning organizations (MPOs) across the country, aimed to consolidate many MPOs. As a demonstration of just how unpopular the rule was, the bipartisan repeal effort unanimously passed in the Senate and overwhelmingly passed in the House.

The MPO Consolidation Rule was ...

Bombardier and Metrolinx announced that they have amended their Eglinton Crosstown LRV contract and settled their pending arbitration, showing how re-negotiation and compromise can preserve project schedule and quality, cement customer relationships and eliminate financial uncertainty.

Under the agreement, Bombardier’s LRV production is dramatically cut from 182 to 76 vehicles. However, Bombardier also secured an 18 month extension on its Metrolinx-owned GO Transit operations and maintenance contract.  The amended contract "resets the relationship ... and brings ...

Humber College students and Toronto West residents will soon be able to access Canada’s largest subway system in five years.  The CA$1 billion Finch West LRT project is slated to open in 2022.  The new dedicated light rail transit line will run 11 kilometres along the surface of Finch Avenue from Humber College’s north campus to the new Finch West subway station on the Toronto-York Spadina Subway Extension that opened yesterday.  There will be 16 surface stops and 2 below-grade termini at Humber College and the subway station.  The Finch West LRT project includes a maintenance and ...

The New York Metropolitan Transportation Authority’s (NYMTA) board has approved a $1.8 billion expansion project for another important milestone in Governor Andrew M. Cuomo’s, comprehensive, interconnected plan to improve transit and transportation throughout the New York metropolitan region.

The project includes signal system and bridge state-of-good-repair elements, but the central element is the addition of a 9.8-mile third track between Floral Park and Hicksville, NY on a segment of the LIRR mainline that handles more than 250 trains per weekday.

The project also ...

President Trump recently appointed former Seyfarth Shaw LLP (Seyfarth) attorney Juan D. Reyes, III as Chief Counsel of the Federal Railroad Administration (FRA).  Mr. Reyes was previously a partner in the real estate department of the New York City office of Seyfarth and he led the firm’s P3 practice.  Proponents of P3s may be pleased to have a Chief Counsel that understands the potential benefits of P3s.

The appointment of Mr. Reyes marks a continuation from the Obama Administration of appointing counsel with P3 experience.  President Obama’s first FRA Chief Counsel, Karen ...