Volume 9, Issue 4 - January 25, 2017
Airport modernization - next big wave of infrastructure projects
Mary Scott Nabers, President/CEO, Strategic Partnerships, Inc.
The United States may boast the world's top economy, but that's not evident when travelers arrive at America's front door. The country's airports do not impress international travelers. Not even one American airport is listed in the top 25 in Skytrax's 2016 survey of the world's best airports. In fact, U.S. airports are so far down the list, it is shocking.

Operational inefficiencies, passenger congestion, limited retail, access in and out of terminals and the negative passenger experience found in almost every U.S. airport is the result of outdated design, increasingly high demand, a lack of funding investment and a tendency to reject the concept of collaborating with private-sector experts. That, however, is changing.

Big changes are occurring in the U.S. and more are expected soon. In fact, airport modernization in America is expected to outpace all other countries in the next few years.

Los Angeles International Airport (LAX), historically notorious for subpar facilities, has launched a $14 billion modernization project. More gates are available to service the massive Airbus A380 jets, retail ranges from Armani and Porsche to KFC and passengers are treated to all types of new amenities at the Tom Bradley International Terminal. A "people-mover" train will allow travelers to have quick access to terminals, car rental facilities, parking garages and automated kiosks for quick boarding.

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A new year of natural disasters is off to an energetic start across the Unites States with recent news this month of tornadic activity taking lives and causing destruction in Georgia and other states in the Southern region.  Will 2017 exceed last year's devastation totals? 

Worldwide natural disasters caused $175 billion in damages in 2016. According to the National Oceanic and Atmospheric Administration, last year there were 15 weather and climate events with losses exceeding $1 billion each across the United States. These events included drought, wildfire, four inland flood events, eight severe storm events and a tropical cyclone event. These disasters carried a destructive price tag of $46 billion. This total was the second highest annual number of U.S. billion-dollar disasters, behind the 16 events that occurred in 2011.

From 1980-2016, the U.S. South/Central and Southeast regions experienced a higher frequency of billion-dollar disaster events than any other region. Losses during these disasters included physical damage to residential, commercial and government/municipal buildings, material assets within a building, time element losses, vehicles, boats, offshore energy platforms, public infrastructure and agricultural goods.

When a disaster occurs, communities must be rebuilt and survivors require reasonable care and attention.  Individuals affected by a natural disaster are dependent upon local, state and federal governments for aid and provision of resources. Sometimes governments may not have the ability to aid their citizens properly due to lack of funds. Public-private partnerships (P3) are an option.

The U.S. Department of Transportation (USDOT) has identified 10 sites as officially designated proving grounds for autonomous vehicle testing in the U.S. The sights chosen are appealing to USDOT because they have the best ability of sharing best practices and information, forming a core community that will spur autonomous vehicle development. The pilot program will assist in setting the standards for the vehicles and how self-driving is implemented on roadways.The full list of the 10 proving grounds is located here.

Upcoming contracting opportunities

The Commonwealth Transportation Board approved a $31 million design and construction project contract to extend the 95 Express Lanes further south into Stafford County. The project will add 2.2 miles of reversible lanes in addition to the new entrances to and exits from express lanes. Construction is scheduled to be done by August 2018. Virginia is also planning to transform the Interstate 395 HOV lanes in Arlington County into an extension of the express lanes. Construction is expected to start in 2017 and by 2019, the HOV lanes will be fully converted into express lanes.
The California Transportation Commission has approved 49 projects, all together valued at $127 million, to improve California's aging roads and bridges, upgrade transit and rail systems and encourage the use of alternative transportation like biking and walking. A total of $330,00 has been set aside for the Stanislaus Council of Governments for planning, programming and monitoring projects in the county. The Stockton to Escalon Double Track Project will receive $23 million. Sections of BNSF track between Stockton and Escalon will have double tracks installed. Also included in this $23 million is engineering, siding upgrades and grade crossing modifications in San Joaquin County. The State Highway Operation and Protection Program has allocated $47.4 million for 14 "Fix-It-First" projects that improve old roads, maintain roads that are already in good condition and upgrade bridges.
Lake Pontchartrain Causeway's proposal to borrow up to $133 million through bonds to pay for safety improvements on the 26-mile bridge was unanimously approved by the Jefferson Parish Council on Jan. 11. The safety improvements will include better railings and add sections of shoulders. The Causeway Commission cleared the last hurdle when it secured the Jefferson Parish Council's approval for a bond after having secured confirmation by the St. Tammany Parish Council in October. In order to finance $103 million of the debt, toll increases are being proposed. Under the proposal, $2 round trip cost for Louisiana toll tag customers would increase to $3, and cash customers would see their $3 round trip cost rise to $5.
In the past 20 years, the Sacramento region, described as the U.S. metropolitan area at second greatest risk for flooding, has spent about $2 billion in an effort to strengthen its defenses against devastating floods. Levees on the Sacramento and American rivers and south county streams have been strengthened and various vulnerable regions have had their problems addressed. However, after more than five years with little rain, flood defense has not been a top priority. But the recent rainstorms in the region have brought the issue back to light. Sacramento Area Flood Control Agency Director Rick Johnson, has expressed his desire for projects that enable the region to handle a 200-year flood, which is a flood with high river flows and conditions that have a 0.5 percent chance of occurring in a year. Johnson has stated that there is $2.4 billion worth of flood control projects on the drawing board to ensure that such protections become a reality.
New York Gov. Andrew Cuomo has proposed a $2 billion plan to improve New York's water and sewer systems - some of the oldest in the nation. The $2 billion would be spent over five years on top of the $200 million already dedicated for water projects around the state. Many water systems around New York have been experiencing water main breaks - The Erie County Water had 1,453 in 2015 and Syracuse had nearly 400 in the same year. In addition, it is estimated that 20 percent of treated water in municipal pipes in New York City leaks out before it makes it to a faucet. In the past, issues such as education and healthcare have been prioritized before improving water systems but the situation has become dire enough to demand attention. The proposed $2 billion plan is only the first step in improving New York's water systems as it is projected that about $80 billion would be needed in the coming years to completely replace old water mains, modernize sewer systems, and remove lead pipes.
The state of Nebraska recently awarded $40 million in state matching grants through the County Bridge Match Program. The money will be utilized to replace 68 bridges in 32 counties. The County Bridge Match Program will provide the first $4 million of the $40 million in grants. The program is part of a larger legislation called the Transportation Innovation Act passed by the Legislature last year. Nebraska's bridges are due for improvements. Out of 11,147 county bridges, 814 bridges are functionally obsolete, 2,152 bridges are structurally deficient and 185 bridges have been shut down. The rest of the $36 million will be awarded in grants over the next six years to counties that can demonstrate a significant need and cost savings. So far, 61 counties have submitted 80 proposals for bridge grant money. These proposals would replace 151 bridges and cost about $20 million in construction services.
The Connecticut Department of Transportation (CTDOT) has announced its five-year capital plan for fiscal years 2017-2021. The plan allocates $10.9 billion to fund projects relating to highways, bridges, public transportation and bicycle and pedestrian needs. CTDOT plans to spend $2.2 billion in fiscal year 2017 with $1.3 billion set for highway and bridge infrastructure projects and about $900 million for bus and rail projects. CTDOT also plans to bid 87 projects that have a $570 million contract value all together. Over the five years of the plan, $6.3 billion is allocated for highway and bridge projects, followed by $4.3 billion for public transportation and $245.8 billion for facilities.
Officials in Doña Ana County, New Mexico are planning for systems to help prevent flooding in county residential areas. Severe flooding during rainstorms has caused overflows in the canals under I-25, rushing down to the arroyo near I-10. The Doña Ana County Flood Commission is working on plans with engineers to build a series of culverts to direct the water away from the impacted residential homes. This part of the project will be dependent on receiving incremental funds from the county's capital improvement plan. The plans culminate with the construction of a pond for all the water to be redirected towards, which will be funded by Colonias Infrastructure funds. The County Flood Commission will present the plan to the Board of County Commissioners in March 2017.
In fiscal year 2018, Louisiana could spend $663 million on coastal restoration and levee projects. The drafted coastal annual plan, currently under consideration by the Coastal Protection and Restoration Authority, lists four phases for every project and allocates the money accordingly. The three projects in the planning phase received a budget of $6.7 million, while the 38 projects in the design phase received a budget of $123 million. The largest budget of $371 million was granted to the 27 projects in the construction phase. The fourth phase, the maintenance of 143 completed projects and the monitoring of 109 projects, received a budget of $39 million. Additional expenses in the annual plan include $1.6 million for the removal of marine debris and $45.8 million to repair beach and dune projects. The 2018 draft budget is about $20 million less than the draft budget for fiscal year 2017 and the budget for fiscal 2019 is anticipated to drop again to $612.6 million. However, in fiscal year 2020, it is projected that the budget will increase to $1.2 billion as court settlement-related payments from the BP Deepwater Horizon oil spill start coming in. The annual plan each fiscal year acts as the budget for the state's Master Plan for coastal restoration and hurricane storm surge protection.
The executive director of the Regional Transportation Alliance, Joe Milazzo, recently identified the "Complete 540" project as his organization's top priority. The project will look to improve the 540 loop to ease the increasing traffic congestion. The project is currently scheduled to move forward in 2020 although Milazzo is hoping to accelerate the timeline by two years. The North Carolina Department of Transportation (NCDOT) is pushing for the construction all the way from 55 to I-40. However, the project faces some obstacles such as the presence of endangered species, and the disruption to residents in the area. About 270 homes will need to be relocated. NCDOT expects Complete 540 to cost $2.2 billion.
The South Central Light Rail Extension, which will connect the current light rail system in downtown Phoenix to Baseline Road, is on track to be completed by 2023. The Phoenix City Council approved accelerating segments of the future light rail transit system to advance into the Regional Transportation Plan. As a result, the South Central Light Rail Extension will operate in 2023 instead of 2034. After an environmental approval from the Federal Transit Administration, the final design work on the extension will begin and the project will advance to meet the 2023 projected deadline. The advancement is funded by a 35-year, multi-modal transportation plan called "Transportation 2050."
News about public-private partnerships (P3s)

A piece of land that once housed an amusement park in Gulf Shores, Ala. is now being restored with a 240-room hotel and conference center. After the amusement park was blown away by Hurricane Ivan in 2004, the city purchased the land for $2 million. City officials will now sell the property to a Birmingham developer who will add to the infrastructure already in progress along the Beach District. This public-private partnership will be based on revenues and improvements for public use in exchange for the piece of property. The city is waiting on economic studies showing what the return on their investment is projected be. The estimates are close to $40 million in tax revenue per year right now and construction is projected to begin in a year.
Delaware Gov. John Carney signed his first Executive Order, establishing a 14-member group to create recommendations for the implementation of a public-private partnership (P3/PPP) at the Delaware Economic Development Office( DEDO). The group will research ways that state government can work with the private sector to increase economic development in Delaware by attracting new companies and supporting innovation. As Delaware's economy is in transition after the recession, the state is taking this initiative as top priority to grow the economy by acquiring new talent and jobs. The working group will begin its work and research in February, reporting back to Carney by April 7, 2017. The group will be comprised of a member from each of the General Assembly's four caucuses, four representatives from the business community, the director of the DEDO, the governor's policy director, and various representatives from the nonprofit sector, higher education, labor and the general public.
Fairfax Water and a materials company recently signed an agreement, originally drafted in 2000, that involves a phased conversion of Vulcan's quarry to a Fairfax Water reservoir over the next 70 years. The reservoir will be capable of holding up to 17 billion gallons of water. The reservoir will be developed in two stages, with the northern part of the quarry projected to be transferred to Fairfax Water by 2035 and the remainder to be transferred by 2085. The Washington Aqueduct, the Washington Suburban Sanitary Commission and Fairfax Water are the primary suppliers of the region's drinking water. The suppliers work cohesively through the Cooperative Water Supply Operations on the Potomac (Co-Op). The Co-Op systems produce an average of 370 million gallons of drinking water per day, with the capacity to produce 600-million gallons per day during peak demand. This agreement is a historic step forward for the region, as the public-private partnership will increase the ability and sustainability of the water system.
The Port Authority of New York and New Jersey (PANYNJ) has agreed upon a $32 billion plan to fund infrastructure over ten years. The plans for both states includes a $3 billion Port Authority bus terminal, a new rail tunnel under the Hudson River, a $10 billion overhaul to the John F. Kennedy (JFK) Airport and a $4 billion renovation to the LaGuardia Airport. Funds for the plan will be divided between the two states. New York will spend up to $2 billion on improved roadway access to the airport. The state is also exploring the feasibility of different "one-seat" ride options to JFK. The state of New Jersey will pay $2.1 billion of the terminal's costs. For the LaGuardia airport renovations, a public-private partnership between PANYNJ and LaGuardia Gateway Partners will be used to fund and create the project with a lease term through 2050.
The U.S Department of Interior announced that a commercial wind lease sale for 122,000 acres off the coast of North Carolina is scheduled for March 16. The sale will be managed by the U.S. Bureau of Ocean Energy Management (BOEM). The company has selected 9 qualified companies to bid on the agency. BOEM has granted 11 commercial offshore leases for development, designating a dozen areas in the Atlantic as suitable for wind development. Companies have also proposed floating wind farms off the California and Hawaiian coasts. Massachusetts passed a mandate for 1,600 MW of offshore capacity by 2027. The first and only operating offshore wind facility in the United States is a five-turbine, 30 MW facility off the coast of Rhode Island. The $300 million project can power 17,000 homes and will supply 1 percent of Rhode Island's electricity.
After 14 years of waiting for approval, the Colorado Department of Transportation (CDOT) has the thumbs-up for a $1.2 billion project on Interstate 70. The project is to be completed in 4 or 5 years and expand 10 miles from Brighton Boulevard to Chambers Road in Aurora. Engineering and construction for the project will require extreme attentiveness since traffic must be kept moving while nearly 2 miles of a 53-year-old viaduct in the area northeast of downtown are replaced with a widened freeway, increasing the chance of flood risk. With the Federal Highway Administration's blessing, CDOT now can move ahead in coming months with a final bid solicitation for four short-listed teams vying for a public-private partnership. The partner will design, finance, build, maintain and operate the expanded highway.
The DC Zoning Commission has tentatively approved D.C. United's $300 million soccer stadium, according to SB Nation's Black and Red United. Both the team and the city it resides in were finally able to agree with payment after D.C. United offered $5 million escrow in case the project didn't happen. The city and team have agreed to split construction cost that overruns $20 million. Officials said the project will create an estimated 1,000 construction and permanent jobs. Additionally, the stadium will contribute $1 billion to the economy of the city. The team selected a local construction company to build the stadium and awarded them a $150 million contract.

The 2017 Public-Private Partnership Conference & Expo (P3C) will be held Feb. 27 through March 1 at the Sheraton Hotel in Dallas. The P3C offers education and networking opportunities to professionals exploring P3s and want to better understand how the model can address their project delivery needs. 

Our audience of over 1,200 senior government leaders, higher education officers, and industry development professionals provides a unique opportunity to network with prospective partners and clients in a development focused forum.

The 2017 program will examine trends in P3 delivery, provide granular case studies, host conversations with project owners and stakeholders, and explores best practices and lessons learned. See who's attending, our program preview, and speaker list. Visit our website to learn more. Register by Friday, Dec. 16, to save $200.
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