BORDER-TO-BORDER TRANSPORTATION CONFERENCE 2007 POTENTIAL PUBLIC & PRIVATE PARTNERSHIPS

COMPREHENSIVE DEVELOPMENT AGREEMENTS Agreement with one entity (the developer) to design, develop, construct, finance, acquire, operate and/or maintain certain kinds of facilities Types of facilities: –Highways, Turnpikes, Freight or Passenger rail, Public Utilities Best value selection

CDA PROCESS Prospective CDA projects may be initiated as follows: –Project nominations – including: TxDOT identified and defined projects Projects identified by local communities/regions –Unsolicited proposals from developers

5 Sample of Possible/ Existing CDA Projects San Antonio I-69/ TTC-69 Dallas/Fort Worth TTC-35 Trans-Texas Corridor 69 Trans-Texas Corridor 35 SH 121 I-635, “LBJ Freeway” SH 161 North Tarrant Express (I-820/SH 183/I-35W ) US 281/Loop 1604 DFW Connector (SH 114/SH 121, “The Funnel”)

TYPES OF CDAs Business models used to date: –Design Build –Strategic business partnership –Concession model –Other possible models: DBM DBOM DBFO Pre-development agreements

SCREENING POTENTIAL CDA PROJECTS Project Nominations CDA Screening Criteria CDA type Criteria Scheduling Criteria Implementation Unsolicited Proposals Annually or as appropriate Quarterly or as appropriate CDA Candidate List Updated Schedule

CDA SCREENING OVERVIEW MAIN GOAL: ACCELERATE PROJECTS TO IMPROVE MOBILITY Identify, assess and prioritize potential projects –Readiness –Qualitative risk –Mobility needs –Financial feasibility Develop a priority project pool to direct resources most effectively Projects are screened for suitability as a concession CDA Screening exercise is a “work in progress” Project pool to be screened will evolve over time as new projects are added Projects include those developed by TxDOT and other entities

ASSESSMENT OF READINESS Estimate the earliest date a procurement could begin –Either entire project or the first project phase Primary drivers of project timing –Environmental clearance –Additional T&R studies –Regional support

QUALITATIVE RISK ASSESSMENT System interface –Integration with existing and planned infrastructure Design and construction –(e.g. right of way, rail, geotechnical, hazardous materials, schedule, etc.) Operations and maintenance Traffic demand Acceptability Approvals / scheduling

MOBILITY NEED ADDRESSED Critical –Immediate congestion issue –Identified regional priority Near term –Important to mobility needs but may be secondary to critical regional priorities –Meets anticipated need near the time facility is expected to open Long term –Anticipated to address future growth and corridor demands

FINANCIAL ANALYSIS Assemble available project cost and revenue estimates Develop basic financial model to calculate net present value of cash flows –40 year term per available data –Base case NPV at 5% –Does not include impact of taxes or financing costs The NPV serves as a proxy for –Potential for concession fees –Toll equity required

SUMMARIZING PROJECT PRIORITIES Identify projects to be developed by other parties Projects ready to begin procurement process within 2 years –Low to medium risk projects –Critical or meeting near term mobility needs –Can result in an expected concession fee or require toll equity Future Projects –More than 2 years away from being ready for a CDA procurement or –Additional information is needed to assess the risk or financial profile –After additional analysis, more projects could indicate ready for a CDA procurement in less than 2 years

El Paso Houston San Antonio Lubbock Dallas Ft. Worth Corpus Christi Pharr Potential Projects Potential projects identified in… –Dallas –Ft. Worth –San Antonio –Corpus Christi –El Paso –Lubbock –Houston –Pharr “CDA screening criteria” has been applied to these projects: –SH 161 –North Tarrant Express (IH 820/SH 183/IH 35W) –DFW Connector (SH 114 “The Funnel”)

FUTURE PROJECTS Projects which are more than 2 years away from CDA procurement include: –Dayton/La Porte Rail Tunnel (Houston) –Galveston-Bolivar Bridge (Houston) –Harbor Bridge (Corpus Christi) –Hidalgo County SW Loop (Pharr) –Loop 9 (Dallas and Ft. Worth) –South Padre Island 2nd Causeway Bridge (Pharr) –US 83 Rio Grande City Bypass (Pharr)

FUTURE PROJECTS (CONT’D) Some projects require near-term additional investigation to best assess the project risk, financial, and readiness profile: –IH 10 W (San Antonio) –IH 10 E (San Antonio) –IH 30/US 80 East Corridor (Dallas) –IH 35 NE (San Antonio) –Port-to-Port (Corpus Christi/Laredo) –SH 16 (San Antonio) –SH 190 East Branch (Dallas) –SH 360 (Ft. Worth) –US 170 (Ft. Worth) –Wurzbach Parkway (San Antonio)

Future Projects (cont’d) Some projects were not fully investigated due to current project development stage and lack of information available: –US 67 Gateway Horizon (Dallas) –Lubbock Outer Loop (Lubbock) –Northeast Parkway (El Paso) –Northern Relief Route (El Paso) –Port-to-Plains (Lubbock) –US 62/US 180 Montana (El Paso) –Southside Mobility Corridor (Corpus Christi) –SH 286 Extension (Corpus Christi)

SUMMARY OF CDA SCREENING 40+ potential CDA projects identified Assessing according to readiness, risk, mobility and feasibility Categorized for further analysis Continue T&R studies to refine revenues Refine project schematics and cost estimates Identify sources of public funding Develop financial models to assess project economics

NEXT STEPS FOR PRIORITY PROJECTS Continue required environmental approvals Continue discussions with regional stakeholders: MPOs, toll authorities, regional mobility authorities, and others as appropriate Identify TxDOT procurement team Discuss project specific policies –Approach to tolling and toll rate regulation –Key business terms –Address unique circumstances Draft RFQ and other project documents

SH 121

Project Needs: –SH 121 Unfunded Highway Improvements –Estimated at $420 million –Long Term Maintenance Expense Regional Needs: –$24 billion in unfunded mobility needs –Maintaining the existing highway system is not included in the $24 billion THE PROBLEM Insufficient Funds Available to Meet These Needs.

$5.060 Billion Transportation Investment in North Texas* BEST VALUE PROPOSAL $2.1 billion - Upfront Concession Payment $700 million – Total lease payments over the next 49 years in today’s dollars (guaranteed) $560 million – Design & Construction Cost $1.7 billion – 50 years Operation & Maintenance in today's dollars *Additional revenue sharing if traffic is higher than expected

PROGRAMMATIC APPROACH A program wide view to CDAs will bring: –Greater efficiency and consistency in procurement –Reduce developer bid costs and due diligence requirements More standardized terms and associated contract documents Streamlined procurement process –Incorporate lessons learned

CONTACT INFORMATION Diana E. Vargas CDA Program Manager, Texas Turnpike Authority Division Texas Department of Transportation (512) Fax (512)