1. Using Public-Private Partnerships to Move More People The Story of HOT Lanes in Northern Virginia January 30, Morteza Farajian, Ph.D.

2. Overview of P3s Definition
P3 Defined
A P3 involves a partnership between the public and private sector to share the risk and rewards of constructing, financing, operating, and/or maintaining what are traditionally publicly-owned assets in order for projects to be completed faster, on budget, and at an enhanced value for money to the owner
Why Utilize P3s?
Innovation leading to more cost effective delivery and long term operations
Flexibility through private financing and funding regimes
Integrated services
Outcome-based performance
Budget certainty over the ‘whole life’ of an asset
Accelerated project delivery
Risk transfer to the private sector

3. Ingredients for a successful P3

4. P3 Guidance Documents
Commonwealth’s PPTA Implementation Manual & Guidelines (2014)
Increases Transparency
Increases Competition
Increases Public Engagement
P3 Risk Management Guide
P3 Value for Money Guide
P3 Public Engagement Guide

5. P3 Project Delivery Framework

6. P3 Project Screening High-Level Criteria: Detail-Level Criteria:
Ability to Transfer Risk
Funding Requirement
Ability to Raise Capital
Complexity of Effectively Leveraging Private Sector Innovation/Expertise
Addresses Priorities in State, Regional and/or Local Transportation Plan
Project Efficiencies through P3 Delivery
Detail-Level Criteria:
Public Need and Benefits
Economic Development
Market Demand for P3 Delivery
Stakeholder Support
Technical Feasibility
Systematic Interface and Compatibility
Financial Feasibility
Legal/Legislative Feasibility
Project Risks

7. Case Study: Northern Virginia
495 Express Lanes

8. Northern Virginia Express Lanes Network
A 90+ mile seamless network of express lanes will provide faster and more reliable trips for drivers, carpoolers, and transit users in Northern Virginia.

9. Typical Express Lanes Facility

10. How Northern Virginia’s Express Lanes Work
I-495 Express Lanes: 14 miles of Express Lanes - 2 lanes in each direction
I-95 Express Lanes: 29 miles of Express Lanes - reversible according to peak travel directions
Dynamic system with variable tolls manages traffic
Mandatory E-Z Pass for all users
HOV-3, transit and motorcycles ride toll-free with E-ZPass Flex
Rules of the road are in effect 24 hours a day, seven days a week

11. 495 Express Lanes Partnership
Nearly $2 billion transportation improvement project accelerated due to public-private partnership with Transurban-Fluor
Funded by $1.5 billion in private equity and debt and state contribution of $409 million
Key risks transferred to private partner, away from taxpayers
80-year partnership agreement shifting long-term operations and maintenance responsibilities
Partnership agreement includes key provisions to protect public interest
Revenue sharing
No non-compete
Transparency
Long-term performance requirements

12. Key Benefits: 495 Express Lanes
Began construction July 2008, opened Nov – ahead of schedule
Added 50% capacity to manage congestion
Replaced $260M of local aging infrastructure
First major improvement to the Capital Beltway in a generation
First-time opportunity for ride-sharing, carpooling and use of mass transit
Connected four major commuter routes creating seamless HOV and transit network
Three new access points to major retail and employment centers

13. I-66 Outside the Beltway Express Lanes
Recently Procured:
I-66 Outside the Beltway Express Lanes

14. Project Scope

15. Summary of Requirements
Maximum amount of Commonwealth contribution is $600M.
Other sources of Project financing include:
Private equity
TIFIA
Private Activity Bonds (PABs)
Commonwealth receives funding (fixed amounts) for transit elements of Project.
Commonwealth receives $350,000,000 in net present value over term of contract from the Developer that can be used for future corridor enhancements.
Commonwealth will receive a share of the revenue if Project generates more revenue than expected.

16. Competitive Procurement Process

17. Preferred Proposer Best value proposal Express Mobility Partners
Equity Investors
Cintra Global LTD, Meridiam Infrastructure North American Fund II
Design-Build Contractors
Ferrovial Agroman US Corp, Allan Myers VA, Inc.
$2.3 billion construction project
Provides required transit payments and support of corridor improvements
Will make concession fee payment ($500M) to Commonwealth
Construction design provides innovative solutions to improve the physical quality and operations of the project

18. Other Benefits to the Commonwealth
$500M now available for additional improvements to the I-66 Corridor subject to VA Code requirements
(§ )
$300M will return to the Northern Virginia Transportation Authority for other key regional projects
$300M will return to the High Priority Project Program in SMART SCALE for statewide competition

19. THANK YOU Morteza.Farajian@P3.virginia.gov VirginiaDOT.org