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2. Concession Agreements The Focus Georgia Conference Thomas W. Pelnik III, P.E. Director, Innovative Project Delivery Division April 26, 2007

3. 3 Overview Concession Agreements and VDOT’s PPTA Program –Program Status / Summary –Past, Present and Future –Concessions A fundamentally different way of doing business

4. 4 PPTA Program Status Summary of VDOT’s PPTA Portfolio Value of All Projects ~ $6 Billion Value of Completed Projects = $767 Million Value of Active Projects + $5 Billion Value of Active Proposals ~ $1.5 Billion

5. 5 ProjectContract Value in Millions Date Signed VMS – Interstate Maintenance$132December 1996 Route 895$ 346June 1998 Route 288$ 237December 2000 VMS – R (Renewed)$ 162June 2001 Coalfields Expressway$ 2,500January 2002/06 Route 28$ 324September 2002 Route 199$ 32October 2002 Route 58 (Phase I)$ 20December 2003 Dulles Rail Phase 1 (DRPT)$2,400 – 2,7002004 I- 495 HOT Lanes$ 1,200April 2005 Route 895 Concession$ 520June 2006 I-95/395 HOT Lanes$ 913October 2006 Total Value VDOT Contracts$ 6,386**(not including Dulles Rail) PPTA Contracts 20 April 2007

6. 6 VDOT Past and Present Vast majority of VDOT work by design-bid-build Interstate outsourcing by 2009 Public-Private Partnerships cannot save us, but can help

7. 7 US Interstate Planning and Toll Roads Bureau of Public Roads, 1939

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10. 10 Public-Private Transportation Act PPTA §56-556 et. seq. Policy –Encourage private investment Opportunities –Brownfields –Greenfields Potential Scope –DB –DBF –DBFOM –FOM –…

11. 11 Route 288, Richmond, VA Four lane, limited access highway ~ Ten miles Asphalt pavement warranty –Cost $10 million in 2000 –Limits 20 years 12,500,000 ESALS $15 million LOL Design / Construction / QAQC / Monitoring Performance standards – pavement Inflation risk

12. 12 Route 895 PPTA (2002)

13. 13 Route 895 PPTA (2002)

14. 14 Route 895, Richmond, VA Four lane, limited access toll highway ~ Nine miles DBF Contract, PPTA, $346M 1998- 2002 FOM Concession Agreement, PPTA, 2006-2105 + $500 million transaction June 2006

15. 15 DB Contract Incentives / Risks Design - construct - get out –Design –Constructability –Schedule –Inflation –QC/QA –Limited performance bond obligations –Limited warranty obligations Lowest cost project delivery

16. 16 Concessions Lowest cost program delivery –Parallel interests with Owner –DB a phase prior to O&M Rewarded for managing life-cycle costs –Build quality at low cost, –Operate a well-maintained facility –Provide good customer service Business deal must make sense, but successful relationship is essential

17. 17 Concessions Not a sale of property –Commonwealth maintains ownership –Concession transfers rights for the use or control of the facility to the lease holder –Rights return to owner at end of term

18. 18 Looking Ahead Continue to require pertinent standards –AASHTO –FHWA –VDOT Consider opportunities for corridor management, and lessons learned from projects such as London M25 Flexible framework accommodates change –Laws, policies and specifications No free money

19. 19 Conclusions / Recommendations You’ll get what you contract for Direct your program –Communicate your objectives –Know the value of your assets –Know the costs of your operations –Fair procurement –Time is money Each project is unique It’s not easy

20. 20 VDOT’s PPTA Program http://www.virginiadot.org/business/ ppta-default.asp

21. Concession Agreements The Focus Georgia Conference Thomas W. Pelnik III, P.E. Director, Innovative Project Delivery Division April 26, 2007