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 WorthTTC-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

SchedulingCriteria

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 supportRepresentative Project Procurement Timeline

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12RFQ Process

Evaluate RFQ Submissions

Envirnonmental Approval/Clearance

Issue Draft RFP

Issuse Final RFP

Note: This chart represents the earliest possible procurement schedule

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

Brownsville West Loop Base Case Nominal Cash Flows

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

($ 0

00

s)

Revenue Base Case O&M Expenses Base Case Total Initial Capital Costs

5.0% 6.0% 7.0% 9.0%

-50% (155) (161) (163) (164)

-25% (113) (127) (137) (146)

-10% (87) (107) (121) (136)

Base Case

(70) (94) (110) (129)

+10% (53) (80) (100) (122)

+25% (27) (60) (84) (112)

+50% 16 (27) (57) (94)

Re

venu

e S

en

sitivities

Brownsville West Loop Cash Flow NPV Ranges($millions)

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

DallasFt. 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 STEPSFOR 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 inNorth 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) 936-0974

Fax (512) 936-0970

dvargas@dot.state.tx.us