State seeks partnership to build Grand Parkway
The Texas Department of Transportation has issued Requests for Information to explore using a public-private partnership process to develop the Grand Parkway.
Subject to a moratorium since 2009, the PPP process, also known as comprehensive development agreements, is re-authorized by SB 1420, which was approved by the state Legislature.
Gov. Rick Perry signed the law June 17. It takes effect Sept. 1 and continues TxDOT through August 2015.
The law will enable TxDOT to use public-private partnerships to develop the Grand Parkway, U.S. 249, Texas 290, Texas 288 and other specified projects.
TxDOT defines a PPP as an agreement between the department and the private sector for the design, construction and potential financing, operation and maintenance of a tolled project.
"The general concept behind this public-private agreement is that a private entity will basically take some of the risk and put their money in it," said Harris County Judge Ed Emmett.
Emmett acknowledged that the concept "got a bad name" when it was applied to the Trans-Texas Corridor but said it has been used successfully all over the world, including in Texas.
"The idea behind the legislation, and Sen. Tommy Williams of The Woodlands was instrumental in it, is to have companies present creative ideas about what they would do to help TxDOT build these roads more quickly," Emmett said.
TxDOT issued Requests for Information June 10 to develop a strategy to use the public-private agreements for both the Grand Parkway and the Interstate 35 E in Dallas managed lanes. The requests indicate the agency's intent to work with stakeholders and the private sector to deliver the two projects as expeditiously as possible.
"Issuing these RFIs now will allow us to gather valuable information that will help to accelerate development of these vitally important projects," said Mark Tomlinson, director of TxDOT's Turnpike Authority Division, in a press release.
The Grand Parkway, or Texas 99, is a proposed 180-mile circumferential highway traversing seven counties in the Greater Houston area.
It is divided into 11 segments, designated A through I-2, two of which are open already, including Segment D from U.S. 59 to Interstate 10 and Segment I-2 from north of Fisher Road to I-10 East. Tolling is expected to begin on Segment I-2 this fall.
According to the RFI, the potential PPP would cover maintenance and operations for portions of Segments D (U.S. 59 to I-10), G (I-45 to U.S. 59) and I-2 and all of Segments E (I-10 to U.S. 290), F-1 (U.S. 290 to SH 249) and F-2 (SH 249-I-45).
It would cover financing, development, construction, operation and maintenance for Segments F-1 and F-2 and all or part of Segment G. The segments total about 61-miles of the 180-mile project.
TxDOT would consider developing the project using a full concession agreement, an availability payment structure, a design-build or design-bid-build agreement using tax-exempt toll revenue bonds.
The availability payment structure would reimburse a developer for capital costs, operating and maintenance costs and financing to build the roadway, with a return on equity. Reimbursements would be from toll revenue and potentially from state highway funds, with restrictions.
The RFI seeks innovative ideas on development and risk balance on all possible business models from individual firms or teams that have experience in developing and/or financing large transportation infrastructure projects. Responses to the RFI on Grand Parkway are due by July 6. Requests for qualifications and proposals could follow through the summer and fall, and conditional award of a PPP agreement could be made a year from now.
Kelli Petras, a TxDOT spokeswoman, said the agency's authority to use the process for the 11 projects is based on obtaining environmental clearance by August 2012 for all but Texas 99.
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