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Wrigley and Mars Are Rethinking Store Displays to Make Sure You Keep Buying Candy

Wrigley and Mars Are Rethinking Store Displays to Make Sure You Keep Buying Candy


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Wrigley and Mars have teamed up to study how consumers make impulse candy purchases, so they can make you do it more

Mars Inc. is exploring ways to make sure that shoppers give in to their candy cravings at the cash register.

Mars chocolate and Wrigley, the Chicago-based company bought by Mars Inc. in 2008, have joined forces to tackle the fickle shopping habits of the American consumer — and to make sure that the fleeting urge to grab a piece of candy at the grocery store never goes unanswered.

The two candy units have teamed up to study the way that candy is displayed in supermarkets and drugstores, as well as on the Internet, with the goal of redesigning and expanding them so that candy is even more appealing to shoppers. Wrigley’s brands include Skittles, Juicy Fruit, Altoids, Starburst, and Life Savers, while Mars owns 3 Musketeers, M&Ms, Dove, Twix, Milky Way, and Snickers.

According to the Chicago Tribune, Wrigley and Mars are concerned that stores that don’t offer candy right next to the register represent a “missed opportunity.”

Although it’s not clear how and when changes to candy racks will be implemented, the project reportedly focuses on three “transaction zones,” or the areas where impulse buys are most common.

“It's no secret that people don’t shop like they used to, and the traditional mix of impulse items in transaction zones needs to better meet consumer needs,” Kurt Laufer, vice president of U.S. sales for Wrigley, said in a statement. “By tapping into our deep understanding of the shopper and taking a hard look at what items are performing and why, we believe our strategies can help our retail partners capture valuable impulse sales.”


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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Eagle P3 Denver CO The Eagle P3 project is a Public Private Partnership between the Regional Transportation District of Denver CO and Denver Transit Partners a private consortium made up of more than eight different private construction consulting engineering and financial companies. Denver Transit Partners has secured a $2.2 billion contract to design build finance operate and maintain (DBFOM) three new commuter rail lines spanning more than 36 miles in the Denver metro area. It is the first public transit DBFOM P3 project undertaken in the United States. The project is currently under construction with the East Line connecting downtown Denver with Denver International Airport (23 miles east of the city) expected to open in January 2016. Two other lines include the Northwest Electrified Segment which will run from Denver to the north metro suburb of Westminster CO and the Gold Line which will run west of the city to the suburb of Arvada CO (toward the city of Gold en CO). The long term vision for Denver s Metro Public Transit system (called FasTracks) includes the Northwest Line reaching as far as Longmont CO (38 miles north of Denver) via the college town of Boulder CO and southern rail lines reaching Littleton Co and Centennial CO to the south in all connecting 122 miles of rail transit into Downtown Denver. The central hub of the commuter rail system will be Downtown Denver s Union Station which is undergoing a $500 million redevelopment as part of the project. (RTD) This is the principle public transportation authority serving the Denver Metropolitan Area providing bus and light rail service to eight counties. FasTracks is the name of the new multi billion dollar transit system expansion project that the agency is currently undertaking . http //www.rtd denver.com/Fastracks.shtml The Eagle P3 is a major component of and RTD is the lead Sponsor agency responsible for the Public Private Partnerships associated with the Project. It is also a revenue raising authority generating project funds through revenue bonds and a voter approved added sales and use tax on goods and services within the District s eight county region. – Selected as the winning bid in the Eagle P3 Project the Concessionaire was created as a partnership between (a unit of Fluor Corp.) (a unit of John Laing PLC) and Uberior Infrastructure Investments(No 4)USA LLC.(a unit of ) Other team members include . and . http //denvertransitpartners.com/ The Federal Government through the FTA is providing about $1.03 billion of capital funds to the project through the Public Private Partnership Pilot Program (Penta P) to demonstrate the advantages of using a P3 for transit projects. The Eagle P3 project is the first of three transit projects designated through the FTA Penta P initiative and will serve as a model for future P3 public transit across the country. The funding is coming primarily from FTA s Section 5309 New Starts Capital Program. In addition to New Starts funding from FTA the Dept. of Transportation is also supporting the project with $280 million in direct TIFIA loans. The Transportation Infrastructure Finance and Innovation Act program began in 1998 and has provided billions of dollars in loans loan guarantees and credit assistance to help secure private financing interest in major surface transportation infrastructure projects across the U.S. Denver Transit Systems (DTS) Design Build Contractor (Fluor and Balfour Beatty Rail Inc.) Denver Transit Constructors (DTC) Design Build Subcontractor Group (Flour Balfour Beatty Rail Inc and Ames Construction) Hyundai Rotem USA Rolling Stock Provider (Locomotives and Rail Cars) Denver Transit Operators (DTO) Operations and Maintenance Contractor (Flour Balfour Beatty Rail Inc and ACI) April 2004 RTD develps FasTracks plan a multi billion dollar public transportation expansion plan which would add 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new parking spaces. The project is expected to cost $4.7 billion and open by 2017 November 2004 Denver Metro Area voters approve 0.4 percent sales tax increase to fund FasTracks. August 2007 Federal Transit Administration (FTA) selects Eagle Project as part of the Public Private Partnership Pilot Program (Penta P). Penta P program was established to demonstrate the advantages and disadvantages of P3s for certain new fixed guideway capitol projects within the New Starts program. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf August 2008 RTD issues Request for Qualifications (RFQ) for the Eagle P3 project. The Eagle project consists of the East Rail Line connecting downtown Denver with Denver International Airport the Gold Line Northwest Electrified Segment a new fleet of electric commuter rail vehicles and a maintenance facility for the new railcars. Three potential concessionaire teams respond to the RFQ and all three are found to be qualified to continue the procurement process. September 2009 Following a year of discussion with stakeholders and the potential concessionaire teams RTD issues a Request for Proposal (RFP) to the teams. April 2010 – RTD receives final technical and financial proposals from concessionaire teams. June 15 2010 RTD Board of Directors votes unanimously to award the Eagle P3 contract to Denver Transit Partners (DTP) July 9 2010 Contract is signed August 12 2010 – Financial closing. RTD simultaneously issues Notice to Proceed for Phase I of the project allowing DTP to proceed with final design of the project construction of the East Rail Line the maintenance facility and the tracks from Denver Union Station (DUS) to the maintenance facility and the provision of all of the rolling stock required for the project. August 31 2011 FTA approves $1 Billion Federal Funding Grant Agreement for Eagle P3. New funding allows for RTD to issue NTP for Phase II of the project which includes construction of the Gold Line and first segment of the Northwest Line. May 9 2014 Completion of Denver Union Station rehabilitation the main terminal for the commuter lines. September 2014 Commuter Rail Maintenance Facility turned over from construction contractors to Denver Transit Partners. January 2016 The first new commuter rail line the East Line to Denver International Airport is expected to open. Timeline derived from RTD FasTracks website on Eagle P3 project http //www.rtd fastracks.com/ep3 77 In early 2004 the Regional Transportation District of Denver Colorado and its surrounding areas worked to develop a plan to tackle growing congestion issues in the region. The city had been ranked as the third most congested metro area in the country and the lack of a comprehensive high quality public transportation network was cited as one of the top transportation issues in the area. In addition according to the Denver Regional Council of Governments the region is expected to add 900 000 more residents and 600 000 more jobs by the year 2025. With these extra people using the transportation network VMT was expected to increase 64% which was in turn expected to increase severe congestion by 89%. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf After examining the situation RTD published their FasTracks plan to significantly improve the public transportation system in the Denver region. FasTracks called for the construction of 122 miles of new commuter rail service 18 miles of BRT service 57 new total transit stations and a total of 21 000 new park and ride spaces. RTD listed the three main goals of FasTracks as 1. Additional Transportation Options Additional transportation choices add to the region’s quality of life. Reduced reliance on a single mode of transportation by providing additional convenient transit options gives individuals choices on how to travel and where to live work and play. FasTracks provides over 119 miles of new rail transit contributes to the construction of 18 miles of bus rapid transit and greatly enhances the bus network to support investments in rail serve suburb to suburb trips and provide local and regional service. 2. Increase use of Public Transit Existing congestion during peak travel times of the day is frustrating for many drivers and is only expected to get worse as the region continues to grow. Providing viable transit options during the peak travel times will help provide relief for frustrated drivers. FasTracks is projected to increase the percentage of people taking transit during the peak hours from 11 to 22 percent in the region’s major transportation corridors where congestion is worst. 3. Meet Future Transportation Needs The Denver metropolitan region is expected to grow from 2.46 million (2001) people to 3.39 million in 2025. This growth requires an enhanced transit system to help meet the future transportation needs of the region. FasTracks responds to this need and provides opportunities to focus development near transit to take advantage of the increased capacity and convenience of the enhanced system. RTD FasTracks Plan http //www.rtd fastracks.com/media/uploads/main/FasTracks Plan.pdf The Eagle P3 project combines two of the planned commuter rail lines from FasTracks plus a segment of a third and a maintenance facility for new the new rolling stock into a single PPP concession contract. The three lines spread out from their terminal at Denver Union Station in downtown Denver where they connect with RTD bus and light rail lines. The Eagle project will help to jump start the new commuter rail program as the two other planned commuter rail lines will also use the same rolling stock and will be supported by the same maintenance facility. The East Line is a 22.8 mile electrified commuter rail line that connects Denver Union Station to Denver International Airport. The line will also serve five additional stations in Denver s eastern suburbs adding 3 529 park and ride spaces on opening day with an eventual expansion to 7 900. East Corridor Fact Sheet http //www.rtd fastracks.com/media/uploads/ec/East Rail Fact Sheet 2014.pdf Construction on the East Line began in August 2010 and the line is expected to open in January 2016. The Gold Line will run 11.2 mile electrified commuter rail line from Denver Union Station to the nearby west suburb of Wheat Ridge serving 7 stations along the route. This line will add 2 300 new park and ride spots on opening day with an eventual expansion to 2 890 spaces. Construction on the Gold Line began in 2011 as part of Phase II and is planned to open in summer 2016. Gold Line Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/GL Fact Sheet 2014.pdf The Northwest Electrified Segment is the third and final new electrified commuter rail line being built as part of the Eagle project. The electrified segment will run 6.2 miles from Union Station to South Westminster a suburb northwest of Denver. FasTracks has planned for the line to eventually be expanded 41 miles to Boulder and Longmont but cost overruns and the economic downturn in 2009 required the RTD to postpone the full development of the Northwest Line until 2044 unless additional funding is found. Northwest Rail Line FAQ http //www.rtd fastracks.com/nw 74 The segment to Westminster is planned to open in March 2016 As part of the contract to build the rail lines Denver Transit Partners is also tasked with acquiring new rolling stock and building a $224 million maintenance facility to service the new railcars. DTP chose Hyundai Rotem to build 50 electric multiple unit (EMU) cars similar to the new Silverliner V recently delivered to Philadelphia. The cars will be built at Hyundai Rotem s plant in South Philadelphia and meet Buy America requirements for 60% of components to be produced in the United States. RTD site on new railcars http //www.rtd fastracks.com/ep3 84 RTD chose heavier commuter rail cars rather than to expand their existing light rail network because of federal regulations required due to the proximity of the new rail lines to existing freight lines. However the EMU cars offer fast acceleration and higher capacity than the light rail cars which will make these cars more effective on the longer commuter lines. RTD Quarterly Newsletter Spring 2013 http //www.rtd fastracks.com/ep3 64 The Eagle P3 Project is a 34 year DBFOM concession agreement (5 years design build and finance + 29 years operations and maintenance) with construction payments and availability adjusted service payments to the concessionaire by RTD. The bidding process began in August 2008 with a Request for Qualifications through which three groups became pre qualified to respond to the 2009 Request for Proposals competition. The RFQ was designed to gauge private interest opportunities project alignment and feasibility of quickly completing a revenue raising P3 portion of the FasTracks project. This portion was called the "Eagle Project" (" E ast A nd G old L ine E nterprise") and was set to be completed in two phases between 2010 and 2016. The three groups that were pre qualified through the RFQ process included "Denver Transit Partners" A joint subsidiary formed between Fluor Enterprises Inc. (Texas USA) and Macquarie Capital Group (Australia) "Mile High Transit" led by John Laing PLC (UK) and "Mountain Air Transit" led by Babcock Brown (Australia). http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf Through the RFQ feedback received the RTD decided to issue the Request for Proposals in the form of performance based standards instead of detailed design specifications. RTD relied on base industry standards for public transit and on the Concessionaire incentive as the Operator and Maintainer of the system to construct a quality system. After the RFQ RTD dumped more than 800 pages of design specifications from the RFP process. RTD created the Alternative Technical Concepts (ATC) Process to replace the traditional Value Engineering process (which is a U.S.DOT mandated process for determining the value of a design based on its function to cost ratio). The ATC process approved by DOT allowed the concessionaire to propose innovative quality improving and cost efficient design changes that could be approved in the place of traditional design standards still remain in compliance. The RFP was issued in September 2009 with a due date of May 2010. The three pre qualified partnerships were invited to participate and submit a proposal. The RFP set performance standards for the project based on Safety Dependability Cost Effectiveness and User Considerations but otherwise left the door open with a high degree of flexibility in the project design in the proposals. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The Proposals were evaluated based on the Base Annual Service Payment (BASP) structure proposed (in terms of the lower BASP the higher the score) the feasibility of the financial proposal the price and quality of the rolling stock how well the technical approach fits with the overall goals of the project including safety systems integration technical innovations and O M planning the proposer s ability creativity and commitment level and bonus points for value added proposals above and beyond the base requirements of the project. http //www.rtd fastracks.com/media/uploads/main/PPP Board briefing 010609 v5.pdf The RFP process encouraged competitors to submit their cost saving and innovative technical designs into the competition by providing compensation for the intellectual property rights of the proposal. This would allow the Eagle P3 project to use innovative ideas and aspects of different proposals to the project s overall advantage. First the RTD reduced the expense risk of submitting a proposal by offering a $20 million "insurance compensation" to teams that submit a proposal in the event that RTD decided not to move forward with the project after receiving the bids. In addition RTD offered a $2.5 million stipend to bidders who submitted proposals into the competition but did not receive the concession contract. This stipend was used in order to compensate the bidders for their design innovations and contributions to the project from their bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Mile High Transit Partners dropped out of the competition in November 2009 citing internal problems between stakeholders and the RFP was left with only two bidders. This has been cited as a serious lesson for the P3 project process which only pre qualified three teams and ran the danger of only receiving one proposal bid for the project setting itself up for a disadvantageous deal. Critics have reason to question the RTD in giving into proposer s project risk transfer issues in their effort to keep the remaining two teams in the process and move forward with a competitive bid process. RTD counters that the two teams remaining were the only teams with the interest and strong qualifications necessary for a project of this size and the competition remained very competitive despite the low number of bids. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Both DTP and Mountain Air Transit ended up submitting their proposals. The winning bid was announced in June 2010. The RTD board voted unanimously for the Denver Transit Partners team over Mountain Air Transit s Bid. The DTP bid came in with BASP savings of about $300 million and a schedule that opened the system 11 months ahead of schedule. http //www.rtd fastracks.com/media/uploads/main/MEDIA RELEASE20100615RTD Board Selects Denver Transit Partners as Eagle P3 Concessionaire.pdf Mountain Air Transit was compensated $2.5 million for their bid from RTD s project funds and in July 2010 RTD and DTP jointly decided to reduce the length of the concession lease from 46 years to 34 years. This mutual decision reduced risks associated with the project to both parties due to the end of lifecycle and replacement costs of the Rolling Stock (which have a useful product life of 30 years) and reduced the overall cost of the project (12 extra availability payments) by $2 billion. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf At the time of the concession agreement being signed in July 2010 Macquarie Capital Group decided to sell its 90% equity stake in Denver Transit Partners to Denver Rail (Eagle) Holdings Inc. (a unit of John Laing PLC which led the withdrawn Mile High Transit proposal) and Uberior Infrastructure Investments(No 4)USA LLC. According to Project Finance Magazine the equity stake transfer was preplanned as part of the financing arrangement. http //www.pwfinance.net/document/research reprints/7%20denver%20eagle.pdf < ! Source of Funding !! Amount (in $millions) !! Percent of Total FTA New Starts Capital (Section 5309) 1030 46.8% FHWA Flexible Funds (for CMAQ program) 62 2.8% DOT/TIFIA Loan 280 12.7% RTD Bond Proceeds 57 2.6% RTD 0.4% Sales and Use Tax 114 5.2% Contributions from the City of Aurora City County of Denver Adams County Jefferson County City of Arvada City of Wheat Ridge 40 1.8 Concessionaire Financing Private Equity and Debt 488 22.2% Total funded 2062 94.1% Total RTD original projected costs 2200 100% >http //www.transportation.northwestern.edu/docs/2013/2013.01.28 LipinskiSymposium Clarke.pdf The Concession agreement is based off of both the project finance structure and a monthly service payment. The construction payments are paid out according to the financing structure which includes federal government funding private funding private activity bonds and other loans. The construction payments are paid out in installments determined by two phases of the project and based on the progress achieved in the project. Construction Phase 1 is the East Line to Denver International Airport which began in 2011 and is set to be completed in early 2015 and the Commuter Rail Maintenance Facility which began in mid 2012 and is set to be completed first in early 2015. Construction Phase 2 is the Northwest Electrified Segment the Gold Line to Arvada both of which began in early 2012 and is set to be complete in late 2016. RTD retains some control over the financing. Construction Payments are based off of the Earned Value of Work calculated by multiplying the percentage of work completed on a particular construction element according to the Original Baseline Schedule. All Construction Bills to RTD from the Concessionaire are audited by an Independent Engineer for the project. The Concessionaire must submit monthly reports to RTD according to the agreement detailing construction progress. http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf Monthly service payments to the concessionaire will begin at the start of the Operations and Maintenance portion of the project once revenue raising lines are opened. These monthly payments from RTD will be based on a pre agreed formula. RTD will determine and set all fares collect the fares from the Concessionaire and bares the entirety of the risk associated with revenue raising ability of the project. The availability payments will be based on RTD s sales taxes bonds and local financing. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 11 EXECUTION.pdf The formula awards monthly availability payments adjusted based on system performance levels. The base availability payment per month ranges from slightly less than $3 million per month when the East Line firsts opens in 2016 to nearly $7 million per month at the end of the lease term when all service expansions have been realized. This monthly rate however can be reduced up to about 25% for poor service delivery (which takes into account on time performance station closure time maintenance delays reduced capacity (from expected rates) station accessibility elevator functions cleanliness trash removal and graffiti cleanup and passenger and employee safety). The payment can also be increased up through a 0.5% bonus for perfect delivery. http //www.rtd fastracks.com/media/uploads/ep3/Attachment 10 EXECUTION.pdf http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf In 2007 the Federal Transit Administration started a new funding program called the Public Private Partnership Pilot Program (Penta P). The goal of Penta P was to study whether P3s in comparison to conventional procurements are beneficial in providing new fixed guideway projects that are seeking New Starts federal funding. Due to increasing costs associated with a raise in price for building materials and a drop in value of the sales tax due to economic recession the RTD was now facing a $2 billion funding gap for their FasTracks program. RTD Eagle P3 Lessons Learned http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf The RTD saw an opportunity for the FasTracks program to benefit from Penta P and came up with the Eagle project proposal as a candidate. Inclusion into the Penta P program allowed RTD to enter into a streamlined review and funding process in order to deliver the project sooner. This streamlined process included allowing concurrent approval of the project into Preliminary Engineering and Final Design. RTD Penta P Fact Sheet http //www.rtd fastracks.com/media/uploads/gl/Penta P fact sheet 6 11 07.pdf In addition the $1.03 billion from the FTA accounted for 46% of the total Eagle project funding and filled a significant gap in the FasTracks budget. Under Penta P the FTA put emphasis on the transfer of risk to the private partner tied with the life cycle performance of the project and the FTA would not provide full funding until the RTD and DTP entered into a binding public private agreement that met their risk transfer parameters. The FTA also provided a P3 advisor to the RTD in order to ensure the risk transfer was sufficiently protecting the RTD. Risk Management in the Development of a Penta P Project http //www.apta.com/mc/rail/previous/2010/Papers/Risk Management in the Development of a Penta P Project.pdf In order to transfer risk RTD selected a DBFOM to allow the best partner to take on certain risks. In accordance with the FTA Penta P program the risks transferred to the private sector are the ones most associated with long term life cycle costs. The 36 year operations and maintenance obligation gives the concessionaire strong motivation to design and build a facility that will provide the most long term value in order to maximize their return on investment. < ! RTD Risks Retained!! Risks Transferred to Concessionaire !! Shared Risk Design review timeliness Concessionaire Design problems (delays rejections) Third Party design reviews and disputes RTD Requested Changes Construction delays Non discriminatory legislative changes Delays in Site Access/Permitting Cost Overruns Force majeure events Unforeseen Archaeological Findings/Delays Additional land requirements Environmental Findings/Impact Statement errors Environmental compliance Unidentified and dry Utilities Geological obstacles Legislative changes Safety and Security Ridership and Fare evasion Concessionaire Specified permitting delays Third Party Claims Maintenance/Repair costs and delays during operations Contractor/Concessionaire default delays associated with wet utilities Condition of the system at the end of the lease Failure to meet operating/performance standards Agreements with railroads and compliance >http //ncppp.org.previewdns.com/wp content/uploads/2013/03/Carey.pdf (Slide 7) Under Colorado law taxpayers are protected under the Colorado Taxpayer Bill of Rights (TABOR) that restricts increases in revenues by Government entities. Under TABOR state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. State Spending Limitations TABOR and Ref C http //www.colorado.gov/cs/Satellite?blobcol urldata blobheader application%2Fpdf blobkey id blobtable MungoBlobs blobwhere 1251601829837 ssbinary true While voters approved a 2005 measure to issue a 5 year suspension against retaining excess revenue under TABOR the restrictions on issuing multi year fiscal obligations remained. RTD Lessons Learned Report http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf This meant that as a Colorado government entity RTD would be prevented from developing a new revenue source for availability payments to a potential concessionaire. At the start of the procurement process for the Eagle project outside sources thought it was possible to try to go outside of TABOR to provide a legally enforceable commitment to the potential concessionaires as it had been done several times before the financial recession. However all three teams rejected this proposal and notified RTD the RFP would not be picked up if it was structured as such. As a result RTD was forced to use 2004 voter approved debt requirements for the project. This meant the element of FFGA funding became more important as TABOR commitments do not apply to federal funds. http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf Through September 2014 more than $1.04 billion (about 47% of the total project finance cost) has been spent in Denver. The Commuter Rail Maintenance facility received a temporary certificate of occupancy and is in its final construction phases ahead of schedule. The opening of the CRMF allows the delivery of rolling stock and for rail cars and systems to begin their testing phases. The latest news on the East and Gold Lines is that DTP is in the process of laying track and electrical lines and the project is on schedule. Two major transit interstate bridges have begun construction and are set for completion in 2015. The Concessionaire is keeping involved in the community donating hundreds of hours of work time to community causes including food banks and extreme community makeover projects as well as publicizing the project and advance notice of construction related street closures. http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Should the RTD have offered compensation to failing bids? Should a bidding process still move forward with only two qualifying bidders? Did voter tax increase approval in 2004 signify full public support of the project? Can the positives of Denver s P3 Experience be replicated in other cities or for other types of projects? Should Denver utilize the same structure for larger and more long term transit expansions? RTD FasTracks Project Website http //www.rtd fastracks.com/main 1 Concessionaire Website http //www.denvertransitpartners.com/ Fluor Project Profile http //www.fluor.com/projects/Pages/ProjectInfoPage.aspx?PrjID 242 Latest Project Newsletter http //denvertransitpartners.com/wp content/uploads/2014/10/Project Newsletter Fall 2014.pdf Concession Agreement http //www.rtd fastracks.com/media/uploads/ep3/Concession Agreement.pdf FTA Project Profile http //www.fta.dot.gov/documents/CO Denver Eagle Commuter Rail complete profile.pdf Procurement Project Lessons Learned (RTD) http //www.rtd fastracks.com/media/uploads/ep3/Eagle P3 Procurement Lessons Learned Report.pdf 2011 Conference Presentation P3 Success Story http //www.nga.org/files/live/sites/NGA/files/pdf/1109PUBLICPRIVATELIEN.PDF


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