Keynote Part 1 - Alternative Funding of Road Projects
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Transcript of Keynote Part 1 - Alternative Funding of Road Projects
1
Innovative Financing
Mark Foster, Chief Financial Officer
North Carolina Department of Transportation
April 8, 2011
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Innovative Finance“I don’t have any money… do you?”
Agenda:
• Transportation Overview
• Current Use of Innovative Finance
• Tools to Explore
• Transformation - NCDOT Delivers
• Future
3
• State Transportation System - Largest Capital Asset
• Invested* - $40 billion +
• Replacement Value - $450 billion
• Economic Value - $$$$$$$ (Commerce/Jobs/Lifestyle)
4
System Responsibility
- 100,000 200,000
Florida
Georgia
South Carolina
Virginia
North Carolina
Texas
US Average
Lane-Miles
13
11
2
4
1
3
- 50 100 150 200
Florida
Georgia
South Carolina
Virginia
North Carolina
Texas
US Average
24
50
47
32
4848
State Lane-mile and Ranking Total Disbursements per Lane-mile and Ranking
3
5
Public Road Ownership
- 50 100 150 200 250 300 350
Florida
Georgia
South Carolina
Virginia
North Carolina
Texas
US Average
Miles in Thousands
State
County
Local
Federal
6
NC Gross Domestic Product Adjusted for Inflation vs. Transportation Revenues %
GDP has increased but the percent spent on transportation has decreased
7
Purchasing Power of NCDOT Highway Construction Dollars (Since 2002)
-43%
-34%
-52%-47%
-44%
-33%
-26%
-8%
0%
-60%
-40%
-20%
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010
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2010 Transportation Texas Institute (TTI)Urban Mobility Report - National Statistics
Congestion Costs1982 - $24 billion2009 - $115 billion
Wasted Fuel2009 - 3.9 billion gallons – equal to 130 days of flow in the Alaska Pipeline.
Commuter Cost (Annual) Commuter Delay
1982 – 14 hours (NC- 5) 1982 - $351 (NC- $78)2009 – 34 hours (NC- 26) 2009 - $808 (NC- $635)
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Age of NCDOT Bridges(not including culverts)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
<1930 1930 1940 1950 1960 1970 1980 1990 2000
BridgesDeficient Bridges
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US Logistics Survey
No NC city ranked in top 50 logistics friendly cities
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NC Ranking & Population Growth
0
2
4
6
8
10
12
14
2000 2005 2010 2015 2020 2025 2030
(in
Mill
ion
s)
Rank:11
(VA - 12 SC - 26)
Rank:11 Rank:10
(Surpassing New Jersey)
Rank:10 Rank:9
(Surpassing Michigan)
Rank:8
(Surpassing Georgia)
Rank:7
(Surpassing Ohio)
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Freight Tonnage by Mode, 2005-2035With moderate economic growth at about 2.8% CAGR
Freight tonnage will nearly double by 2035
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Strategic Prioritization Model
Highways
• $9B in available revenue
• Data-driven
• MPO and RPO ranked projects
• $45B in needs
1,100 projects = $38B
Other highway needs = $7B
Non-Hwy Transportation
• $1.5B in available revenue
• Units establish priorities
• Coordinated with MPOs
• $9B in needs
900 Non-Highway Projects
$54 Billion in Total Transportation NeedsApprox. $10.5 Billion in Revenue (Years 2015-2020)
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Finance Strategy
• Prioritization of Existing ResourcesPolicy to Projects – Outcomes BasedValue EngineeringAsset ManagementFunding FlexibilityOutsourcing
• Sustainable LeverageGARVEE BondsToll Financing
• Public/Private Resources (P3)Municipal AgreementsDesign Build/Design Build FinanceP3 (Public & Private)Sponsorships
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NCDOT Transformation
–Outcomes Based Planning–Logistics Planning links infrastructure to commerce
–Network Connectivity & Function
–Linked to Performance Measures–Project Ranking Based on Mobility, Safety, Condition
–Performance Dashboard and Individual PDA
–Enhanced Communications
–Innovative Finance
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How Does it All Fit Together
-------------------------------------------------------------------------------------------------------------
NC
NCDOT
North Carolina Comprehensive Plan
N.C. Transportation Plan20 yr
Program & Resource Plan 10 yr
Work Program 5 yr
“NCDOT Financial Planning & Cash Model Fully Integrated”
Biennium Budget
Economic Indicators
Long Range Revenue Projections
Innovative Finance:
• GARVEE• Design Build• DB Finance• Tolling• TIFIA
Strategic PlanningPrioritization
STIP Budget
Cash Model
Annual Maintenance of Effort Spend Plans – 1 yr
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NCDOT Cash Model 10 Year Work ProgramSFY 2011 - SFY 2020
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Innovative Financing Provides Capital for State and Local GovernmentsProvides Capital for State and Local Governments
18
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GovernmentOwns - Operates
Design - Build
Design - BuildFinance - Operate - Maintain
(“concession Model”)
Design -BuildOperate - Maintain
Private SectorOwns and Operates
Build, Own, Operate
Build, Own, Operate- Transfer
Traditional 100%Government Owned Model
Key difference: Private SectorFinancing in “P3” approach
Current “P3”Model
100% Privatized
Private Sector Involvement
Pri
vate
Sec
tor
Ris
ks
Government owns asset;private sector designs
and builds to meet public specifications often for a fixed
price. Cost risk transferred to private sector
Government owns asset;private sector designs, builds
and operates. Cost and operational risk transferred to
private sector
Government owns asset;Grants private sector the right to
develop asset and receive revenues generated. Private
sector takes cost and operational risk. Performance standards and
rates defined in concession agreement.
Private sectorInitially owns asset: finances, designs, builds and operates asset for defined period and
receives revenues for defined period. At end of period, ownership transferred to
government.
Private sector owns and operatesasset to provide governmental
service. Performance standards are defined initially and
regulated/monitored on an ongoing basis.
Public/Private Sector Innovation & Financing
20
US Market PPP Observations• Almost all activity sponsored at State, Regional, City or
other local level
• 23 States with enabling legislations
• Federal Government support:
– Private Activity Bonds
– TIFIA direct loans, loan guarantees, and lines of credit
– SEP 15
– State Infrastructure Banks (SIBs)
– GARVEE Bonds and Transit GANS
• Markets
– Active - Texas, Virginia and Florida
– Moderate – Georgia, Oregon, Missouri and California
– Promising – North Carolina
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P3s Are Happening & Adding Capacity in the U.S.
List of projects in various stages of procurement, may not be exhaustive
States:
Texas - TC-35, I-69/TTC, I-635 North Tarrant Express, DFW Connector
Georgia - Northwest Corridor, I-285 Northwest TOT Lanes
Virginia - Capital Beltway HOT Lanes Corridor
Florida - Port of Miami Tunnel, I-595 Improvements, Coast Outer Beltway
22
Active P3’s within NCDOT
• Design Build / Design Build Finance– 55 Design Build projects active/complete to date– 14 Projects Advertised for future award– Yadkin River Bridge savings $95M– Monroe Connect/Bypass bid savings $100M– Charlotte projects accelerated up to 7 years with cost savings $130M
• Contractual Agreements – Authorize public/private sector role in delivery and financing of transportation
projects (30 - 50 per month)
• Interstate Maintenance – Contractor maintains 135 miles (I-77, I-85, I-485 & I-277) Mecklenburg & Cabarrus counties
• Randolph County Rest Area – Operated by Safe-T-Concierge
23
Turnpike Authority - Mid-Currituck BridgePublic Private Partnership
Financial analysis including evaluation of private financing versus traditional toll financing underway
24
NCDOT Delivery Innovative Finance Techniques
• Value Engineering & Project Clustering– Replacement of 7 Bridges on Ocracoke Island in 75 days
• Public Public Partnerships– Charlotte New starts Light Rail Project
• NCDOT (25%) / City of Charlotte (25%) / FTA (50%)
• Public Private Partnership– Gateway Project (downtown Charlotte)
25
Toll Technology
Contracts are in place for full toll operations & collection on the Triangle
Expressway
The systems being put into place (including software systems and other infrastructure) are easily expandable to meet the needs of all toll projects under development as well as additional projects statewide
North Carolina’s Toll Roads are being
construction with the latest technology
available
They will have “open road tolling” with no toll collection booths
26
Future Initiatives – Value Pricing
I-77 HOT Lanes
27
GARVEE Program Plan
• Nationally Showcased as one of the Best Garvee Programs
• “Evergreen Structure” Ability to continually issue bonds subject to legislative authorization
• Flexible Program allows Project Additions/Deletions
• Geographic distribution of Projects on Strategic Highway Corridors
2007 & 2009 Series Accelerated Projects Average of 3.5 years
Two issuances ($530M) to date covering 42 projects
2828
29
30
31
32
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Key Issues and Opportunities• Sustainability of Gas Tax Revenues
– Address Changing Technology– Transition Strategy
• Impact of Federal Rescissions and Budget Cutbacks
• Funding Flexibility to Achieve Performance Outcomes– Both Federal and State Dollars
• Protect and Enhance NC’s Largest Economic Asset – Continued Focus on Resource Prioritization, Internal Efficiencies, &
Outsourcing Opportunities– Broaden Strategic Use of Innovative Finance and Partnerships– Expand Ability to Recover Inflationary Costs as World Economy Recovers