[bouldercouncilhotline] Hotline: Questions about financing of US36 express lanes project

[cmosupport at bouldercolorado.gov]

Sender: Weaver, Sam



Colleagues,
 
Since we will be discussing the US36 improvement project tonight under matters, I would like to see if staff can help clarify a few issues during the discussions.  As I have reviewed the CDOT presentation, Fitch ratings evaluation, and other materials, I
 have the following observations:
 
1) For me, the lane configuration, management, and use seem pretty well-conceived.  Most of my questions are about the financing and public private partnership arrangements.
 
2) My summary of the project finances is as follows (both Phase 1 and Phase 2 included).  I would love for staff to confirm or correct this summary:
 
$497M total project construction costs
 
$323M from governmental bodies (RTD, DRCOG, CDOT, HPTE, local gov't)
 
$174M involvement by Plenary Rods Denver (PRD, a private firm):
 
- $20M equity
- $20M private loan
- $20M private activity bonds (issued by High Performance Transportation Enterprise on behalf of Plenary Roads Denver)
- $54M Phase 1 Transportation Infrastructure Finance and Innovation Act (TIFIA) loan assumed.  This is bonded debt.
- $60M Phase 2 TIFIA loan generated and assumed by PRD.  This is bonded debt.
 
So PRD puts up $20M in equity, levers another $154M (with a lot of state and Federal help), and gets 50 years of cash flows, including I-25 toll lanes.  HPTE and CDOT privatize the maintenance (including snow
 removal), operations, and upkeep.
 
3) Couldn't HPTE and CDOT have assembled essentially the same financing package without PRD?
 
4) How do TABOR restrictions limit or prevent doing this project without a PPP?
 
5) CDOT asserts that without the PPP, this project would not happen for 20 years.  Why is that?
 
6) Why did the HPTE want to pass off the TIFIA repayment obligations?  Would terms and interest rates be more favorable if held by HPTE rather than PRD?
 
7) Why does CDOT want to privatize the routine maintenance of all of US36, including snow removal?  Are there performance risks with this arrangement?
 
I am interested in understanding these issues and learning about options for future regional transportation projects.  Aside from the complex nature of the project financing, questions about maintenance, and
 the potentially questionable duration of the private involvement, this seems like a highly beneficial project.  I would hope for maximum transparency in the contract terms when a private enterprise is going to toll and maintain a major regional arterial for
 50 years. 
 
Thanks,
 

Sam Weaver
Member of Boulder City Council
weavers at bouldercolorado.gov
Phone: 303-416-6130