STATUS OF PUBLIC-PRIVATE PARTNERSHIPS IN CONNECTICUT

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1 STATUS OF PUBLIC-PRIVATE PARTNERSHIPS IN CONNECTICUT James Redeker, Commissioner, Department of Transportation Garrett Eucalitto, Undersecretary, Office of Policy and Management

2 Brief History of PPP Use in Connecticut Prior to 2011, CT had limited experience with Public Private Partnerships (PPPs) June Sp. Sess. P.A authorized CTDOT to execute Transit-Oriented Development projects in a manner that opened the door to alternative project delivery One project currently under negotiation, others in discussion CT executed a new concession agreement with a single prime contractor for the service plazas along I-95, Route 15, and I-395 As part of the concession agreement, private capital would finance the construction and upgrades at the facilities, and the private party would be liable for cost increases The state receives a portion of sales from non-fuel purchases, as well as a cents per gallon of gasoline sold

3 Brief History of PPP Use in Connecticut October 2011: Governor Malloy worked with the legislature to pass the first PPP legislation in Connecticut PA 11-1 of the October Special Session enabled the State to enter into PPPs involving state-owned assets or functions, up until January 2015 OPM, in consultation with DECD and DOT, selected a PPP advisory team that offered financial, legal and technical expertise in the development and potential execution of PPP opportunities A list of potential PPP projects was prepared and evaluated by the PPP advisory team

4 Status of Current Legal Authority CGS Sec authorizes the state to enter into Public-Private Partnerships for the design, development, operation or maintenance of the following new or existing project types: Early childcare, educational, health or housing facilities; and, Transportation systems, including ports, transit-oriented development and related infrastructure State agencies are permitted to submit PPP projects for approval by the Governor, but first must complete a series of analyses, including: projected demand, economic and social impact, feasibility, cost-benefit analysis, and the publicly financed alternatives

5 Status of Current Legal Authority: Project Selection Proposed PPPs must originate with a state agency The submitting agency must consult with DECD, DAS/DCS, DOT, OPM, and the State Treasurer The submitting agency must also have estimated that the revenue generated, in combination with other previously identified funding sources, including any appropriated funds, will be sufficient to fund the cost to develop, maintain and operate, provided state support of a P3 shall not exceed 25% of the cost of the project In addition, a P3 may not be established for the operation or maintenance of a facility unless such agreement also provides for the financing and development of such a facility

6 Status of Current Legal Authority: Approval Process and Selection No more than five PPP projects may be approved by the Governor prior to January 1, 2016 (subsequent legislation extended the deadline one year) The Governor must find that the project will result in job creation and economic growth No projects have been submitted or approved under this legislation Submitting agency must notify the Finance and Appropriations Committees, which must hold public hearings on the proposal

7 Status of Current Legal Authority: Additional Considerations No PPP may extend for a term longer than 50 years from the closing date PPP agreements must include reverter provisions No PPP agreement may contain non-compete provisions limiting the ability of the state to perform its functions Only those user fees which are set forh in the partnership agreement may be levied by a PPP prvate sector partner Any property developed, operated or held by a private entity pursuant to a partnership agreement shall be exempt from municipal property tax

8 Status of Current Legal Authority: Issues and Concerns Current statute places significant limitations on their potential financing: Requiring each project to generate revenue, therby excluding projects that could be financed through availability payments Capping state contributions to no more than 25% of the cost of the project Statute also imposes numerous non-financial limitations on potential PPP candidates Non-compete clauses 50 Year time restriction Many Quasi-Publics, which would oversee many of the potential PPP project, already have the authority to do PPPs without this statute

9 Previously Vetted Potential Projects Under Current Statutory Restrictions New London State Pier Improvements Bradley International Airport Parking and Rental Car Facility Transit-Oriented Development Cell Phone Tower Lease Assignments State-Financed Affordable Housing Portfolio XL Center Improvements State University System Facilities Dormitories, Recreation Centers Parking Garages Classrooms, Incubators

10 Where are we today? Since the P3 legislation in 2011, Connecticut has taken a position to be a national leader on transportation investments. Governor Malloy unveiled Let s Go CT in February, 2015, to put Connecticut on a sustainable path for growth and economic development. The legislature approved the first five years of Let s Go CT bond authorizations What is Let s Go CT? 10

11 Best in Class Vision 30-year plan: all critical preservation & enhancement needs 5-year ramp-up: projects within the 5-year budget cycle to jump start investment Lock Box Cost: o 30-year Vision: $100 Billion investment o 5-year ramp up: $10 Billion investment o Base Capital Program is $7.2 Billion (fed + state) o Ramp-Up funds $2.8 Billion (additional state) 11

12 Actions To Improve Project and Service Delivery Project delivery: provide tools needed for more efficient delivery Design/Build, CMAR, GMGC, Accelerated Bridge Construction, P3 Service delivery: implement more effective contracting methods Transportation capacity: operations, engineering, technology, program management, asset management. More cash funding for regular capital programs Support basic repair & preservation programs 100% state-funded design Use state funds for design; state and federal funds for construction More efficient, faster, stretches dollars farther & grows program 12

13 Core DOT Capacity Staff and consultant services to expand project delivery methods and support expansion during ramp up. LEAN initiatives Strategic evaluation of future core organization capacity and capabilities underway as part of Let s GO CT! 13

14 5 Year Ramp Up Capital Budget Base Program vs. Ramp Up Base Capital Program $3.2 Billion State $3.8 Billion Federal Ramp Up $ 2.8 Billion - State Total = $10 Billion investment over the 5 year period 14

15 Governor s Call to Action Increases Capital Funds to $2 Billion/Yr during the 5-Year Ramp-up Safety & Preservation program backlog first Creating the opportunity for Enhancement Projects $3,500 $3,000 Vision Level Capital Funding $2,500 $2,000 $1,500 $1,000 $500 $ , Yr Ramp Up - Let's Go CT! Value = $2.8 Billion Proposed "Base" State Bonding Authorizations (based on recent trends) Past Years State Bonding Authorizations Assumed Federal Funding Current Biennial Budget 15

16 Let s Go CT Initiatives Transit-Oriented Development Rail stations Parking Bridge upgrades and replacements Highway capacity and congestion management Port investment Rail freight 16

17 P3 Possibilities -- TOD TOD along CTFastrak, Hartford Line New rail stations Orange, Barnum, Harford Line Stations Development of existing New Haven Line parking and station facilities 17

18 P3 Possibilities -- Parking Parking operations and management Parking expansion Parking investment 18

19 P3 Possibilities -- Bridges Bridge upgrades and replacements Groupings of infrastructure replacement/rehabilitation Could include long term maintenance as well Recently done in Pennsylvania 19

20 P3 Possibilities Capacity Highway corridor investments in capacity and congestion management I95 Southwest I95 Southeast I84 NY Hartford Route 11 Congestion management 20

21 P3 Possibilities Port Development State Pier in New London Port/rail partnerships 21

22 P3 Possibilities Freight Rail Expanded upgrade of freight infrastructure Intermodal facilities 22

23 Opportunities and Challenges for Connecticut With $100 billion in transportation infrastructure improvements, and significant related investments on the horizon, Connecticut is in a prime position to work with the private sector to fund and deliver investments Issues remain that inhibit Connecticut s ability to successfully utilize P3s: Expiration of P3 authority on December 31, 2015 Inability to use availability payments in contracts Statutorily imposed 25% cap on state contribution Currently there are limited revenue opportunities, which limits long term operating agreements 23

24 Thank you! Opportunity for Discussion 24