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Keynote Part 1 - Alternative Funding of Road Projects
 

Keynote Part 1 - Alternative Funding of Road Projects

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Mark Foster, chief financial officer of the North Carolina Department of Transportation (NCDOT), reports on innovative financing at the Charlotte Chamber 2011 Transportation Summit.

Mark Foster, chief financial officer of the North Carolina Department of Transportation (NCDOT), reports on innovative financing at the Charlotte Chamber 2011 Transportation Summit.

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  • This is a snapshot of 10 Year Needs broken out by Highway and Non-Highway projects Highway needs (including Bridges, resurfacing and safety projects) totaled to $45 Billion Non Highway Needs totaled to $9 Billion Our Cash Model in the Dept projects available revenue of: $9 Billion for Highways $1.5 Billion for Non Highways Therefore the total Needs vs Rev picture is almost 5 to 1: $54 B in Needs and $10.5 B in Rev

Keynote Part 1 - Alternative Funding of Road Projects Keynote Part 1 - Alternative Funding of Road Projects Presentation Transcript

  • Innovative Financing Mark Foster, Chief Financial Officer North Carolina Department of Transportation April 8, 2011
  • 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
    • State Transportation System
    • - Largest Capital Asset
    • Invested* - $40 billion +
    • Replacement Value - $450 billion
    • Economic Value - $$$$$$$ (Commerce/Jobs/Lifestyle)
  • System Responsibility State Lane-mile and Ranking Total Disbursements per Lane-mile and Ranking 3
  • Public Road Ownership
  • NC Gross Domestic Product Adjusted for Inflation vs. Transportation Revenues % GDP has increased but the percent spent on transportation has decreased
  • 2010 Transportation Texas Institute (TTI) Urban Mobility Report - National Statistics
    • Congestion Costs
      • 1982 - $24 billion
      • 2009 - $115 billion
    • Wasted Fuel
      • 2009 - 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)
  • Age of NCDOT Bridges ( not including culverts)
  • US Logistics Survey No NC city ranked in top 50 logistics friendly cities
  • NC Ranking & Population Growth
  • Freight Tonnage by Mode, 2005-2035 With moderate economic growth at about 2.8% CAGR Freight tonnage will nearly double by 2035
  • 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 Needs Approx. $10.5 Billion in Revenue (Years 2015-2020)
  • Finance Strategy
    • Prioritization of Existing Resources
      • Policy to Projects – Outcomes Based
      • Value Engineering
      • Asset Management
      • Funding Flexibility
      • Outsourcing
    • Sustainable Leverage
      • GARVEE Bonds
      • Toll Financing
    • Public/Private Resources (P3)
      • Municipal Agreements
      • Design Build/Design Build Finance
      • P3 (Public & Private)
      • Sponsorships
  • 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
  • How Does it All Fit Together ------------------------------------------------------------------------------------------------------------- NC NCDOT North Carolina Comprehensive Plan N.C. Transportation Plan 20 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 Planning Prioritization STIP Budget Cash Model Annual Maintenance of Effort Spend Plans – 1 yr
  • NCDOT Cash Model 10 Year Work Program SFY 2011 - SFY 2020
  • Innovative Financing Provides Capital for State and Local Governments
  • Government Owns - Operates Design - Build Design - Build Finance - Operate - Maintain (“concession Model”) Design -Build Operate - Maintain Private Sector Owns and Operates Build, Own, Operate Build, Own, Operate - Transfer Traditional 100% Government Owned Model Key difference: Private Sector Financing in “P3” approach Current “P3” Model 100% Privatized Private Sector Involvement Private Sector Risks 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 sector Initially 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 operates asset to provide governmental service. Performance standards are defined initially and regulated/monitored on an ongoing basis. Public/Private Sector Innovation & Financing
  • 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
  • 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
  • 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
  • Turnpike Authority - Mid-Currituck Bridge Public Private Partnership Financial analysis including evaluation of private financing versus traditional toll financing underway
  • 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)
  • 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
  • Future Initiatives – Value Pricing I-77 HOT Lanes
  • 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
  • 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