On January 19, 2007, the Federal Transit Administration ("FTA") published a notice in the Federal Register containing the definitive terms of the Public-Private Partnership Pilot Program ("Penta-P") authorized by SAFETEA-LU to demonstrate the advantages of PPPs for certain new fixed guideway capital projects funded by FTA.84 The Secretary was authorized to select up to three projects to participate in Penta-P and has selected the BART Oakland Airport Connector and the Denver RTD projects, which are discussed in Section IV(B), and the North Corridor and Southeast Corridor Bus Rapid Transit project in Houston, Texas.
Penta-P is intended to study whether, in comparison to conventional procurements, PPPs achieve any of the following benefits:
• Reducing and allocating risks associated with new construction;
• Accelerating project delivery;
• Improving the reliability of projections of project costs and benefits; and
• Enhancing project performance.
Penta-P was authorized to study projects that, among other things, utilize methods of procurement that integrate risk-sharing and streamline project development, engineering, construction, operation, and maintenance. The amount and terms of private investment to be made were significant considerations in selecting Penta-P projects. The benefits of the program include eligibility for a simplified and accelerated review process that is intended to substantially reduce the time and cost to the sponsors of New Starts reviews.
PPPs utilized in the transit industry have primarily taken the form of design-build and design-build-operate-maintain ("DBOM") procurements, which typically do not involve a significant long-term equity investment by the private partner or require the private partner to take ridership or revenue risk. Design-Build transit projects funded by FTA include five New Starts projects (Denver RTD's T-Rex project; the South Florida Commuter Rail Upgrades; the Minneapolis Hiawatha LRT Line; the BART Extension to the San Francisco International Airport; and the Washington Metro's Largo Metrorail Extension), and one project outside of the New Starts program (the Portland MAX Airport Extension). DBOM projects funded by FTA include the New Jersey Transit Hudson-Bergen LRT and the Port Authority of New York and New Jersey's JFK Airtrain.
The Las Vegas Monorail Project, completed in 2004, is the only urban rail transit project since the 1920s with a significant portion of the financing based on projected farebox revenues. Penta-P is designed to encourage more private risk-taking and investment in fixed guideway transit projects than is found in typical Design-Build and DBOM procurements.
Los Angeles County Metropolitan Transportation Authority ("Metro") is developing a PPP program to identify specific highway or transit projects that could be constructed through PPPs. Metro's program could potentially provide funding for currently unfunded transportation projects or accelerate funded projects. Projects identified in the 2008 Long Range Transportation Plan Tier 1 Strategic (Unfunded) highway and transit lists are high-priority candidates for PPPs. On April 24, 2008, on a motion made by Los Angeles Mayor Antonio R. Villaraigosa, Metro's Board of Directors approved the issuance of a Request for Information from the private sector with respect to PPP solutions for 18 projects, and on May 12, 2008, Metro issued the Request for Information.85 As of July 14, 2008, Metro has received 12 responses to the Request for Information.86
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84 This summary of Penta-P was adapted from the summary included in Appendix A to USDOT's Report to Congress on the Costs, Benefits, and Efficiencies of Public-Private Partnerships for Fixed Guideway Capital Projects released as of November 2007.
85 Request for Information Regarding Public-Private Partnerships for LACMTA Transportation Projects, available at http://www.metro.net/projects_studies/ppp/images/ppp_rfi.pdf (last visited on July 18, 2008).
86 LA Receives 12 Presentations for P3s, P3Americas.com, July 14, 2008, at http://www.p3americas.com/newsdetails.asp?iNID=11949&TempID=5 (last visited on July 18, 2008).