iii .  Turnkey Procurement

Although it has been used for public works and private construction for many years, turnkey procurement has rarely been used in public transportation. This is partly the result of a pay-as-you-go process that has developed because public transportation agencies are generally dependent upon annual appropriations. It is also a result of the lack of successful prior examples of design-build. While many light rail and rapid rail systems were built on a turnkey basis in the 1890's and early 1900's, this was based upon concurrent land speculation on the part of the system owner and the system builder. In the current environment, the system owner is a municipal entity-which cannot own or control significant amounts of land except by public procurement-and the system builder is a private sector contractor who by definition cannot speculate in the land or development rights that may accrue to the land near the new transit system.[31]

Nevertheless, there have been some recent partnerships in the public transportation sector, of which three are summarized below:

∙  Tren Urbano: This project, in downtown San Juan, Puerto Rico, is a rapid rail (Metro) system of 11 miles in extent with 17 stations. It has been in planning and development since 1972, and was originally proposed as a light rail system. By the time FTA signed a Full Funding Grant Agreement for the project, it had evolved into a rapid rail system, with projected ridership of over 100,000 per day in its opening year. The project was procured by the Puerto Rico Highway and Transportation Authority as a Design-Build contract. Siemens Corporation is the prime contractor, responsible for 60 percent of the total project, including right-of-way, track, systems, and vehicles. The 17 stations, accounting for 40 percent of the project, are the responsibility of several local subcontractors to Siemens. The project was originally scoped at $1.375 billion. However, weather, lawsuit, Federal requirement, and funding issues have delayed the project significantly. The current estimate to complete the initial 17-station segment is now over $2.3 billion.

∙  Hudson-Bergen Light Rail: A two-phase, $1.1 billion light rail startup system, this was a Design-Build-Operate-Maintain or DBOM project. The partnership between New Jersey Transit and Washington Group International (formerly Raytheon Infrastructure) resulted in early completion of the project at substantial cost saving. The combination of the DBOM contract with Grant Anticipation Bonds ensured consistent progress on construction and realized cost savings of over $300 million, as the following comparison shows (see Figure 2.6). The first segment of the Hudson-Bergen Light Rail went into revenue service in April of 2000-nearly five years ahead of projections.

Figure 2.6

Hudson-Bergen Light Rail DBOM Example

∙  Las Vegas Monorail: In May of 2000, the Governor of Nevada created the Las Vegas Monorail Corporation (LVMC) by appointing members to its board of directors. LVMC was responsible for the issuance of $650 million in revenue bonds to finance the construction of the first phase of the Las Vegas Monorail, running 3.7 miles from Sahara Avenue to Tropicana Avenue and serving seven stations in downtown Las Vegas. Design, construction, maintenance and operation are the responsibility of the Master System Developer. The actual project sponsor is the Regional Transit Commission (RTC), which is the transit provider for Clark County and the city of Las Vegas. This project is the first totally privately financed public transportation project in the U.S., although it is seeking Federal funds for its second phase. The project went into revenue service in July of 2004, within budget although several months late.