While the U.S. 36 project was still under environmental review in 2007 CDOT sought funding under the federal Urban Partnership Agreement (UPA) program from the U.S. Department of Transportation (USDOT). The UPA program funded projects in metropolitan areas employing innovative solutions, such as BRT, HOT lanes, and dynamic pricing, to combat congestion. The U.S. 36 project was ultimately not selected for a grant, so after the project gained final approval from FHWA and FTA, CDOT applied for $100 to $200 million in funding under the first round of the federal "TIGER" discretionary grant program that was put in place as part of the American Recovery and Reinvestment Act. The project was ultimately awarded a $10 million TIGER challenge grant in 2009, and FHWA encouraged CDOT to apply the grant proceeds toward the federal government's subsidy cost associated with a possible loan from a USDOT credit program known as "TIFIA."
CDOT had not initially sought TIFIA credit assistance, but was interested in following through on FHWA's suggestion. In 2010 CDOT commissioned a traffic and revenue study that found that toll revenues from the facility would be sufficient to pay a TIFIA loan. The TIFIA loan-together with additional funding from the Denver Regional Transit District (RTD), the Denver Regional Council of Governments, and the state-would be sufficient to cover the costs of Phase 1 of the U.S. 36 project. CDOT opted to procure Phase 1 on a design-build basis, providing it with the benefit of a firm fixed cost for the project and allowing it to benefit from the design and scheduling efficiencies of bundling the design and construction activities into a single contract.
Meanwhile, in 2009 the Colorado General Assembly created the Colorado High Performance Transportation enterprise (HPTE) with the mission of seeking out opportunities for innovative strategies for financing important surface transportation projects in the state. HPTE was established as a division within CDOT and one of its initial activities was to embark on a strategic planning process and the development of a short-term 2010 Action Plan. As part of that effort, HPTE reviewed P3 programs in other states and assembled a list of strategic projects in Colorado that could benefit from innovative financing and procurement strategies, one of which was the U.S. 36 Express Lanes.
In March 2011, CDOT submitted its application for a $54 million TIFIA loan to support Phase 1 of the U.S. 36 Express Lanes project and in May it initiated the design-build procurement process. CDOT closed on the TIFIA loan in early September 2011 and awarded its design-build contract for Phase I in March of 2012 to the Ames/Granite Joint Venture team.
Meanwhile, HPTE and CDOT explored different options for completing Phase 2 of the project. This final portion of the project was expected to have a capital cost of $208 million and HPTE and CDOT were interested in considering a P3 arrangement that would combine the operation of the existing I-25 Express Lanes and both phases of the U.S. 36 project with the construction and long-term operation of Phase 2 on a design-build-finance-operate-maintain basis. HPTE and CDOT estimated that using a P3 approach would enable construction to be completed at least five years ahead of CDOT's anticipated schedule if it used a design-build procurement. Moreover, a P3 structure would enable CDOT and HPTE to transfer significant project risks to the private sector partner, such as meeting the construction schedule and budget, collecting sufficient toll revenue to meet debt obligations and return on investment expectations, and ensuring the project is returned to CDOT in well maintained condition.