innovative financing schemes steve heminger executive director, mtc sonoma transportation summit...
TRANSCRIPT
InnovativeFinancingSchemes
InnovativeFinancingSchemes
Steve HemingerExecutive Director, MTC
Sonoma Transportation SummitJune 21, 2006
Vaudeville definition of “Innovative Finance”
Vaudeville definition of “Innovative Finance”
I Don’t Have Any Money.
Do You?
1. Is the Gas Tax
a Goner?
1. Is the Gas Tax
a Goner?
“Read my Lips: No New Taxes”
“Read my Lips: No New Taxes”
— George H. W. Bush, 1998
State Gas Tax Hasn’t Kept Pace
State Gas Tax Hasn’t Kept Pace
The state’s gas tax has lost one-third of its value
since 1964, adjusted for inflation.
Feds to the Rescue? Not Likely
Feds to the Rescue? Not Likely
Purchasing power of federal gas tax has also eroded due to inflation
The Gas Tax Vanishing ActThe Gas Tax Vanishing Act
• No federal rate increase since 1993
• Less than 1/3 of states have raised the state gas tax since 1993
• 6 of 15 states with tax hikes were due to automatic indexing
Far Higher Gasoline Prices Abroad
Far Higher Gasoline Prices Abroad
Sourc
e:
Inte
rnati
onal Energ
y A
gency
, A
pri
l 2
00
5
Gasoline Prices for Selected Countries, 2005
2.You Say You Want a Devolution?
2.You Say You Want a Devolution?
“It’s our money, and we’re free to spend it any way we please…If you have money you spend it and win.”
“It’s our money, and we’re free to spend it any way we please…If you have money you spend it and win.”
— Rose Kennedy
Local Sales Tax Revenues Dwarf STIP
Local Sales Tax Revenues Dwarf STIP
All Bay Area counties except Napa and Solano
$23 billion over 30 years
Bay Area vs. State
Voting Results on Transportation Funding Ballot Measures:
Voting Results on Transportation Funding Ballot Measures:
Devolution LosersDevolution Losers
• Rural counties with small tax base and anti-tax ethos
• Large “lumpy” projects that don’t neatly fit within county shares
• Modes that lack electoral appeal: bikes vs. freight
3.Son, Can I Borrow the Charge Card?
3.Son, Can I Borrow the Charge Card?
Proposition 1B — Transportation Bond
Proposition 1B — Transportation Bond
Category Amount
Highway Improvements
$ 4.5
Transit Capital $ 4.0
Goods Movement $ 2.0
Local Roads $ 2.0
State Transportation Improvement Program
$ 2.0
Air Quality $ 1.2
State-Local Partnership
$ 1.0
State Route 99 $ 1.0
Transit Security $ 1.0
Highway Repairs $ 0.5
Other $ 0.7
Total $ 19.9
Dollars in billions
Bay Area’s Share ofLocal Streets and Roads
Funding
Bay Area’s Share ofLocal Streets and Roads
Funding
Dollars in millions
County Allocation
Alameda $ 75.0
Contra Costa $ 52.1
Marin $ 14.5
Napa $ 9.1
San Francisco $ 40.0
San Mateo $ 40.8
Santa Clara $ 91.7
Solano $ 24.3
Sonoma $ 27.9
Regional Total $375.4
Bay Area’s Share ofSTIP Funding
Bay Area’s Share ofSTIP FundingCounty Amount
Alameda $ 54.5
Contra Costa $ 35.2
Marin $ 10.3
Napa $ 6.4
San Francisco $ 27.8
San Mateo $ 28.7
Santa Clara $ 63.8
Solano $ 16.7
Sonoma $ 20.4
Subtotal $ 263.8
Interregional (Est.) $ 84.1
Regional Total $ 347.9
Dollars in millions
Agency Amount
AC Transit $ 107
BART $ 246
Caltrain $ 40
Golden Gate $ 40
SF Muni $ 336
SamTrans $ 47
VTA $ 144
Regional $ 347
Other $ 27
Total $ 1,334
Dollars in millions
Public Transit Funding — Bay Area Share
Public Transit Funding — Bay Area Share
Bay Area Funding Shortfall: $18 Billion
Bay Area Funding Shortfall: $18 Billion
80 percent of the region’s funds will go to maintain our existing road and transit system.
Even with passage of November 2006 bond, large shortfalls remain.
Growing Reliance on Non-User Fees
Growing Reliance on Non-User Fees
Sourc
e:
Surf
ace
Tra
nsp
ort
ati
on P
olic
y P
roje
ct,
20
02
Type of Revenue
1995 1999 ChangePercent Change
State Borrowing
($ in millions)
92$4,316 $ 8,298 $3,982
Other Local Taxes Includes Sales Taxes $ 4,487 $ 7,079 $ 2,592 58
Other State Taxes $ 6,565 $ 8,560 $ 1,995 30
Local General Funds$
12,326 $ 15,857 $ 3,531 29
Local Property Taxes $ 5220 $ 6384 $ 1164 22
State User Fees $36,200 $42,730 $6,530 18
4.Does the Road Toll for Thee?
4.Does the Road Toll for Thee?
Original Toll Concept — River Chains
Original Toll Concept — River Chains
Congestion TollsCongestion TollsProject Type Status
Singapore Cordon Operational 1975
Norway Cordon Operational 1986
London Cordon Operational 2003
Stockholm Cordon Operational 2006
Orange County, SR 91 HOT Operational 1995
San Diego I-15 HOT Operational 1996
Houston Katy Freeway HOT Operational 1998
Minneapolis I-394 HOT Operational 2005
Denver I-25 HOT Operational 2006
Seattle Route 167 HOT Planned 2007
Alameda County I-680 HOT Planned 2009
Orange County SR 91 Express Lanes
Orange County SR 91 Express Lanes
San Diego I-15 Express Lanes
San Diego I-15 Express Lanes
Proposed Alameda I-680 ConceptProposed Alameda I-680 Concept
Limited access
Double-yellow stripe separation with intermediate access (access design under study)
Toll varies by time of day, day of week
Early polling: 60% to 70% support (project area)
Conceptual Regional HOT Network
Conceptual Regional HOT Network
Federal Legislation — SAFETEA
Federal Legislation — SAFETEA
Value Pricing Pilot Program
• 15 demonstration projects
• $11 to $12 million/year
Broad permission to convert HOV to HOT
• Must maintain service levels (45 mph minimum)
• Encourages directing excess revenue to ridesharing and highway safety programs
5.Have I Got a Bridge to Sell You?
5.Have I Got a Bridge to Sell You?
Current U.S. Toll Road Privatizations —
A Brief History
Current U.S. Toll Road Privatizations —
A Brief History
May 23, 2003 October 2004 August 2005 February 2006 May 2006
Road SR 125, South Bay Expressway
Chicago Skyway Dulles GreenWay Indiana Toll Road Pocahontas Parkway
Location San Diego, CA Chicago, IL Dulles, VA Indiana Richmond, VA
Length 9.3 miles 7.8 miles 14 miles 157 miles 9 miles
Buyer Macquarie (Australia) Macquarie (Australia), Cintra (Spain)
Macquarie (Australia) Macquarie (Australia), Cintra (Spain)
Transurban (Australia)
Concession length 35 years from 2006 99 years 51 years 75 years 99 years
Relevant government body(s)
San Diego County, Caltrans, SANDAG, USDOT
City of Chicago VDOT Indiana State VDOT
San Diego, CA
Chicago, IL
Dulles, VA
Richmond, VA
Indiana
Current Privatized U.S. Toll Roads — Investment and Operating Profile
Current Privatized U.S. Toll Roads — Investment and Operating Profile
Concessionnaire
/Operator Project
Description Concession Duration
Concession Price
Price/ EBITDA (x) Leverage
Price/ Year/Mile Comment
SR 125 South Bay, San Diego, CA
Macquarie 9.3 mile road linking State 95 to State 54
35 years from
construction
$668 mm NM 75% $2.1mm Construction estimated to be completed late 2006
Chicago Skyway, IL Macquarie & Cintra
7.8 mile urban toll road linking Chicago to I-80 in Indiana
99 years $1.83bn 49.5x 65% (85% post
refinancing)
$2.4mm Brownfield Road
Price net of Cap Ex
Dulles Greenway, VA
Macquarie 14 mile urban toll road
51 years $533mm 19.8x <50% $0.7mm Brownfield Road, widening project
Indiana Toll Road, IN
Macquarie & Cintra
157 mile east-west inter-city toll road
75 years $3.85bn 63.5x 81% $0.3mm Brownfield Road, major trucking and commercial traffic
Pocahontas Parkway, VA
Transurban 9 mile toll facility located in Richmond, VA
99 years $611mm N/ A 69% $0.7mm Distressed asset, traffic well below T&R forecast
Overview of U.S. toll road acquisitionsOverview of U.S. toll road acquisitions
Ownership Structure of Current Privatized U.S. Toll
Roads
Ownership Structure of Current Privatized U.S. Toll
Roads
•Concession structure rather than outright sale of the asset
•Concession terms range from 35 to 99 years
•Concession agreement determines toll pricing, operational and maintenance requirements
CommentComment SR 125SR 125 Chicago SkywayChicago Skyway
Pocahontas ParkwayPocahontas ParkwayIndiana Toll RoadIndiana Toll RoadDulles GreenwayDulles Greenway
Gov’t. Body
Macquarie Infrastructure Corp. (MIG)
ASX listed (MIG) $9bn market cap. Managed by Macquarie
Bank
99 yearconcession
$300mm
VDOT, VA State
MIG
ASX listed (MIG) $9bn market cap.
51 yearconcession
$533mm
VDOT, VA State
Transurban
ASK listed (TCL) $4bn market cap.
99 yearconcession
$600mm
City of Chicago
Skyway Vehicle
Spain listed $ market
cap.
99 yearconcession
$1.83bn
Cintra MIG
ASX listed $9bn market
cap.
55% 45%
State of Indiana
ITR Vehicle
Spain listed $ market
cap.
99 yearconcession
$3.85bn
Cintra MIG
ASX listed $9bn market
cap.
50% 50%
Projects Under Agreement Or In Progress
Projects Under Agreement Or In Progress
State Description Est. Size Stage in Progress Est. Completion Private Partner
I-81 VA Four lane widening project with separation of truck and car lanes
$7.9bn Selected by VA in March 2004; project yet to be undertaken
TBD STAR Solutions (Adam, APAC, KBR, English, Wilbur Smith)
Coalfields Expressway
VA New four-lane highway connecting the WV Coalfields Expressway to Wise County
$2.3bn KBR finished design/ engineering for initial section of highway; announced partnership with coal producers on J an. 13, 2006
TBD KBR (with Pioneer and Alpha)
Capital Beltway HOT Lanes
VA HOT lanes in both directions along 14 miles and add a connection to the road and I-95
$985m Signed PPP agreement in April 2005; construction scheduled to begin within a year
TBD Fluor-Transurban
I-95/I-395 VA Improvement along 56 miles adding a third lane to existing HOV lanes
$913m Advisory panel recommendation of Fluor-Transurban made in November 2005; no action taken
Spring 2007 Fluor-Transurban
Route 28 VA Special district tax financed widening from six to eight lanes; interchange upgrading
$200m Four of six interchanges upgraded; fifth in progress
TBD Clark Construction
I-75/575 GA High volume of widening projects along I-75 $1.2bn Received $48m contract in late 2005; larger project expected
TBD GTP (Bechtel, Gilbert, Matthews)
South Bay Expressway
CA 14.9 km four lane toll road, SR125 $635m Under construction Winter 2006 Macquarie
Port of Corpus Christi
TX 1,000 acre port development, including road/ rail/ waterway extension and marine terminal capital improvements
$274m In late 2005, PCCA entered into a six-month exclusive agreement to develop a concession agreement
TBD Dragados S.P.L.
I-205 Corridor
Sunrise Project
Newberg-Dundee
OR - Lane widening and interchange improvements
- Construction of five-mile limited access four-lane facility
- Proposed 11 mile bypass corridor
$1bn+ Identified as preferred partner in November 2005; currently undertaking pre-development financing study
TBD OTIG (Macquarie, Hatch Mott MacDonald, Preston Gates Ellis)
Project Overviews
Key Policy QuestionsKey Policy Questions
1. How high could tolls really get?
2. Why doesn’t the public agency just raise tolls itself?
3. Where does the lease revenue go?
4. What if the asset needs to be replaced during the term of lease?
For more information, visit:
http://www.mtc.ca.gov
For more information, visit:
http://www.mtc.ca.gov