Transit Public-Private Partnerships: Legal Issues (2014)

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59 fact, in 2012, 94 percent of qualified equity in- vestments took advantage of the leverage fea- ture.764 G. Transit Agency Experience with TOD and Joint Development Transit agencies, including BART, WMATA, and MARTA, have promoted TOD and joint devel- opment to increase ridership and generate reve- nues. Nevertheless, according to one report, some “high-profile” projects for transit agencies have had “mixed results” because of the complexity in developing them.765 As described in Appendix A, pending or com- pleted transit projects having TOD as a compo- nent include the Grossmont Trolley Station, Fruitvale Village, Transbay Transit Center, and West Dublin Station in California; the Stamford TOD in Connecticut; the Miami Intermodal Cen- ter; the MBTA Orange Line Station and Holyoke Multimodal Center in Massachusetts; the TriMet MAX Red Line and Patten Park projects in Ore- gon; and the City of La Crosse Municipal Transit Utility project in Wisconsin. Finally, PPPs are not just for large urban area projects. Small transit systems in the New Eng- land states, most having PPP legislation, use PPPs for TOD for transit stations, construction of new parking facilities, rehabilitation, construction of intermodal hubs, and expansion of service.766 XIII. SAFETEA-LU’S PILOT PROGRAM FOR PPPS A. Introduction In 2005, SAFETEA-LU authorized FTA to se- lect up to three pilot or demonstration projects under FTA’s New Starts program.767 The pilot program “invited project sponsors to experiment with alternative system procurement in order to identify more effective ways of bundling new transit capacity.”768 Although the pilot projects would be evaluated according to the criteria for the Starts program, the evaluation would be “ad- justed” for the projects’ “demonstration value.”769 764 Id. 765 Capturing the Value of Transit, supra note 10, at 27. 766 Implementation of PPPs for Transit, supra note 24, at 1. 767 H.R. REP. NO. 110-24, Hearings on PPPs, supra note 9, at XI. 768 Id. at 4. 769 Id. at XI. FTA selected three projects: the Oakland Air- port Connector (OAC), Denver Eagle P3 East and Gold Light Rail Lines (Eagle P3 Project), and the Houston North and Southeast Corridor High Ca- pacity Transit Extension Projects (Houston Pro- jects). The pilot program sought “to encourage more private risk-taking and investment in fixed guideway transit projects than is found in typical design-build and DBOM procurements.”770 To ex- pedite the projects, FTA offered the sponsors some relief from its usual requirements: it provided “Letters of No Prejudice earlier than traditionally allowed in the New Starts process to Houston Metro” and granted “a waiver from federal per- formance bonding requirements” to BART’s OAC, something that FTA is said not to have done pre- viously for any nonpilot project.771 B. Oakland Airport Connector ($493.10 Million) The OAC project, costing approximately $493 million, relies on technology known as an Auto- mated Guideway Transit (AGT) that permits ve- hicles to operate within their own guideways without a vehicle operator.772 A DB contract was selected for the project, but an OM contract was chosen for the AGT technology. BART’s solicita- tion of proposals for private financing of the OAC was based in part on the use of fare box reve- nues.773 However, the resulting project was a “col- laborative partnership” of BART, the FTA, Ala- meda County Transportation Improvement Authority (ACTIA), Alameda County Congestion Management Agency, Metropolitan Transporta- tion Commission (MTC), Caltrans, California Transportation Commission, City of Oakland, and the Port of Oakland (Table 1).774 The OAC is ex- pected to be in service in 2014. 770 FTA Public-Private 3P Program, supra note 56. 771 Public Transportation: Federal Project Approval Process Remains a Barrier, supra note 170, at 25–26. GAO has described the projects and obtained copies of the development and concession agreements and other documentation related to the financial structure of the projects. Id. at 3. 772 BART, Oakland Airport Connector, hereinafter referred to as “BART–Oakland Airport Connector,” available at http://bart.gov/about/projects/oac/index. aspx#anchor9. 773 FTA Public-Private 3P Program, supra note 56, at 2. 774 BART–Oakland Airport Connector, supra note 772.

60 Table 1.775 Sources of Funding for the Oakland Airport Connector. Federal Federal Transit Administration—Small Starts $25.0 million Total Federal $25.0 million State STIP $20.7 million CMIA/RTIP Funding Exchange $10.0 million SHOPP/RTIP Funding Exchange $10.0 million MTC/State-Local Partnership Program (SLPP) Prop 1B $20.0 million PTMISEA (Prop 1B) $12.8 million PTMISEA (Prop 1B FY 2008/2009) $5.4 million Total State $78.9 million Local Regional Measure 2 (2004 Bridge Toll) $115.2 million Port of Oakland $29.3 million ACTIA Measure B $89.1 million Regional Measure 1 (1988 Bridge Toll) $31.0 million BART SFO Reserve Account $10.0 million Total Local $274.5 million Subtotal agency/ public grant funding $378.4 million Debt draws $105.7 million Total Sources of Funds $493.10 million C. Denver Eagle P3 East and Gold Light Rail Lines ($2.056.1 Billion) In 2007, FTA selected the Eagle P3 project as a Penta-P project. The Eagle P3 venture is part of the Denver RTD’s $7 billion, 12-year program to expand commuter and light rail and bus rapid transit service. In September 2009, the RTD re- leased an RFP that sought a private partner to design, build, finance, operate, and maintain the East Rail and Gold Rail Lines.776 In June 2010, 775 Id. 776 Chrissy Mancini Nichols, Metropolitan Planning Council, PPP Profiles: EagleP3 (Apr. 2011), available at http://www.metroplanning.org/news-events/article/ 6139. the RTD selected Denver Transit Partners (DTP) for a DBFOM contract at a cost of $1.64 billion for the East Rail Line that includes a 34-year conces- sion. RTD will set and retain all assets and revenues generated from transit fares, advertising, and parking. The concession period will last 34 years, with a 5-year design/build period and 29 years of operation and maintenance. In return, RTD will make availability payments monthly to DTP based on availability and performance of the Ea- gle P3. In total, RTD will pay DTP $5.5 billion in service payments over 29 years in exchange for operating and maintaining the rail lines.777 In August 2011, the Eagle P3 project received an FFGA from the FTA in the amount of $1,030.45 million.778 Because RTD is managing the two lines as a single project, there is one FFGA for the Eagle P3. 777 Id. 778 RTD, Facts and Figures, FasTracks East Light Rail Line, available at http://www.rtd-denver.com/FF- EastLRT.shtml.