SAN FRANCISCO — California’s first public-private project got a $1.1 billion boost from the recently passed state budget, which will fund construction of a new six-lane roadway linking San Francisco and the Golden Gate Bridge.
The allocation for the Presidio Parkway Project will be paid out over the 30 years of the contract with the selected developer to cover milestone and availability payments. The lump sum ensures project completion will not be dependent on future allocations.
“It is not a one-time allocation where they have to go to the Legislature next year and then ask for more money,” said Michael Bowman, a spokesman for the state’s Business, Transportation and Housing Agency. The budget “is basically saying this is specifically for Presidio.”
Procurement guidelines call for the chosen developer to be paid a $173 million milestone payment at the end of construction, with availability payments estimated by the California Department of Transportation to be between $1.13 billion and $1.38 billion in year-of-expenditure dollars over 30 years.
“While there has been much speculation and debate surrounding appropriations risks and the legality of availability payments, the governor and Legislature have now mitigated these risks by making sure that all monies needed to cover future obligations for the Presidio Parkway Project will be available when needed,” BTHA secretary Dale Bonner said in a statement.
San Francisco County Transportation Authority officials have said the point of using the P3 procurement is to off-load the risk of cost overruns and ensure proper maintenance of the new facility over time. The U.S. Department of Transportation has already provided $128 million in stimulus funds to the project.
Three bidders have submitted technical and financial proposals and the winner will be announced by the end of the month, according to Bowman. The three short-listed bidders are Golden Gate Access Group, Golden Link Partners, and Royal Presidio SF Partners.
CalTrans and the SFCTA will hold a public hearing on Oct. 21st regarding the project’s lease agreement.
The U.S. DOT has called the project one of the largest, most complex and labor-intensive highway projects in the country. Twelve different funding sources — including federal, state, and local government monies — will finance the billion-dollar project.
The SFCTA is asking the DOT to make available $592 million of private-activity bond authority for the “design-build-finance-operate-maintain” project.
The new parkway will replace a 73-year-old, 1.5-mile portion of U.S. Highway 101 known as Doyle Drive, a key link from central San Francisco to the Golden Gate Bridge.
The drive will be replaced with a new six-lane parkway and a southbound auxiliary lane. The contract will also include operation and maintenance of all of the facilities.
The project has two major phases. The first one, which is underway, will upgrade the road to meet earthquake safety standards by late October 2011. The second phase will complete major construction and finish the project by spring 2014.
The new road will snake through the Presidio, a national park. Part of the project will also be to improve the environment, pedestrian and bicycle access at the park. The existing roadway, which handles 120,000 trips per day, does not meet structural standards and traffic regularly gets snarled there.
The Presidio Parkway would be the first project financed under legislation approved by state lawmakers in 2009, with the governor’s strong support, to facilitate greater use of P3 financing.