DALLAS — The California Department of Transportation and the San Francisco County Transportation Authority closed Thursday on financing for the $1.1 billion Presidio Parkway Public-Private Partnership.
The agreement with Golden Link Concessionaire, a consortium led by Hochtief PPP Solutions NA and Meridiam Infrastructure NA, is the first transportation P3 in California under a 2009 state law.
The P3 legislation was strongly supported by then-Gov. Arnold Schwarzenegger as a way to stretch transportation dollars by working with private partners.
Senate Bill 4 did not set a limit on the number of P3 projects, but put a deadline of Sept. 1, 2017, to enter into the agreements.
The Presidio Parkway project is the third highway effort in California with an availability payment structure.
The first phase of the project, which involved seismic upgrades, was completed in 2011.
Caltrans and the county Transportation Authority worked with the Presidio Trust, the Golden Gate Bridge Highway Transportation District, the Metropolitan Transportation Commission and the Federal Highway Administration to complete the P3 financing for the second phase of the Presidio Parkway project.
Financing for the effort includes a combination of equity, bank debt and loans provided through the Transportation Infrastructure Finance and Innovation Act.
The P3 agreement calls for the consortium to operate and maintain the road for 30 years.
Golden Link will receive $28 million a year if it meets operational and maintenance performance targets.
Golden Link will finance, design and build a six-lane replacement for an iconic 1.5-mile segment of U.S. Highway 101 built in the late 1930s to connect San Francisco and the Golden Gate Bridge.
The private financing includes proceeds from $150 million of private-activity bonds to cover part of the estimated $358 million price tag for Golden Link's part of the project.
The project includes seismic upgrades, two sets of short tunnels, a wide landscaped median, enhanced pedestrian access and improved traffic transitions into city streets.
The financial agreement was originally scheduled for completion in December 2010, but a lawsuit by a public employees union in November 2010 delayed the negotiations.
The California Supreme Court ruled the project could proceed in November 2011.
The Professional Engineers in California Government contended that Caltrans was wasting nearly $1 billion on a no-bid contract unauthorized by state statute.
The union, which represents 13,000 state employees, asked the courts to order Caltrans to return to traditional procurement methods, with department employees doing the engineering work on the project.
Nossaman LLP advised Caltrans on legal issues involved in procurement, financing and contracts for the project.
Geoffrey Yarema, head of Nossaman's infrastructure practice group, said the Presidio Parkway project shows the value of a P3 delivery method for large infrastructure projects.
"Caltrans should be applauded for its efforts to improve access to the Golden Gate Bridge with little financial impact on the citizens of California," Yarema said.
