LOS ANGELES — Nevada officials said they plan to spend $1 billion on improvements to a nearly two-mile stretch of Interstate-15 that traverses Las Vegas and averages 270,000 cars a day.
The Nevada Board of Finance on Tuesday approved a $100 million revenue bond sale to buy properties located in the right-of-way of 1-15 from Sahara Avenue to the U.S. Highway 95 connector.
The bonds are expected to price Feb. 26 in a competitive sale. They will be repaid using money from the federal highway fund that is replenished using gas taxes.
"This is not only the largest road building project in Nevada history; it targets the busiest section of highway in all of Nevada," said Robert Nellis, assistant director of administration at Nevada Department of Transportation.
The plan, christened Project Neon, involves not only widening that stretch of the highway, but adding freeway ramps and connecting with the HOV lane. It follows a half billion dollars in improvements on U.S. 95 north and south of the project area, Nellis said.
Project Neon may reduce congestion, but Nellis said the main impetus is to reduce accidents.
The NDOT board approved using a public-private partnership in June 2012, the first time NDOT has used a P3.
"We are using design-build-finance-operate-maintain because we want to get the project done in three years as opposed to 10-to-12 years," Nellis said.
The three contractor-finance teams selected from a request for qualifications to submit a proposal by the Oct. 2014 deadline are Kiewett-Meridian Neon Partners; Las Vegas Neon Ventures, a partnership of the Las Vegas Gaming Corp. and Macquarie Capital Group; and Neon Mobility Group, a partnership of ACS Infrastructure Development Inc. and Fengates Capital Management Limited and Star America Funds.
NDOT plans to select a finalist in December 2014 and begin construction May 2015 on the three-year project.
The private partner would front all of the construction costs through a private financing method that NDOT would repay over a 35-year period, said Scott Magruder, an NDOT spokesman.
Financing it this way enable the department to stretch out payments over a longer time period, because the state doesn't bond for maturities over 20 years, Nellis said.
The private partner would maintain the highway over the 35 year life of the agreement with money included in the financing plan. The cost of maintenance is included in the $1 billion project costs.
NDOT currently has $440 million in outstanding bonds, so the bond payments on the new bonds will keep the department near its threshold of never paying more than $100 million in debt payments in any given year. The department's debt payments for the Neon project and its other outstanding debt would peak at about $101 million in 2020, dropping to $89 million in 2021 and $81 million in 2022, according to a fact sheet.
NDOT, which calculated its base capital improvement program between 2007 and 2011 at roughly $378 million per year, will still have about $380 million a year for statewide capital improvement projects, according to the fact sheet.
The department hopes to earn the same AA ratings from the three largest rating agencies on the upcoming bond sale that it currently holds on outstanding debt, officials said.
NDOT also plans to seek approval from the state board of finance in 2019 to sell $200 million in highway revenue bonds to pay off construction costs, Nellis said. The transportation agency expects to have more bonding capacity after paying off older bonds, he said.
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Corrected January 16, 2014 at 11:21AM: Instead of Interstate 90 it should say U.S. 95.